Individual Health Care Insurance Mandate Debate
November 3, 2009
Questions and Answers:
There is no constitutional problem with Congress requiring that individuals purchase health care or pay a penalty. There is much to debate over health care reform and how to achieve it, but I have no doubt that the proposals would be constitutional.
The constitutional objection that I have heard most often is that Congress lacks the authority under Article I of the Constitution to do this. But such a mandate clearly falls within the scope of Congress's authority to regulate commerce among the states.
Over many cases, the Supreme Court has held that Congress can regulate economic activities that taken cumulatively across the country have a substantial effect on interstate commerce. Purchasing health insurance is an economic transaction. Taken cumulatively those who do this, or who don't do it, have a substantial effect on interstate commerce.
In 2007, healthcare expenditures amounted to $2.2 trillion, or $7,421 a person, and accounted for 16.2% of the gross domestic product. These statistics leave no doubt that regulating health insurance is regulating interstate commerce.
Those who argue that this is unconstitutional maintain that those not purchasing health insurance, by definition, are not part of interstate commerce. There are numerous flaws with this argument. First, Congress can regulate activities that themselves are not part of interstate commerce if they have a substantial effect on interstate commerce. For example, in Wickard v. Filburn, the Supreme Court held that Congress could regulate wheat that farmers grew for their own home consumption. More recently in Gonzales v. Raich, the Court ruled that Congress could prohibit cultivating and possessing small amounts of marijuana for personal medicinal use. Even though the individuals were not personally engaged in commerce, the matter still fit within the commerce power.
Second, not engaging in economic transactions is a form of commercial behavior that Congress can regulate. The Supreme Court held that Congress could require that hotels and restaurants provide services to African-Americans. Their refusal to engage in commerce still was deemed to be within the scope of Congress's commerce clause power.
Third, the likelihood is that everyone will require medical care at some point. An uninsured person in an automobile accident will be taken to the emergency room for treatment. An uninsured person with a communicable disease will be treated. Congress can ensure that there is an adequate fund to pay for everyone's medical needs.
In other words, the health care system is part of interstate commerce. Providing care for all unquestionably has a substantial economic effect. Congress, then, can use its authority under the necessary and proper clause to make sure that the system that it is creating is viable and capable of providing health care for all.
Nor is there any individual right violated by a mandate for purchasing health care. There is no constitutionally protected freedom to be able to refuse to be insured or to avoid paying for the benefits provided.
There are many close constitutional questions. But this is not among them. Congress clearly has the legal authority to require individuals to have health insurance.
There is no doubt that Congress can regulate an entire array of economic activities, large and small, inter- and intra-state. Thus, for example, there is no problem, Constitution-wise with having Congress regulate health care insurance purchase transactions. The problem with an individual insurance purchase mandate, however, is that it does not regulate any transactions at all. It regulates human beings, simply because they exist, and orders them to engage in certain types of economic transactions.
The cases cited by Professor Chemerinsky – Wickard v. Filburn and Gonzales v. Raich – do not support his position. In both of these cases, Congress sought to regulate individuals engaged in traditional agricultural/economic activities, growing wheat and marijuana. The fact that they did so for personal consumption did not detract from the underlying economic nature of these activities, especially since Congress sought to regulate them as a part of a comprehensive inter-state regulatory scheme.
It is also true that a refusal to serve a particular customer, the conduct in issue in the Heart of Atlanta Motel case, is a form of an economic behavior, fully reachable under the Commerce Clause. However, what Professor Chemerinsky conveniently overlooks is that this form of conduct – refusal to serve – took place in the context of an operating commercial establishment. It is this fact and this fact alone that made the refusal to serve an economic transaction. If Professor Chemerinsky feels otherwise, he would have to accept the notion that Congress can, under the Commerce Clause, regulate the entirely private, non-commercial behavior of an individual who chooses whom to invite for dinner to his house, and who discriminates against some of his neighbors.
Professor Chemerinsky also overlooks the existence of two major cases – United States v. Lopez and United States v. Morrison – in which the Supreme Court, in 5 to 4 decisions, has specifically rejected the notion that Congress can regulate non-commercial behavior merely because, arguably, such behavior can have an impact on Commerce. The Court's overarching reason for doing so was its compellingly articulated belief that the Commerce Clause is a limited grant of power and one that cannot be infinitely capacious. This reasoning is unassailable.
Indeed, the vertical separation of powers, under which the federal government possesses limited and enumerated powers, while the States wield general police powers, is the key part of our constitutional architecture. Far from being an 18th century affectation, these structural limitations on government powers were designed to protect individual liberty. In the Framers' view, these structural limitations on the ability of the federal government to exercise authority were the primary ways of ensuring that no single government entity would grow too powerful. They were viewed by the Framers as the most important way of protecting liberty, far more important than even the provisions of the Bill of Rights.
