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Federal Judge Rules “individual mandate” Unconstitutional

December 13, 2010 by 6 Comments

It won’t be the last stop  for President Obama’s signature health care bill, the Affordable Health Care for America Act, but it was a road bump that I’m sure the Obama Administration could have done without. Today, a federal judge in Virginia ruled that the “individual mandate,” which mandates health coverage for most Americans by 2014, is unconstitutional. The judge did not address the entire law, such as parts dealing with expansion of Medicaid coverage.

Although the case is eventually headed to the Supreme Court, opponents of the law were pleased with the ruling.

“I am gratified we prevailed,” Virginia Attorney General Ken Cuccinelli said in a statement. “This won’t be the final round, as this will ultimately be decided by the Supreme Court, but today is a critical milestone in the protection of the Constitution.”

Ken Cuccinelli's suit argued that individual mandate is an unconstitutional expansion of the Commerce Clause. | AP Photo

Interestingly, health care stocks rose at the news, with Standard & Poor’s 500 Health Care Index up 0.5 percent at noon New York time.

The ruling, according to the WSJ, is the first against the law. The judge stated that the law’s requirement that most Americans carry insurance or pay a penalty “exceeds the constitutional boundaries of congressional power.” Two other cases have ruled in favor of the law.

Despite the plaintiff’s request, Judge Hudson did not issue an injunction against the law. Although the individual mandate does not go into effect until 2014, aspects of it will take effect as soon as January.

In his opinion, Judge Hudson reasserted sounded more than a little like the late Milton Friedman:

“At its core, this dispute is not simply about regulating the business of insurance — or crafting a scheme of universal health coverage — it’s about an individual’s right to choose to participate.”

Find the opinion text here.

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You won–now what? Cut the budget.

November 10, 2010 by 6 Comments

How might the new Congress avoid the “do-nothing” trap and prove to the American people that they heard the message and actually provide solutions that limit the growth of government and decrease the federal deficit?

I sat at lunch the other day with a friend, and last weeks election came up. The Republicans won, he said, but so what? Now they actually have to do something. They have to prove that they actually have something to offer other than obstructionism. They’ve got to show they can actually cut the deficit and the federal spending that they campaigned against.

“But how are Republicans going to cut the budget? They’re just as vested in programs and entitlements as the Democrats.”

It’s a fair question. Now that Republicans have a seat at the table, what are some of the public policy options they have available to them? Will they remain a “Party of No” or will they produce solutions that respond to voters’ desires for smaller and more accountable government?

Here are two options.

1.  A “do-nothing” Congress.  There are those out there who would respond to my friend’s assertion that the GOP will only cause grid-lock with “So what? That’s great!” They don’t want Congress to create any new programs or expanding entitlements, at all, and with Congress and the President at loggerheads, a “do-nothing” Congress is a very viable solution for them.  In addition to just preventing the expansion of growth, there is also the idea that after doing so much over the last couple years, the country needs time to digest what Congress has done, to absorb new regulation, and see what works and what doesn’t.
Here’s how Stephen Bainbridge put it, after making a comparison of an anaconda swallowing a deer:

Over the last two years Congress has done more in the way of economic regulation than it had in decades. In many cases, we have no idea how these new laws will work in practice. We know there will be unintended consequences, we just don’t know what they’ll be.

This is the case for Congress to step back and do very little in the way of new economic regulation while the government and the economy digests the changes of the last 2 years. Repeal stuff that we know or learn doesn’t work, when politically possible, but certainly the new House GOP majority needs to keep saying no to new regulations of business

Dave Hoffman, referring specifically to the financial regulation and the health care reform act, adds his two bits:

I am myself still trying to figure out what the 111th Congress did to innovation and entrepreneurship.  Will health care portability enable more small business risk-taking, or will regulatory costs bury main street?  Does Dodd-Frank’s anti-systemic risk and derivative trading apparatus meaningfully increase liquidity and/or transparency, or does it simply drive bad actors into tighter tangles & more shadowy corners.  It seems obviously true to me [...]  that very little of Dodd-Frank was empirically tested before its adoption.  Similarly, although health care economics & behavior is a deep and richly mined field, HCR itself is already creating unanticipated effects as the market & consumers react to the unfolding of the State’s new & multi-tentacled regulatory arms.

And, he adds,

It strikes me what business really need over the next two years is certainty. This (nothing more but nothing less) are the rules of the game you will play under.  Good or bad, we’re sticking with it for a while to see what happens.  Take regulatory change off of the table[.]

