SCOTUS: ObamaCare Day II

Posted: March 27, 2012 in Politics
Tags: , , , ,

Today is individual mandate day! The Supremes will hear oral arguments concerning the US Congress’ ability to regulate interstate commerce.  Article 1 Section 8 clearly states that the US Congress has the power

 To regulate commerce with foreign nations, and among the several states, and with the Indian tribes;

The Solicitor General argued today that the individual mandate was in fact regulating interstate commerce. The argument rested on the idea that even if a citizen did not purchase health insurance you were affecting the market in a way because eventually one would purchase health care. Therefore, they were engaging in commerce.

Economically speaking insurance works only because many who pay for insurance seldom require it. This allows for the insurer to pay out claims with money from others who do not require the claim. With health Insurance, those who are sick or older tend to need healthcare and therefore are willing to pay for health insurance. Those who are healthy and younger do not require as much health attention and therefore are not willing to pay for the insurance at this time. Those healthy individuals who would be unlikely place a claim on their insurance would feed the system for those who needed it. Secondly, those who are young will eventually get old and if they don’t get insurance would go to the emergency room and receive lifesaving operations for free (assuming they don’t have the ability to pay out of pocket). The hospital would then raise costs for all their paying customers (health insurers) and essentially raise rates on those who are unhealthy and require the healthcare desperately.

The Solicitor General claims that this is a unique market where those who don’t purchase insurance will eventually use healthcare and cause insurance rates to rise. Therefore, this eventually engagement in commerce requires that the Congress force you to purchase insurance.

The problem with all that is that it greatly expands the definition of commerce. In my opinion one may never actually need to buy insurance to receive healthcare. Health insurance and healthcare are two different markets. A healthy person may be willing to purchase healthcare out of pocket and save themselves the hassle of paying monthly premiums. This law requires that he enter the health insurance market event if he is already receiving adequate healthcare.

On a more philosophical level, I believe the courts over time have radically altered the original understanding and intent of the commerce clause. How would you define interstate commerce? I think it would be defined as goods and services (including labor) traveling across state lines.  In the civil rights era the court defined interstate commerce as a restaurant opening up on a highway and would be frequented by out of state customers and therefore was engaging in interstate commerce. This allowed the congress to enforce anti-discrimination laws. That part may be a stretch. Ultimately, if you choose to abstain from purchasing health insurance than you are not engaging in commerce. Our decisions to sit out of commerce and not purchase an item does have an effect on that market, but that shouldn’t matter. Our decision not to purchase record players destroyed that market. Many individuals lost their jobs and record players are difficult to purchase. Does that mean we must require individuals to purchase record players in order to keep that market operational? Of course not that would be an absurd expansion of interstate commerce.

Yet, today it seems the court may be halting the ever expanding definition of interstate commerce.  Justice Kennedy, the one justice who will probably be the deciding vote in the case did not seem impressed. At one point he stated that the government faced a heavy burden of justification in order to radically transform the relationship between the citizen and the state.

Justice Scalia had an interesting back and forth with the solicitor (I bolded parts that were really interesting and to the point:

JUSTICE SCALIA: By the way, I don’t agree with you that the relevant market here is health care. You’re not regulating health care. You’re regulating insurance. It’s the insurance market that you’re addressing and you’re saying that some people who are not in it must be in it, and that’s — that’s different from regulating in any manner commerce that already exists out there.

 GENERAL VERRILLI: Well, to the extent that we are looking at the comprehensive scheme, Justice Scalia, it is regulating commerce that already exists out there. And the means in which that regulation is made effective here, the minimum coverage provision, is a regulation of the way in which people participate, the method of their payment in the health care market. That is what it is.  And I do think, Justice Kennedy, getting back to the question you asked before, what — 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. That’s not something that counts against the provision in a Commerce Clause analysis.

 JUSTICE SCALIA: Wait. That’s — it’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 is — 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 — what is left? If the government can do this, what — what else can it not do?

 GENERAL VERRILLI: This does not violate the norm of proper as this Court articulated it in Printz or in New York because it does not interfere with the States as sovereigns. This is a regulation that — this is a regulation -­

JUSTICE SCALIA: No, that wasn’t my point. That is not the only constitutional principle that



JUSTICE SCALIA: 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?

 GENERAL VERRILLI: Of course we do, Your Honor.

 JUSTICE SCALIA: Okay. That’s what we are talking about here.

 GENERAL VERRILLI: And the way in which this Court in its cases has policed the boundary that — of what’s in the national sphere and what’s in the local sphere is to ask whether Congress is regulating economic activity with a substantial effect on interstate commerce.  And here I think it’s really impossible, in view of our history, to say that Congress is invading the State sphere. This is a — this is a market in which 50 percent of the people in this country get their health care through their employer. There is a massive Federal tax subsidy of $250 billion a year that makes that much more affordable. ERISA and HIPAA regulate that to ensure that the kinds of bans on pre-existing condition discrimination and pricing practices that occur in the individual market don’t occur.

 JUSTICE SCALIA: I don’t understand your point -­


JUSTICE SCALIA: Whatever the States have chosen not to do, the Federal Government can do?

 GENERAL VERRILLI: No, not at all.

 JUSTICE SCALIA: 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.

 GENERAL VERRILLI: But this — but, Your Honor, this is — what the Court has said, and I think it would be a very substantial departure from what the Court has said, is that when Congress is regulating economic activity with a substantial effect on interstate commerce, that will be upheld. And that is what is going on here.

This from Justice Kennedy (The one who will cast the deciding vote on this matter)

But the reason, the reason this 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 a very fundamental way

Another interesting back and forth between Scalia and the Solicitor on whether or not young people will buy insurance and the cost of providing insurance to those with pre-existing conditions:

JUSTICE SCALIA: These people not stupid. They’re going to buy insurance later. They’re young and need the money now.

 GENERAL VERRILLI: But that’s -­

JUSTICE SCALIA: When they think they have a substantial risk of incurring high medical bills, they’ll buy insurance, like the rest of us.

 GENERAL VERRILLI: But that’s — that’s -­

JUSTICE SCALIA: I don’t know why you think that they’re never going to buy it.

 GENERAL VERRILLI: That’s the problem, Justice Scalia. That’s — and that’s exactly the experience that the States had that made the imposition of guaranteed issue and community rating not only be ineffectual but be highly counterproductive. Rates, for example, in New Jersey doubled or tripled, went from 180,000 people covered in this market down to 80,000 people covered in this market. In Kentucky, virtually every insurer left the market.  And the reason for that is because when people have that guarantee of — that they can get insurance, they’re going to make that calculation that they won’t get it until they’re sick and they need it. And so, the pool of people in the insurance market gets smaller and smaller. The rates you have to charge to cover them get higher and higher. It helps fewer and fewer — insurance covers fewer and fewer people until the system ends. This is not a situation in which you’re conscripting — you’re forcing insurance companies to cover very large numbers of unhealthy people -­

JUSTICE SCALIA: You could solve that problem by simply not requiring the insurance company to sell it to somebody who has a condition that is going to require medical treatment, or at least not — not require them to sell it to him at a rate that he sells it to healthy people. But you don’t want to do that.

GENERAL VERRILLI: But that seems to me to say, Justice Scalia, that Congress — that’s the problem

here. And that seems to me -­

JUSTICE SCALIA: It’s a self-created problem.

Let us see what tomorrow brings!

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