Professor Chemerinsky's vision of a Commerce Clause on steroids would fundamentally warp our constitutional architecture. Because every single decision by individual Americans, be it buying health insurance, cars, health club memberships or any other good or service, has some impact on the economy, it could be subject to regulation by Congress. Indeed, Congress would be able to compel how individuals would dispose of every penny of whatever monies they have left after paying taxes, transforming Americans into virtual serfs. Meanwhile, because, under the Supremacy Clause, any constitutional federal legislation trumps exercises of state power, an infinitely capacious Commerce Clause would rob States of any remaining authority. This point was ably articulated by Justice Kennedy in his concurring opinion in Lopez. Accordingly, there is a great deal at stake here. No matter how important the cause of health care reform might be, it is not consequential enough to destroy the very sinews of our constitutional system.
It is firmly established that Congress may regulate economic activities that have a substantial effect on interstate commerce. Purchasing insurance, by definition, is economic activity. Congress mandating that individuals have insurance is obviously regulating economic activity. There is no denial that this has a substantial effect on interstate commerce. Once this is established, and I cannot imagine how it can be disputed, then Congress can enforce this under the necessary and proper clause by penalizing those who violate the mandate. Under current and long-standing constitutional doctrines it is not a close question that this is within the scope of Congress's commerce clause power.
Mr. Rivkin says that if Congress can do this, there will be no limit to Congress's power. He says that this is the commerce clause "on steroids" and that Congress will be able to regulate everything, even who people have over to their homes for dinner. He says that the system of dual federalism will be at an end. Such hyperbole and apocalyptic predictions are familiar in this area. In 1918, in Hammer v. Dagenhart, the Supreme Court declared unconstitutional a federal law that prohibited the shipment in interstate commerce of goods made by child labor. The Court concluded its opinion by declaring: "[I]f Congress can thus regulate matters entrusted to local authority by prohibition of the movement of commodities in interstate commerce, all freedom of commerce will be at an end, and the power of the states over local matters may be eliminated, and thus our system of government practically destroyed." For more than 70 years Congress has prohibited child labor and none of these dire predictions came true. Nor would allowing Congress to mandate the purchase of health insurance mean that Congress could regulate who people invite to their homes for dinner or end our system of federalism.
As a matter of constitutional law, there are two relevant questions in assessing whether Congress's mandate of health insurance fits within the scope of its commerce power. First, is Congress regulating economic activity? Certainly, compelling the purchase of health insurance is regulating economic activity in its most obvious sense. Mr. Rivkin points to United States v. Lopez and United States v. Morrison to support his position. But neither involved economic transactions. Lopez concerned the federal Gun Free School Zone Act which made it a crime to have a firearm within 1,000 feet of a school. Morrison involved the Violence Against Women Act, which created a civil cause of action for money damages for victims of gender-motivated violence. Neither involved economic activity. But purchasing or not purchasing insurance is an economic transaction.
Nor is Mr. Rivkin's distinction of Wickard v. Filburn and Gonzales v. Raich persuasive. In these cases, the Supreme Court held that Congress could regulate the amount of wheat that farmers grew for home consumption and prohibit the cultivation or possession of marijuana for personal medicinal use. Mr. Rivkin says that these cases involved economic activity. But in making that argument Mr. Rivkin makes a crucial conception: a person can be involved in economic activity even if there is no economic transaction or commercial activity. In Wickard, it was a farmer growing wheat for his family to eat. In Raich, it was a person growing marijuana for personal medicinal use. If this is economic activity, then certainly the purchase of health insurance (or a refusal to do so) is economic activity.
The second question is whether the activity has a substantial effect on interstate commerce. This, of course, Mr. Rivkin does not question because it cannot be denied that the purchase of insurance has an enormous effect on interstate commerce. Likewise, taken cumulatively those who refuse to purchase insurance also have a significant impact on interstate commerce. If the wheat that a farmer grows for his family to eat or the marijuana that a person grows for home consumption have this effect, there can be no dispute that a national mandate to purchase health insurance meets this requirement.
There are many valid and important issues to debate concerning how to implement health care reform. But constitutionality is not among them. Congress clearly has the power to use its power to regulate commerce among the states to mandate the purchase of health insurance.
There is no question that purchasing insurance is an economic activity which Congress can regulate. To be sure, even so, the regulation can be properly imposed only on the commercial entities that are in the business of selling insurance, i.e., insurance companies. The government can regulate what insurance products they sell, what prices they can charge, what disclosures they make to the purchasers and all other aspects of their activities. Directly regulating the purchasing public is a much dicier proposition, from a constitutional perspective. When Congress wanted to ban purchases of liquor, it needed a constitutional amendment to do so. When Congress regulates gun sales, the onus of the regulations fall on gun sellers and not on gun buyers.
