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Supreme Court Begins Hearing Challenges to Unconstitutional Obamacare Provisions

At CNN, George Mason University law professor Ilya Somin explains why Obamacare's requirement that individuals buy health insurance is beyond Congress's power under the Interstate Commerce Clause. GMU law professor David Bernstein explains why Obamacare's defenders are wrong, and have contradicted themselves, in trying to defend Obamacare based on a cost-shifting rationale. Vanderbilt law professor James Blumstein, an advisor to former Governor Phil Bredesen (D-Tenn.), argues that Obamacare's Medicaid mandate is a violation of the Tenth Amendment and exceeds Congress's power under the Spending Clause. GMU's Somin rebuts the "everyone uses healthcare" argument for Obamacare here.

The Cato Institute's briefs, which CEI joined, explain why Obamacare's individual mandate is not valid under the Constitution's Interstate Commerce Clause and tax provisions. The brief CEI filed in the Eleventh Circuit Court of Appeals for Minnesota and North Carolina legislators explains why Obamacare's Medicaid mandate violates the Tenth Amendment, and in its last section, explains why the government's cost-shifting rationale for the individual mandate is baseless. CEI also explained in a more recent brief why the court need not invalidate just the unconstitutional individual mandate, since it is interrelated with other provisions of the Obamacare statute, which logically should be invalidated along with it. Law professor and former University of Chicago Law Dean Richard Epstein explains how Obamacare is an "unconstitutional misadventure" here.

The Supreme Court, which is rather deferential to Congress, has only invalidated two federal statutes as beyond Congress's power under the Commerce Clause since 1936, and it has been even more reluctant to enforce Tenth Amendment limits on Congress's spending-clause powers. On the other hand, if the government can force people to engage in economic activity under the Commerce Clause, and do so based on the sweeping rationales advanced by the government in this case, there will effectively be no limit on Congress's power under the Commerce Clause. The language and logic of the Supreme Court's Morrison and Lopez decisions cut against the government's arguments, and the Morrison decision requires more than a simple quantitative relationship to interstate commerce for an activity to be federally regulated; but these were 5-to-4 decisions unpopular with the largely liberal legal community.

This week, the Supreme Court is hearing a challenge to the Obamacare over the course of three days. Today, the Supreme Court heard arguments that Obamacare is a tax for purposes of the Tax Anti-Injunction Act, which bars certain challenges to taxes in advance of their enforcement. On Tuesday, the court will hear the challenge to the "individual mandate." On Wednesday, the court will hear argument on whether the "individual mandate" is severable. (I previously explained why the government's argument for "severability" based on United States v. Morrison is erroneous.  In some previous cases, the Supreme Court has invalidated entire laws based on a single invalid provision.  See, e.g., Am. Booksellers v. Hudnut, 771 F.2d 323, 332 (7th Cir. 1985), aff’d, 475 U.S. 1001 (1986) (invalidating entire law on First Amendment grounds despite severability clause).)

Regardless of whether it is unconstitutional, Obamacare will harm the health care system and reduce employment. The Dean of Harvard Medical School, Jeffrey Flier, noted that Obamacare will harm life-saving medical innovation. Obamacare is causing layoffs in the medical device industry. Obamacare will raise the cost of insurance by at least 55 percent in Ohio, according to one study. The healthcare law taxes medical devices and cosmetic surgery, arbitrarily discriminates against certain hospitals, and raises taxes starting in 2013 on investors. The Associated Press and others have noted that it breaks a number of Obama campaign promises

Below is a summary of the arguments courtesy of National Review:

Anti-Injunction Act

Date of oral argument: March 26

Issue: Can the parties sue before the law takes full effect?

Parties:

The Anti-Injunction Act bans consideration of the law until after 2014, when the individual mandate will take effect, because the mandate is properly characterized as a tax.

The Anti-Injunction Act is not applicable. Challengers in particular will argue that the Act does not apply because the mandate is not a tax, as it merely punishes the failure to buy insurance.

Individual mandate

Oral argument date: March 27.

Issue: Can Congress compel commerce under the Commerce Clause, the Necessary and Proper Clause, or the Taxing Power?

Parties

Commerce Clause: The Commerce Clause does not authorize the health-care law’s mandate that all individuals purchase health insurance. The mandate compels, instead of regulates, commerce, the Clause has never historically been used this way, and this interpretation precludes any reasonable limiting principle on the exercise of federal power.

Necessary and Proper Clause: The Necessary and Proper Clause could also not authorize the individual mandate, as the Necessary and Proper Clause cannot be stretched to create otherwise non-existent authority. At best the mandate counteracts bad effects of the law’s insurance regulations. It does not enforce the insurance regulations.

Taxing Power: The mandate is not a tax, but a punishment for breaking the law that requires everyone to purchase insurance, a position taken by the law’s crafters in the Democrat-controlled Congress.

  • Government, represented by United States Solicitor General Donald Verrilli.

Commerce Clause: The distinction between activity and inactivity, offered by opponents of the bill, is overly formalistic, and virtually all Americans will eventually participate in the health-care market. Congress is merely regulating the decision of how to pay for health care, requiring that it be funded through insurance.

Necessary and Proper Clause: Alternatively, the mandate is necessary to the health-care law’s regulatory system behaving in accord with Congressional intent. Because the other insurance regulations in the health-care law are within the Commerce Clause’s power, the individual mandate must be as well, because without it, the insurance mandates would increase costs, contrary to Congress’s intent.

Taxing power: The penalty for failure to obtain insurance is a tax, as it raises money, is codified within the Internal Revenue Code alongside federal-tax laws, and is reported and paid along with one’s federal taxes. Courts give Congress’s decisions to tax minimal scrutiny.

Medicaid Expansion

Oral argument date: March 28

Issue: Is the health-care law’s Medicaid expansion, conditioning the receipt of federal Medicaid dollars on the states’ dramatic expansion of Medicaid eligibility and coverage, constitutional?

Parties

The Supreme Court’s dicta (non-binding guidance for future decisions) in South Dakota v. Dole says that the conditions Congress puts on federal grants might be disallowed if they become “so coercive as to pass the point which pressure turns into compulsion.” This proves the unconstitutionality of the expansion.

Congress is free to dictate the terms of federal money, pointing out that the states know that the conditions of Medicaid grants are subject to change. Furthermore, the vast majority of the expansion’s costs will be borne by the federal government, especially in the early years of the law’s implementation.

Severability

Oral argument date: March 28

Issue: Severability, which determines if the mandate falls, how much of the law must fall with it? Issue hinges on, in part, whether “it is evident that the Legislature would not have enacted [the constitutional] provisions . . . independently of that which is invalid.”

Parties

If the mandate is unconstitutional, the Court should only strike down the individual mandate, as this is the most restrained approach.

The Court should excise only the other major insurance regulations if the individual mandate is unconstitutional. The provisions include those that require insurers to issue policies to individuals without respect for their health conditions, and require them to charge the same price for healthy and sick individuals. These insurance regulations only function in conjunction with the individual mandate, as without the mandate, insurance prices would skyrocket.

The mandate is central to the law, and so the whole law should be taken off the books. Congress would not have passed the law, as it is currently written, without the individual mandate. This position most takes Congress at its word, as expressed when it passed the bill. Even provisions of the bill that are seemingly unrelated to the individual mandate could not function as Congress intended without the mandate