...where the Constitution meets cotton candy.

Is Health Care Reform Constitutional?

The Constitutionality of the Health Care Reform Bill

In this decade, we are witness to the biggest piece of social reform legislation since LBJ’s Great Society.  Is it good or bad for America?  It depends on who you believe.  Here is a more important question: is health care reform constitutional?  In Constitutionland, the question is on everyone lips! The federal judiciary has entered the debate. See the summary of the federal court opinions below, and further down, see the in depth discussion.  First a brief summary of the new laws and some constitutional background:



                                    
The Patient Protection and Affordable Care Act

On March 23, 2010, President Barack Obama and the Democratic 111th Congress achieved the long elusive goal of health care reform with the enactment of the Patient Protection and Affordable Care Act.  This law, along with the corresponding Health Care and Education Reconciliation Act of 2010 (signed March 30, 2010),  overhauls the American health care system in the following ways:

  1. Removes pre-existing conditions as justification to deny insurance to people.
  2. Requires states to create health insurance exchanges where the uninsured individuals and small businesses can purchase insurance.
  3. Expands eligibility for Medicaid for individuals with income up to 133% of the poverty line.
  4. Extends insurance for children under their parents' plans until age 26.
  5. Creates tax benefits to small business for providing health coverage, and penalties for those that fail to provide coverage.
  6. Imposes a penalty on individuals who do not purchase health insurance.
The two laws are significantly more involved than the above thumbnail sketch.  Let's look at the constitutionality of the historic laws from  a few angles:

The Commerce Clause Rationale

Article I, Section 8, Clause 3 of the Constitution states: “The Congress shall have Power …To regulate Commerce with foreign Nations, and among the Several states.”


For over 60 years, the Supreme Court has concluded that Congress' authority over “commerce among the several States” empowers the national government to address all activity “whatever its nature ... if it exerts a substantial economic effect on interstate commerce.”  


The quote is from Wickerd v. Filburn 317 U.S. 111 (1942), a case dealing with a farmer named Roscoe Filburn who grew “a small acreage of winter wheat” to be used on his farm to feed “livestock and poultry” and make flour for his family.  Mr. Filburn’s 1941 crop was more successful than allowed by the Agricultural Adjustment Act of 1938 and he was required to pay a penalty of “$117.11” for the excess wheat.  Roscoe Filburn argued Congress could not regulate “local” production of wheat.  Justice Robert Jackson and a unanimous Supreme Court disagreed.  “[E]ven if appellee’s activity be local and though it may not be regarded as commerce, it may still be reached…by Congress if it exerts a substantial economic effect on interstate commerce.”  This has been called the "substantial effects test.Ultimately, Wickerd opened the door for an expansive reading of the power of Congress to regulate interstate commerce.


For the current state of Commerce Clause jurisprudence we can look to Gonzales v. Raich, (2005).  Just like their constitutional ancestor, Roscoe Filburn, Angel Raich and Diane Monson also grew "crops" for personal use...in this case, marijuana.  While Ms. Monson cultivates her own crops and Ms. Raich relies on "caregivers" to provide her with it, both require marijuana for medical reasons to treat various ailments, pursuant to doctors’ orders.  In Gonzalez, the court reaffirmed the reasoning in Wickerd, arguing:  "the regulation is squarely within Congress’ commerce power because production of the commodity meant for home consumption, be it wheat or marijuana, has a substantial effect on supply and demand in the national market for that commodity." 


Thus, the "substantial effects test" is still the law of the land.  Pursuant to it, at least four members of the Supreme Court will likely conclude Congress has the power to regulate health insurance based on its power to regulate interstate commerce (i.e. the health care industry).

 

The Taxing and Spending Power Rationale

Article 1, Section 8, Clause 1 of the Constitution states: “The Congress shall have the Power to lay and collect taxes…for the general welfare.”


Under the taxing and spending power, a single payer health care system would be constitutional.  The way single payer works is citizens pay taxes to a governmental entity who either provides health care directly or pays certain authorized private institutions to provide health care.  An example of such a system would be Medicare which provides health care for all qualified senior citizens over the age of 65 in the United States. Medicare is financed by payroll taxes (appearing as FICA on pay stubs which stands for the Federal Insurance Contributions Act) and then payment is made for seniors on 80% of their health care costs.  The remaining 20% is covered either by the indivdual or private "gap" insurance.


