Day Two: Too Close To Call On The Mandate

Today was the day followers of the ACA litigation have been awaiting for two years:  The Supreme Court heard historic oral argument on the individual mandate, the heart of the ACA’s market reforms.  The dramatics started early, with chanting demonstrators gathered outside and a who’s who of D.C. politics — from Senate majority leader Mitch McConnell to minority leader Harry Reid to Attorney General Eric Holder — mingling in the courtroom.  But things really got interesting when argument began.  It quickly became clear that the Court’s liberal wing (Justices Ginsburg, Breyer, Sotomayor, and Kagan) believes the mandate is constitutional, and that Justices Scalia and Alito believe it is not.  Justice Thomas is a third reliable vote to strike the law down.  That leaves two votes — Chief Justice Roberts and Justice Kennedy — controlling the outcome.  And while neither one made his position obvious, both had tough questions for the Obama Administration’s lawyer, and Justice Kennedy repeatedly called the individual mandate an “unprecedented” law that “changes the relationship” between the people and the government.  For now, the fate of the individual mandate remains too close to call.

Read more below, and stay tuned for a Q&A at 3 p.m.  Also, I will answer questions during a special AHA members-only Townhall Interactive Webcast at 4 p.m.

The Parties’ Positions

By now the parties’ basic arguments may be familiar, but I’ll walk through them quickly before recounting today’s details.  The individual mandate requires most Americans to purchase health insurance or pay a tax penalty.  The challengers argue that that requirement cannot be justified under either Congress’ power to regulate interstate commerce or its power to tax.  It falls outside the commerce power, they say, because the individual mandate does not regulate commerce; it instead regulates people who choose to remain outside commerce by declining to buy insurance.  They argue that Congress cannot force people into commerce, or create commerce from whole cloth, in order to regulate it.  And the challengers argue that the mandate cannot be justified under Congress’ power to tax because it is not a tax at all.

The government responds with several arguments.  It says the mandate falls within Congress’ commerce power because the health care market is a massive interstate market whose failures “substantially affect interstate commerce” — the usual test for when Congress can regulate.  It says people who choose not to purchase insurance in fact are still part of the broader health care market — and accordingly the way they choose to pay for care can be regulated — because everyone will eventually need health care and therefore everyone is part of the health care market, like it or not.  It says the uninsured themselves substantially affect interstate commerce because they often cannot afford to pay for health care they receive, and that uncompensated care imposes billions in costs on the nation.  It says the mandate is justified because it is necessary to make other parts of the ACA – namely, provisions that force insurers to cover people with pre-existing conditions at market rates – function properly.  Finally, it says that even if the commerce power doesn’t apply, the individual mandate and penalty can be upheld under Congress’ taxing power because the penalty essentially functions as a tax.

The Oral Argument

The Government.  U.S. Solicitor General Donald Verrilli led off today’s arguments, defending the individual mandate on behalf of the Obama Administration.  He said the mandate addresses a “fundamental and enduring problem in our health care system and in our economy” – namely, failures in the insurance market and lack of access to care for millions of Americans.  But he hadn’t gotten far before the Court’s conservative wing began attacking his position.  Justice Scalia said the government’s position means Congress can regulate practically anything, and make anyone buy practically anything Congress chooses:  “If I’m in any market at all, my failure to purchase subjects me to regulation.”  He suggested, among other things, that if the government’s position is correct, Congress can make Americans buy broccoli or join a gym.  Chief Justice Roberts and Justice Alito seemed to agree with Scalia that the government’s position would mean a practically unlimited federal government.  And Justice Alito characterized the mandate as “forcing” young people “to provide a huge subsidy” to the rest of the market. 

But it was the comments of Justice Kennedy — often the Court’s swing vote on controversial issues — that drew particular attention.  Justice Kennedy began by asking Verrilli whether Congress “can create commerce in order to regulate” – a question that suggests his agreement with the plaintiffs’ claim that the individual mandate unlawfully creates commerce out of nothing.  He later characterized the indnvidual mandate as “unprecedented” and “a step beyond what our cases have allowed” and said it “changes the relationship of the federal government to the individual in a very fundamental way.”  But, he suggested, that does not necessarily mean the mandate is invalid.  Instead, it means the government may have a “heavy burden to show authorization under the Constitution.”

