Four Constitutional Limits That the Minimum Coverage Provision Respects
Siegel, Neil S., Constitutional Commentary
JUSTICE O'CONNOR: If this is covered, what's left of enumerated powers? What is there that Congress could not do, under this rubric, if you are correct?
GENERAL DAYS: Justice O'Connor, that certainly is a question that one might ask, but this Court has asked that question in a number of other circumstances, and rather than starting from the assumption that something was inherently local, it's looked at the degree to which Congress had a reasonable basis for extending its authority under the commerce power to regulate that particular activity. (1)
The minimum coverage provision in the Patient Protection and Affordable Care Act (ACA) (2) requires most people lawfully living in the United States to obtain a certain level of health insurance coverage or pay a certain amount of money each year. (3) Constitutional critics of this "individual mandate" fall into two categories. Some critics make the sweeping assertion that if Congress can impose a mandate to obtain health insurance coverage, then Congress can impose any mandate--indeed, any Commerce Clause regulation--it wants on Americans, so that there is nothing left of the constitutional principle of a national government of limited, enumerated powers. Less implausibly, other critics insist that even if upholding the minimum coverage provision would not mean Congress could impose any mandate or other regulation it wants on Americans, Congress could at least impose whatever "economic" mandates it wants, including federal requirements to purchase specific kinds and quantities of food, transportation, housing, and insurance.
Supporters of the ACA tend to defend the minimum coverage provision by showing that its constitutionality follows from a correct application of contemporary doctrine concerning the Commerce Clause, the Necessary and Proper Clause, or the tax power. (4) These demonstrations are sufficiently persuasive that a number of prominent conservative jurists or scholars have deemed decisive at least one doctrinal argument in favor of the minimum coverage provision. (5) The Supreme Court of the United States, however, can change the governing doctrine. Accordingly, such demonstrations alone may not suffice to persuade five Justices to uphold the minimum coverage provision. For the provision to survive the Court's likely review in the wake of its invalidation by the United States Court of Appeals for the Eleventh Circuit, (6) defenders of the ACA's constitutionality may need to identify principled, judicially enforceable limits on the scope of Congress's enumerated powers that the minimum coverage provision respects. (7)
So far, however, the federal government's briefs shy away from endorsing specific limits on the Commerce Clause beyond what the Supreme Court itself has identified. (8) If anxiety about unlimited federal power attracts the attention of five Justices, they will take a hard look at what the government's limiting principles are.
The present situation brings to mind the oral argument in United States v. Lopez. (9) The Justices asked Solicitor General Drew Days a series of direct questions about the limits of the Commerce Clause. In response, General Days was unable or unwilling to identify a single hypothetical regulation that was beyond the scope of the commerce power. (10) Folk lore has it that his nonresponsive answers contributed to the federal government's 5-4 loss. (11) Whether or not that is true, his exchanges with the Court could not have helped the government's case.
In this essay, I identify four principled and judicially enforceable limits on the scope of the Commerce Clause that counsel upholding the constitutionality of the minimum coverage provision in the ACA. Under the restrictions imposed by these limits, Congress may not use its commerce power: (1) to regulate noneconomic subject matter; (2) to impose a regulation that violates constitutional rights, including the right to bodily integrity; (3) to regulate at all, including by imposing a mandate, unless it reasonably believes that the regulation will ameliorate a significant collective action problem involving multiple states; or (4) to impose an economic mandate unless it reasonably believes that other regulatory means would be less effective or more coercive.
The first two limits are firmly established in the jurisprudence of the Supreme Court. The third limit has been developed by an increasing number of scholars whose work understands the Commerce Clause in light of the collective action problems that the nation faced under the Articles of Confederation, when Congress lacked the power to regulate interstate commerce. (13) The fourth limit--a restrained inquiry into the coerciveness and efficacy of the regulatory alternatives available to Congress--I articulate here. Although I do not endorse such a limit, its imposition would have a sounder constitutional basis than the interpretive mistake of invalidating the minimum coverage provision on the broad ground that Congress may never regulate "inactivity" using its commerce power, either alone or in combination with the Necessary and Proper Clause. From McCulloch v. Maryland (14) to United States v. Comstock, (15) the Court has understood Congress to possess ample means to pursue its constitutionally enumerated ends. Therefore, any concerns about the coerciveness of regulating "inactivity" should be balanced against the relative efficacy and coerciveness of regulating through other means.