 

On July 30, 1965, President Lyndon Johnson, signed the Medicare bill into law in the presence of President Harry S. Truman, and his wife Bess Truman.  In 1945, President Truman proposed a national health plan for working class Americans.  For proposing the forerunner of Medicare, President Truman and his wife received Medicare cards numbers 1 and 2 from President Johnson. 

Extending Medicare, or a Medicare-like system, to all Americans would be the equivalent of a single payer option for universal health coverage---everybody pays into a fund (i.e., tax) and the government pays from that fund (i.e., spends) for the health care of all Americans (i.e., general welfare). Unquestionably, ta single payer system is constitutional.

Proponents of the single payer plans include Democratic Representatives John Coyners, Jr. (New Mexico) and Dennis Kucinich (Ohio) who have introduced single payer legislation every year since 2003. 
The current Health Care Reform Bill is NOT a single payer system. 

Are mandates to purchase health insurance Constitutional?
 
Five cases have been heard at the federal District Court level since 2010.  Three judges have held it constitutional and two judges have held it unconstitutional.  Let's look at the cases:

QUICK SUMMARY:

Challenge #1: Commonwealth of Virginia vs. Sebelius
702 F. Supp.2d 598 (2010)

For the first time, a federal court judge allowed a constitutional challenge to the new health care act to proceed.  All prior challenges had been dismissed on procedural grounds.  In his opinion, Judge Hudson laid out the principal issues, as follows: (1) Whether the commerce clause is broad enough to allow congress to require all Americans to purchase health insurance. (2) Whether the fine imposed on Americans for failing to purchase health insurance is a penalty or a tax for the general welfare?  These were issues to be resolved once the case was decided on its facts.

THE DECISION: Defendant's Motion to Dismiss denied (August 2, 2010).

In this December 13, 2010, follow up to his October opinion allowing the challenge to proceed, Judge Hudson decided the case on its merits and held Congress cannot regulate interstate commerce when people do not voluntarily enter into the market.  Hence, the uninsured cannot be regulated. Furthermore, Congress cannot pass this law under the taxing authority, since the law treats the fine as a penalty and not a tax.  Finally, under the Tenth Amendment, the people retain the right to choose NOT to participate in the health care industry.

THE DECISION: Judge Hudson's Memorandum Opinion, plaintiffs win on merits. The mandate provision is unconstitutional. (December 13, 2010).

ON APPEAL: The decision was appealed to Fourth Circuit Court of Appeals and, on September 8, 2011, Judge Diana Gribbon Motz reversed Judge Hudson's decision.  The basis of the original challenge was that the Patient Protection and Affordable Care Act (PPACA) conflicted with the Virginia Healthcare Freedom Act (VHCFA), a law which prohibits the government from mandating that its citizens buy health insurance.  Judge Motz ruled that Virginia did not have standing to challenge the federal law since the VHCFA was merely an attempt by the commonwealth to immunize its citizens from a federal law: "the VHCFA
merely declares, without legal effect, that the federal government cannot apply insurance mandates to Virginia's citizens.  This non-binding declaration does not create any genuine conflict with the individual mandate."  Thus, Virginia does not suffer an injury, nor is it hampered in its sovereignty--meaning, in its ability to govern. 

THE FOURTH CIRCUIT DECISION: Case sent back to the US District Court for the Eastern District of Virginia.  District Court is instructed to dismiss the case.

CURRENT STATUS: Virginia Attorney General Ken Cuccinelli filed a Rule 11 request with the US Supreme Court, asking the court to hear an appeal of the Fourth Circuit opinion directly, rather than let it go back to the Virginia District Court, based on the significance of the issues.  The Supreme Court denied the request.

______________________________________

Challenge #2: Thomas More Law Center v. Barack Hussein Obama
Case No. 10-CV-11156

The act was held to be constitutional. Congress has the authority to regulate economic activities as long as they have a rational reason to do so.  Here, the economic activity being regulated is paying for health insurance.  Since it is something every American will need to do, eventually, it is rational for Congress to regulate it. Commerce Clause grants Congress the power.