However, there is an even more fundamental problem with Professor Chemerinsky's analysis. What lies at the heart of my disagreement with him is his view that a decision by a private individual not purchase insurance is also a form of economic activity. Let's stipulate here that any purchasing decision by a consumer in a market economy has some economic impact. But to call a decision not to purchase, when undertaken by a private person not engaged in a commercial activity, an economic transaction is a fundamental misnomer. In this regard, under Professor Chemerinsky's definition of economic activity, every aspect of consumer behavior, or, for that matter, any aspect of individual behavior, would become an economic activity.
It is worth reflecting that, under the same kind of logic, the Lopez and Morrison cases were wrongly decided. Both involved activities by individuals – carrying guns and engaging in gender-motivated violence – that quite logically and plausibly could be expected to have, in the aggregate, an adverse impact on the economy. (Indeed, the government cobbled together such an argument to defend the underlying laws.) I fail to understand the distinction between the decision not to purchase insurance – which, according to Professor Chemerinsky, in the aggregate, will have an adverse impact on the economy – and a decision to carry guns near school which, in the aggregate, will also have an impact on the economy. Under Professor Chemerinsky's logic, both of these decisions amount to an economic activity, subject to regulations under the Commerce Clause.
By contrast, the Lopez and Morrison cases are perfectly reconcilable with the Wickard and Gonzales cases. This is because growing agricultural products or plants, whether for resale or personal consumption, is inherently an economic activity. Choosing not to go to a movie, or not buy a car, or not buy insurance, is not an economic activity.
But, let's try to get beyond the verbal gymnastics. Professor Chemerinsky is not impressed by my argument about the constitutional consequences of adopting his vision of the Commerce Clause, calling it hyperbolic and apocalyptic. This is not, unfortunately, a credible rejoinder.
The importance of having a limiting principle associated with the use of the Commerce Clause isn't something that only I care about; this was precisely the concern expressed by the five Justices of the United States Supreme Court in Lopez and Morrison. Are they also being hyperbolic and apocalyptic? Even more fundamentally, I would respectfully urge Professor Chemerinsky to give serious consideration to answering my question – how does his vision of an infinitely capacious Commerce Clause, endowing Congress with the authority to regulate every single purchasing and life style decision of all Americans reconcile with the notion of the federal government being a government of limited and enumerated powers? Professor Chemerinsky appears comfortable with Congress exercising its power under the Commerce Clause unencumbered by any limiting principle. The upshot of this argument has Congress saying, "you can trust us not to go too far." That is distinctly not the structure of the Constitution, and the prospects of such a limitless exercise of power would likely have led states to reject its ratification. Indeed, I can imagine no constitutional law scholar who would not recoil from this expansive view of power in any other context, especially those involving individual liberties.
Mr. Rivkin and I agree that under well-established law that Congress can regulate economic activity that has a substantial effect on interstate commerce. He also appears to agree that under this power Congress can mandate that individuals purchase health insurance. Buying health insurance, by definition, is commercial activity. Taken cumulatively across the country, there is quite obviously a substantial effect on interstate commerce.
The only apparent area of disagreement is whether Congress can impose some penalty on those who do not purchase health insurance. Mr. Rivkin says that they are not engaging in commerce so Congress cannot regulate them. First, if Congress can require the purchase of health insurance as an exercise of the commerce power, then surely under "the necessary and proper clause" it can enforce that mandate by punishing those who refuse to do so. Long ago in McCulloch v. Maryland, the Supreme Court held that the necessary and proper clause authorizes Congress to adopt any means to carry out its powers. Punishing those not purchasing health insurance is the means to enforcing the constitutional requirement for purchasing insurance.
Second and independently, the choice whether to purchase or not purchase health insurance is an economic decision and constitutes economic activity. If I decide to buy or not buy something, that is economic activity. Those not purchasing health insurance have a substantial effect on interstate commerce.
As I mentioned earlier, the Court allowed Congress, under its commerce power, to require that hotels and restaurants serve racial minorities. It was no defense for the hotels and restaurants to say that they were not engaging in commerce. Mr. Rivkin says that it is different because hotels and restaurants were commercial enterprises. That misses the point: the refusal to engage in an economic transaction is deemed economic. Even growing crops for personal use is economic despite the lack of any transaction.
Mr. Rivkin again resorts to hyperbole and says that my view of the commerce clause would give unlimited powers to Congress. That's simply wrong: all I am defending is that Congress under the commerce clause can require an economic transaction and enforce that requirement as appropriate. This gives Congress no power to regulate outside of the area of economic transactions. It does not call into question the Supreme Court's decisions in Lopez and Morrison which had nothing to do with economic transactions.
