• Constitutional Challenges Asserted in Health Care Reform Litigation
  • April 15, 2011 | Author: Paul W. Heiring
  • Law Firm: Faegre Baker Daniels - Minneapolis Office
  • The constitutionality of health care reform has been challenged in numerous cases, some of which have been decided on the merits. For readers interested in the arguments being advanced in these cases, set out below is a brief description of the constitutional challenges asserted.

    Commerce Clause.  The relevant portion of the Commerce Clause is only seven words long and grants Congress the power "to regulate Commerce . . . among the several states."  The Supreme Court has identified three strands of Commerce Clause power:  (1) the power to regulate the channels of interstate commerce, (2) the power to protect the instrumentalities of interstate commerce and persons or things in its stream, and (3) the power to regulate activities "substantially affecting" interstate commerce.  It is this third strand that is at issue in these cases.

    All of the ACA cases revolve around the same four precedents -- Wickard v. Filburn, 317 U.S. 111 (1937), Gonzalez v. Raich, 545 U.S. 1 (2005), United States v. Lopez, 514 U.S. 549 (1995), and United States v. Morrison, 529 U.S. 598 (2000).

    Wickard and Raich represent the most expansive view of Commerce Clause power, as those cases upheld Congress' power to regulate the activities of individuals who claimed not to be participating in interstate commerce.  Wickard upheld the federal regulation of wheat a farmer grew solely for home consumption.  Since he was growing it for himself, his conduct did not involve "commerce" in the first place, and there was no way his wheat was going to enter "interstate" commerce.  Raich was similar to Wickard and upheld the federal regulation of medical marijuana grown for home use.  In both cases, the Court held that these products, although grown for home use, would displace purchases in the open market (even though in Raich the market was an illegal market), and that while each individual's displacement of that market was small, the aggregate effect of all such individual activities was large, and therefore had a substantial effect on interstate commerce.  The Court also noted that the challenged regulations were just one part of a much larger regulatory scheme that clearly regulated economic activity.

    On the other side of the ledger, Lopez and Morrison represent the only two instances in which the Supreme Court has struck down legislation as exceeding Congress' Commerce Clause power.  Lopez involved the Gun-Free School Zone Act, which criminalized the possession of a firearm in a school zone.  The Court struck down the law because it was only tenuously related to commerce (the government argued that violent crime in school zones affects the quality of education, which in turn affects interstate commerce) and was not an essential part of a larger regulation of economic activity. The Court noted that if this law passed muster, "we are hard pressed to posit any activity by an individual that Congress is without power to regulate."  In Morrison, the Court struck down a portion of the Violence Against Women Act which provided a federal civil cause of action for victims of gender-motivated violence.  As in Lopez, the Court noted that the law regulated criminal activity, that the economic justification was tenuous (the government argued that victims of gender-based violence are deterred from traveling and engaging in interstate business and are less productive employees), and that upholding the law would eliminate any meaningful limits on federal power.

    Into this legal framework drops the individual purchase requirement.  The courts striking down the requirement note that, while Congress can regulate economic activity such as growing wheat or marijuana, the Supreme Court has never authorized the regulation of inactivity, such as the decision not to purchase health insurance.  In Judge Vinson's words in Florida ex rel. Bondi, "[i]f Congress can penalize a passive individual for failing to engage in commerce, the enumeration of powers in the Constitution would have been in vain for it would be difficult to perceive any limitation on federal power . . . ."

    The courts on the other side start out by reframing the argument, noting that virtually all human beings need medical care at some point in their lives and that no one can "opt out" of the health care market (except perhaps for individuals who refuse health care for religious reasons, but they are exempted from the individual purchase requirement under the "religious conscience" exemption).  For most people, the only question is how that care will be paid for, and that is quintessentially an economic decision.  An individual can either purchase insurance, pay out-of-pocket, or fail to pay and thereby shift the cost of his or her care to others (the ACA contains a finding that this happened to the tune of $43 billion in 2008).  In Judge Kessler's words in Mead, "[i]t is pure semantics to argue that an individual who makes a choice to forgo health insurance is not ‘acting,' especially given the serious economic and health-related consequences . . . of that choice.  Making a choice is an affirmative action, whether one decides to do something or not do something.  They are two sides of the same coin.  To pretend otherwise is to ignore reality."  (To which Judge Vinson responds, the same holds true of the decision to purchase life insurance or burial insurance, etc., and that "[e]very person throughout the course of his or her life makes hundreds or even thousands of life decisions that involve the same general sort of thought process that the defendants maintain is ‘economic activity.'  There will be no stopping point if that should be deemed the equivalent of activity for Commerce Clause purposes.")

