Wednesday, June 27, 2012

Supreme Court Poised to Release Decision on Constitutionality of Affordable Care Act: One Last Look Back at the Commerce Clause and the Historical Origins of the Individual Mandate

Conservatives have bemoaned that the Patient Affordable Care Act (derisively referred to as Obamacare) is the "most massive transfer of power to the Executive Branch of government that has ever occurred".  Conservative critics have long claimed that there is no language in the U.S. Constitution giving Congress the authority to regulate health care.While it is true that there is no such explicit language contained in the Constitution itself to regulate health care, any Constitutional scholar, or law student for that matter, will tell you that there is a long history of legal precedent under the Commerce Clause, Article I Section 8 Clause 3 of the Constitution of the United States, granting Congress the power “To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes”. The commerce power is an enumerated power of Congress and the Supreme Court has interpreted it as an express grant of authority to Congress and an affirmative limitation on the rights of the states to regulate commerce within their own borders.

The scope of the commerce power depends on the interpretation of “commerce”. If construed sufficiently broadly, the commerce power can give Congress the power to legislate in many areas that otherwise would fall within the scope of the states’ police power. The Constitution does not define the term and the Supreme Court therefore has great flexibility in deciding cases involving the Commerce Clause and enormous power to influence the balance of state versus federal power.

Survey of Notable Supreme Court Commerce Clause Cases

In Gibbons v. Ogden (1824), New York gave Livingston and Fulton the exclusive right to operate steam ships on state waters and Livingston assigned his rights to Ogden. Ogden sought to enforce the exclusive right against Gibbons. The Supreme Court held that the states cannot pass legislation for the regulation of internal affairs that would normally fall within the scope of the states’ police powers, if such legislation is inconsistent with federal law enacted under the commerce power.
In Cooley v. Board of Wardens (1851), Congress passed an Act in 1789 stipulating that ship pilots would continue to be regulated under state law until Congress passed legislation to the contrary. In 1803 Pennsylvania enacted legislation requiring all ships to engage local pilots to guide them through the harbor at Philadelphia. The Supreme Court upheld the statute, holding that the Commerce Clause does not prohibit Congress from conferring the power to regulate interstate commerce upon the states.
In The Daniel Ball (1871), Congress passed an Act in 1838 prohibiting the operation of steam ships on the internal navigable waters of the United States without a license. The Daniel Ball was fined $500 for operating without the license. The Supreme Court held that Congress has the power to regulate the intrastate transport of goods if those goods are bound for or originated from another state.
In Hammer v. Dagenhart (1918), Congress passed the Child Labor Act in an attempt to combat the use of child labor in factories. The Supreme Court held that Congress did not have the power under the Commerce Clause to regulate goods produced through child labor and transported in interstate commerce. The Court held that manufacture is not commerce and the exclusion of goods was permitted only when it involved the nature of the goods themselves, not the manner in which they were made.
In Baldwin v. G.A.F. Seelig, Inc. (1935), New York enacted the New York Milk Control Act which established a price fixing scheme for transactions between milk producers and dealers. Darby refused to grant Seelig a license unless it agreed to comply with the law. Seelig refused and challenged the law as invalid in light of the Commerce Clause. The Supreme Court held that a state regulation imposing a minimum price fixing scheme to benefit the local community was an unconstitutional burden on interstate commerce.
In NLRB v. Jones & Laughlin Steel Corp. (1937), Congress enacted the National Labor Relations Act of 1935 which prohibited unfair labor practices affecting interstate commerce. Jones & Laughlin Steel was charged under the Act for allegedly discriminating against union members. The Supreme Court held that Congress has the power to regulate manufacturing activities that have a significant effect on interstate commerce, including activities that burden interstate commerce or its free flow.
In South Carolina State Highway Department v. Barnwell Brothers, Inc. (1938), South Carolina passed a law imposing limits on the weight and width of trucks on its state highways. The Supreme Court upheld the state law and held that states may regulate trucks to promote safety and prevent damage to highways, provided they do not discriminate between trucks traveling in interstate commerce and those traveling only in-state.
In United States v. Darby Lumber Co. (1941), Congress passed the Fair Labor Standards Act of 1938 establishing a minimum wage and maximum hours for employees involved in producing goods for interstate commerce. Darby was charged under the Act and challenged the law on the grounds that the regulation of in-state manufacturing activity was unconstitutional for exceeding Congress’s authority under the Commerce Clause. The Supreme Court upheld the statute, holding that Congress can exclude from interstate commerce articles which deteriorate the health, welfare, and morals of the nation. Congress may apply its own vision of public policy in excluding articles even though the state in which the goods are produced has not deemed it necessary to regulate their use.
In Wickard v. Filburn (1942), Congress set quotas on wheat production through the Agriculture Adjustment Act. Wickard exceeded his quota when the amount of wheat produced for his own use was included with the amount he sold. The Supreme Court held that Congress has the power to regulate local intrastate activities, such as the production of wheat for personal use, if they have an aggregate effect on interstate commerce.
In H. P. Hood & Sons, Inc. v. Du Mond (1949), New York passed a law stipulating that licenses for new milk processing plants could not be issued unless the Commissioner was satisfied that grant of the license would serve the public interest and would not cause disruptive competition. H. P. Hood & Sons opposed the law on the grounds that it imposed an unconstitutional burden on interstate commerce. The Supreme Court found the law unconstitutional, holding that a state regulation is unconstitutional under the Commerce Clause if its purpose and effect would be to reduce the volume of interstate commerce for the benefit of the local economy.
In Katzenbach v. McClung (1964), Congress passed the Civil Rights Act of 1964 which prohibited race based discrimination by restaurants serving food obtained through interstate commerce. The Supreme Court held that Congress can regulate business activity that is purely local, if any part of the activity affects interstate commerce, if the aggregate activity has a substantial effect on interstate commerce.
In Hicklin v. Orbeck (1978), Alaska passed the Alaska Hire statute requiring that qualified Alaska residents be hired in preference to non-residents for jobs related to the oil and gas industry. The Supreme Court found the law unconstitutional, holding that the Commerce Clause prohibits the states from preferring its own residents in utilizing natural resources located within the state but bound for interstate commerce.
In United States v. Lopez (1995), Congress enacted the Gun-Free School Zones Act of 1990 (GFSZA) prohibiting the possession of firearms in school zones. Lopez brought a loaded handgun to school and was charged under the Act. The Supreme Court held that the commerce power only grants Congress the ability to regulate the use of the channels and instrumentalities of interstate commerce, and other activities having a substantial relation to or a substantial effect on interstate commerce. The Act was held to unconstitutional for exceeding the power of Congress under the Commerce Clause. has noted:

"Other lawyers who believe, or don’t believe, that Congress has the authority to regulate health care have engaged the argument more cogently. The dispute hinges mainly on differing interpretations of the commerce clause of the Constitution, which gives Congress the power “to regulate commerce with foreign nations, and among the several states, and with the Indian tribes.” Writing about the Clinton administration’s proposed effort to overhaul health care, the Justice Department’s Office of Legal Counsel said in 1993 (with quotes from a 1940 Supreme Court decision):
Justice Department Office of Legal Counsel, 1993: The American health care industry is one of the largest and fastest growing segments of the American economy, and it has the most direct and crucial impact on the lives of all Americans. Spiralling health care costs and inequities in the provision of health care services have an immediate and massive effect on the national economy and thus upon interstate commerce. As a result Congress unquestionably possesses the power "to deal directly and specifically" with health care in order to obtain "social, health [and] economic advantages" for the American people.
Since the OLC memo was written, there have been a couple of important Supreme Court decisions striking down congressional statutes for being insufficiently grounded in the commerce clause: One law banned the possession of firearms in the vicinity of schools, while another gave victims of gender-motivated crimes the right to sue their attackers in federal court. But the activities being regulated by those laws were not as clearly economic as the purchase and delivery of health care.
The Right to Buy Insurance
Critics argue particularly strongly against the requirement in health care legislation pending in both the House and Senate that nearly all citizens buy health insurance. A counter-argument is that the success of the whole systemic overhaul depends on the individual mandate being part of the scheme, meaning the requirement is authorized by the commerce clause. But the uncertainty of this approach was voiced by the Congressional Research Service, which recently wrote (as reported by the New York Times):
CRS: Whether such a requirement would be constitutional under the commerce clause is perhaps the most challenging question posed by such a proposal, as it is a novel issue whether Congress may use this clause to require an individual to purchase a good or service.
Another argument is made by critics that the government can’t make an individual buy something just because he or she exists. The "economic liberty" argument harkens back to the early 1900s, when the Supreme Court, in Lochner v. New York, threw out a New York law limiting the number of hours per day that a baker could work. The court said such regulation amounted to "unreasonable, unnecessary and arbitrary interference with the right and liberty of the individual to contract." But the Lochner era had moderated by the late 1930s, and legal experts consider the current Supreme Court unlikely to produce a majority in favor of reverting to early 20th century interpretations in this area. Mark Hall, professor of law and public health at Wake Forest University’s law school, writes that there is no fundamental right to be uninsured. "The liberty in question is purely economic and has none of the strong elements of personal or bodily integrity that invoke constitutional protection," he says.
Hall: Under the Due Process Clause [of the 5th Amendment], no Supreme Court decision since 1935 has struck down any state or federal legislation for infringing economic liberties, and any such action would be radically inconsistent with current constitutional doctrine.
Hall also notes that the Takings Clause (which is also found in the 5th Amendment, and prohibits the government from taking private property for public use without "just compensation") might form the basis of a challenge, but writes that it’s not at all clear that mandating a private purchase constitutes a "taking."
Democrats in the House and Senate have framed the mandate as a tax provision, which might have the effect of helping the bill dodge some of the constitutional showdowns. After all, lawmakers have the power "to levy taxes and spend funds" for the "general welfare of the United States." In the House bill, the amount is a percentage of income, with some adjustments. In the Finance Committee version, it is a flat fee.
But David Rivkin Jr. and Lee Casey, lawyers who served in the Reagan and George H.W. Bush administrations, say that calling the fee a "tax" is "congressional trickery" and that the levy is "clearly a penalty for failing to comply with requirements otherwise beyond Congress’s constitutional power." They add that "a tax that is so clearly a penalty for failing to comply with requirements otherwise beyond Congress’s constitutional power will present the question whether there are any limits on Congress’s power to regulate individual Americans."
Republicans in some states have moved to try to outlaw the individual mandate, saying the federal government is overreaching its authority. But even some legal thinkers who question the constitutionality of health insurance mandates believe the states’ rights argument would make a weak case.
We may find out. There’s little doubt that if the health care legislation passes and requires citizens to buy health insurance, it will be challenged in court. The final pronouncement may well be up to the nine justices who preside in the chamber right across the street from the Capitol.
P.S. The Kitchen Sink
Oh yes, almost forgot. Connelly also spools out a list of evils supposedly caused by the bill, providing support for none of them. We’ve dispatched many of these assertions before. He claims that the bill provides for:
  • "…rationing of health care," especially for seniors. That’s false, as we’ve explained many times.
  • "…free health care for illegal immigrants." Actually, it prohibits illegal immigrants from getting federal subsidies for their care. They could still get care at any hospital emergency rooms that would treat them, which is true currently, too.
  • "…free abortion services." It’s true that private insurance purchased with the help of federal subsidies could cover abortions, as could a proposed "public option" plan run by the government. But neither would be free. The bill also says abortions would have to be paid for with money from policyholders’ premium payments, and not taxpayer money.
  • "…probably forced participation in abortions by members of the medical profession." That’s wrong. H.R. 3200, the bill Connelly is writing about, continues "conscience" provisions in current law that allow health care workers to decline to provide abortions.
As for Connelly’s assertions that the bill will "eventually force private insurance companies out of business" and "put everyone in a governrment-run system," they are Connelly’s speculation, and there is nothing in the bill to that effect. Likewise the claim that "ultimately" all personal health care decisions will be made by "federal bureaucrats." Connelly also says that "hospital admissions, payments to physicians, and allocations of necessary medical devices will be strictly controlled." That too is conjecture. To some degree, that’s what happens today under Medicare, though Connelly doesn’t mention it. The bill wouldn’t take it beyond that program."