If the proffered distinction between inactivity and activity resonates with the Court, then the outcome of the ACA litigation may turn on whether approving the minimum coverage provision means approving any mandate that Congress might theoretically impose (no matter how politically unlikely). The minimum coverage provision is constitutionally distinguishable from many other potential mandates for at least four reasons. First, the subject matter regulated by the provision is economic in nature. Second, the provision violates no constitutional rights. Third, Congress reasonably concluded that the provision would help to solve a significant problem of collective action among the states caused by cost shifting and adverse selection in the health care and insurance markets. Fourth, Congress reasonably concluded that no alternative to the minimum coverage provision would be as effective and less coercive.
Part I identifies why the minimum coverage provision regulates economic subject matter. Part II discusses why the provision does not violate constitutional rights. Part III explains why the provision is unlikely to be saved by the invocation of political limits on the power of Congress to impose mandates. Part IV clarifies why Congress had a reasonable basis to conclude that the minimum coverage provision would ameliorate a significant problem of collective action among the states. Part V addresses why Congress had a reasonable basis to conclude that regulatory alternatives to the provision would be less effective or more coercive.
Part VI uses these four limits on the scope of the Commerce Clause to illuminate the constitutional pertinence of five characteristics of the interstate health care market that economists have identified as distinguishing it from other markets: the inevitability of access, the unpredictability of access, the potentially enormous cost of care, the legal entitlement to care in an emergency, and the substantial cost shifting and adverse selection problems that disrespect state borders. The Conclusion summarizes the four judicially enforceable limits on Congress's commerce power that are either presently in place or potentially available, all of which will be maintained if the Court upholds the minimum coverage provision in the ACA.
I. LIMIT #1: NO NONECONOMIC MANDATES
The most aggressive critics of the ACA insist that if Congress can require people to obtain health insurance coverage or pay a certain amount of money each year, then Congress can impose on individuals whatever requirements it wants by invoking its commerce power. (16) They further insist that if Congress can regulate whatever it wants by invoking its commerce power, then there is nothing left of judicial enforcement of constitutional limits on Congress's enumerated powers.
The conclusion follows from the premise, but the premise is incorrect. The decision whether or not to purchase health insurance is an economic decision. Because the need for nearly all people to access health care services is unavoidable, unpredictable, and legally guaranteed in medical emergencies, and because the cost of such access is potentially crushing even for wealthy individuals who lack insurance, (17) the decision whether or not to obtain health insurance coverage is a decision about how to manage substantial financial risk. Financially able individuals who decline to purchase health insurance are making the economic decision to "go bare" with respect to the risk of serious injury or illness.
In insurance law, the phrase "going bare" is used to describe the conduct of a business enterprise that chooses to be uninsured, or severely underinsured, regarding a risk. Such an enterprise is making the economic decision to self-insure, relying either on personal resources or on the protections afforded by federal bankruptcy law in the event the risk materializes. (18) Businesses that persist in going bare are sometimes described as engaging in conduct that entails potentially high economic risk to themselves and others. (19) If bankruptcy results, substantial costs associated with this financial risk will be shifted to creditors. (20)
The economic nature of the decision whether or not to purchase health insurance means that upholding the minimum coverage provision would not require revisiting the requirement of United States v. Lopez, United States v. Morrison, and Gonzales v. Raich that Congress may regulate only "economic" or "commercial" subject matter when using its commerce power in cases involving allegedly substantial effects on interstate commerce. (21) Accordingly, upholding the minimum coverage provision would not authorize Congress to impose mandates that regulate noneconomic subject matter. (22) The Court articulated the distinction between economic and noneconomic subject matter in Lopez, Morrison, and Raich in order to give Congress the authority to regulate markets, but not to regulate merely social forms of interaction. (23)
A mandate is noneconomic, as opposed to economic, when Congress is attempting to regulate something other than a market through the mandate. For example, if the Court were to uphold the minimum coverage provision, it would remain beyond the scope of the commerce power for Congress to require individuals to possess firearms in their homes (or in school zones) on the ground that such possession, in the aggregate, substantially affects interstate commerce. (24) It would remain beyond the scope of the commerce power for Congress to provide victims of gender-motivated violence with a private civil damages remedy against individuals who do not render assistance when they witness acts of gender-motivated violence being perpetrated in their midst. (25) In both instances, as in Lopez and Morrison but unlike in Raich, Congress would not be attempting to regulate an actual or shadow market.