THE DECISION: Judge George Caram Steeh Dismisses Plaintiff's Motion for Injunction.  Challenge defeated. (October 7, 2010).
CURRENT STATUS: Appealed to Sixth Circuit Court of Appeals.  Oral arguments heard June 1, 2011. A three judge panel held, (in three separate opinions) that the Affordable Care Act was a constitutional exercise of Congress' Commerce Clause power.  Judge Boyce Martin, Jr., (a Carter appointee) reasoned the individual mandate was "essential to creating effective health insurance markets."  In dismissing the argument that the mandates are an attempt by Congress to regulate inactivity, Judge Martin held "the test of the Commerce Clause does not acknowledge a constitutional distinction between activity and inactivity." Judge James L. Graham (a Reagan appointee on temporary assignment to the Circuit Court) in dissent opined: "If the exercie of power is allowed and the mandate upheld, it is difficult to see hwat the limits on Congress's Commerce Clause authority would be."

______________________________________

Challenge #3: Liberty University Inc. vs. Geithner
Case No. 6:10-cv-00015-nkm

Similar to the Michigan decision (Challenge #2), the judge held Congress has a rational basis to enact the law as a method of regulating the uninsured who will inevitably become part of the health care system.  Commerce clause grants Congress the power.

THE DECISION: Judge Norman K. Moon Grants Defendant's Motion to Dismiss.  Challenge defeated. (November 30, 2010)

ON APPEAL: The decision was appealed to Fourth Circuit Court of Appeals and, on September 8, 2011, the Fourth Circuit Panel dismissed the case, finding the individual mandate is a tax. Based on the Anti-Injunction Act, a tax cannot be challenged until it is collected, which will not occur until 2014.

CURRENT STATUS: Case dismissed.
 

______________________________________

Challenge #4: Florida v. US Dept. of Health and Human Services, et. al.
Civil Action No. 1-950 (GK)

In the second opinion to hold the health care act unconstitutional, Judge Vinson concluded the term "penalty" was used to insulate the law from the scrutiny of a tax.  Thus, it was a conscious decision, and cannot now be transformed into a tax.  Also, Judge Vinson concluded, to allow the Commerce Clause has never and should never allow Congress to regulate inactivity.

THE DECISION: Judge Roger Vinson Grants Plaintiff's Motion for Summary Judgment,
plaintiffs win on merits. The mandate provision is unconstitutional. (January 31, 2011)

ON APPEAL: The decision was appealed to Eleventh Circuit Court of Appeals and, on August 12, 2011, the
three judge panel rule 2 to 1 that the individual mandate is unconstitutional.  However, the court severed the mandate from the rest of the health care act, and allowed it to stand.

CURRENT STATUS: The Obama administration waived the right to request the entire Eleventh Circuit to reconsider the case, opting for it to proceed to the U.S. Supreme Court. A writ of certiorari was granted by the Supreme Court on November 14, 2011, and an extraordinary 5 1/2 hours of oral arguments will be held over three days, commencing on March 26, 2012.

______________________________________

Challenge #5: Margaret Peggy Lee Mead v. Eric H. Holder, Jr.
Case No.: 3:10-cv-91-RV/EMT

In the third opinion to hold the health care act constitutional, Judge Kessler concluded the Commerce Clause authorizes Congress to regulate economic activity, if it has a rational basis to do so.  The economic activity regulated by the mandate is paying for health care.  Non-payment (not obtaining health insurance) increases the cost of health care for everyone else.  So, the law is constitutional under the commerce clause.

THE DECISION: Judge Gladys Kessler Grants Defendant's Motion to Dismiss. Challenge defeated (February 22, 2011)

NOTE: For a more thorough overview of each decision, see below.

______________________________________


A THOUGHT ON THE POLITICS OF THE HEALTH CARE DECISIONS

The three decisions holding the health care act to be constitutional were written by the following Judges, appointed by Democratic presidents:

Thomas More Law Center et. al. v. Barack Hussein Obama, et. al. decided by Judge George Caram Steeh, appointed to the District Court for the Eastern District of Michigan by President Bill Clinton in 1997.

Liberty University Inc. vs. Geithner, et. al. decided by Judge Norman K. Moon, appointed to the District Court for the Western District of Virginia by President Bill Clinton in 1997.

