Obamacare and the Constitution

OBAMACARE
AND THE CONSTITUTION
A Status Update
From Pacific Legal Foundation
Pacific Legal Foundation and Obamacare
Pacific Legal Foundation is proud to be a leading voice in the constitutional challenges to
“Obamacare”—the Patient Protection and Affordable Care Act (PPACA)—which represents the federal
government’s most extreme effort yet to take control of the health care industry.
PLF has been the most active voice in the nation challenging the constitutionality of Obamacare,
in courts across the nation on a broad spectrum of issues, ranging from the well-known Individual Mandate—the section of the law that forces every American to buy health insurance from a private company—to complicated procedural issues involving the power of states to sue over the constitutionality of a
federal law. This booklet presents an overview of the constitutional issues involved, drawn from PLF’s
briefs in Sissel v. Department of Health & Human Services, Florida v. Department of Health & Human Services,
Seven-Sky v. Holder, Virginia v. Sebelius, Coons v. Geithner, and our broader involvement in this crucial constitutional debate.
Donor-supported Pacific Legal Foundation is the nation’s oldest and most successful legal watchdog organization that litigates for limited government, private property rights, individual rights, and
equal protection, in courts across the country. If you would like to learn more about Pacific Legal Foundation and the many ways we work to rescue liberty from coast to coast, check out the PLF Liberty Blog
(blog.pacificlegal.org) or our website (PacificLegal.org).
2
MATT SISSEL
I
On July 26, 2010, PLF filed a lawsuit on behalf of Iowa resident
Matt Sissel, challenging the constitutionality of the Individual Mandate.
After serving for eight years in the Iowa Army National Guard
and winning the Bronze Star for his service in Iraq, Matt Sissel studied
art at the Toronto Academy of Realist Art in Canada, where he specialized in realistic painting and portraiture. In August, 2010, he returned
home to Iowa City to start a new career as a professional artist, opening his own studio and website.
Sissel is healthy and current on his medical expenses. He has
chosen not to buy health insurance because he wants to invest in his
business instead, and costly insurance premiums aren’t worth the
money to him. Sissel wants the freedom and flexibility to do his own budgeting, including setting aside
money for his medical needs as he chooses, without government oversight. “As a small business owner,”
Sissel says, “I don’t need the government telling me how to manage my expenses; they can’t even manage their own.” Indeed, the Act imposes “more government-mandated paper work,” on businesses, leaving “fewer choices in health plans for their employees, and no mechanism to control costs.”[Endnote 1]
The Centers for Medicare and Medicaid Services report that U.S. health spending is projected to grow at
an average annual rate of 6.3 percent over the next decade, up from 6.1 percent from before the Act took
effect.[2] And one study, performed by researchers at Suffolk University’s Beacon Hill Institute, found
that the Act could destroy up to 700,000 jobs by 2019.[3]
Yet Sissel’s objection to the Individual Mandate is about more than dollars and cents. He believes
he should be free to live his life without the federal government meddling in his most personal affairs. “I
object to being conscripted into a federal health care program,” he says.
Sissel’s opposition to the Individual Mandate is rooted in the Constitution’s principles of individual freedom and limited government: “My principles, I believe, are the same ones held by our Founding
Fathers,” he says. “To defend individual freedom, they tried to limit the size of the federal government
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and what it could do. They could not have conceived of the federal entanglement in people’s personal,
private choices that the Act represents.”
How the Act forces Americans to buy health insurance
The Individual Mandate is “an unprecedented form of federal
action” that gives the federal government expansive control over the
health care sector.[4] Beginning in 2014, every American must maintain “minimum essential” health insurance coverage.[5] People who
do not maintain such coverage are subject to hundreds or thousands of
dollars in penalties.
With exceptions for persons of limited means, any individual
who fails to maintain what the Secretary of Health and Human Services defines as “minimum essential coverage” must pay a fine to the
IRS equal to the greater of 2.5 percent of his or her annual income, or
$695 per uninsured family member per year, up to a maximum of
$2,085 per family per year.[6] Because Sissel is an applicable individual under the Act, he is now subject to stiff penalties if he fails to buy
health insurance.
Why the Individual Mandate is not a regulation of commerce
One of the most basic rules of constitutional law is that Congress has only limited powers, which
are listed in the Constitution. Congress cannot make any law that the Constitution does not authorize it
to make. The Constitution was written with limitations on the federal government’s reach, and powers
were enumerated to prevent the federal government from infringing on individual liberty. The framers
did not give Congress authority to do whatever might be wise or desirable, but instead listed its powers
and reserved all other powers to the states or to the people at large.
Article I, Section 8, of the Constitution allows Congress to regulate “interstate commerce.” As
originally understood, this power gave Congress authority to regulate cross-border sales of goods and
services, or the transportation of commerce. But beginning in the New Deal era, the Supreme Court ventured away from this original understanding. In the famous 1942 case of Wickard v. Filburn,[7] it held that
the federal government had power over farmer Roscoe Filburn’s wheat production, even though his
wheat was grown only for his own private use and did not enter the national market. In rejecting Filburn’s Commerce Clause challenge, the Court ruled that Congress could regulate farming activities having a “substantial economic effect” on interstate commerce, regardless of whether those activities themselves qualified as interstate commerce. As the Court later explained, that decision “ushered in an era of
Commerce Clause jurisprudence that greatly expanded the previously defined authority of Congress.”[8]
Decades later, in the 2005 case Gonzales v. Raich,[9] the Supreme Court found that Congress could forbid
the local, noncommercial production and consumption of medical marijuana in the course of prohibiting
the interstate sale of marijuana. The Raich Court explained that as part of a scheme to regulate narcotics,
4
Congress could regulate noninterstate, noncommercial activity—even though the Constitution only gives
Congress power to regulate interstate commerce.