II. LIMIT #2: NO MANDATES THAT VIOLATE CONSTITUTIONAL RIGHTS
Upholding the minimum coverage provision would not mean that Congress could impose mandates that violate constitutional rights. Some of the hypotheticals that have been floated include requiring Americans to eat broccoli or exercise a certain number of hours per week. (26) These hypotheticals implicate the constitutional right to bodily integrity, for "[t]he integrity of an individual's person is a cherished value of our society." (27) This right is protected against interference by both the federal government and the states under the Due Process Clauses of the Fifth and Fourteenth Amendments. (28)
Infringements of the right to bodily integrity must meet heightened scrutiny. (29) This would be difficult for any government in America to do. If, say, there were an epidemic spreading around the nation that could be cured or prevented only by eating broccoli, then it likely would not violate the right for Congress to require people to eat broccoli--just as it likely would not violate the right for Congress to require people to get vaccinated in such circumstances. But given the state of the world in which Americans have long lived (that is, a world in which one's life does not depend on eating broccoli), any attempt by Congress to force people to eat broccoli would violate the right.
The minimum coverage provision does not implicate the right to bodily integrity. No one argues otherwise. Congress has required most lawful residents of the United States to obtain health insurance coverage or pay a certain amount of money. (30) Congress has not required them even to use their coverage, let alone to ingest anything or engage in a certain level of physical activity. Although it might seem unnecessary to mention the distinction between constitutional powers and constitutional rights, this distinction warrants inclusion in a catalogue of constitutional limits because much criticism of the minimum coverage provision ignores it.
Nor does the minimum coverage provision violate substantive due process, notwithstanding the emphases of opponents of the ACA on themes of constitutional liberty, freedom from coercion, and individual rights. (31) The Supreme Court long ago abandoned freedom from contract as an independent limit on government power. (32) Accordingly, Lochner-style substantive due process challenges to the minimum coverage provision have not survived motions to dismiss. (33)
To summarize the analysis so far, upholding the minimum coverage provision would not authorize Congress to regulate noneconomic subject matter using its commerce power, whether through a mandate or some other regulatory means. Nor would upholding the minimum coverage provision allow Congress to impose mandates that violate constitutional rights. Criticism of the minimum coverage provision to the contrary is best viewed as hyperbolic political rhetoric.
III. AN ASIDE: POLITICAL SAFEGUARDS
Are there any additional constitutional limits on the power of Congress to impose mandates? One possible response to this question, which is preferred by many defenders of robust federal commerce power, is that Congress may use the Commerce Clause to impose any rights-respecting economic mandate as long as Congress rationally could conclude that the object of congressional regulation has substantial effects on interstate commerce in the aggregate. (34) Indeed, many nationalists would go further by rejecting Lopez and Morrison, arguing that Congress can impose noneconomic mandates as long as Congress rationally could conclude that the object of congressional regulation substantially affects interstate commerce in the aggregate.
