Scalia jumped in: "I tell you what the something else is. The something else is everybody has to exercise, because there's no doubt that lack of exercise cause -- causes illness, and that causes health care costs to go up. So the Federal government says everybody has to join an exercise club. That's the something else."
Mr. Verrilli tried to explain: "What matters here is whether Congress is choosing a tool that's reasonably adapted to the problem that Congress is confronting. And that may mean that the tool is different from a tool that Congress has chosen to use in the past."
Justice Scalia responded: "Well, that's both "Necessary and Proper." What you just said addresses what's necessary. Yes, has to be reasonably adapted. Necessary does not mean essential, just reasonably adapted. But in addition to being necessary, it has to be proper. And we've held in two cases that something that was reasonably adapted was not proper because it violated the sovereignty of the States, which was implicit in the constitutional structure. The argument here is that this also may be necessary, but it's not proper because it violates an equally evident principle in the Constitution, which is that the Federal Government is not supposed to be a government that has all powers; that it's supposed to be a government of limited powers. And that's what all this questioning has been about. What is left? If the government can do this, what, what else can it not do? But that's not the only constitutional principle at stake in this case. An equally evident constitutional principle is the principle that the Federal Government is a government of enumerated powers and that the vast majority of powers remain in the States and do not belong to the Federal Government. Do you acknowledge that that's a principle?" Verrilli so acknowledged.
Scalia continued: "I mean, the Tenth Amendment says the powers not given to the Federal Government are reserved, not just to the States, but to the States and the people. And the argument here is that the people were left to decide whether they want to buy insurance or not."
Justice Kennedy added: "The reason this Mandate is concerning is because it requires the individual to do an affirmative act. In the law of torts our tradition, our law, has been that you don't have the duty to rescue someone if that person is in danger. The blind man is walking in front of a car and you do not have a duty to stop him absent some relation between you. And there is some severe moral criticisms of that rule, but that's generally the rule. And here the government is saying that the Federal Government has a duty to tell the individual citizen that it must act, and that is different from what we have in previous cases and that changes the relationship of the Federal Government to the individual in the very fundamental way."
Chief Justice inserted: "The States are not limited to enumerated powers, but the Federal Government is. And it seems to me it's an entirely different question when you ask yourself whether or not there are going to be limits in the Federal power, as opposed to limits on the States."
Another issue that came up was whether the penalty could be classified as a tax (returning to some degree to the topic touched on the day before). If the penalty could be classified as a tax, then the thought is that the Individual Mandate could be supported, in the alternative, under Congress' "Tax and Spend" powers. Justice Scalia quickly noted that "the President has said it isn't a tax." Then Justice Ginsberg added: " A tax is to raise revenue, tax is a revenue-raising device, and the purpose of this exaction is to get people into the health care risk pool before they need medical care, and so it will be successful. If it doesn't raise any revenue, if it gets people to buy the insurance, that's what this penalty is designed to do - to affect conduct. The conduct is buy health protection, buy health insurance before you have a need for medical care. That's what the penalty is designed to do, not to raise revenue."
At that point, the Solicitor General stepped down and the respondents' attorney (that is, for the states), Mr. Clement was given time before the Court. He immediately struck down the administration's position that the Individual Mandate (the penalty, in particular) could be legally supported under the Taxing power. As he told the Court: "I think it might raise some issues about whether or not that would be a valid exercise of the taxing power. My constitutional concern is that it would be a disguised impermissible direct tax. And we all know that Congress is limited in its ability to impose direct taxes. The one thing I think the framers would have clearly identified as a direct tax is a tax on not having something. I mean, the framing generation was divided over whether a tax on carriages was a direct tax or not. Hamilton thought that was a indirect tax; Madison thought it was a direct tax. I have little doubt that both of them would have agreed that a tax on not having a carriage would have clearly been a direct tax. I also think they would have thought it clearly wasn't a valid regulation of the market in carriages."
Attorney Clement then moved on to the market that the government is trying to dominate: "What health insurance does and what all insurance does is it allows you to diversify risk. And so it's not just a matter of I'm paying now instead I'm paying later. That's credit. Insurance is different than credit. Insurance guarantees you an upfront, locked-in payment, and you won't have to pay any more than that even if you incur much great expenses. And in every other market that I know of for insurance, we let people basically make the decision whether they are relatively risk averse, whether they are relatively non-risk averse, and they can make the judgment based on..."
