I wanted to actually read the opinion before I posted (radical, I know). We have 3 votes that the Medicaid expansion is constitutional and that the individual mandate is fully severable. The court splits 2-1 on whether the individual mandate violates the Commerce Clause, with the majority answering in the affirmative. The winning argument was broccoli, not inactivity.
No one should report this decision as “ObamaCare is unconstitutional.” The most you can say is “two judges decided the individual mandate is unconstitutional under the Commerce Clause, but would have been constitutional if it had been more explicitly designed as a tax. The rest of health care reform is constitutional.”
I’ve argued before that the States don’t have standing to bring a challenge to the individual mandate. This issue was briefed before the 11th Circuit, but the opinion sidesteps the issue entirely (at 10) since it is clear that the individual plaintiffs and NFIB have standing. Of course, it would have been big news if the states had been dismissed from the suit and it would have made it abundantly clear that this ruling only applies within the 11th Circuit. (Some AGs improvidently claimed that the district court ruling applied in their home states as well). The 11th Circuit missed a chance to dramatically reduce the number and type of plaintiffs.
After more than 40 pages summarizing the PPACA, the court reaches 3 substantive constitutional issues: the Medicaid expansion under the 10th Amendment; the individual mandate under the Commerce Clause; and the individual mandate under the Tax Power.
2. Medicaid Expansion
Red states have argued that the Medicaid expansion is unduly coercive as a “take it or leave it” offer from the federal government. The relevant case is South Dakota v Dole, where the Supreme Court allowed the federal government to condition federal highway funds on state compliance with related laws such as the drinking age. Under the Spending Clause, federal restrictions must be “reasonably related to the legislation’s stated goal.” (Dole at 207, 11th Cir at 56) The states conceded the constitutionality of the Medicaid expansion under this test, but argued that it nonetheless violated the 10th Amendment by removing state choice and compelling states to act, with no other options (at 57). This is the “commandeering” or “coercion” doctrine in the context of the Spending Clause.
The 11th Circuit found no coercion, for four reasons. First, the states were told from the beginning that Medicaid could be modified unilaterally by the federal government, and Congress has not disappointed on that score (at 63-64). Second, the feds pay for the lion’s share of the expansion costs (at 65-66). Third, unlike used care sales people who force you into a quick decision, states have 4 years to decide whether to participate. Finally, the court finds that HHS need not cut all Medicaid funding for a non-compliant state; lesser punishments might follow a state’s decision.
3. Commerce Clause & Necessary and Proper Clause
As expected, the decision turns on the Commerce Clause substantial effects doctrine, as interpreted in Lopez, Morrison, and Raich, and a narrow view of the Necessary and Proper Clause from Comstock. After a summary of the cases, the analysis begins on page 100. The court rejected the activity/inactivity distinction, popularized by Randy Barnett:
Nevertheless, we are not persuaded that the formalistic dichotomy of activity and inactivity provides a workable or persuasive enough answer in this case. Although the Supreme Court’s Commerce Clause cases frequently speak in activity-laden terms, the Court has never expressly held that activity is a precondition for Congress’s ability to regulate commerce—perhaps, in part, because it has never been faced with the type of regulation at issue here. (at 109)
But the good news for ACA doesn’t last, as the opinion finds the individual mandate unconstitutional, not so much for its own sake, but for the sake of the children. The court discusses a parade of horribles, things (like broccoli) that Congress could force us to buy. The Court demands “sufficient and meaningful limiting principles” (at 113) that would prevent the government from making us buy broccoli:
From a doctrinal standpoint, we see no way to cabin the government’s theory only to decisions not to purchase health insurance. If an individual’s mere decision not to purchase insurance were subject to Wickard’s aggregation principle, we are unable to conceive of any product whose purchase Congress could not mandate under this line of argument (at 125).
In the end, the individual mandate is unconstitutional because the USG didn’t come up with a constitutionally relevant way to distinguish health insurance from broccoli. Mariner, Annas & Glantz tried to do exactly that in the NEJM last January. (The dissent discusses broccoli at 269)
The opinion offers several escape routes, akin to what Austin and I suggested previously: carrots and sticks to encourage participation in the insurance market in lieu of a mandate. (Here’s another idea: delay Medicare & Medicaid eligibility by a month for every year a person doesn’t maintain coverage. Clearly constitutional.)
The majority acknowledge that Massachusetts and New Jersey have apparently legal health insurance mandates (at 156), but goes on to say:
But if anything, this gives us greater constitutional concern, not less. Indeed, if the federal government possesses the asserted power to compel individuals to purchase insurance from a private company forever, it may impose such a mandate on individuals in states that have elected not to employ their police power in this manner.124 After all, if and when Congress actually operates within its enumerated commerce power, Congress, by virtue of the Supremacy Clause, may ultimately supplant the states. When this occurs, a state is no longer permitted to tailor its policymaking goals to the specific needs of its citizenry. This is precisely why it is critical that courts preserve constitutional boundaries and ensure that Congress only operates within the proper scope of its enumerated commerce power.
In order to distinguish Raich, the majority opinion minimizes the estimated damage that would flow from a repeal of the individual mandate (contrasting it to the “gaping hole” that Raich would have left for recreational marijuana use) (at 166). I agree (would have been nice to cite us). The court goes on to chide Congress for not making the individual mandate harsher, suggesting that tougher tax penalties might have improved the constitutional argument (at 166):
Eschewing the IRS’s traditional enforcement tools, the Act waives all criminal penalties for noncompliance and prevents the IRS from using liens or levies to collect the penalty. Id. § 5000A(g)(2). Thus, to the extent the uninsureds’ ability to delay insurance purchases would leave a “gaping hole” in Congress’s efforts to reform the insurance market, Congress has seen fit to bore the hole itself.
Finally, in a strange twist, the opinion attacks the individual mandate as “overinclusive” – covering both free riders and the (rare) person who will never obtain either health insurance or free care (126-31). In a truly disappointing section for libertarians, they suggest a more individualized process for determining whether the individual mandate should apply to a particular person.
“Tell me, Mrs. Bachman, are you now or have you ever been, or do you ever intend to be, a card-carrying member of a health plan?”.
4. Tax Power
If only Congress had imposed a tax on free riders, the case would be over (172-189). (prior TIE coverage on the tax issue) I propose this as the “constitutionally relevant” limiting principle needed for the Commerce Clause: the fact that the provision would have been clearly constitutional as a tax. Especially when the individual mandate is placed by Congress in the Internal Revenue Code.
As we’ve noted before, it makes no sense to kill the excise tax on devices, or to reverse transparency in gifts to physicians, or to kick people off Medicaid because the individual mandate is unconstitutional. The court agrees, but takes a more careful look at 2 insurance related provisions: guaranteed issue and the prohibition on preexisting condition exclusion (194-95). This is a thoughtful approach:
our severability concern is only whether “it is evident” that Congress “would not have enacted” the two insurance reforms without the individual mandate. (at 197)
In light of all these factors, we are not persuaded that it is evident (as opposed to possible or reasonable) that Congress would not have enacted the two reforms in the absence of the individual mandate. (at 204)
My summary of this opinion: “two judges decided the individual mandate is unconstitutional under the Commerce Clause, but would have been constitutional if it had been more explicitly designed as a tax. The rest of health care reform is constitutional.”