Nationalists have a response to "slippery slope" concerns about the numerosity and invasiveness of future economic mandates that Congress would be authorized to impose absent further judicial safeguards. (35) In light of the widespread political unpopularity of individual mandates in the United States, (36) nationalists can plausibly insist that the political safeguards of federalism will operate to discipline Congress. (37) This observation about public perceptions of federal regulation, rather than the Eleventh Circuit's suggestion about Congress's past confessions of unconstitutionality, (38) likely explains why Congress has not made a habit of imposing purchase mandates throughout American history. Congress seems as likely to impose future purchase mandates as it is to have imposed them in the past. It seems as likely to impose them as it is to set the federal minimum wage at $100 or $1000 per hour. The Court has long upheld federal minimum-wage laws notwithstanding this theoretical possibility. (39)
The minimum coverage provision, however, is unlikely to be saved by even a powerful case that the political safeguards of federalism will limit federal imposition of economic mandates. Justices who believe in the judicial safeguards of federalism must be persuaded that upholding the minimum coverage provision would not mean abandoning those safeguards. Specifically, whether or not Justices Ginsburg, Breyer, Sotomayor, and Kagan will be reassured by the invocation of political safeguards, none of the five remaining Justices are likely to view them as sufficient. If Chief Justice Roberts and Justices Scalia, Kennedy, Thomas, and Alito prove unwilling to sign off on federal power to impose any and all economic mandates (that, of course, respect individual rights), then the question becomes whether other judicially enforceable limits are available.
IV. LIMIT #3: NO MANDATES ABSENT COLLECTIVE ACTION PROBLEMS
As a matter of professional "logic" and "reason," (40) would upholding the ACA mandate allow Congress to impose whatever mandates it wishes, as long as the mandate is economic and Congress does not violate individual rights? A key question presented by this litigation is whether there is a principled distinction between the minimum coverage provision and other rights-respecting economic mandates that Congress might, at least as a theoretical matter, impose using its commerce power.
An increasing number of constitutional scholars have argued that the commerce power should be interpreted in light of the collective action problems that the nation faced under the Articles of Confederation, when Congress lacked the power to regulate interstate commerce. (41) During the Critical Period of the 1780s, the states acted individually when they needed to act collectively, discriminating against interstate commerce and free riding on the contributions of other states to the federal treasury and United States military. When states engaged in conduct that spilled over from one state to another, James Madison, James Wilson, Alexander Hamilton, and other nationalist Framers registered that the actions of individually rational states were producing irrational results for the nation. (42) This is a collective action problem. Empowering Congress to regulate commerce "among the several States" was and remains a pivotal part of the solution.
The states often cannot achieve an end when doing so requires multiple states to cooperate. The commerce power authorizes Congress to solve economic problems of collective action that predictably frustrate the states. Such problems are "among the several States." Conversely, governmental activities that do not pose collective action problems for the states are internal to a state or local. They are beyond the scope of federal power. All ordinary crime falls in the latter category regardless of whether the victim of the crime is a commercial enterprise, unless the crime involves multistate organizations (43) or crosses state lines. (44)
The distinction between individual and collective action by states gives independent, sensible meaning to the phrase "among the several States" in the Commerce Clause. This phrase references a problem of collective action involving two or more states. This is the key inquiry in determining whether "Commerce," understood by the Court in terms of its economic/noneconomic categorization, is interstate and thus regulable under Clause 3, or is intrastate and thus beyond the scope of the commerce power.
The distinction between activities that pose collective action problems for the states and those that do not best explains why Congress may not usually use its commerce power to regulate such crimes as assault or gun possession in schools, but may regulate an interstate market for guns, wheat, or drugs. That is, a collective action perspective offers a way to distinguish the "truly national" from the "truly local" in Commerce Clause litigation, (45) justifying the outcomes in such cases as Wickard v. Filburn, (46) United States v. Lopez, (47) United States v. Morrison, (48) and Gonzales v. Raich. (49)
According to a collective action approach to the Commerce Clause that reflects the Court's typical level of scrutiny in federalism cases, Congress may invoke its commerce power if there is a reasonable basis to believe that it is ameliorating a significant problem of collective action involving "more States than one." (50) If there is no reasonable basis to believe that Congress is addressing such a collective action problem, then Congress may not invoke its commerce power. (51)
A collective action requirement in commerce power cases would counsel upholding the minimum coverage provision. As I have argued elsewhere, (52) the provision aims to solve a collective action problem involving multiple states because it addresses two free rider problems that spill over state boundaries. The first free rider problem arises because a financially able individual who declines to purchase health insurance free rides on benevolence. Pursuant to federal and state law, (53) as well as the longstanding charitable practices of most hospitals in the United States, (54) others will pay a significant share of the cost of medical treatment rather than let an uninsured person go untreated. (55) Moreover, even when the uninsured individual does not receive medical care for the time being, he or she benefits from the existence of the health care infrastructure and can rely on its availability in case of emergency. The minimum coverage provision is designed to overcome risk taking in reliance on benevolence.