Still, the Court has invalidated federal
laws under the Commerce Clause, even in modern times. In the 1995 case United States v. Lopez,
the Court struck down a federal law establishing
a gun-free zone around public school campuses
because, as the Court explained, the law had
“nothing to do with ‘commerce’ or any sort of
economic enterprise.”[10] The Court refused to
“pile inference upon inference” to establish a
connection between gun possession in a school
zone and interstate commerce. Five years later,
in United States v. Morrison, the Court invalidated
a portion of the federal Violence Against Women Act, holding that Congress may not regulate noneconomic conduct (i.e., rape) based solely on the fact that violent crimes against women have some eventual effect on the national economy.[11] In both Lopez and Morrison, the Court said there must be meaningful limits to Congress’ commerce power, because “even under our modern, expansive interpretation
of the Commerce Clause, Congress’ regulatory authority is not without effective bounds.”[12]
Compelled purchase is not a “regulation”—and not buying something is not “commerce”
One reason the Commerce Clause cannot be read as allowing Congress to force people to buy
goods or services lies in the language itself. The words “regulate” and “commerce” do not imply compelling people to act who have not chosen to do so. In normal English, the word “regulate” means to
regularize actions, not to compel actions. And “commerce” usually refers to some kind of activity, instead of a person’s merely existing. When the Constitution was written, the word “commerce” was generally understood to mean transactions or the exchanges of goods or services,[13] and the word
“regulate” meant “to make regular.”[14]
These words contrast notably with the language of other clauses that do allow Congress to compel activity.[15] For example, the federal power to draft an army is rooted in Clauses 12, 13, and 15 of
Article I, Section 8, which allow Congress “to raise armies” and “provide for calling forth the Militia.”[16]
The Militia Act of 1792, which required individuals to buy guns and ammunition, and which the
Obama Administration has often pointed to as precedent for the Individual Mandate, was actually
passed pursuant to the Clause that allows Congress to “provide for . . . arming . . . the Militia.” Words
like “raise,” “provide,” and “call forth” imply compelling action. The word “regulate” does not.
What is more, if the power to “regulate” had been understood to include the power to compel
any behavior having some economic effect, these militia and army clauses, and many other constitutional
provisions, would have been redundant. The military, the Post Office, the patent and copyright system,
5
the coining of money, and many other federal powers listed in the Constitution, have effects on the national economy. Yet the Constitution’s authors chose to list these separately. Had they meant the Commerce Clause to give Congress power to compel any behavior that had some ultimate effect on the economy, there would have been no need to write these other provisions. As Justice Clarence Thomas has observed, “An interpretation of [the Commerce Clause] that makes the rest of [the list of congressional
powers] superfluous simply cannot be correct.”[17]
Also, the national debate over the Constitution’s ratification, and the historical context in which it
was born, are strong reasons to doubt that they meant the Commerce Clause to be read so broadly. The
Founders were skeptical of centralized power, and chose not to give the federal government undefined
national authority. Instead, as James Madison and others insisted, the Constitution gives the federal government only “few and defined” powers, leaving any powers not listed with the states.[18] One of the
leading reasons for the Revolution was the British Parliament’s assertion of power to “bind the colonies
and people of America . . . in all cases whatsoever.”[19] The founders would hardly have ratified the
Constitution if they thought Congress would enjoy the same limitless power against which they had just
rebelled.
The Obama Administration’s extreme view of federal power
If Congress can force people to engage in commerce, then it enjoys truly unlimited power. It
could mandate that each American purchase a gym membership on the theory that having a healthier
populace would improve the national economy by decreasing the cost of health insurance. The Ameri-
6
can auto industry could convince Congress to pass a law requiring everyone to buy a new domestically
manufactured car every five years to “create jobs.”
Absurd as these examples sound, newly
appointed Supreme Court Justice Elena Kagan
notably refused to agree at her confirmation
hearings that Congress lacks power to require
Americans to eat vegetables every day.
The Obama Administration’s limitless
interpretation of the commerce power would
transform the federal government from one of
enumerated powers to one which can compel
or prohibit any and all individual behavior that
has some ultimate effect on the economy—
which of course means any and all behavior.
This is not an exaggeration. In a decision upholding the constitutionality of the Individual Mandate, the Virginia Federal District Court held that Congress can compel the purchase of health insurance
because, due to “the nature of supply and demand,” not buying health insurance will “directly affect the
price of insurance in the market, which Congress set out in the Act to control.”[20] In another case, a federal judge held that Congress can regulate any “mental activity, i.e., decision-making,” which has an ultimate economic effect.[21] These decisions indicate the total lack of principled limits on the Obama Administration’s constitutional theory. All activity or inactivity of any sort has some ultimate effect on supply and demand, and any failure to do what Congress commands can always be characterized as a
“mental activity” with ultimate economic consequence.
The Administration has argued that the Individual Mandate regulates how medical services are to
be paid for, but the Mandate is actually silent about how people must pay for their medical care if and
when they seek it. Nor does the law connect payments with the receipt of care—a person may still buy
insurance and then also pay for private health care. And the Individual Mandate does not apply to those
groups that are most likely to use medical care without paying for it—illegal immigrants and the impoverished are exempt. Thus the law does not merely require that people pay for the health care they receive. Instead, it requires healthy, young individuals like Matt Sissel to buy insurance as a subsidy to private insurance companies, and it does so on the theory that Congress can control anything—even mental
activity—that ultimately affects the economy. This interpretation of the Commerce Clause ignores the
plain language of the Constitution and would convert Congress’ limited power into a boundless authority to control all personal choices.
7
THE NECESSARY AND PROPER CLAUSE
(FLORIDA CASE)
II
The largest and best known of the Obamacare lawsuits is Florida v. Dep’t of Health & Human Servs.,
in which more than half of the states and several individual plaintiffs are challenging several features of
the new law. On January 31, 2011, District Judge Roger Vinson held the law unconstitutional, as exceeding Congress’ powers under the Commerce Clause, and on August 13, 2011, the Eleventh Circuit Court
of Appeals agreed.