Margaret Peggy Lee Mead v. Eric H. Holder, Jr. decided by Judge Gladys Kessler, appointed to the District Court or the District of Columbia by President Bill Clinton in 1994.

The two decisions holding the health care act to be unconstitutional were written by the following Judges, appointed by Republican presidents:

Commonwealth of Virginia vs. Sebelius decided by Judge Henry E. Hudson appointed to the District Court for the Eastern District of Virginia by President George W. Bush in 2002.

Florida v. US Dept. of Health and Human Services, et. al. decided by Judge Roger Vinson appointed to the District Court for the Northern District of Florida by President Ronald Reagan in 1983.

Does the Constitution or politics control the constitutionality of laws?  See this excerpt from "Why Obama Wants a Supreme Court Fight on Health Reform in 2012" by Massimo Calabresi in Time.com posted, September 27, 2011:

"The law’s history in the appeals courts has been bizarre. In the sixth circuit, where two GOP judges and one Democrat were expected to rule against it, the measure was upheld, thanks to a devastating defense of its constitutionality by former Antonin Scalia clerk, Jeffrey Sutton.

In the 11th circuit, Clinton appointee Frank Hull turned on the bill and ruled the mandate unconstitutional. Then last Friday in the DC circuit, the conservative stalwart, Judge Laurence Silberman, told those claiming the individual mandate was unconstitutional, “I don’t see anything in the Constitution that supports you.”

Given all that, the administration figures it can win outright in the Supreme Court, even though it remains weighted 5-4 Republican appointees vs. Democratic ones, in what would be a huge campaign victory for Obama."

Read more: Why Obama Wants a Supreme Court Fight on Health Care Reform: Swampland: Time.com

 
THE CASES IN DEPTH

Challenge #1: Commonwealth of Virginia vs. Sebelius
702 F. Supp.2d 598 (2010)

Defendant's Motion to Dismiss denied (August 2, 2010).

On August 2, 2010, Judge Henry E. Hudson of the District Court for the Eastern District of Virginia denied the federal government's motion to dismiss the Virginia challenge to the constitutionality of the Patient Protection and Affordable Care Act (PPACA).  Section 1501 of the new law "requires individuals to either obtain a minimum level of health insurance coverage or pay a penalty for failing to do so."  Judge Hudson allowed the case to proceed on the merits.

The principal argument made by the Secretary of the Department of Health and Human Services in defense of the laws (two laws make up the Health Care Act: the PPACA and the Health Care and Education Reconciliation Act of 2010) was that each individual in America will eventually need medical services: "Everyone, voluntarily or otherwise, is...either a current or future participant in the health care market."  Funds collected as penalties for not having health insurance would underwrite loses from paying for the uninsured.

THE COMMERCE CLAUSE RATIONALE
By way of Constitutional justification, the Secretary argued PPACA was a proper exercise of the Congress' Commerce Clause Power.  The Secretary argued the "aggregation theory" using the substantial effects (some times called the "substantial affects") analysis, the most expansive view of the Commerce Clause, argued in  both Wickard v. Filburn and Gonzales v. Raich.  In sum, the argument  is "the sum of individual decisions to participate or not in the health insurance market has a critical effect on interstate commerce."  Conversely, Virginia looked to the cases of United States v. Lopez and United States v. Morrison, both dealing with federal criminal laws, which held there are "outer limits" to the Commerce Clause justification for legislation.  Specifically, laws can be enacted under the Commerce Clause  ONLY IF they regulate "activities truly economic in nature and that actually effect interstate commerce."  Virginia argued "the failure--or refusal--of it's citizens to elect to purchase health insurance is not an 'economic activity' and therefore not subject to federal regulation under the Commerce Clause."

THE TAXING AUTHORITY RATIONALE
Additionally, the Secretary attempted to justify the penalty imposed for failure to obtain health insurance as an exercise of Congress' power to tax for the general welfare.  The Commonwealth of Virginia countered since Congress is not acting according to an "enumerated power" from the Constitution, neither the necessary and proper clause nor taxing authority may be invoked to regulate "passive economic inactivity."  Although the goal of health care reform is "laudable" the Commonwealth of Virginia insisted "the Necessary and Proper Clause cannot be employed as a vehicle to enforce an unconstitutional exercise of Commerce Clause Power."   After first arguing a tax is not a penalty, the Commonwealth, allowing even if the penalty is a tax, argued the taxing power is not without limits.  Arguably what is being taxed is a "person's decision not to participate in interstate commerce." Congress cannot impose a tax for inactivity.   