Justice Sotomayor interrupted: "But we don't in car insurance, I mean the states don't. Let me ask you a question: Do you think that if some states decided not to impose an insurance requirement, that the Federal Government would be without power to legislate and require every individual to buy car insurance?"
Clement answered: "Let me say this, you're right in the first point to say that it's the states that do it, which makes it different right there."
Justice Kennedy asked: "Isn't everyone in the market in the sense that they are creating a risk that the market must account for?" Similarly, Justice Kagan asked: "If the effect of all the uninsured people is to raise everybody's premiums, not just when they get sick, if they get sick, but right now in the aggregate, and Wickard and Raich tell us we should look at the aggregate, and the aggregate of all these uninsured people are increasing the normal family premium, Congress says, by a thousand dollars a year. Those people are in commerce. They are making decisions that are affecting the price that everybody pays for this service.
[Wickard v. Filburn (wheat case; 1924, holding that Farmer Filburn couldn't grow wheat for his own use because, if other were to do the same, then in the aggregate, all these farmers would have no need to buy wheat on the open market and would therefore affect commerce) and Gonzalez v. Raich (medical marijuana case; 2005; holding that California's Compassionate Use Act, which legalized marijuana for medical use, conflicted with the federal government's Controlled Substances Act, which is a valid exercise of Congress' commerce powers)].
Mr. Clement disagreed. He answered: "Let's be careful about what they were regulating in Wickard. What they were regulating was the supply of wheat. It didn't in any way imply that they could require every American to go out and buy wheat. And yes, one of the consequences of regulating local market participants is it'll affect the supply and the demand for the product. That's why you can regulate them, because those local market participants have the same effect on the interstate market that a black market has on a legal market.
That aside, I don't think the point you make distinguishes the healthcare market from other markets. When I'm sitting in my house deciding I'm not to buy a car, I am causing the labor market in Detroit to go south. I am causing maybe somebody to lose their job, and for everybody to have to pay for it under welfare. So the cost shifting that the government tries to uniquely to associate with this market, it is everywhere. And even more to the point, the rationale that they think ultimately supports this legislation, that look, it's an economic decision, once you make the economic decision, we aggregate the decision, there is a substantial effect on commerce. That argument works here. It works in every single industry. There are other markets that affect every one: transportation, food, burial services, though we don't like to talk about that either. There also are situations where there are many economic effects from somebody's failure to purchase a product. My unwillingness to buy an electric car is forcing up the price of an electric car. If only more people demanded an electric car there would be economies of scale, and the price would go down.
If I could talk about the difference between the health insurance market and the health care market...... If some private company comes up with a great new wonder drug that would have huge benefits for everybody's health and if everybody had to buy it, it would facilitate economies of scale, and the production would be efficient, and the price would be cheaper and force everybody in the health care market, the actual health care market to buy the wonder drug, and if the government wanted to compel people to take this drug, I'd be up here making the same argument. I would be saying that there is no such authority within the commerce power of the federal government. In Federalist 45, Madison says the commerce power is a new power, but it's not one anyone has any apprehension about. And the reason they didn't have any apprehension about it is because it's a power that only operated once people were already in commerce. You see that from the text of the clause. The first kind of commerce Congress gets to regulate is commerce with foreign nations. Did anybody think the fledgling Republic had the power to compel some other nation into commerce with us? Of course not. And in the same way, I certainly don't think the framers had understood the commerce power to include the power to compel people to engage in commerce."