In addition to engaging in an in-depth analysis of the Commerce Clause arguments, the Eleventh
Circuit addressed the scope of the Constitution’s Necessary and Proper Clause—the provision that allows Congress to “make all Laws which shall be necessary and proper for carrying into Execution the
[federal government’s] Powers.” PLF filed a friend of the court brief arguing that just as the Individual
Mandate exceeds the Commerce Clause—because forcing someone to buy something is not
“regulating”—it also exceeded Congress’ power under the Necessary and Proper Clause.
The Individual Mandate is not an “appropriate” means for regulating commerce
The Necessary and Proper Clause is not a freestanding source of congressional authority; it merely supplements Congress’ enumerated powers, expressing nothing more than the principle that Congress
may choose legitimate means by which to accomplish legitimate ends.[22] But if a particular law is not
within the scope of Congress’ enumerated powers, the Necessary and Proper Clause cannot authorize it.
Chief Justice John Marshall (pictured at left) set out the test
for determining whether a law passes muster under the Necessary
and Proper Clause in McCulloch v. Maryland (1819):
Let the end be legitimate, let it be within the scope of the
constitution, and all means which are appropriate, which
are plainly adapted to that end, which are not prohibited,
but consist with the letter and spirit of the constitution, are
constitutional.[23]
In short, Congress can only choose methods that are
consistent with fundamental constitutional principles like federalism and limited, enumerated powers—the “spirit” of the
Constitution.[24] But the Individual Mandate is not consistent
with this spirit. To expand federal authority so that Congress may
8
compel whatever personal behavior has some ultimate effect on the nation’s economy would break
down the concept of limited federal powers—what the Supreme Court called the “first principle” of the
Constitution.[25] Such a proposition cannot be necessary or proper.[26]
The Individual Mandate also is not appropriate because it undermines representative government.
Unlike a public health care system, which would be funded through taxes and ostensibly overseen by
the voters, the Individual Mandate lets Congress evade political accountability by forcing people to purchase insurance policies from private companies. Georgetown University Law Professor Randy Barnett
explains:
[E]conomic mandates undermine political accountability . . . . The public is acutely aware of tax
increases. Rather than incur the political cost of imposing a general tax on the public using its tax
powers, economic mandates allow Congress and the President to escape accountability for tax increases by compelling citizens to make payments directly to private companies.[27]
Courts should view the Individual Mandate with great skepticism because it forces individuals,
companies, and states to absorb the burden of implementing a federal regulatory program, and insulates
Congress from accountability for the program’s defects.
In United States v. Comstock (2010), the Supreme Court set forth five “considerations” for determining whether a law is a constitutional exercise of the Necessary and Proper Clause: (1) the breadth of
the Clause; (2) a long history of federal involvement in the area being regulated; (3) the government’s
sound reasons for enacting the law in light of its interest in safeguarding the public; (4) the law’s accommodation of state interests; and (5) the law’s scope.[28] As Justice Thomas noted in dissent, Comstock
doesn’t specify how many of these factors must be satisfied for a law to be upheld.[29] Nevertheless, the
Individual Mandate fails each one.
While the Necessary and Proper Clause is “broad,” in that it provides Congress with substantial
leeway to choose the means for achieving legitimate ends, it does not expand Congress’ commerce power into a plenary power to do whatever it pleases in the name of commerce. Its boundaries were articulated in McCulloch, which bars Congress from passing laws that contradict fundamental constitutional
principles.
The Individual Mandate also has no longstanding history, as the law in Comstock did. It is a legislative novelty that raised constitutional suspicions from the instant it was proposed.[30] And the House
of Representatives voted to repeal the Mandate less than a year after it was enacted.[31] It is hardly a
longstanding tradition in American federal law.
There is also no question that the Individual Mandate interferes with the states’ powers. Several
states filed briefs in Comstock supporting the law at issue in that case.[32] By contrast, more than half the
states are now suing to have the Individual Mandate declared unconstitutional, and a number of them
have passed laws to protect their citizens from the health care law’s effects.
9
Last, the Individual Mandate is not narrow in scope. It
applies to virtually every American, and prescribes a blanket
rule: buy health insurance, or pay a fine. It is, in principle, unavoidable.
An interpretation of the Constitution that would expand
federal authority so broadly as to break down the “first principle”
of limited, enumerated powers, and allow Congress such sweeping authority, is neither “appropriate,” nor consistent with the
“spirit” of the Constitution.
The Eleventh Circuit’s decision in the Florida case
On August 12, 2011, the Eleventh Circuit Court of Appeals agreed with the trial court, and held that the
Individual Mandate was not constitutional under the Commerce Clause or the Necessary and Proper Clause.
The court relied heavily on the Raich case, in which the Supreme Court held that the federal government
may control any activity that is “essential” to the success of a federal regulatory scheme. This holding is significant
because while the Lopez and Morrison decisions confined Congress’ power to economic matters, the “essential to the
success” theory would let Congress regulate even noneconomic activity if doing so is “essential” to the working of
some other federal economic plan.
The Eleventh Circuit recognized that without significant judicial oversight, this theory could have dangerous implications. Congress could easily declare anything it wished to be “essential” and therefore within its power.
But the Court of Appeals held that the Raich decision was not meant to
g[i]ve Congress carte blanche to enact unconstitutional regulations so long as such enactments were part of a
broader, comprehensive regulatory scheme. We do not construe the Supreme Court’s “larger regulatory
scheme” doctrine as a magic words test, where Congress’s statement that a regulation is “essential”
thereby immunizes its enactment from constitutional inquiry. Such a reading would eviscerate the
Constitution’s enumerated powers and vest Congress with a general police power.[33]
This issue will be central when the Supreme Court takes up the Individual Mandate, because in Raich, four
justices applied rational-basis scrutiny—the most lenient form of judicial review, to the law in question. The government virtually never loses when the Court applies that test. But Justice Antonin Scalia, in a separate opinion,
seemed to apply a more skeptical judicial test. Which test applies is a decisive question in this case.
