Direct Continuation of: The Constitutionality of ObamaCare: Background

When we last left off, Florida v. the United States Department of Health and Human Services had been appealed all the way to the Supreme Court, who would be faced with the final judgement on the constitutionality of ObamaCare, in National Federation of Independent Business v. Sebelius.

The claim of the respondents (National Federation of Independent Business) was that ObamaCare was unconstitutional because it was regulating economic inactivity, and the claim of the petitioners (Sebelius) was that ObamaCare is constitutional because it is allowed under either (a) the Commerce Clause, (b) the Necessary and Proper / Elastic Clause, (c) Congress’s power to tax, or some combination of the three.

In this essay, we will look at (a) and (b) — the Commerce Clause and Elastic Clause — in depth.

 

What Are These Clauses?

The Constitution enumerates what it is the US government can do in broad terms through a variety of clauses. One of these clauses is Article I, Section 8, Clause 3, which states that the United States Congress shall have power “[t]o regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.” This is the Commerce Clause.

Also relevant is Article I, Section 8, Clause 18, which states that Congress shall also have power “[t]o make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.” As you can see, this clause is exceedingly broad or elastic, being stretched to cover nearly any conceivable goal — this is why it’s often informally called the elastic clause, though it is formally referred to as The Necessary and Proper Clause.

These two clauses are often used together to give the government the power to regulate a wide variety of things when the states can’t do so effectively (because the issue is interstate in scope — not particular to any specific state, but rather to all states) and when the need is pressing (Congress really wants to do so to solve a major problem).

 

Risk Pools: The Argument for Commerce-Based Constitutionality

When it comes to ObamaCare, the individual mandate compels people to enter into an economic transaction to buy insurance, which is interstate in nature because insurance markets are interstate and the health problem is interstate — thus the involvement of interstate commerce, seemingly, can be regulated by the Commerce Clause. Furthermore, the individual mandate is supposed to be the only way such a goal can be accomplished (otherwise no one has a reason to buy insurance) and thus the law was necessary and proper to achieve this end.

The problem comes from how healthcare works. As I mentioned in “Why the ObamaCare Mandate Isn’t Infringing Your Freedoms”, the Emergency Medical Treatment and Labor Act requires all hospitals to provide medical care even if the patient is uninsured and unable to afford the treatment. Thus, a certain amount of people choose to forgo purchasing health insurance gambling that they won’t need to draw upon it, and costing the hospital a lot of money if they lose their gamble.

In response, healthy people take the gamble and duck out of insurance and only sicker people end up buying insurance. This makes it riskier for insurance companies to operate (its more likely that each person with insurance will need to draw upon it), so prices of insurance have to go up in response, causing even more people to risk it rather than pay the higher price, causing prices to go up again… putting upward pressure on health insurance premiums.

Thus, as ObamaCare proponents argue, by choosing to not buy health insurance, you are affecting these interstate risk pools and making the price go up, and (simplifying a bit) the government wants to make health insurance affordable by stopping this upward pressure and forcing everyone to get insurance. So the pro-ObamaCare argument is, essentially, all about risk pools.

 

Economic Inactivity: The Argument Against

If the refrain for pro-ObamaCare is “risk pools”, the anti-ObamaCare refrain is “economic inactivity”. Essentially, the pro-argument says that Congress can regulate economic activity, especially when it’s necessary and proper to do so in order to achieve an important goal (more widespread and affordable access to healthcare).

But the catch is, according to this argument, the process of not buying insurance is not economic activity — it’s the absence of activity (the buying of insurance) that’s at risk. …It’s like calling “not stamp collecting” a hobby or “bald” a hair color. And if there’s no relevant activity, there’s nothing for Congress to regulate, no matter how much they might want to or how necessary and proper it would be.

Can a government regulate not only decisions people make to do something, but rather their decision to refrain from doing something, or their simple failure to do something? In general, yes — for example, refraining from or deliberately deciding not to properly secure equipment that then falls and kills someone is criminal negligence. But what about when we get to Commerce? The Court has to, perhaps ironically, decide.