STATES' RIGHTS
Finally, the Commonwealth raised a states' rights argument: that the PPACA violates the Tenth Amendment since it conflicts with the Virginia Health Care Freedom Act and, thereby, encroaches on matters within the Commonwealth's sovereignty.  To summarize the principal argument underlying the entire challenge, the Judge concluded: "all [the arguments] seem to distill to the single question of whether or not Congress has the power to regulate--and tax--a citizen's decision not to participate in interstate commerce."

STANDING
At the outset, Judge Hudson addressed the issues of standing (whether the Commonwealth was the proper party to commence the lawsuit) and justiciability (simply, whether there is an actual case or controversy--meaning the Commonwealth suffered an injury--and whether the case was ripe--meaning it was a proper time to evaluate the law).  The Judge answered both procedural questions in the affirmative.  The decision itself was prompted by the Secretary's Motion to Dismiss arguing the Commonwealth did not have standing.  The Judge's findings of standing and justiciability were enough to defeat the motion. Based on his summary of the arguments and counter-arguments as listed above he concluded: "Neither the U.S. Supreme Court nor any circuit court of appeal has squarely addressed this issue. *** Given the presence of some authority arguably supporting the theory underlying each side's position, this Court cannot conclude at this stage that the Complaint fails to state a cause of action."  So, procedurally the Commonwealth was permitted to go forward with the challenge.

Note, in all of the cases challenging the health care acts, standing is a significant issue which the respective judges spend a considerable amount of time evaluating.  If a case passes the standing prerequisite, it then proceeds to a decision on its merits.  Otherwise, as happened to a number of the prior health care act challenges, the case would be dismissed on the procedural ground that the plaintiff lacked standing.

Score: Constitutional 0 Unconstitutional 0

Significance: Case did not determine constitutionality, but a significant challenge was allowed to proceed.  

Challenge #2: Thomas More Law Center v. Barack Hussein Obama
Case No. 10-CV-11156

Judge George Caram Steeh Dismisses Plaintiff's Motion for Injunction (October 7, 2010).

In this subsequent challenge Judge Steeh of the U.S. District Court for the Eastern District of Michigan held the Patient Protection and Affordable Care Act constitutional. 

The central issue, again, was the scope of the commerce clause.  To Judge Steeh the law does not attempt to regulate inactivity since Americans "as living, breathing beings" are unable to opt out of the health insurance industry:  "The Act regulates a broader interstate market in health care services. This is not a market created by Congress, it is one created by the fundamental need for health care and the necessity of paying for such services received."  The purpose of the minimum coverage provision is to insure that every American bears the cost of the health insurance industry, rather than sit on the sidelines and wait until health care is needed.

The long established question before a court with regards to the constitutionality of economic regulations is whether the Congress had a rational basis for enacting the law.  To Judge Steeh, with respect to health care reform, Congress clearly does:

"There is a rational basis to conclude that, in the aggregate, decisions to forego insurance coverage in preference to attempting to pay for health care out of pocket drive up the cost of insurance. The costs of caring for the uninsured who prove unable to pay are shifted to health care providers, to the insured population in the form of higher premiums, to governments, and to taxpayers. The decision whether to purchase insurance or to attempt to pay for health care out of pocket, is plainly economic. These decisions, viewed in the aggregate, have clear and direct impacts on health care providers, taxpayers, and the insured population who ultimately pay for the care provided to those who go without insurance."

The Score: Constitutional 1 Unconstitutional 0 

Significance: The first federal court decision on the merits finds Congress to have acted within its Commerce Clause Power

Challenge #3: Liberty University Inc. vs. Geithner, et. al.
Case No. 6:10-cv-00015-nkm

Judge Norman K. Moon Grants Defendant's Motion to Dismiss (November 30, 2010)

Judge Moon of the U.S. District Court for the Western District of Virginia was the second federal court judge to hold the Patient Protection and Affordable Care Act constitutional. 