The Eleventh Circuit held that the Individual Mandate does not meet Raich’s “essential” test because “the conduct regulated by the Individual Mandate . . . in no way ‘burdens’ or ‘obstructs’ Congress’s
ability to enforce its regulation of the insurance industry.”[34] Other provisions in the Act would survive
without the Mandate, the judges observed; the Mandate is “designed not to enable the execution of the
Act’s regulations, but to counteract the significant regulatory costs on insurance companies and adverse
consequences stemming from the fully executed reforms”[35]—that is, to patch up holes that the other
provisions of the Act tore in the insurance market. And, the court pointed out, the many exemptions to the
Mandate created by Congress further undermined the argument that the Mandate is “essential.”
10
To a certain extent, the “necessary and proper” analysis is the most difficult part of the challenge to the Individual Mandate. The Necessary and Proper Clause is not a model of clarity, and the few precedents that exist—
primarily Raich, Comstock, and McCulloch—are very deferential to the government. Yet courts must be skeptical of
congressional assertions that regulating an activity is “essential” to the success of its laws. Otherwise, Congress
could simply declare any activity whatsoever to be “essential,” and the constitutional limitation of powers would
be an illusion.
11
CAN STATES SUE? VIRGINIA V. SEBELIUS
III
Several states, including Virginia, responded to the Individual Mandate by passing Health Care
Freedom Acts—laws that guarantee citizens the right not to buy insurance if they choose not to. Shortly
after its Health Care Freedom Act was passed, Virginia filed a
lawsuit challenging the Mandate’s constitutionality on the
grounds that it conflicts with its own state law. On December 13,
2010, federal judge Henry Hudson held the Mandate unconstitutional, and the case was subsequently appealed to the Fourth Circuit. On September 8, 2011, the Fourth Circuit ruled that the State
of Virginia lacked standing to file suit.
While the Florida case had included both state and individual
plaintiffs, Virginia’s suit was filed solely on behalf of the state.
The constitutional question is whether a state is allowed to challenge the constitutionality of a federal law that conflicts with a
state enactment. In briefs before the Fourth Circuit and then U.S.
Supreme Court, PLF has argued that states can sue to defend laws that protect their citizens from unconstitutional federal legislation.
States Have an Interest in Articulating and Defending the Rights of Their Citizens
The constitutional system of divided sovereignty makes the federal government supreme with
regard to those subjects listed in the Constitution. But under the Tenth Amendment, the states remain
sovereign over matters not delegated to the federal government.[36]
One of the powers of any sovereign is the power to identify and protect citizens’ rights through
law. That is a responsibility the Constitution leaves primarily to states, except when such rights are given over to federal protection.[37] This means that states have a distinct sovereign interest in protecting
what the founders called The States “residuary and inviolable sovereignty,”[38] and may sue to defend
that power.[39]
The federal system, as the Supreme Court has emphasized, does not protect state autonomy just
for the sake of states, but to ensure greater protection for individual freedom.[40] The “power surrendered by the people,” wrote James Madison, is divided “between two distinct governments,” federal and
state, so that “[t]he different governments will control each other.”[41]
12
The authors of The Federalist papers repeatedly explained that states would serve as a barrier
against overreaching federal authority. Seeking to allay antifederalist fears, Madison and his colleagues
argued that if the federal government were to “extend its power beyond the due limits,” states would
have plentiful “means of opposition,” including the people’s “refusal to co-operate with the officers of
the Union” and the use of
“legislative devices” to “embarrass”
federal usurpations.[42]
The states’ residual powers include
the power to legislate to protect
public health, safety, and welfare—a
power known as the police power.
The Constitution’s grant of enumerated powers to the federal government does not undermine the states’
general police powers, and therefore
states retain the power to lay and
collect taxes,[43] to regulate alcohol
consumption,[44] to regulate hunting within its borders,[45] to regulate the disposal of toxic waste,[46]
and to operate their elections,[47] among other things. The Supreme Court has allowed states to defend
these powers by suing to challenge federal laws that interfere with them. It was on a similar basis that
Maryland was allowed to challenge the national bank in the McCulloch case in 1819—one of the precedents central to the Individual Mandate lawsuits. Virginia is following in this tradition by defending its
constitutional power to “guard the rights of each individual citizen”[48] by enacting a Health Care Freedom Act.
States Are Uniquely Positioned to Litigate
Tenth Amendment Violations, and Courts Should Allow Them to Do So
The Tenth Amendment states:
The powers not delegated to the United States by the Constitution, nor prohibited by it to the
States, are reserved to the States respectively, or to the people.
States have a unique interest in Tenth Amendment questions, and powerful incentives to defend
that Amendment. There is no reason to deny them the power to challenge federal laws on such grounds.
Indeed, that Amendment was written to help prevent the federal government from assuming powers not
delegated to it so that states have what Professor Akhil Amar has called a “special role and responsibility
in protecting their constituents from federal lawlessness.”[49] State autonomy was designed into the
constitutional system to help keep the federal government within its limits “in part by mutual jealousy
and monitoring.”[50]
13
Such jealousy should not be confused with unconstitutional attempts at “nullification,” the theory that states can absolve citizens of the duty to comply with federal laws that the state believes are unconstitutional. Virginia’s Health Care Freedom Act is not an attempt to “nullify” federal law. On the
contrary, it represents a constitutionally legitimate alternative to nullification, because Virginia is merely
asking the federal courts to resolve a constitutional question. As Professor Amar has warned, we must
take care while “discarding the extremism of nullification” that we do not “throw away a rich antebellum tradition emphasizing state protection of constitutional norms against the federal government.”[51]
Even Madison, who for a brief period flirting with the “nullification” doctrine, acknowledged that the
federal judiciary is the right place to resolve disputes about federal overreaching.[52] Federal courts, he
wrote, must adjudicate “controversies relating to the boundary between” the states and the federal government “impartially . . . according to the rules of the Constitution.”[53]
For Virginia to seek a judicial remedy within the federal system is an appropriate recognition of
its relationship to the federal government. To deny it the right to obtain a fair judicial review of the constitutionality of a federal law that interferes with the state’s constitutionally recognized powers will only
increase conflict and encourage states to resort to unconstitutional alternatives.