2.  Slash the Budget. Like cutting back on your junk food intake while preparing for a marathon, cutting the budget will hurt.  But, it’s going to make you faster, leaner, and healthier. And so it will for the American economy.

But where?

How about MEDICARE? Created in 1965 for the nation’s poorest and sickest individuals, the best of intentions went into creating what was then, in 2010 dollars, a $9 billion program. Today, the Department of Health and Human Services has estimated the total cost of Medicaid to top half a trillion dollars and, since states are required to kick in part of the cost, 20% of states’ budgets. Recent studies have even found that in some procedures, Medicare recipients may actually receive worse care than people with no health care insurance at all.

Reform it. Recommends Peter Suderman:

[S}top the matching grant funding process, in which states receive federal money for each Medicaid dollar they spend—creating an incentive for ever greater spending. Instead, the program should be funded by federal block grants indexed to the rising cost of health care. Better yet, scrap the program entirely in favor of a temporary assistance program that doesn’t create long-term dependency. That may sound radical, but the alternative is to perpetuate the ugly and unsustainable status quo, in which we devote ever more resources to a program that fails both taxpayers and patients.

Looking at the inherent incentives in the program and finding ways to decrease the dependency is a great way to start, and I believe can reduce waste, corruption, and inefficiencies. It’s politically touchy, but it could make all the difference.

Limit involvement in foreign wars. “War–what is it good for?” Since the end of World War Two, the United States has been involved in one conflict after another. Without entering into a debate about whether participation in those conflicts was in our interest, the fact remains–they are expensive, they are destructive, and they engender ill-will towards the United States around the world.  Serious consideration should be give to how to decrease US troop levels abroad while still maintaining strategic military superiority world wide. Congressional Budget Office projections for the 2012–2020 costs of the wars Afghanistan and Iraq range from $274 billion to $588 billion, and that includes a draw down from current levels, and that does not include the costs of providing veterans benefits over the next thirty years.

End federal education spending. Why do we have a Department of Education, anyway? It’s common knowledge that no one knows the needs of children better than their parents, and the further educators get from that level of involvement the less useful education policy proves to be. Put it in Washington, D.C., the home of “one size fits all” solutions–like No Child Left Behind–and you can expect that it will be a cost far greater than the return.

Lisa Snell notes that:

The feds’ largest education program, Title I, which costs $16 billion a year, has failed to come anywhere close to its goal of helping disadvantaged kids in high-poverty schools close the achievement gap. Head Start, at $8 billion annually, duplicates many other federal, state, and local early education programs without adding to their effectiveness; a January 2010 gold-standard study by the Department of Health and Human Services found that by first grade not one of more than 114 academic and behavioral tests indicated a reliable, statistically significant effect from participating in Head Start. The $1.2 billion in funding for 21st Century Community Learning Centers that provide after-school care should be eliminated too.

Return education spending to the states. Cut the Department of Education out of the budget, and let states determine what works best.

End defined-benefit contributions. Right now, when the average voter wants to prepare for retirement, they save, often in the form of a 401k. A public employee, on the other hand, gets a pension paid for by the voters. Public employees are making more than ever, on average more than the private sector. So why not save the tax payers a bundle of money down the road and make them pay for their own retirements, too? Why pay them twice–once while they are working and again after they are retired–for work that is already paid above average?

End agricultural subsidies. The Depression ended over seventy years ago, but many of the agricultural subsidies meant to help farmers struggling through it are still in place.

Says Kathrine Mangu-Ward:

Farm subsidies and price supports offer something for people of all political stripes to hate. They distort markets and spark trade wars. They make food staples artificially expensive, while making high-fructose corn syrup—the bogeyman of crunchy parents, foodies, and obesity activists everywhere—artificially cheap. They give farmers incentives to tamper with land that would otherwise be forest or grassland. They encourage inefficient alternative energy programs by artificially lowering the price of corn ethanol compared to solar, wind, and other biomass options. School lunches are jammed full of agricultural surplus goods, interfering with efforts to improve the nutritional value (and simple appeal) of the meals devoured by the nation’s chubby public schoolers.

And the beneficiaries are not small local farmers, either. They are giant corporate conglomerates. They are subsidy that our country no longer needs.