    In response to the "Congress would have unlimited power" argument, Judge Kessler notes that there are established limits on Congress' Commerce Clause power, and they are clearly spelled out in Lopez and Morrison.  Those limits apply to criminal statutes without any direct connection to commerce, and not to statutes regulating fundamental economic decisions such as how to pay for health care, especially when the regulation at issue is just one part of a larger regulatory scheme that is clearly directed at economic activity (health care represents one-sixth of the U.S. economy).  Judge Kessler also notes that this need not be the first step on the slippery slope to total federal domination, because the health care market is unique and easily distinguished from other markets, in that under federal law medical providers may not refuse basic medical services, even if the individual has no way to pay for that care.  That is not true of any other market (such as food or transportation), and that is a big part of the cost-shifting problem that Congress sought to address in the ACA.  (To which Judge Vinson responds that even if the health care market is "unique," that is not really a meaningful limitation, as all markets are unique in one way or another.  Furthermore, it is not constitutionally significant, as there is nothing in the Commerce Clause that allows federal regulation of "unique" markets but not other markets.)

    General Welfare Clause.  As an alternative to the Commerce Clause argument, the government has argued that the individual purchase requirement falls within Congress' power to regulate under the General Welfare Clause (also called the Taxing and Spending Clause), which states that "Congress shall have the Power to lay and collect Taxes . . . to . . . provide for the . . . general Welfare of the United States."  There is apparently Supreme Court precedent holding that Congress has the power to tax things that it would not have the power to regulate directly under the Commerce Clause, so a law could be justified under this clause even though it fails under the Commerce Clause.

    The government's argument is that the payment for failure to procure acceptable insurance is codified in the Internal Revenue Code and is paid as part of an individual's annual income tax return, so, even though the statute calls it a "penalty," it is actually a tax and can be upheld under the General Welfare Clause.

    The government's argument has been rejected by every court to consider it, which includes two of the three courts that found the individual purchase requirement valid under the Commerce Clause (Mead and Liberty University).  The first obstacle is the plain language of the statute, which clearly states that the payment is a penalty, and which describes other payments as taxes (showing that Congress knew the difference).  Furthermore, prior versions of the health care bill called this specific payment a "tax," but Congress changed that to "penalty" at the eleventh hour.  The courts do not think they should set aside the language Congress specifically adopted, particularly since that means substituting the language Congress specifically rejected.  Furthermore, the text of the ACA makes clear that it was enacted pursuant to Congress' Commerce Clause power, not the taxing power.  Finally, the primary purpose of the monetary payment is to provide incentive to buy insurance, rather than to raise revenue, and that is the key distinction between a tax and a penalty.  Judge Vinson goes on to note that when they were garnering support for the bill, Congressional supporters and President Obama stated repeatedly and unequivocally that the penalty provision was not a tax, and did not raise taxes, and that it seems disingenuous for the government to now argue otherwise.

    Necessary and Proper Clause.  The Necessary and Proper Clause states that Congress shall have the power "To make all Laws which shall be necessary and proper for carrying into Execution the foregoing [enumerated] Powers . . . ."

    While this clause is not an independent source of federal power, the Supreme Court has held that in some circumstances it can justify laws that Congress would not have the power to enact in isolation, as long as those laws are in effectuation of an enumerated power.  In Mead, Judge Kessler agreed with the government's argument that the insurance reforms in the ACA (guaranteed issue and community rating) are indisputably within Congress' power to regulate under the Commerce Clause, and that the individual purchase requirement is valid because it is necessary to effectuate those reforms.  It is the only way those reforms will work as intended.

    In Florida ex rel. Bondi, Judge Vinson rejects that argument, holding that the Necessary and Proper Clause cannot be construed that broadly.  In his view, that clause does not add much to the Constitution.   He does not think the Necessary and Proper Clause saves the individual purchase requirement because that end was not within Congress' enumerated power under the Commerce Clause.  To uphold the individual purchase requirement (because it is necessary to save the insurance reforms) would turn the Necessary and Proper Clause on its head, and essentially gives the federal government unlimited power.

    Tenth Amendment.  The Tenth Amendment reserves to the states those powers not given to the federal government.  The Tenth Amendment is violated if (1) Congress exceeds its constitutional authority in passing a regulation, or if (2) the means of regulation employed impermissibly infringe on state sovereignty.  In Liberty University the court held that the first basis did not apply because Congress had not exceeded its power under the Commerce Clause, and that the second basis also did not apply because Congress has frequently regulated health insurance and health care services and the terms and conditions of employment of state employees, and therefore was not intruding on a special area of state sovereignty.  Florida ex rel. Bondi echoes that second holding.