In response to the Fourth Circuit’s adverse decision based upon standing, the State of Virginia
filed a petition with the United States Supreme Court on September 30, 2011, asking the Court to rule on
this question.
14
THE INDIVIDUAL MANDATE IS NOT A TAX
VIRGINIA V. SEBELIUS
IV
One of the Obama Administration’s recurring arguments is that, even if the Individual Mandate
is not constitutional under the Commerce Clause, it is nevertheless a constitutional exercise of the power
to tax. This is important because federal laws bar federal courts from even considering certain kinds of
cases involving taxes. If the Individual Mandate is a tax, the Obama Administration argues, courts don’t
have jurisdiction. PLF has argued in several cases that this tax argument does not rescue the Mandate.
The financial penalty that applies to those who fail to buy government-mandated health insurance is not a tax. Congress designed and intended the penalty to force individuals to engage in commerce—i.e., to purchase health insurance—and to punish
those who fail to comply.
A tax is a “burden laid upon individuals or property
for the purpose of supporting the Government.”[54] But a
“penalty” is designed to punish or regulate behavior.[55]
As the Supreme Court observed, “whereas [penalties] are
readily characterized as sanctions, taxes are typically different because they are usually motivated by revenue-raising,
rather than punitive, purposes.”[56]
The penalty imposed for noncompliance with the
Individual Mandate is not meant to raise revenue to support the government. Indeed, the Act “does not
mention any revenue-generating purpose that is to be served by the Individual Mandate penalty, even
though such a purpose is required.”[57] Moreover, the Act lists seventeen “revenue offset provisions,”
and includes a section called “provisions relating to revenue,” both of which mention other provisions in
the Act that are characterized as taxes.[58] The penalty is not listed among them.
Instead, the penalty is designed only to coerce people to buy federally approved insurance, and
punish those who do not. According to Congress, the purpose of the penalty is to add “millions of new
consumers to the health insurance market,” and deter people from “forego[ing] health insurance coverage and attempt[ing] to self-insure.”[59] If the mandate to buy health insurance works as intended, the
government will collect no revenue whatsoever, because no one will be penalized for failing to buy insurance.
15
Congress did not refer to the penalty as a tax in the version of the Act that President Obama signed
into law—and while the law uses the term “tax” to describe several other provisions, it does not use that
word in describing the penalty. Most strikingly, Congress eliminated traditional tax enforcement methods for
those who fail to pay the penalty.
Several courts have considered the Obama Administration’s argument that the Individual Mandate is
constitutional under the power to tax, but only the Fourth Circuit Court of Appeals has agreed. That case is
now headed to the Supreme Court which is not likely to accept it.
16
IPAB’S “PLATONIC GUARDIANS”
COONS V. GEITHNER
V
Another aspect of the Patient Protection and Affordable Care Act that has received increased media attention in recent months relates to an agency called the Independent Payment Advisory Board, or
IPAB, an unelected commission that enjoys virtually limitless power to set rates for Medicare reimbursement.[60] IPAB is the target of a lawsuit now pending in the Arizona federal District Court. In its friend
of the court brief, PLF argues that the creation of IPAB violates the “non-delegation” doctrine by giving
Congress’ lawmaking powers to an unelected agency—without meaningful legislative, executive, or judicial controls.
IPAB is legally charged with the duty of preparing “recommendations” which will “reduce the
Medicare per capita growth rate.” But these “recommendations” are much more than recommendations.
Congress does not choose to adopt or give effect to these “recommendations.” Instead, the Secretary of
Health and Human Services must “implement the recommendations” regardless of congressional approval. In fact, Congress is given no significant opportunity to review or alter these “recommendations”
at all; on the contrary, the statute deprives Congress of such an opportunity by prohibiting either house
from considering “any bill, resolution, or amendment . . . that fails to satisfy” specific requirements—
requirements that spell out statutory criteria IPAB itself is required to comply with when drafting the
“recommendations.” In other words, Congress is only allowed to amend the “recommendations” by
adding provisions that IPAB itself could have already drafted but failed to. And the law goes further—it
prohibits Congress from repealing this restriction.
Thus, the Secretary is required to enforce the “recommendations” IPAB drafts regardless of what
Congress thinks of them. Congress as a whole may add further “recommendations,” but it may not reverse or alter them.
Professor Timothy Jost, one of PPACA’s most prominent advocates,
explained in a recently published article that IPAB is purposely shielded
from meaningful accountability, so that it can act, in his words, as a group
of “Platonic Guardians,” or an “independent ‘Federal Health Board’ of experts.”[61] But the Constitution is not compatible with any system of independent Platonic Guardians.[62] Indeed, the framers explicitly rejected the
idea of being governed by “a will in the community independent of the majority,” because such an independent entity “may as well espouse . . . unjust
views.”[63] They chose instead a system of checks and balances, in which
17
all three branches of government enjoy clear, defined, and limited powers, and are ultimately accountable
to the public, so as to protect both the majority and the minority.
The Supreme Court has held that “Congress may not delegate the power to make laws and so may
delegate no more than the authority to make policies and rules that implement its statutes.”[64] While
Congress may create administrative agencies and commissions, it may not yield its constitutionally defined lawmaking power to another entity, which, in this case, would sit within the Executive, not the Legislative, branch.
The “true distinction” between legitimate and illegitimate delegations of authority is “between the
delegation of power to make the law,” which “cannot be done,” and statutes which “confer authority or
discretion as to its execution, to be exercised under and in pursuance of the law.”[65] A delegation of authority is unconstitutional “if there is” an absence of standards for the guidance of the Administrator’s
action, so that it would be impossible in a proper proceeding to ascertain whether the will of Congress
has been obeyed.”[66]
As Prof. Jost admits, “the conscious abdication of congressional responsibility to the IPAB is striking.”[67] It is more than striking: PPACA’s provisions insulate IPAB from accountability, either to Congress, the public, or the courts. They drastically limit Congress’ power to abolish it, and otherwise render
it independent of executive, legislative, or judicial control. In short, the purported delegation goes far beyond any previous example of legitimate, or, for that matter, illegitimate, delegation ever before attempted by Congress.