In addition, theoretical rationales and empirical evidence suggest that the free rider problem of uncompensated care is interstate in scope. It is interstate in scope primarily because of the operation of many insurance companies in multiple states, the phenomenon of cross-state hospital use, and the interstate migration (or immobility) of insurance companies, providers, and individuals in partial response to the existence of different state health care regimes. (56) Perhaps Massachusetts can manage the federalism problem created by the existence of sister states, at least once Medicare and Medicaid solve the worst of this problem. Massachusetts had a low population of uninsured residents, a health economy, and ample financial resources at the time it acted. But almost every other state is differently situated. (57)
Strikingly, Massachusetts is the only state that has passed health care reform legislation that shares the basic ends and means of the ACA. (Consider, by contrast, the more than forty states that had enacted laws banning guns in schools when Congress passed the Gun Free School Zones Act of 1990. (58)) The reason is probably not lack of support for the ACA everywhere except Massachusetts. The President campaigned on the issue of health care reform, and the nation is divided evenly over the law, "with 46% saying it was a good thing and 44% saying it was a bad thing." (59) In all likelihood, part of the reason for the current situation at the state level is that the federalism problems associated with state-by-state solutions are significant--and are perceived by state legislators to be significant. (60)
The minimum coverage provision addresses another kind of free rider problem: adverse selection in insurance markets. This adverse selection problem occurs when individuals with higher expected health care costs are more likely to purchase insurance than individuals with lower expected health care costs. Absent a requirement to obtain health insurance coverage, the ACA exacerbates this problem. This is because the law prohibits insurance companies from denying coverage based on preexisting conditions, canceling insurance absent fraud, charging higher premiums based on medical history, and imposing lifetime limits on benefits. (61) Such prohibitions on underwriting permit healthy individuals without insurance to free ride on healthy people with insurance by entering the market only when they expect to require expensive medical care.
Insurance companies may not be financially viable if the law denies them the capacity to control costs in the ways noted above without broadening the risk pool to include healthier people and preventing market timing behavior. (62) As Congress found, "if there were no [coverage] requirement, many individuals would wait to purchase health insurance until they needed care." (63) The predicted consequence of the adverse selection problem absent the minimum coverage provision is a substantial rise in insurance rates. (64)
The connection between the minimum coverage provision and the (concededly constitutional) ACA provisions that prohibit underwriting offers a strong constitutional rationale for the minimum coverage provision. (65) This connection justifies the minimum coverage provision under the interpretation of the Necessary and Proper Clause in McCulloch v. Maryland (66) and United States v. Comstock. (67) This connection also justifies the provision under the interpretation of the Commerce Clause in United States v. Lopez (68) and Gonzales v. Raich. (69)
While there often will be disagreements about the existence, scope, and significance of collective action problems, as well as the adequacy of Congress's response, collective action reasoning is easier to employ with respect to some problems than others. For example, in light of the aforementioned free rider problems that impede the functioning of the health insurance and health care markets, it is easier to justify the minimum coverage provision on collective action grounds than it would be to justify a federal mandate to buy a General Motors car, a house, broccoli, or a health club membership.
In order to impose a mandate to purchase (not to eat) broccoli, the mandate would have to be designed to regulate (most likely, to stabilize) agricultural markets, and Congress would have to reasonably conclude that such a mandate would help to solve a collective action problem among the states with respect to those markets. It would not suffice that "the required purchases will positively impact interstate commerce," or that "people who eat healthier tend to be healthier, and are thus more productive and put less of a strain on the health care system." (70) If a collective action requirement were imposed in commerce power cases generally, it would limit the authority of Congress to enact economic mandates specifically.