Repeal the Stimulus. Yeah. That’s right. Much of it hasn’t even been spent yet. As of September, $301 billion is still sitting unspent. Rather than waste it on unnecessary spending, let’s save it. “A quick, merciful end to the dysfunctional stimulus program could save as much as $300 billion, taking a sizable chunk out of the projected $1.5 trillion deficit.” Anthony Randazzo.

How’s that for a start?

(h/t to Reason.com where a lot of these ideas can be found in more detail.)

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Will nullification pass legal challenge?

August 4, 2010 by Leave a Comment
Missouri is the first state to pass a nullification measure on the recent federal health care act.  There’s no doubts about its political implications as a referendum (in Missouri) on Obama’s health care policies, but will it pass legal muster?
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The legal challenges to the health care bill

March 24, 2010 by 1 Comment

Apparently, there is some question about the legality of the bill recently (as in yesterday) signed into law by President Obama.  I’ve already discussed the questionable procedures used to pass it in the House.  But what about

Obama signs the health care reform bill while Congress people look on... and what's with Pelosi? How does she manage to always look so goofy?

the bill itself?  Is it legal?  Is it constitutional?

Let me just say at the outset that rational minds can disagree, and this topic is no exception.  I hope merely to provide some short review of the differing sides of this discussion, and hopefully you can come to your own conclusions without falling back on your pre-conceived partisan inclinations (yes, we all have biases, even if we don’t recognize them).

On the one side of the discussion, there are those that believe that the health care reform bill is unconstitutional.  Their arguments boil down into several points and discussed in two lawsuits contesting the bill, one by the state of Virginia and the other by  Florida and, in the words of Josh Blackmun, “a bunch of other states.”

Virginia and the Commerce Clause complaint

The Virginia case attacks the health care bill on “commerce clause” grounds.   The commerce clause, found in Art. 1, Sec. 8, Clause 3 of the Constitution, gives Congress the power to “To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes[.]”  Historically, the commerce clause has been one of the most empowering in the Constitution and the means through which Congress passes a large portion of legislation every year because it allows Congress to regulate anything that passes through the stream of commerce.  However, as Randy Barnett, professor of constitutional law at Georgetown University, very aptly points out, insurance contracts have not before now been considered as affecting interstate commerce:

[...] the individual mandate extends the commerce clause’s power beyond economic activity, to economic inactivity. That is unprecedented. While Congress has used its taxing power to fund Social Security and Medicare, never before has it used its commerce power to mandate that an individual person engage in an economic transaction with a private company. Regulating the auto industry or paying “cash for clunkers” is one thing; making everyone buy a Chevy is quite another. Even during World War II, the federal government did not mandate that individual citizens purchase war bonds.

If you choose to drive a car, then maybe you can be made to buy insurance against the possibility of inflicting harm on others. But making you buy insurance merely because you are alive is a claim of power from which many Americans instinctively shrink.

If we have to buy insurance for our car, why not for our health?

Josh Blackman points this out, too, citing directly from the Virginia complaint:

Paragraph 17:  ”The status of being a citizen of Virginia is not a channel of interstate commerce; nor a person or thing in interstate commerce; nor is it an activity arising out of or connected with a commercial transaction. Instead, the status arises from an absence of commerce, not from some sort of economic endeavor, and it is not even a non-economic activity affecting interstate commerce. It is entirely passive.”

Paragraph 18:  The Commerce Clause authority has never been held to “require citizens to buy goods or services. To depart from that history to permit the national government to require the purchase of goods or services would deprive the Commerce Clause of any effective limits contrary to Lopez and Morrison and would create powers indistinguishable from a general police power in total derogation of our constitutional scheme of enumerated powers.”

Paragraph 19: “Requiring citizen-to-citizen subsidy or redistribution is contrary to the foundational assumptions of the constitutional compact [under the Necessary and Proper Clause].”

In closing, the Virginia complaint dismisses the bill with rhetorical flair:

“because the individual mandate exceeds the enumerated powers conferred upon Congress. Because the individual mandate is an essential, non-severable provision, the entire act is likewise invalid.”

Florida and the “bunch of other states” everything-but-the-kitchen-sink complaint

Florida is joined in its complaint by South Carolina, Nebraska, Texas, Utah, Louisiana, Alabama, Colorado, Michigan, Pennsylvania, Washington, Idaho, and South Dakota.  Other than a short mention of the commerce clause

Both the Florida and the Virginia legal challenges to the health care reform act are rooted in states' belief that the federal government is overreaching its constitutional authority.