Congress has only one means of barring IPAB’s
“recommendations” from automatically becoming
law, and that method is rendered void if it is not exercised during a brief period in the year 2017. Congress
can only disband IPAB if it enacts a joint resolution,
before August 15, of 2017, to do so. That resolution
must be introduced during the 29 days between January 3 (when Congress convenes) and February 1, 2017,
and must receive a vote of 3/5 of all elected members
of Congress—one of the most extreme supermajority
requirements ever enacted in the history of American
law. And it must be enacted by August 15, 2017. If
these things do not occur, the process whereby IPAB’s “recommendations” automatically become law
becomes utterly irreversible. From that point on, IPAB’s recommendations become law every year regardless of what Congress does.
18
IPAB Enjoys Autonomous Lawmaking Authority Free of Legislative,
Executive, or Judicial Oversight
Not only does the Act allow the politically unaccountable IPAB to write “recommendations” that
require no congressional approval before being implemented—and which Congress is basically powerless to alter or block—but the statute also restricts the President’s oversight powers. If IPAB fails to submit the “recommendations” as required, the Secretary of
Health and Human Services must prepare such
“recommendations” instead, and the President is then required
to submit them to Congress within two days. Since the content of these “recommendations” is dictated by the same rules
provided to IPAB, the Act itself specifies the content of legislation that the President may submit to Congress. This conflicts
with the Constitution, which gives the President full discretion to “recommend to [Congress] Consideration such
Measures as he shall judge necessary and expedient.”[68]
In addition to eliminating congressional or presidential control over IPAB, the Act also deprives the courts of any power
of review. It explicitly prohibits any judicial or administrative
review of the “recommendations” that IPAB or the Secretary
implements.
In summary, then, in regard to the IPAB, the Act:
●
requires IPAB to formulate “recommendations” that automatically become law;
●
insulates those “recommendations” from normal Administrative Procedure Act notice and
comment rules;
●
prevents Congress from altering or amending the “recommendations” in any way except to
add provisions that IPAB could itself have added but for some reason failed to;
●
forbids Congress from repealing the restriction against alteration or amendment;
●
prohibits judicial review of the “recommendations”;
●
curtails the President’s constitutional power to recommend such measures as he considers
expedient;
●
provides that Congress may bar IPAB’s “recommendations” from automatically becoming
only law, during a 29-day period in 2017, only if 3/5 of all elected members of Congress pass
a joint resolution to disband IPAB; and
19
●
eliminates even this impracticable opportunity of repeal in 2020 if Congress does not exercise
It before August 15, 2017.
The dangers of allowing such an autonomous, unaccountable lawmaking body to exercise this
kind of power are obvious. As Prof. Jost writes,
There is no reason to believe that Congress is ready to adopt price controls in the private
sector, and thus the gap between Medicare and private payment is likely to continue to be
an issue. At some point, however, the gap may become unacceptable, which may require
Congress to take the private sector recommendations of the IPAB more seriously. If this
leads to all-payer rate setting, this may be the most revolutionary contribution of the IPAB
concept. If the IPAB plays a role in all-payer rate setting, it will truly have become the
Platonic Guardian of our health care system.[69]
20
OBAMACARE AND THE FUTURE OF THE
CONSTITUTION
VI
This is an exciting and challenging time for constitutional litigators. And however the Supreme
Court ultimately decides the constitutionality of the Individual Mandate and the other provisions of the
Act, it is clear that Americans are increasingly interested in the meaning of the Constitution and the limits it imposes on federal power. This is a healthy development. For too long, political leaders have ignored their constitutional limits—and courts have often simply looked the other way. Yet the Constitution is not an obscure or technical legal document: it is written in ordinary language, intended to be
used by everyday Americans to protect themselves against the government. Pacific Legal Foundation’s
mission is to help them—and rescue liberty from coast to coast.
21
ENDNOTES
[1] Roger Stark, MD, The Impact of the National Health Care Law on Businesses in Washington State 4 (Washington Policy
Center, Policy Note, June, 2010).
[2] Andrea M. Sisko, et al., National Health Spending Projections: The Estimated Impact of Reform Through 2019, Health
Affairs (Sept. 9, 2010), available at http://content.healthaffairs.org/cgi/content/full/hlthaff.2010.0788v1 (last visited Sept. 13,
2010).
[3] David G. Tuerck, Ph.D., et al., Killing Jobs Through National Health Care Reform, Beacon Hill Institute at Suffolk University,
BHI Policy Study (Mar. 2010), available at www.beaconhill.org/BHIStudies/HCR2010/BHI-HealthCareReformAsJobKiller100317.pdf (last visited Sept. 13, 2010).
[4] Michael F. Cannon, All the President’s Mandates: Compulsory Health Insurance Is a Government Takeover, Cato Institute
Briefing Paper No. 114 (Sept. 23, 2009), available at http://www.cato.org/pubs/bp/bp114.pdf (quoting U.S. Congressional
Budget Office, “The Budgetary Treatment of an Individual Mandate to Buy Health Insurance,” CBO Memorandum 1 (Aug.
1994), available at http://www.cbo.gov/ftpdocs/48xx/doc4816/doc38.pdf.) (last visited Sept. 13, 2010).
[5] 26 U.S.C. § 5000A (2010).
[6] 26 U.S.C. § 5000A(e) (2010). Applicable individuals who fail to maintain “minimum essential coverage” are exempt from
the penalty if they are suffering financial hardship, are American Indians, have been without coverage for less than three
months, are individuals for whom the lowest available insurance option exceeds eight percent of household income, or are
individuals whose incomes are below the tax filing threshold.
[7] 317 U.S. 111 (1942).
[8] United States v. Lopez, 514 U.S. 549, 556 (1995).
[9] 545 U.S. 1 (2005).
[10] Lopez, 514 U.S. at 561.
[11] 529 U.S. 598, 617-18 (2000).
[12] Id. at 608.