The Commerce Clause figured prominently in Judge Moon's opinion.  As in Judge Steeh's opinion, the standard applied is the rational basis test:  "Congress must have a rational basis for determining that the 'total incidence' of the class of activity substantially affects interstate commerce."  Judge Moon reasons from precedent (Raich v. Gonzalez and other Commerce Clause cases) that Congress can regulate "purely local activities" as long as in the aggregate they meet the substantial affects test.  The mandates are an attempt by the act to regulate the uninsured.  Judge Moon found Congress' reasoning for the mandate provision was rational.  Requiring everyone to purchase health insurance was "essential to this larger regulatory scheme because without it, individuals would postpone health insurance until they need substantial care, at which point the Act would obligate insurers to cover them at the same cost as everyone else."

The Score: Constitutional 2 Unconstitutional 0

Challenge #1a: Commonwealth of Virginia vs. Sebelius-Revisited
702 F. Supp.2d 598 (2010)

Judge Hudson's Memorandum Opinion (December 13, 2010 ).

In the decision on the merits which followed, Judge Henry E. Hudson tackled the principal substantive issue raised by the Commonwealth: whether Section 1501, the Minimum Essential Coverage Provision, requiring every United States citizen to maintain a minimum level of health insurance, was constitutional.  The issue, in the words of the Secretary, is "whether Congress acted within its Article I powers [from the Constitution] in enacting ACA [the Patient Protection and Affordable Care Act]."

The Commonwealth of Virginia argued, as summarized above (Challenge #1),  that the Minimum Essential Coverage Provision is "beyond the outer limits" of the Commerce Clause and Necessary and Proper Clause.  Additionally, the Commonwealth argued the Provision cannot be justified under Congress' taxation power under the General Welfare Clause as it is a "penalty untethered to an enumerated power."  Finally, the Commonwealth argued the Provision directly conflicts with the Virginia Health Care Freedom Act, thus conflicting with the Tenth Amendment.

In opposition, the Secretary argued the Act merely "builds on prior reforms of the interstate health insurance market over the last 35 years."  The Commerce Clause is the proper justification since the Minimum Essential Coverage Provision "regulates health care financing...[a] quintessential economic activity."  Secondly, the Secretary argued the Tenth Amendment is not violated since state officials are not required to "carry out a federal regulatory scheme."  That is to say, individuals, as opposed to states, are regulated by the law.  Finally, the Secretary said the Mandate falls squarely within the taxing power, generating a projected $4 billion in annual revenue, being paid on an individuals tax return, and enforced  by the IRS.

Two points raised by the Secretary are beyond dispute.  Federal legislation is always given the "presumption of constitutionality" by the federal courts.  Also, reviewing courts are not empowered to judge the necessity or benefit of congressional regulation, but whether the legislature had a rational basis for enactment.  This is the case, especially with regards to economic regulation.

Referencing his August opinion allowing the challenge to proceed, Judge Hudson held the Minimum Essential Coverage Provision "appeared to extend beyond existing constitutional precedent."  The current opinion would determine whether "Congress has exceeded its constitutional bounds."  The Judge then proceeded to analyze the case under the three major rationales.

1. THE COMMERCE CLAUSE RATIONALE
For the Act to pass constitutional muster under the Commerce Clause, it must regulate an activity "that substantially effect[s] interstate commerce."  This "substantial effects" test works here only based on the aggregation theory established in Wickard v. Filburn (1942) and most recently applied in Gonzales v. Raich (2005) (see above).  These opinions represent the most expansive readings of the extent of the Commerce Clause power of Congress.  The argument works as follows: "the sum of individual decisions to participate or not in the health insurance market has a critical collective effect on interstate commerce."  Pragmatically, the entire health care reform law would fail since, without full contributions from all citizens, whether through obtaining health insurance or paying the penalty, "the revenue base will be insufficient to underwrite the costs."  Judge Hudson's opinion focused on the voluntariness of the activity in question.  Historically, being empowered to regulate activities under the Commerce Clause--extending even to non-economic activities--required "some type of self-initiated action."  Thus, absent voluntary participation, the Commerce Clause is not a fair rationale: "Neither the Supreme Court nor any federal circuit court of appeals has extended Commerce Clause powers to compel an individual to involuntarily enter the stream of commerce by purchasing a commodity in the private market."  The Necessary and Proper Clause, therefore, necessarily fails since the latter must be "tethered" to a specific enumerated power.  Without the ability to piggy back on the Commerce Clause, the Necessary and Proper Clause is without independent authority.