 

The Relevant Court Precedent

You’d expect decisions about constitutionality to be easy — just look to the Constitution and see what it says. But as a document it requires interpretation, and there are many ways something can be read, and the document clearly doesn’t cover certain cases — like what is commerce? is this commerce? what is necessary and proper and what isn’t? You get the picture.

One way the Court has worked to make this easier is by turning to their past decisions and trying to apply them. This isn’t because the Court was smarter then or even correct then, but rather it helps build a consistent and more or less predictable interpretation of the Constitution so Congress knows what to expect when making laws.

So by looking to the Commerce and Elastic Clauses, the Court looks to how it ruled in the past…

Wickard v. Filburn (1942)
Flashback to the Great Depression. Times are tough, and the government desperately needs to get wheat prices up in order to get more income flowing in the economy. Don’t worry about the whys or hows of that policy, just recognize that the government passed a law that limits the amount of wheat that farmers can produce. Now Roscoe Filburn enters the scene, growing wheat for his own personal consumption, never intends to sell it, and grows more than the limits. The government seeks to stop him, and Filburn sues, saying that all his consumption is intrastate and not intended for commerce, so the government can’t regulate. The Supreme Court says the government actually can, because his wheat stores may affect interstate commerce.

Perez v. United States (1971)
Congress seeks to ban loan sharking, or credit transactions that seek to extort people. However, there’s a problem: all the loan sharking Congress sought to regulate was within the state — it’s intrastate commerce. However, the Supreme Court saw the way out — loan sharking is used to fund organized, interstate crime, and thus can be regulated after all. Moreover, it’s irrelevant that each individual person regulated has the most minor impact on organized crime if at all, because Congress can regulate a problem if it emerges in the aggregate.

United States v. Lopez (1995)
Citing the authority of the Commerce Clause, Congress enforces a nation wide ban on guns in schools, since guns lead to violent crimes which have dire economic effects (insurance costs go up, fear restricts markets) and the presence of guns creates a fear which inhibits learning, which creates a weaker economy since education is important to forming better businesspeople. Such a loose and very indirect connection was not supported by the Court, however, which ruled that such a nation-wide ban was unconstitutional.

Gonzales v. Raich (2005)
In 1996, California voters legalized the use of medical marijuana, despite a federal ban. Angel Raich decides to grow marijuana for personal use because of a medical condition that causes extreme pain unless marijuana is used to lessen it. The government, in enforcing its ban on marijuana, ends up destroying Raich’s crops, and Raich sues. The Supreme Court determines that doing so was constitutional under the Commerce Clause because growing this marijuana could affect the interstate market for marijuana if it was sold, which could potentially happen.

 

The Decision

From these cases, Chief Justice Roberts, delivering his opinion, made it clear that the Court had taken a very wide interpretation of what Congress could regulate, provided it had a direct and demonstrable connection to commerce. Een if it was growing wheat or marijuana for personal use, the mere threat that such commodities could enter into the market and affect prices was enough to trigger the Commerce Clause, backed up by the Elastic Clause. However, flimsy connections to commerce, like the ban on guns, would not fly.

The refusal to buy health insurance did have a demonstrable affect on prices in the aggregate, so the connection was there and sufficiently strong. However, the critical difference was that in all of these cases cited from precident, there was an economic activity involved — Filburn chose to grow wheat and Raich chose to grow marijuana. However, in the case of health insurance, it was refraining from activity, and the Court said that such inactivity could not be regulated.

Likewise, the Necessary and Proper clause would be no additional help, since this only authorizes Congress to do what is already within its regulatory scope, not dramatically expand it. Indeed, such regulation could lead dangerously to the country becoming a “Nanny state”, where people could be ordered to eat a balanced diet, since refraining from doing so also has a substantial affect on health, and thus on insurance costs.

With the slippery slope firmly in place, the Commerce and Elastic Clauses were no further help. We’ll have to turn elsewhere.

 

In the next essay, we’ll look at the issue of taxes, especially as applied to the Anti-Injunction Act, which could have blocked the case from even going to trial, and Congress’s Power to Tax, which is what the Supreme Court ultimately used to declare ObamaCare constitutional.