, the complaint challenges the bill through the 10th Amendment, the Capitation Clause, the Guarantee Clause , general principles of federalism (commandeering) and state sovereignty.   In pertinent part, and again a nod to Blackman, some of the highlight from the complaint are these:

2. The Act represents an unprecedented encroachment on the liberty of individuals living in the Plaintiffs’ respective states, by mandating that all citizens and legal residents of the United States have qualifying healthcare coverage or pay a tax penalty. The Constitution nowhere authorizes the United States to mandate, either directly or under threat of penalty, that all citizens and legal residents have qualifying healthcare coverage. By imposing such a mandate, the Act exceeds the powers of the United States under Article I of the Constitution and violates the Tenth Amendment to the Constitution.

3. In addition, the tax penalty required under the Act, which must be paid by uninsured citizens and residents, constitutes an unlawful capitation or direct tax, in violation of Article I, sections 2 and 9 of the Constitution of the United States.

4. The Act also represents an unprecedented encroachment on the sovereignty of the states.

5. Further, the Act converts what had been a voluntary federal-state partnership into a compulsory top-down federal program in which the discretion of the Plaintiffs and their sister states is removed, in derogation of the core constitutional principle of federalism upon which this Nation was founded. In so doing, the Act exceeds the powers of the United States and violates the Tenth Amendment to the Constitution.

56. The Act exceeds Congress’s powers under Article I of the Constitution of the United States, and cannot be upheld under the Commerce Clause, Const. art. I, §8; the Taxing and Spending Clause, id.; or any other provision of the Constitution.

57. By effectively co-opting the Plaintiffs’ control over their budgetary processes and legislative agendas through compelling them to assume costs they cannot afford, and by requiring them to establish health insurance exchanges, the Act deprives them of their sovereignty and their right to a republican form of government, in violation of Article IV, section 4 of the Constitution of the United States.

58. The Act violates the Tenth Amendment of the Constitution of the United States, and runs afoul of the Constitution’s principle of federalism, by commandeering the Plaintiffs and their employees as agents of the federal government’s regulatory scheme at the states’ own cost.

Are the criticisms legitimate?

Just because a lot of conservative states have filed suit does not necessarily mean that the criticisms are legitimate.  Jack Balkin, a Yale constitutional professor, dismissed the legal challenges presented to the health care bill.  Since the 1930s, Congress has had almost unfettered authority to regulate the economy, and as long as the individual mandate is framed as a tax, Congress may be well within its rights to require it:

“The attack on this bill,” said Jack M. Balkin,“is not merely an attack on the substance of this particular measure. It’s also a challenge to understandings that come with the New Deal.”

Replying to the proposition that people have a right not to buy health insurance, Erwin Chemerinsky, a constitutional scholar and dean of the University of California, Irvine School of Law speaking to the New York Times:

[S]aid the right not to buy health care was “rhetorically appealing” because of its paean to personal freedom. But “individual freedom not to purchase health care, I think, has no basis in Constitutional law.

In fact, Professor Chemerinsky added, “there is no case law, post 1937, that would support an individual’s right not to buy health care if the government wants to mandate it.”

Congress has often taken actions that impinge on personal freedom for a national purpose, he noted, including the Civil Rights Act of 1964, which required hotels and restaurants to serve minorities.

“If the court stays true to its Commerce Clause jurisprudence of the last 15 years,” Professor Chemerinsky said, “I think this will be upheld.”

Vote Counting on the Supreme Court

Ironically, it is this very point–that it doesn’t really matter how close the legislation adheres to the Constitution that will allow it to survive legal challenges but whether it can be upheld on judicial precedent of the last eighty years–that Bartlett notes will be the ultimate determinate of its legality.  When it comes to the legal challenge, Bartlett says

Ultimately, there are three ways to think about whether a law is constitutional: Does it conflict with what the Constitution says? Does it conflict with what the Supreme Court has said? Will five justices accept a particular argument?

What the Constitution says, what the Supreme Court has said, and what will five justices accept are not necessarily the same thing, and it is this last factor that draws the ire of the political left.  Regarding the lawsuits filed by Virginia and Florida (et al.), the Economist View had this to say:

From what I’ve read, there are two points to make. First, it would be crazy to rule that the individual mandate (or any other component of the legislation) is unconstitutional. Second, we have four crazy justices on the Supreme Court.

Start counting the votes now.  It may come down to just one swing justice, and that’s a vote that neither side can presume.

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HCR and the Constitution: procedural problems?