To be clear, the Court did not say it was imposing a collective action limit in Lopez, Morrison, and Raich. As argued above, however, a collective action framework provides the best way of understanding--and justifying--what the Court did in those cases. Moreover, language in the majority and concurring opinions in Lopez and Raich appears to be animated by collective action concerns. (71) For example, Chief Justice Rehnquist wrote in Lopez that the Gun-Free School Zones Act "is not an essential part of a larger regulation of economic activity, in which the regulatory scheme could be undercut unless the intrastate activity were regulated." (72) This statement suggests that the absence of regulation of guns near schools in one state would not undercut the effectiveness of regulations prohibiting them in other states. Justice Kennedy similarly wrote that if a state or local government "determines that harsh criminal sanctions are necessary and wise to deter students from carrying guns on school premises, the reserved powers of the States are sufficient to enact those measures. Indeed, over 40 States already have criminal laws outlawing the possession of firearms on or near school grounds." (73)
V. LIMIT #4: NO MANDATES IF ALTERNATIVES ARE AS EFFECTIVE AND LESS COERCIVE
I would stop here. From the perspective of constitutional federalism, there is nothing distinctive about economic mandates, as opposed to other concededly constitutional forms of federal regulation that require regulated individuals to comply by engaging in certain conduct. It seems to me constitutional for Congress to impose a rights-respecting economic mandate when it has a reasonable basis to conclude that such a mandate would meaningfully address a significant problem of collective action among the states--a problem in the commercial sphere that the federal government is better situated to address than the states. I do not see how, from a federalism perspective, the distinction between mandates and other forms of federal regulation-between regulations of "inactivity" and "activity"--is relevant. It has no basis in constitutional text, structure, history, precedent, or a consequentialist analysis of the appropriate division of powers in a federal system. (74) It is a distinction sounding in economic substantive due process. (75)
Moreover, the distinction between inactivity and activity is unresponsive to the very concerns about differences in coerciveness that purport to justify it. There is no meaningful difference in coerciveness between many kinds of mandates and many other kinds of regulation. For example, there is little difference in coerciveness between requiring individuals to obtain health insurance coverage (regulation of "inactivity") and requiring them to obtain coverage if, but only if, they seek health care services (regulation of "activity"), as almost everyone does at some point. There is no meaningful difference in coerciveness between requiring financially able individuals to purchase a certain kind of food (regulation of "inactivity") and requiring individuals to purchase a certain kind of food if, but only if, they decide to enter the food market by purchasing food (regulation of "activity"), as almost everyone must.
Focusing just on health insurance coverage, there is no difference in coerciveness between the minimum coverage provision and a tax increase for everyone combined with a tax credit for insured individuals that wipes out the increase and equals the amount of the exaction for going without insurance in the ACA. A requirement to obtain health insurance coverage or pay is materially equivalent to a requirement that only individuals with health insurance do not pay more in taxes. Indeed, the exaction in the ACA for going without insurance is materially equivalent to a tax. (76)
By contrast, there is a meaningful difference in coerciveness between the minimum coverage provision and a federal law establishing a government-run, single-payer system of national health care. But that is because the single-payer is more coercive than the minimum coverage provision. The ACA preserves private health insurance markets and allows individuals to choose among a variety of private health insurance options. Also more coercive than the minimum coverage provision is denying people medical care unless they already have insurance--or unless they agree to purchase it on the spot in the emergency room.
And yet the Court may disagree. Notwithstanding the arguments in support of the three limits set forth above, the Court may be loath to commit to the proposition that Congress may impose an economic mandate that respects individual rights only if it reasonably concludes that the mandate meaningfully addresses an interstate collective action problem. The Court may conceive of the commerce power, at least in part, in libertarian terms. And the Court may be sympathetic to the view that the minimum coverage provision is coercive in a way that is quantitatively or qualitatively different from other kinds of federal regulation.
A Court so disposed is a Court that may be inclined to break new doctrinal ground by announcing the constitutional relevance of a distinction between regulating economic "inactivity" and regulating economic "activity." Such a Court, however, should exhibit the same caution it exhibits in other areas of constitutional law when it breaks new ground. (77) Such a Court should hesitate before holding broadly that Congress may never impose an economic mandate no matter how grave the interstate economic problem and no matter how much less effective or more coercive other forms of federal regulation may be.
Instead, a Court concerned generally about the coerciveness of rights-respecting economic mandates that solve interstate collective action problems should remain faithful to