Given the size of the health care industry and the enormous resources being spent, it is inconceivable to me that a court would find that regulation is beyond the scope of Congress's commerce clause power. It is not a close question: Congress is regulating commerce among the states when it mandates that individuals purchase health insurance.
It appears that Professor Chemerinsky and I are no closer to an agreement at the end of this exchange than at the beginning. Unfortunately, it also seems that Professor Chemerinsky has misconstrued what I said in my previous post. I agree that purchasing health insurance or any other good or service is an economic activity, which Congress can regulate under the Commerce Clause. My previous post also makes it abundantly clear that a decision not to purchase insurance or not to acquire any other good or service is not an economic activity at all and, as such, is not subject to regulation under the Commerce Clause.
With this misunderstanding clarified, let me try to elaborate what is wrong with Professor Chemerinsky's underlying position, namely that "the choice whether to purchase or not purchase health insurance is an economic decision and constitutes economic activity." For starters, as I had previously mentioned, in a market economy, every decision by human beings has some economic impact. This is certainly true of decisions to buy goods and services, acquire an education or forego doing so, travel and lead an active life, or become a couch potato, who rarely leaves one's own dwelling.
Indeed, all these decisions, whether to proceed with something or forego proceeding with something, have a range of economic impacts. The most obvious one is that every purchasing decision stimulates the economy. The decisions not to purchase fail to stimulate the economy, while various life style choices, e.g., eating fatty foods, drinking to excess, not exercising, allowing oneself to be stressed – as is often the case with lawyers, may well impose some projected negative impacts on the economy and society. One can say that all human beings, while they are alive, constantly impose some positive and negative impacts on the economy and society; such is the essence of life. And, according to Professor Chemerinsky, anybody who makes any decision, or exercises any choice even on the most personal and intimate matter, relating, for example, to personal life or procreation, is engaged in an economic transaction.
Just to demonstrate how all-encompassing Professor Chemerinsky's definition of an economic activity really is, let's reflect on the fact that a decision not to marry or not to have children makes it considerably more likely that the individuals making such decisions will be unable to draw on family support in their declining years and, hence, quite likely to become burdens on our medical system and other forms of social/societal support networks. In fact, I frankly cannot think of anything that a human being can do that would not, under Professor Chemerinsky's logic, be an economic activity, especially when individual impacts are aggregated, as courts looking at Commerce Clause cases have done.
In this regard, since the conduct at issue in Lopez and Morrison was projected to have adverse consequences for the economy – and, by the way, these projections were not particularly fanciful – it, under Professor Chemerinsky's own definition of an economic activity, was an economic transaction, subject to regulation under the Commerce Clause. This, by the way, is precisely what the Department of Justice lawyers argued in these cases and this is precisely the position rejected by the Supreme Court.
Professor Chemerinsky's three rounds of posts make much mention of the size of the health care industry and the resources that we, as a society, spend on health care. But, this is not a constitutionally-meaningful factor. As Professor Chemerinsky well knows, and case law makes abundantly clear, if something is in principle within the scope of congressional authority to regulate under the Commerce Clause, the particulars of such a regulation are reviewed by the courts under the rational basis test. To state the obvious, this is not a very exacting basis for judicial review. And, in general, if a failure to join health clubs is an economic activity – as it will be under Professor Chemerinsky's definition of economic activity – then I would be the first one to admit that it would not be irrational for Congress to mandate health club membership. Indeed, it would be quite plausible for Congress to conclude that a vigorous physical exercise by all Americans would save hundreds of billions of dollars in medical costs and produce all sorts of other positive economic impacts.
This brings me back to the limiting factor issue and, what I suppose, would be my last bit of hyperbole in this debate. In a world where every human decision and activity amounts to an economic transaction, Congress' Commerce Clause power is indeed infinitely capacious. To say that Congress has "no power to regulate outside of the area of economic transactions", as Professor Chemerinsky does, isn't to say much if everything is an economic transaction. This would be an interesting world and one that the Framers of the Constitution would not recognize.
I would close by noting that Professor Chemerinsky strongly supports the Supreme Court's post-September 11 jurisprudence, which whatever one thinks of it – and I don't think much of it – evidences a profound conviction that granting the two political branches of the federal government power, above and beyond that to which they are constitutionally entitled, cannot be countenanced, no matter how compelling the imperatives of public safety might be. Why is it that the very same people who applaud Hamdan and Boumediene cases are not at all troubled by the prospect of Congress exercising an unlimited power to regulate every aspect of the lives of all Americans, restrained only by the provisions of the Bill of Rights?