[13] See 2 Encyclopedia Britannica 229 (1771) (“Commerce is an operation, by which . . . wealth, or work . . . may be exchanged”); John Entick, A New English-Latin Dictionary (no pagination) (2d ed. 1783) (indicating that the word “commerce”
derives from the Latin word commercium); John Mair, The Tyro’s Dictionary, Latin and English 96 (2d ed. 1763) (defining commercium as “trade, traffic, commerce, intercourse”); N. Bailey, Dictionarium Britannicum or a more complete Universal Etymological English Dictionary than any Extant (no pagination) (1730) (defining commerce as “trade or traffic in buying and selling”).
[14] See Randy E. Barnett, The Original Meaning of the Commerce Clause, 68 U. Chi. L. Rev. 101, 139 (2001) (“The power to
regulate is, in essence, the power to say, ‘if you want to do something, here is how you must do it.’”); Samuel Johnson,
2 A Dictionary of the English Language (no pagination) (J. F. Rivington, et al., eds., 6th ed 1785) (defining “to regulate” as: “1.
To adjust by rule or method . . . 2. To direct”).
[15] Cf. McCulloch v. State of Md., 17 U.S. (4 Wheat.) 316, 414 (1819), (when the Constitution’s authors meant “absolutely
necessary” they used that language).
[16] See Selective Draft Law Cases, 245 U.S. 366, 382 (1918) (emphasis added).
[17] Lopez, 514 U.S. at 589 (Thomas, J. concurring).
[18] The Federalist No. 45, at 292 (James Madison) (J. Cooke ed. 1961).
22
[19] Compare Declaratory Act of 1766, 6 Geo. III c. 12, in 27 Statutes at Large 19-20 (Danby Pickering ed., 1767) with Declaration of
Independence, 1 Stat. 1, 2 (1776).
[20] Liberty Univ., Inc. v. Geithner, No. 6:10-cv-00015-nkm, 2010 U.S. Dist. LEXIS 125922, at *50-*51 (W.D. Va. Nov. 30, 2010).
[21] Mead v. Holder, No. 10-950, 2011 U.S. Dist. LEXIS 18592, at *56 (D.D.C. Feb. 22, 2011).
[22] Kinsella v. United States ex rel. Singleton, 361 U.S. 234, 247 (1960).
[23] 17 U.S. (4 Wheat.) at 421.
[24] See also Printz v. United States, 521 U.S. 898, 924 (1997) (when a law carrying out the commerce power violates state sovereignty, that law is not “proper”); Gary Lawson & Patricia B. Granger, The “Proper” Scope of Federal Power: A Jurisdictional Interpretation of the Sweeping Clause, 43 Duke L.J. 267, 271-72 (1993) (“The [Necessary and Proper] Clause . . . serves as a textual guardian
of principles of separation of powers, principles of federalism, and unenumerated individual rights.”).
[25] Lopez, 514 U.S. at 552; see also Gregory v. Ashcroft, 501 U.S. 452, 458; 111 S. Ct. 2395, 2399-2400 (1991) (describing federalism as a “check on abuses of government power”).
[26] See Garcia v. San Antonio Metro. Transit Auth., 469 U.S. 528, 547 (1985) (“[T]he text of the Constitution provides the beginning
rather than the final answer to every inquiry into questions of federalism, for ‘[b]ehind the words of the constitutional provisions
are postulates which limit and control.’”) (citation omitted).
[27] Randy E. Barnett, Commandeering the People: Why the Individual Health Insurance Mandate Is Unconstitutional, 5 NYU J. L. &
Liberty 581, 632 (2010).
[28] 130 S. Ct. 1949, 1965 (2010).
[29] Id. at 1975 (Thomas, J., dissenting).
[30] See Congressional Research Service, Requiring Individuals to Obtain Health Insurance - A Constitutional Analysis 6 (Oct. 15,
2010) (“This is a novel issue: whether Congress can use its Commerce Clause authority to require a person to buy a good or a service and whether this type of required participation can be considered economic activity.”).
[31] See David M. Herszenhorn & Robert Pear, House Votes for Repeal of Health Law in Symbolic Act, N.Y. Times, Jan. 19, 2011,
at A1.
[32] 130 S. Ct. at 1982 (Thomas, J., dissenting).
[33] Florida v. United States HHS, nos. 11-11021 and 11-11067, 2011 U.S. App. LEXIS 16806, *229-*230 (11th Cir. Aug. 12, 2011).
[34] Id. at *231-*232.
[35] Id. at *232.
[36] Alden v. Maine, 527 U.S. 706, 714 (1999) (states “‘form distinct and independent portions of the supremacy, no more subject,
within their respective spheres, to the general authority than the general authority is subject to them, within its own
sphere.’” (quoting The Federalist No. 39); see also The Federalist No. 32, at 200 (Alexander Hamilton) (“State Governments . . .
clearly retain all the rights of sovereignty which they before had and which were not by [the Constitution] exclusively delegated to
the United States.”).
[37] The Slaughterhouse Cases, 83 U.S. (16 Wall.) 36, 77 (1873) (“[B]eyond the very few express limitations which the Federal Constitution imposed upon the States . . . the entire domain of the privileges and immunities of citizens of the States . . . lay within the
constitutional and legislative power of the States, and without that of the Federal government.”).
[38] The Federalist No. 39, at 256 (James Madison).
[39] Wyoming ex rel. Crank v. United States, 539 F.3d 1236, 1242 (10th Cir. 2008) (“States have a legally protected sovereign interest in ‘the exercise of sovereign power over individuals and entities within the relevant jurisdiction. . . . Federal regulatory action
that preempts state law creates a sufficient injury-in-fact to satisfy this prong.” (quoting Alfred L. Snapp & Son, Inc. v. Puerto Rico ex
rel. Barez, 458 U.S. 592, 601 (1982))).
23
[40] Bond v. United States, 131 S. Ct 2355 2358-59 (2011); New York v. United States, 505 U.S. 144, 181-82 (1992);
Gregory v. Ashcroft, 501 U.S. 452, 458 (1991); Atascadero State Hosp. v. Scanlon, 473 U.S. 234, 242 (1985).