As Verrilli faced an hour of aggressive questioning from the Court’s conservatives, the more liberal Justices all made clear that they think the mandate is constitutional.  Justice Ginsburg said the mandate regulates a problem with a substantial effect on interstate commerce – health care cost-shifting – because “what you do” when you fail to buy insurance “is going to affect others.”  Justice Breyer took an even broader position, suggesting that Congress can create commerce from whole cloth under its power to regulate commerce.  Justices Sotomayor and Kagan offered similarly supportive comments.

The Challengers.  Washington, D.C. appellate lawyers Paul Clement and Michael Carvin spoke next, representing the law’s challengers.  And in a mirror image of the argument’s first hour, they came under fire from the Court’s liberal wing.  Justice Kagan pointed out that Congress clearly has the power to regulate payment for health care at the point of sale – i.e. when someone in need of treatment shows up at the hospital – and said that must mean Congress has the power to regulate that transaction in advance.   And Justice Ginsburg said it was “ironic” that Congress clearly has the power to take over health care altogether, via a program like Medicare, and that it was being attacked for trying to implement a more free-market-friendly system instead.

But here again, the comments of Chief Justice Roberts and Justice Kennedy were the center of attention, precisely because they suggested Justices on the fence.  Chief Justice Roberts repeatedly recited the government’s position that “everybody is already in the market . . . and all they’re regulating is how you pay for it.”  Whether he actually agrees with that position, or was just restating it to hear Clement’s answer, may hold the key to the case.  Justice Kennedy, for his part, twice articulated an idea that – if he actually believes it – could give him a basis to uphold the mandate:  He asked Clement whether the young, healthy people forced into the insurance market by the mandate are somehow “uniquely proximate” or “very close” to the market, in such a way that they affect the rates others pay.  If he accepts that theory, Justice Kennedy could uphold the mandate while trying to limit the government’s power.  He would say the government can make people buy health insurance because of the market’s unique features – features that do not justify government mandates in other circumstances.

The Tax Power.  The Court could decide the individual mandate falls outside Congress’ commerce power, and still uphold it, if the Justices think the mandate can be justified under Congress’ power to tax.  The Justices gave mixed signals Tuesday about their positions on that issue.  But the odds that the mandate will be affirmed based on the tax power seem slim because even some of the liberal Justices suggested they don’t buy the argument.  Justice Ginsburg said several times that the mandate and penalty are not designed to raise revenue – comments that suggest she thinks it’s not a tax.  And Justice Kagan asked Verrilli about the significance of the fact that Congress insisted in various ways that the mandate and penalty are not a tax.  Verrilli took issue with her premise – but the question nonetheless suggests that Justice Kagan would prefer to uphold the mandate on the commerce power or not at all.

Conclusions

It’s important to bear in mind, as I said yesterday, that predicting outcomes from oral argument is an inexact science.  Justices sometimes play Devil’s advocate; other times they ask tough questions even of the side they support; other times they may genuinely be on the fence.  That said, today’s arguments suggested that four Justices are solid “yes” votes on the mandate, three are solid “no” votes, and two – Roberts and Kennedy – are unclear.  Kennedy clearly thinks the individual mandate represents an expansion of federal power.  His willingness to vote in its favor – and thus the mandate’s fate – may turn on whether he can find a way to write a narrow opinion that blocks future congressional attempts to make Americans buy products against their will.

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2 Responses to Day Two: Too Close To Call On The Mandate

  1. Elizabeth says:

    Based on today’s arguments re: the individual mandate, can you comment on the severability arguments tomorrow?

    • domperella says:

      Thanks Elizabeth. For those who don’t know, the “severability” issue is about what the Supreme Court should do with the rest of the ACA in the event it strikes down the mandate: Would the rest of the law stay intact? Would certain other provisions also fall, because they don’t make sense without the mandate? Would all of it be struck down?

      The only point relevant to severability in today’s argument, I think, is that the Solicitor General repeatedly tied the mandate to the “guaranteed issue” and “community rating” provisions of the ACA, saying they all work together as a “package.” That suggests that if the Court were to strike down the mandate, it should also strike down the provisions I just mentioned. That’s consistent with the government’s brief; they’ve said that if the mandate falls, those two provisions should fall too but the balance of the ACA should remain intact. (The other parties, unsurprisingly, take different positions on that issue.)

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