March 22, 2010 by Leave a Comment

I get a lot of questions from my friends about the HCR bill that just passed.  What happened? might be a good what to sum up most of the questions.  They are confused about how it passed (not to mention about why the Congress would pass something that seems so unpopular…but that’s another issue altogether), whether it was constitutional, and what happens next.  To be honest, even though I’ve managed to survive law school and  the requisite two semesters of conlaw, I still don’t know that an explanation of the constitutionality of the health care reform bill is within my immediate grasp.

So naturally, I turn to smarter minds.  [enter The Volokh Conspiracy]

There’s an interesting debate going on there, and on other sites across the web, about the constitutionality of the way the bill was passed.  Two of the main proponants of the opposing sides are Yale’s Jack Balkin (for the HCR) and Standford’s Mike McConnell (formerly on the 10th Circuit bench).  The debate in about the process:

Yale’s Jack Balkin is now convinced that Democrats in the U.S. House of Representatives have found a constitutional way to combine passage of the Senate health care reform bill with revisions to be passed as part of a reconciliation process.  In a letter to House Rules Committee Chair Louise Slaughter (reproduced here) Balkin writes:

Under Article I, section 7 of the Constitution, a bill does not become a law until it is passed by both houses of Congress, presented to the President for his signature, and the President then signs the bill or otherwise allows it to become law without his signature. These are sometimes collectively referred to as the requirements of bicameralism and presentment.

In order to satisfy the requirements of bicameralism and presentment, the two houses must pass bills with identical language. Clinton v. City of New York, 524 U.S. 417 (1998).

As I understand it, the rule to be employed by the House for the consideration of the reconciliation measure will state that, upon passage of the reconciliation measure by the House, the House concurs in the amendments to H.R. 3590 passed by the Senate. This language means that the House agrees to pass the same language as the amended bill passed by the Senate.

If this is the case, then the language of this self-executing rule complies with the requirements of Article I, Section 7. The Constitution does not require that the House take a separate vote on the Senate amendments to H.R. 3590. Under Article I, Section 5, Clause 2, the Constitution gives the House of Representatives, like the Senate, the power to “determine the rules of its proceedings.” A rule which consolidates a vote on a bill and accompanying amendments, or, as in this case, a reconciliation measure and an amended bill, is within the House’s powers under Article I, Section 5, Clause 2.

Writing in the Wall Street Journal, Stanford’s Michael McConnell responds:

No one doubts that the House can consolidate two bills in a single measure; the question is whether, having done so, it may then hive the resulting bill into two parts, treating one part as an enrolled bill ready for presidential signature and the other part as a House bill ready for senatorial consideration. That seems inconsistent with the principle that the president may sign only bills in the exact form that they have passed both houses. A combination of two bills is not in “the same form” as either bill separately.

Defenders of the Democratic strategy say that a self-executing rule has been used many times before by both parties. But never in this way. Most of the time a self-executing rule is used to incorporate amendments into a pending bill without actual votes on the amendments, where the bill is then subject to a final vote by the House and Senate. That usage may be a dodge around House rules, but it does not violate the Constitution. I am not aware of any instance where a self-executing rule has been used to send one bill to the president for signature and another to the Senate for consideration by means of a single vote.

Self-executing rules have also been used to increase the debt ceiling by virtue of adopting a budget resolution. That procedure is questionable, but because budget resolutions are not laws, this usage does not have the feature of using one vote to send a bill to the president and at the same time to send a different bill to the Senate. There may have been other questionable uses of self-executing rules, but not often enough or in prominent enough cases to establish a precedent that would overcome serious constitutional challenge.

McConnell also addresses arguments that judicial review of the “Slaughter Solution” is precluded by Field v. Clark.  According to McConnell, “It is one thing for the Supreme Court to defer to Congress on questions of what Congress did, and quite another to defer to Congress on the meaning of the Constitution.”  While I don’t think the U.S. Court of Appeals for the D.C. Circuit is likely to accept this distinction (as I noted here), I think that it is a very serious argument, and one the Supreme Court might well accept.  (And, I should note, were the Supreme Court to accept this argument, I think it is unlikely that the Court would divide along traditional ideological lines, as this sort of question tends not to divide the Court in this way; see e.g. Clinton v. New York).

I think the most telling bit of commentary on this debate comes in the comments from one Brett Bellmore: McConnell is right on the Constitution, Balkin is right on how the courts are likely to rule. And it’s a shameful thing that you have to make that distinction.

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