Next month the U.S. Supreme Court will begin hearing arguments regarding the individual mandate in the Patient Protection and Affordable Care Act that requires individuals to buy health insurance by 2014 or pay fines when they file federal income tax. A decision will be announced this summer, before the presidential election in November.
First, the mandate does not apply to people who have religious objections, undocumented immigrants, prison or jail inmates, members of Indian tribes, low-income individuals or families, to those who go without health insurance for less than three months, and a special category for individuals who would suffer “hardship” in getting covered by a health plan.
For those who qualify, failure to satisfy the mandate leads to a requirement to pay a penalty along with one’s federal income tax return. The new law also imposes a penalty on employers, including state governments, if they do not maintain minimal coverage for their full-time employees.
The central issue is whether Congress exceeded its constitutional powers to regulate interstate commerce and to levy taxes when it adopted the so-called "individual mandate" at the heart of the health care law.
Opponents of the Affordable Care Act have turned to the federal courts to challenge the constitutionality of the legislation. These are the four issues receiving the most attention:
1. Whether the individual mandate is a permissible exercise of Congress’s powers under the Commerce Clause in Article 1 of the Constitution.
2. Whether the individual mandate is permissible under Congress’s powers to tax for the general welfare in Article 1 of the Constitution.
3. Whether the individual mandate is permissible under the Necessary and Proper Clause in Article 1 of the Constitution.
4. Whether, if the individual mandate is an impermissible exercise of Congress’s power—the mandate can be severed from the Affordable Care Act, leaving the rest of the Act’s provisions intact.
The Individual Mandate and the Commerce Clause
Article 1, Sec. 8, of the U.S. Constitution gives Congress the power to “regulate Commerce...among the several States.” The Supreme Court has held that this clause gives Congress power over three regulatory categories.
1. Regulation of the channels of interstate commerce
2. Regulation and protection of the instrumentalities of interstate commerce and of persons or things in interstate commerce
3. Regulation of activities that substantially affect interstate commerce.
All the courts that have considered the constitutionality of the individual mandate agree that the focus is on the third category: regulation of activities that substantially affect interstate commerce.
There is precedence to uphold the constitutionality of regulating activities that affect interstate commerce. In Gonzales v. Raich 545 U.S. 1 in 2005, Congress had the authority to prohibit the possession of home-grown marijuana intended for personal use only—even if for medical use permitted under state law—because considered in aggregate, as a whole, the personal growth and consumption of marijuana could have a substantial impact on an established and lucrative interstate market in marijuana.
In two decision in the last 20 years, the Supreme Court has drawn a line at what it saw as Congress’s efforts to regulate non-economic activity. United States v. Lopez 514 U.S. 549 1995 and United States v. Morrison 529 U.S. 598 2000 both were struck down as Congress’s attempt to regulate non-economic.
The focus of the Affordable Care Act cases has been on how to characterize the decision not to purchase health insurance. The government argues the health care market is unique in that no one can permanently “opt out” of the market. The question is how an individual decides to pay for the expenses that will inevitably be incurred in that market. In essence, everyone at some time will need health care whether it’s on an emergency basis or catastrophic illness, and how will it be paid for? The choices are health insurance, out of pocket, or uncompensated care which are those without insurance. Their care ends up being funded by third parties (you and me) through cost shifting in the health care market, which includes a myriad of activities from raising insurance premiums to the cost of an aspirin in the emergency room.
How will the Supreme Court Justices vote?
The Supreme Court split is right down the middle: Justices Ruth Bader Ginsberg,, Sonia Sotomayor, and Elena Kagan are liberal, and widely expected to support the individual mandate. Justices , , , and Chief Justice John Roberts are conservative and are expected to dissent. Swing voter Anthony Kennedy could go either way — and is often the court's deciding vote.
Supreme court analysts predict a 5-4 decision with Kennedy casting the deciding vote in favor of the mandate.
If the Supreme Court breaks down along its usual ideological lines on the vote on the health care law, Kennedy -- known as the swing vote on the court -- could be the one to decide its fate. His decisions in two cases give an idea of how he might vote.
Justice Anthony Kennedy’s opinions in Comstock and Lopez give an indication on how he will vote. In Comstock, Kennedy suggests that Congress exceeds its commerce clause power when it regulates behavior that has no “tangible link to commerce.” Kennedy further explains that “rational basis” for concluding that an individual’s activity in the aggregate affects interstate commerce is based on a “demonstrated link in fact, based on empirical demonstration.” In the aggregate, uninsured status causes individuals to consume “the most expensive and least efficient form of health care” in emergency rooms, and that uncompensated care costs billions every year leading to higher healthcare costs nationwide. (Id.) Thus, the individual mandate clearly meets the “tangible link” standard outlined by Kennedy in Comstock.
Congress clearly has the authority to regulate the insurance industry, but some of the most important regulations (e.g., guaranteed issue, no exclusions for pre-existing conditions) would be rendered futile without the individual mandate. For instance, with a guaranteed issue rule and no mandate, a healthy person could work the system by not buying insurance until they got sick.
If the court follows its own precedents, as it should, this case should not be a close call: The reform law and a provision requiring most people to obtain health insurance or pay a penalty are clearly constitutional. Republican-appointed judges on two appellate courts have found the insurance mandate constitutional. They have pointed out that past Supreme Court decisions have upheld federal laws that were much more intrusive on personal liberty and involved activities less clearly relevant to interstate commerce.
Finally, the health care market is interconnected, and everyone needs health care at some time in their life, whether it’s an emergency or an illness. Someone will have to pay for the uninsured and cost shifting is how it’s done. With the individual mandate the system as a whole—in aggregate—benefits from costs being shared, thus reduces the need for cost shifting.
There is also no doubt that Congress has the authority to set minimum-wage rates and other laws that affect an individual’s economic decisions. As Judge Laurence Silberman of the United States Court of Appeals for the District of Columbia Circuit, wrote last November “the right to be free from federal regulation is not absolute, and yields to the imperative that Congress be free to forge national solutions to national problems, no matter how local — or seemingly passive — their individual origins.”