    Spending Clause/Principles of Federalism Protected under the Ninth and Tenth Amendments.    In Florida ex rel. Bondi, some of the states argued that the changes to the federal Medicaid program imposed tremendous additional financial burdens on the states and essentially commandeered state government.  The court rejected that argument because state participation in the federal Medicaid program is purely voluntary, and the federal government has specifically reserved the right to change the Medicaid program whenever it sees fit to do so.  The mere fact that the federal government gives states large sums of money if they participate, and that the states have grown accustomed to that money and feel they cannot realistically operate without it, does not change the nature of the relationship from voluntary participation to coercion.  "To hold that . . . temptation is equivalent to coercion is to plunge the law into endless difficulties."  (Judge Vinson, quoting Justice Cardozo).

    Establishment Clause of the First Amendment.  The Establishment Clause states that "Congress shall make no law respecting an establishment of religion . . . ."  The plaintiffs in Liberty University argued that the ACA violated this clause because the exceptions to the individual purchase requirement for religious conscience and health-care-sharing ministries required the government to essentially sanction certain religious practices to the exclusion of others and also led to excessive entanglement with religion.  The court rejected that argument, holding that these exceptions were a permissible accommodation of certain religious practices.

    Free Exercise Clause of the First Amendment.  The Free Exercise Clause states that "Congress shall make no law . . . prohibiting the free exercise" of religion.  The plaintiffs in Liberty University argued that the ACA violated this clause because it "forces them to violate their sincerely held religious beliefs against facilitating, subsidizing, easing, funding, or supporting abortions."  The court rejected that argument, holding that the free exercise clause does not excuse individuals from compliance with neutral laws of general applicability such as the ACA.  The court also held that the plaintiffs had not raised a plausible claim that the ACA burdens their religious practices, because the ACA contains strict safeguards at multiple levels to prevent the use of federal funds for abortion (except in cases of rape, incest, or where the life of the woman would be endangered), and it allows health care plans offered through the state exchanges to decline to cover all abortion services whatsoever.

    Freedom of Speech and Freedom of Association Clauses of the First Amendment.  The First Amendment states that "Congress shall make no law . . . abridging the freedom of speech . . . or the right of the people peaceably to assemble . . . ."  The plaintiffs in Liberty University argued that the ACA violated those rights because they were "being yoked with those who support or engage in abortions" and the penalties paid under the ACA were being used to subsidize speech with which they did not agree (abortion).  The court rejected those arguments, holding that being forced to hold an insurance policy in the same health care system in which other policies cover abortion is too remote a connection to intrude on plaintiffs' free association rights, and that free speech rights are not violated when a person is required to subsidize a government message with which he or she does not agree.  Compelled support of government programs, even those with which a person does not agree, is perfectly constitutional.

    Equal Protection Component of the Due Process Clause of the Fifth Amendment.  The Due Process Clause states that "no person shall be . . . deprived of life, liberty, or property, without due process of law . . . ."  This has been interpreted to require "equal protection" under the law, where all similarly-situated persons are treated alike.  The plaintiffs in Liberty University argued that the ACA violated this clause, because it treats different religions differently.  While the ACA accommodates the objections of some religions to being required to purchase health insurance (such as the "religious conscience" objection which exempts Christian Scientists), it does not accommodate plaintiffs equally valid religious objections to the ACA.  The court rejected plaintiffs' equal protection argument, holding that plaintiffs were not in a suspect class and that the statute easily passed rational basis review.

    Violation of Substantive Due Process under the Fifth Amendment.  The plaintiffs in Florida ex rel. Bondi argued that the individual purchase requirement violated the substantive due process component of the Fifth Amendment.  The court rejected that argument, noting that the Supreme Court has long since discarded substantive due process as a theory for reviewing economic legislation.  While it still applies in the context of fundamental rights, the court held that the individual purchase requirement did not implicate the narrow class of fundamental rights recognized by the Supreme Court, and that it is up to the Supreme Court to expand that list, not the district courts.

    Capitation and Direct Tax Clause.  The Constitution states that "no Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census . . . ."  The plaintiffs in Liberty University and Florida ex rel. Bondi argued that the penalties levied on employers and individuals who fail to purchase insurance violated that clause, but the courts dismissed those claims because the penalties were enacted pursuant to Congress' Commerce Clause power, not the power to tax.  The penalties are permitted as mere incidents of the regulation of commerce.  The court in Florida ex rel. Bondi went on to state in dicta, however, that if the penalty was actually a tax, the argument that it violates this constitutional provision "is not only plausible, but appears to have actual merit."

    Guarantee Clause.  The Guarantee Clause states that "the United States shall guarantee to every State in this Union a Republican Form of Government."  The plaintiffs in Liberty University argued that ACA gives the federal government "absolute sovereignty" and "censorial power" over the people, thereby destroying our republican form of government.  The court rejected that argument, noting that ACA was passed by the duly-elected representatives of the people, and can be changed by the duly-elected representatives of the people if they wish to do so.