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Handicapping ObamaCare’s Day in Court

Monday, November 21, 2011

An older, exiled vintage of the Constitution may make an encore appearance

The Supreme Court’s decision to review ObamaCare was predictable but nevertheless historic. Given the unresolved trench warfare of our currently dysfunctional political system, many Americans have resorted to another institution that also often disappoints us—the courts.

After dozens of lawsuits, at least half a dozen significant federal district court decisions all over the constitutional law map, and four federal appellate court rulings pointing in different directions, it’s time for the Supreme Court to at least try to resolve several thorny constitutional issues. The most important one involves whether any legal principles remain that might limit the power of Congress to mandate the purchase of health insurance under the Commerce Clause of the Constitution.

In passing the Patient Protection and Affordable Care Act (PPACA) in March 2010, Congress took the “easier” political route and relied on an individual mandate (plus an employer mandate) to finance most of its proposed insurance coverage expansion, instead of a more straightforward and transparent use of its broader power to tax and spend.

At this point, numerous lower court decisions, as well as the framing of the Supreme Court’s order, make it clear that the individual mandate, as designed in this particular law, cannot be defended as a valid exercise of the federal government’s power to tax and spend for the “general welfare.” That leaves the Court to decide whether any limits remain within its long line of case precedent, which has given wide latitude to Congress whenever it decides to regulate economic activity with some discernable effect on interstate commerce.

Not everything that is politically possible is constitutionally proper.

This upcoming case involves contrasting views of the constitutional powers of the national government, relative both to individual citizens and to the states. The Obama administration’s lawyers argue that the individual mandate is a necessary and proper means to accomplish constitutionally appropriate goals of regulation of healthcare and health insurance. The appellees in the 11th Circuit Court case (26 states, the National Federation of Independent Business, and two private individuals) counter that this unprecedented attempt to compel individuals to “engage” and “initiate” economic activity goes too far and threatens to erode any remaining constitutional limits on the “enumerated” powers of the federal government. They argued successfully in the 11th Circuit that the mandate was neither necessary nor proper to carry out other valid health policy goals of Congress.

A majority of the states also challenge the individual mandate on broader grounds, arguing that it would establish a sweeping exercise of “police powers” under the Commerce Clause that have previously been reserved to state governments. This line of argument might be well received by several current justices, based on Supreme Court decisions during a Rehnquist -era revival of “federalism” and its limits on the reach of the federal government.

The states also raised another major objection to the PPACA in the form of its mandated expansion of Medicaid coverage. The states contend this is so unilateral, one-sided, onerous, and unanticipated that it constitutes “coercion” that would improperly “commandeer” their independent sovereign authority. Some legal observers were surprised that the Supreme Court decided to review this constitutional issue in the upcoming ObamaCare case, because both the district court judge in Florida and the 11th Circuit Court of appeals panel in Atlanta rejected this particular constitutional challenge. For one of the best analyses of the states’ Medicaid expansion objections, see this AEI forum in December 2010 that featured Vanderbilt University law professor James Blumstein.

Defenders of the PPACA and its individual mandate started the lower court litigation with overconfidence that such constitutional objections would be dismissed rather easily. After several unanticipated setbacks in these courts, they still contend that the federal power to regulate just about anything linked to economic activity is so sweeping that the real checks on its potential abuse are political, rather than constitutional. When pressed for a limiting principle for those powers, they generally fall back on the contention that healthcare is “special.” They argue that unique rules are required to prevent market failure—such as mandates to purchase insurance that facilitate its financing, ensure its nearly universal availability, and enable the success of more extensive regulation of insurance markets.

The justices consider the constitutional issues at stake of historic consequence and meriting the most careful and extensive scrutiny.

Four other elements of the Supreme Court order for handling review of this case are significant. First, the Court limited its review to the issues addressed already in the 11th Circuit case without adding direct consideration of similar appellate rulings in cases in the 6th Circuit (upholding the mandate) and 4th Circuit (dismissing the case on procedural grounds). This was not unexpected, but it provides some tactical gains for the strongest team of anti-mandate attorneys in the 11th Circuit case.

Second, the Court awarded an unusually generous allotment of time for oral argument—five and a half hours. This is the clearest signal possible that the justices consider the constitutional issues at stake of historic consequence and meriting the most careful and extensive scrutiny.

Third, the Court went out of its way to provide special review of late-surfacing issues in this litigation involving the application of the relatively obscure 1867 Anti-Injunction Act, which bars courts from hearing any challenge to federal tax collection efforts prior to assessment. In September, the 4th Circuit Court of Appeals in Richmond dismissed appeal of a previous pro-mandate ruling on the rather contorted grounds that the individual mandate’s “penalty” eventually would be collected through the Internal Revenue Service. The court concluded that any legal challenge seeking to invalidate the individual mandate (and the revenue stream it would produce eventually) could not be considered by courts until a private party actually had to pay the “penalty”—beginning in April 2015.