[41] The Federalist No. 51, at 351 (James Madison).
[42] The Federalist No. 46, at 319, 322 (James Madison).
[43] McCulloch, 17 U.S. (4 Wheat.) at 435.
[44] Dole, 483 U.S. at 205.
[45] Missouri v. Holland, 252 U.S. 416, 431 (1920).
[46] New York, 505 U.S. at 157.
[47] Oregon v. Mitchell, 400 U.S. 112, 124 (1970) (opn. of Black, J.).
[48] 1 William Blackstone, Commentaries *48.
[49] Akhil Reed Amar, Of Sovereignty and Federalism, 96 Yale L.J. 1425, 1517 (1987).
[50] Akhil Reed Amar, The Bill of Rights 123 (1998).
[51] Amar, Sovereignty, supra at 1517.
[52] See Drew R. McCoy, The Last of the Fathers: James Madison and the Republican Legacy 119-70 (1989); see further James
Madison, Notes on Nullification, in 9 The Writings of James Madison: 1819-1836 at 573-607 (Gaillard Hunt ed., 1910); James
Madison, Letter to Edward Everett (Aug. 28, 1830), in id. at 383-403; Letter to Joseph C. Cabell (Sept. 7, 1829), in id. at 351
(“[T]here is & must be an Arbiter or Umpire in the constitutional authority provided for deciding questions concerning the
boundaries of right & power. The particular provision, in the Constitution of the U.S. is in the authority of the Supreme
Court.”).
[53] Federalist No. 39 at 256 (James Madison).
[54] United States v. Reorganized CF&I Fabricators of Utah, Inc., 518 U.S. 213, 224 (1996).
[55] Rodgers v. United States, 138 F.2d 992, 995 (6th Cir. 1943).
[56] Dep’t of Revenue of Montana v. Kurth Ranch, 511 U.S. 767, 779-80 (1994); see also United States v. La Franca, 282 U.S.
568, 572 (1931) (A tax “is an enforced contribution to provide for the support of government; a penalty . . . is an exaction imposed by statute as punishment for an unlawful act.”).
[57] Florida, United States HHS, 716. F. Supp. 1120, 1137 (N.D. Fla. 2010)2010 U.S. Dist. LEXIS 111775 at *36 (citing Rosenberger v. Rector & Visitors of Univ. of Va., 515 U.S. 819, 841 (1995)).
[58] Id. at 1138; see Patient Protection and Affordable Care Act, Pub. L. No. 111-148, 124 Stat. 119, §§ 9001-9017, 1090110909.
[59] Patient Protection and Affordable Care Act, Pub. L. No. 111-148, 124 Stat. 119, §§ 1501(a)(2), 10106(a).
[60] Stanley Kurtz, The Acronym That Ate Health Care, National Review, May 16, 2011; George Will, Government By The
“Experts,” Washington Post, June 10, 2011; Our New Obamacare Masters, Weekly Standard, Nov. 29, 2010, available at
http://www.weeklystandard.com/articles/our-new-obamacare-masters_518389.html (last visited July 29, 2011).
[61] Timothy Jost, Focus on Health Care Reform: The Independent Medicare Advisory Board, 11 Yale J. Health Pol’y L. & Ethics
21, 21 (2011).
[62] Plato, of course, believed political power should reside “[o]nly in the hands of the select few or of the enlightened individual.” The Statesman 297c, in Plato: The Collected Dialogues 1067 (Edith Hamilton & Huntington Cairns eds., 1961). His ideal
state would therefore be overseen by Guardians who would govern the “art of medicine” by a law which “will care for the
24
bodies and souls of such of your citizens as are truly wellborn, but those who are not, such as are defective in body, they will
suffer to die, and those who are evil-natured and incurable in soul they will themselves put to death.” Republic 3:409e-410a,
in id. at 654. “This,” he contended, “has been shown to be the best thing for the sufferers themselves and for the state.” Id.
at 3:410a. Thomas Jefferson and John Adams agreed that Plato’s work was “shock[ing] . . . disgust[ing],” “unintelligible . . .
nonsense” produced by a “foggy mind.” Compare Letter from Jefferson to Adams, July 5, 1814, in The Adams-Jefferson
Letters 432-33 (Lester J. Cappon, ed., 1987), with Letter from Adams to Jefferson, July 16, 1814, in id. at 437.
[63] The Federalist No. 51, at 351 (James Madison).
[64] Loving v. United States, 517 U.S. 748, 771 (1996)
[65] Id. at 758-59 (citations omitted).
[66] Yakus v. United States, 321 U.S. 414, 425-26 (1944).
[67] Jost, supra, at 31.
[68] See, e.g., Statement by President Obama on H.R. 1105, Omnibus Appropriations Act, Mar. 11, 2009 (citation omitted)
(declaring it unconstitutional under the Recommendation Clause for Congress to “require me and other executive officers to
submit budget requests to the Congress in particular forms”); Statement by President Clinton on S. 2327, Oceans Act of 2000,
Aug. 7, 2000 (because the Recommendation Clause “protects the President’s authority to formulate and present his own recommendations, which includes the power to decline to offer any recommendation” to Congress, President would “construe
section 4(a) not to extend to the submission of proposals or responses that the President finds it unnecessary or inexpedient
to present.”). See also Constitutionality of Statute Requiring Executive Agency to Report Directly to Congress, 6 U.S. Op. Off.
Legal Counsel 632, 640; 1982 WL 170732, at *8 (Nov. 5, 1982) (“[T]he Constitution gives to the President the right to present
legislative recommendations on behalf of the Executive Branch,” so Congress cannot “require a subordinate executive official
to present legislative recommendations of his own.”); J. Gregory Sidak, The Recommendation Clause, 77 Geo. L.J. 2079, 2121
(1989) (“the recommendation clause obviously contemplates that the President is the sole judge of what measures he will
submit to Congress”).
[69] Jost, supra at 31.
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