As the country braces for what is perhaps the most political, if not controversial decision by the Supreme Court since Bush v. Gore, just one more reminder that the personal mandate was originally conceived by Republicans back in 1993 as a response to Hillarycare and the Republican bill was co-sponsored by the likes of Orrin Hatch.  Years later, the personal or individual mandate as it is now known and has become the focal point of all the conservative and Republican criticism over the Patient Affordable Care Act, was the center piece of then Governor Romney's landmark health care reform in Massachusetts.

Oh how the times have changed but the hypocrites still wear the same old stripes!

Sources article by Viveca Novack citing:

Dellinger, Walter and H. Jefferson Powell. "Constitutionality of Health Care Reform." Office of Legal Counsel, U.S. Department of Justice. 29 Oct 1993.
Sunshine Anthracite Coal Co. v. Adkins, 310 U.S. 381(1940).
United States v. Lopez, 514 U.S. 549 (1995).
United States v. Morrison, 529 U.S. 598 (2000).
Lochner v. New York, 198 U.S. 45 (1905).
United States v. South-Eastern Underwriters Ass’n, 322 U.S. 533 (1944).
Hall, Mark. "Legal Solutions in Health Reform: The Constitutionality of Mandates to Purchase Health Insurance." O’Neill Institute for National and Global Health Law, Georgetown University.
Rivkin, David B., Jr., and Lee A. Casey. "Mandatory Insurance is Unconstitutional." The Wall Street Journal. 18 Sept 2009.
Davey, Monica. "In Some States, a Push to Ban Mandate on Insurance." The New York Times. 29 Sept 2009.
Seelye, Katharine Q. "A Constitutional Debate Over a Health Care Mandate." The New York Times. 26 Sept 2009.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.