At that point, Attorney Clement stepped down and Michael Carvin, the attorney representing several small businesses (National Federation of Independent Businesses, NFIB), addressed the Court to argue the unconstitutionality of the PPACA. "I'd like to begin with the Solicitor General's main premise, which is that they can compel the purchase of health insurance in order to promote commerce in the health market because it will reduce uncompensated care. If you accept that argument, you have to fundamentally alter the text of the Constitution and give Congress plenary power. It simply doesn't matter whether or not this regulation will promote health care commerce by reducing uncompensated care; all that matters is whether the activity actually being regulated by the act negatively affects Congress or negatively affects commerce regulation, so that it's within the commerce power. If you agree with us that this is -- exceeds commerce power, the law doesn't somehow become redeemed because it has beneficial policy effects in the health care market. In other words, Congress does not have the power to promote commerce. Congress has -- Congress has the power to regulate commerce. And if the power exceeds their permissible regulatory authority, then the law is invalid... Think about it this way... when you've entered the marketplace they can impose all sorts of restrictions on you. But what can't they do? I think everyone intuitively understands that regulating participants after A and B have entered into a contract is fundamentally less intrusive than requiring the contract in the first place."
The United States Supreme Court building in early March, 2012: Above. photo by Stan Deatherage
Justice Ginsberg asked: "Isn't the only way to prevent people from paying for the cost-free healthcare of those who are sick and uninsured to have people pay sooner rather than later?"
Carvin answered: "The real problem are those who default on their health care payments. That is an entirely different group of people, an entirely different activity than being uninsured. The people who impose the costs on the rest of us are people who engage in a different activity at a different time, which is defaulting on their health care payments. It's not the uninsured. Under Justice Kagan's theory, you could regulate anybody if they have got a statistical connection to a problem. You could say, since we could regulate people who enter into the mortgage market and impose mortgage insurance on them, we can simply impose the requirement to buy private mortgage insurance on everybody before they have entered the market because we are doing it in this prophylactic way before it develops." [Chief Justice Roberts interrupted to note that not everyone enters the housing market while everyone eventually enters the healthcare market] Carvin continued: "And my basic point to you is this: the Constitution only gives Congress the power to regulate things that negatively affect commerce or commerce regulation. It doesn't give them the power to regulate things that are statistically connected to things that negatively affect the commerce. If they have that power, then they obviously have the power to regulate everything because everything in the aggregate is statistically connected to something that negatively affects commerce, and every compelled purchase promotes commerce." (I admit, I initially had a hard time following that).
Finally, Mr. Carvin ended with these words: "We turn you to the Commerce Clause jurisprudence that bedeviled the Court before the 1930s, where they were drawing all these kinds of distinctions among industries; whereas our test is really very simple. Are you buying the product or is Congress compelling you to buy the product? I can't think of a brighter line. And again, if Congress has the power to compel you to buy this product, then obviously, they have got the power to provide you - to compel you to buy any product, because any purchase is going to benefit commerce, and this Court is never going to second-guess Congress's policy judgments on how important it is this product versus that product. The words "inactivity" and "activity" are not in the Constitution. But the words "commerce" and "noncommerce" are. It's a distinction that comes directly from the text of the Constitution.
The Framers consciously gave Congress the ability to regulate commerce, because that's not a particularly threatening activity that deprives you of individual freedom. If you were required, if you were authorized to require A to transfer property to B, you have, as the early cases put it, a monster in legislation which is against all reason in justice, because everyone intuitively understands that regulating people who voluntarily enter into contracts in setting changing conditions does not create the possibility of Congress compelling wealth transfers among the citizenry. And that is precisely why the Framers denied them the power to compel commerce, and precisely why they didn't give them plenary power."
On the third day of oral arguments, the Court engaged in a discussion of severability - whether the healthcare bill could survive if the Individual Mandate was struck down and whether other provisions could still survive. It was a tortuous line of questioning. Justice Scalia suggested many members of Congress might not have voted for the bill without the central provisions, and so perhaps it wouldn't be fair to allow remaining portions of the bill to survive. He also was emphatic that it was not the province of the Court to go through each and every page to sort out which provision should remain and which should go. He even joked that being required to read the 2,700-page bill should fall under the 8th Amendment's concept of "Cruel and Unusual Punishment." Justice Sotomayor argued that it was Congress' job to fix or scrap the bill, should the mandate be found unconstitutional. Opponents of the bill argued against severability, suggesting that simply striking the mandate while leaving in place corresponding new insurance regulations could result in a spike in premiums that Congress did not intend.