Quite frankly, this was an outlier ruling that does not mesh with previous case precedent, let alone the actual position of Obama administration attorneys, who had already conceded this procedural issue in their appellate briefs. Even after a lengthy dissent by Judge Kavanaugh on similar procedural grounds in a very recent D.C. Circuit Court of Appeals decision otherwise upholding the individual mandate, it remains highly unlikely that the Supreme Court will buy those arguments and avoid reaching a decision on the constitutional merits of PPACA next year.

Fourth, if the Court decides that the individual mandate is not constitutionally proper, it will have to go through a very complex analysis regarding which parts of the Act can survive and which ones must fall—so-called “severability” of portions of the law.

The appellees counter that this unprecedented attempt to compel individuals to ‘engage’ and ‘initiate’ economic activity goes too far and threatens to erode any remaining constitutional limits on the ‘enumerated’ powers of the federal government.

Originally, the respective sides in the mandate debate preferred all-or-nothing decisions: either the entire law is unconstitutional, or all of it is constitutional. But the four separate federal courts striking down the individual mandate have handled this issue differently. Two left the rest of the Act in place, one invalidated the entire law, and a late-coming district court ruling in Pennsylvania also struck down several federal insurance regulation provisions (guaranteed issue, modified community rating) as inextricably linked to the individual mandate and therefore fatally flawed. In any case, the Supreme Court has allocated substantial time for separate oral argument on severability issues.

Prediction Time

So, that’s quite a lot ahead on the constitutional law front, even as the larger politics of November 2012 and beyond loom. Almost two decades ago, I expended part of a year of my misspent “youth” as a producer for the “McLaughlin Group” TV shout fest. In that spirit, now it’s prediction time, but with far from metaphysical certitude.

The Commerce Clause constitutional issues are a close call. Four votes to uphold the individual mandate by any means necessary are in the bank—Justices Ginsberg, Breyer, Sotomayor, and Kagan.

Only one vote to invalidate the mandate on “originalist” constitutional grounds is predictable—Justice Thomas, although Justices Alito and Scalia remain more likely than not to reaffirm their inner (small f) federalists.

Justice Kennedy remains the key swing vote, but his recent line of opinions highlighting the constitutional balance of power between the national and state governments as a bulwark of individual liberty suggest further room for him to grow in a more conservative direction.

After dozens of lawsuits, at least half a dozen significant federal district court decisions, and four federal appellate court rulings, it’s time for the Supreme Court to try to resolve several thorny constitutional issues.

Chief Justice Roberts often approaches politically overcharged cases carefully, with an eye out for the Supreme Court’s institutional reputation, and his past votes on similar federalism issues are far from consistent. Given his key role in deciding who writes the lead opinion in any final majority ruling, one should expect him to be on the narrow side of either a 6-3 vote upholding the entire law or a 5-4 vote knocking out the mandate and perhaps some related regulatory provisions.

The Medicaid expansion issues remain quite likely to be dismissed again, but the Court undoubtedly chose to entertain them at a minimum to ensure that it could review the entire playing field of PPACA provisions, and the states’ objections to them, before crafting a final resolution of any severability issues.

Regardless of how the constitutional issues are resolved by the Court, our pitched political battles over national health policy will not be over. They will just enter a different phase, with one “team” somewhat closer to the goal line.

Ironically, both sides have more or less stopped the regular political clock from running while pausing for validation in the courts for their respective absolutist, all-or-nothing stances. On the one hand, a Supreme Court decision in late June that leaves both sides unhappy will provide a larger lesson that we just have to grind our way through contentious, longstanding political conflicts with more political conflict and sustainable compromise that avoids overreaching by transitory majorities. On the other hand, there is an older vintage of the Constitution in exile that might need to make an encore appearance to remind the latest cast of arrogant policymakers that not everything that is politically possible is constitutionally proper.

Thomas Miller is a resident fellow at the American Enterprise Institute.

FURTHER READING: Miller also writes “Dead Laws Tell No More Lies, but May Reveal Larger Truths,” “Unessential Politics=No Net Benefits,” “Will Health Care's Long Boom Go Bust?” and “Health Spending Projection Spin Cycle: Rinse and Repeat, or Reset?” John Hoff and John E. Calfee describe “The Contradictions of ObamaCare.” James V. DeLong asks “Does the Constitution Make You a Cash Cow?

Image by Darren Wamboldt | Bergman Group

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