2. THE TAXATION POWER UNDER THE GENERAL WELFARE CLAUSE
The central issue under the Article I Section 8 power to tax for the "general welfare" focuses on whether the Minimum Essential Coverage Provision is a tax or a penalty.  Judge Hudson analyzed the text of the statute to ascertain the intent--particularly focusing on a textual change that occurred at the eleventh hour.  When the final version of the Act was enacted by the Senate, the word "tax" was removed and replaced by the word "penalty" in the relevant clause.  The Judge concluded this "conscious and deliberate act on the part of the Congress"...during the final hours preceding an extremely close floor vote undermines the contention that the terms 'penalty' and 'tax' are synonymous."  Likewise, in other sections of the Act, the word "tax" was specifically used.  That "careful choice of words" by the legislature indicates "the term 'tax' was not used indiscriminately."  So, citing precedent, Judge Hudson concluded a penalty in a law "cannot be converted into a tax by the simple expedient of calling it such."   Upon establishing the Minimum Essential Coverage Provision as a penalty, it cannot fall under the General Welfare Clause and must fall under a separate enumerated power.

3. THE TENTH AMENDMENT
Having already failed justification under the Commerce Clause, Judge Hudson concluded the Minimum Essential Coverage Provision was unconstitutional.  To allow the Provision to stand  "would invite unbridled exercise of federal police powers."   Article I, Section 8 grants the Congress "only discrete enumerated powers."  When a power is not delegated to the Congress, then pursuant to the Tenth Amendment, said power is "reserved to the States respectively, or to the people."  In concluding that Congress was without authority to enact the Provision, Judge Hudson summarized his view on the essence of this constitutional controversy:  "At its core,  this dispute is not simply about regulating the business of insurance--or crafting a scheme of universal health insurance coverage--it's about an individual's right to choose to participate."

4. PROCEDURAL CONCLUSIONS
The balance of the opinion turned to the question of whether declaring the Minimum Essential Coverage Provision unconstitutional requires the court to void the entire Act.  Judge Hudson concluded without the ability or opportunity to engage in expert testimony, he should allow the remainder of the act to survive without the "problematic portions."  Nor did Judge Hudson find it necessary to grant the Commonwealth's request for an injunction on the federal government to enforce the Provision in question.  Based on the historic magnitude, significant political issues and that the key provisions of the Act would not take effect until 2013, the request was denied.  Anticipating the inevitable appeal which will follow, wisely, the Judge concluded "the final word will undoubtedly reside with a higher court."     

Score: Unconstitutional 2 Constitutional 1
Significance: The first federal court to hold the Health Care Act unconstitutional

Challenge #4: Florida v. US Dept. of Health and Human Services, et. al.
Civil Action No. 1-950 (GK)

Judge Roger Vinson Grants Plaintiff's Motion for Summary Judgment (January 31, 2011)

Judge Vinson of the U.S. District Court for the Northern District of Florida, in the most forceful opinion on the issue to date held the Patient Protection and Affordable Care Act constitutional. The challenge here was brought on behalf of the Attorneys General or Governors of 26 states. Based on the magnitude of both the issues and the challenge, its path to the Supreme Court is inevitable.

In the words of Judge Vinson, the case itself is not about the American health care system. "It is principally about our federalist system, and if raises very important issues regarding the Constitutional role of the federal government."  

1. TAX vs. PENALTY
Judge Vinson followed Judge Hudson's approach, observing that the final incarnation of the Act substituted the word "tax" with "penalty" in a number of places prior to enactment.  The judge covered a few other additional legal arguments, as well, and one interesting political argument.  He discussed the controversial and bitterly disputed nature of the law and argued that, perhaps, the change in terminology from "tax" to ""penalty" was done to insulate the legislators from a political backlash:

"Not only are taxes always unpopular, but to [enact a new tax] at that time would have arguably violated pledges by politicians (including the President) to not raise taxes, which could have made it that much more difficult to secure the necessary votes for passage. One could reasonably infer that Congress proceeded as it did specifically because it did not want the penalty to be “scrutinized” as a $4 billion annual tax increase, and it did not want at that time to be “held accountable for taxes that they imposed.” In other words, to the extent that the defendants are correct and the penalty was intended to be a tax, it seems likely that the members of Congress merely called it a penalty and did not describe it as revenue-generating to try and and insulate themselves from the potential electoral ramifications of their votes. *** Congress should not be permitted to secure and cast politically difficult votes on controversial legislation by deliberately calling something one thing, after which the defenders of that legislation take an “Alice-in-Wonderland” tack and argue in court that Congress really meant something else entirely, thereby circumventing the safeguard that exists to keep their broad power in check."