In the afternoon session, the justices considered a challenge by the 26 states to the expansion of the Medicaid program for low-income Americans, an important feature in the effort extending health insurance to an additional 30 million people. The court's liberal justices made it fairly clear they will vote to uphold the Medicaid expansion, which would take in 15 million people with the federal government paying almost all the costs. They did not seem to agree with the challengers that expansion of the program is unconstitutionally coercive. Justice Kagan asked: "Why is a big gift from the federal government a matter of coercion?"
Attorney Clement defended the states' position: "Let me focus on what I think are the three hallmarks of this statute that make it uniquely coercive. One of them is the fact that this statute is tied to the nonvoluntary individual mandate. The second factor, of course, is the fact that Congress here made a distinct and conscious decision to tie the state's willingness to accept these new funds, not just to the new funds but to their entire participation in the statute, even though the coverage for these newly eligible individuals is segregated from the rest of the program. In other words, if a state doesn't want to cover the newly eligible individuals, it not only doesn't get the new money, it also doesn't get any of the money under the original contact, agreement (old money). What's coercive is not the absolute guarantee that the secretary could cut off every penny, but the fact that she could. And the third factor is the sheer size and scope of Medicaid. The expansion of Medicaid since 1984 is really breathtaking. In 1984 the Federal spending to the States was a shade over $21 billion for Medicaid. Right now it's $250 billion, and that's before the expansion under this statute. If the Secretary should withhold all funding for a state's poor population, that state would have an impossible time coming up with the funds on its own to cover those people."
Hopefully, we know where Justice Kennedy stands on matters that threaten to upset the balance of power created under our federalist system. In short, he has never been one to want to enlarge the government's status with regard to its relationship to the States.
The arguments and answers given on day two of course represent the meat of the case. I believe it is the closing remark by Attorney Carvin which holds the key to how Justice Kennedy will ultimately view the Individual Mandate. He emphasized that the ability to regulate commerce was not the same as compelling commerce for the latter would deprive individuals of individual liberty. I believe in his final analysis, Justice Kennedy will look at the implications the Individual Mandate has on individual liberty - the very precious intangible that our Founders so judiciously and ambitiously sought to protect and promote.
I point to two fairly recent cases to highlight Justice Kennedy's views on Liberty and Federalism - United States v. Lopez (1995) and Bond v. United States (2011). His words make his intentions clear. I believe his firm belief in the concept of federalism and the liberty interests it serves is an important insight as to how he may come down on the healthcare question, and especially the Individual Mandate.
In Lopez, the Court was asked to decide the constitutionality of a federal statute - the Gun-Free School Zones Act of 1990, which made it a crime for any individual to "knowingly possess a firearm at a place that [he] knows...is a school zone." Alfonzo Lopez, a high school senior, carried a concealed weapon into his San Antonio, Texas high school and was arrested and charged under Texas law with firearm possession on school premises. The next day, the state charges were dismissed after federal agents charged Lopez with violating a federal criminal statute, the Gun-Free School Zones Act. Lopez challenged the federal statute on the grounds that it exceeded the power of Congress to legislate conduct in the states under the Commerce Clause. Justice Kennedy agreed with the majority that the conduct the federal statue sought to regulate was not in fact "commerce" and therefore was an unconstitutional exercise of authority. He wrote a concurring opinion:
The history of our Commerce Clause decisions contains at least two lessons of relevance to this case. The first, as stated at the outset, is the imprecision of content-based boundaries used without more to define the limits of the Commerce Clause. The second, related to the first but of even greater consequence, is that the Court as an institution and the legal system as a whole have an immense stake in the stability of our Commerce Clause jurisprudence as it has evolved to this point. Stare decisis operates with great force in counseling us not to call in question the essential principles now in place respecting the congressional power to regulate transactions of a commercial nature. That fundamental restraint on our power forecloses us from reverting to an understanding of commerce that would serve only an 18th-century economy, dependent then upon production and trading practices that had changed but little over the preceding centuries; it also mandates against returning to the time when congressional authority to regulate undoubted commercial activities was limited by a judicial determination that those matters had an insufficient connection to an interstate system. Congress can regulate in the commercial sphere on the assumption that we have a single market and a unified purpose to build a stable national economy.