NOTE: The Tax vs. Penalty section above is not from the January 31, 2011 opinion.  Rather, it comes from Judge Vinson's October 14, 2010 opinion which allowed the Florida challenge to proceed on the merits.  I quote it here because it is a novel argument (and an interesting political perspective) on the tax issue.

2. COMMERCE CLAUSE POWER
As in every challenge in this field, the Commerce Clause is of central importance in his opinion.  According to Judge Vinson, in every Commerce Clause case in the past "there has always been clear and inarguable activity." The central question is whether activity is required.  Per Judge Vinson: "It would be a radical departure from existing case law to hold that Congress can regulate inactivity under the Commerce Clause."  If Congress were permitted to "compel an otherwise passive individual into a commercial transaction...it is not hyperbolizing to suggest that Congress could do almost anything it wanted." Appealing to the historical foundation of our nation, he reasoned: "It is difficult to imagine that a nation which began...as the result of opposition to a British mandate giving the East India Company a monopoly and imposing a nominal tax on all tea sold America would have set out to create a government with the power to force people to buy tea in the first place."

An argument was presented in Challenge #2 and Challenge #3 above that the decision to forego health insurance is an "economic decision" to pay for health insurance at a later date.   In response Judge Vinson concluded that "it is not difficult to identify an economic decision that has a cumulatively substantial effect on interstate commerce; rather, the difficult task is to find a decision that does not."  Even the decision to buy "a morning cup of coffee" taken in the aggregate impacts interstate commerce. Simply, to allow Congress to regulate a passive economic decision "is without logical limitation and far exceeds the existing legal boundaries established by Supreme Court precedent."

The Score: Constitutional 2 Unconstitutional 2

Challenge #5: Margaret Peggy Lee Mead v. Eric H. Holder, Jr.
Case No.: 3:10-cv-91-RV/EMT

Judge Gladys Kessler Grants Defendant's Motion to Dismiss (February 22, 2011)

On February 22, 2011, Judge Gladys Kessler of the US District Court for the District of Columbia held the Affordable Care Act constitutional. As we have seen in all the prior challenges, Judge Kessler began by addressing the issue of justiciability and then explained the Supreme Court's Commerce Clause jurisprudence from Gibbons v. Ogden to Gonzalez v. Raisch.  Focusing on the major cases after the New Deal to today, the judge identified the three primary issues:  (1) Whether the decision not to purchase health insurance is "economic" or non-economic? (2) Whether Congress had a rational basis to conclude the aggregation of decisions not to purchase health insurance substantially affects interstate commerce? (3) Whether the mandate is an essential part of the larger regulation of economic activity?

Judge Kessler concluded that the decision not to pay for a commodity (i.e. health insurance) is an economic decision. Additionally, the aggregation of such decisions not to pay for health insurance substantially affects the entire health care industry, since the premiums to the insured directly increase to cover the loss in treating the uninsured.  In 2008, the cost of paying for the medical care of uninsured Americans totaled $43 billion. This translated, economically, to higher premiums.  "Thus, the aggregate effect on interstate commerce of the decisions of individuals to forego insurance is very substantial."  Finally, to lose the revenue from the mandate penalty "would create a 'gaping hole' in the ACA"

The judge went on to review the case under the Necessary and Proper Clause and General Welfare Clause and to dismiss an argument based on the Religious Freedom Restoration Act, before holding the ACA is constitutional.

The Score: Constitutional 3 Unconstitutional 2*

*NOTE Score represents the result at the District Court (trial court) level.  On appeal, the 4th Circuit has found the mandate constitutional and the 11th circuit has found it unconstitutional. 

 Last Updated: June 2, 2011


Website Builder