Thursday, April 01, 2010

Healthcare Law Legality

In comments on a previous post, I provided a brief explanation of why the new healthcare reform law, particularly the mandate to purchase insurance, likely is constitutional. (Mind you, I think it idiotic but not illegal.) This conclusion puts me at odds with some conservatives I respect. And at least 14 states have sued the Federal government to block enforcement of the mandate.

In a post last Tuesday, MaxedOutMama agreed with my view. At her suggestion, a spirited debate arose in comments on her blog. This post collects my various thoughts.
  1. Issue: Though there are arguments under the First, Fifth and Fourteenth Amendments, the principal claim is that, because the requirement to buy insurance exceeds Congress' power to regulate interstate commerce (Art. I, § 8, cl. 3) or tax (Art. I, § 8, cl. 1), the law impermissibly intrudes on powers reserved to the states under the Tenth Amendment.

  2. Commerce clause: The scope of the interstate commerce clause will be the key. It grants Congress authority to "regulate commerce . . . among the several states." Some complain that the current judicial reading of this language is limitless, which is not quite true. Activities subject to the commerce clause must be both "interstate" and "commerce."

    • Interstate: In U.S. v. South-Eastern Underwriters Ass'n, 322 U.S. 533, 550 (1944), the Supreme Court already determined that insurance qualified as interstate commerce. This still is so even for insurers selling within a single state--the standard is whether Congress logically concluded the activity has an interstate effect. See Gonzales v. Raich, 545 U.S. 1, 14 (2005) ("We need not determine whether respondents’ activities, taken in the aggregate, substantially affect interstate commerce in fact, but only whether a "rational basis" exists for so concluding."); United States v. Lopez, 514 U.S. 549, 558 (1995) ("Congress is empowered to regulate and protect the instrumentalities of interstate commerce, or persons or things in interstate commerce, even though the threat may come only from intrastate activities."). Indeed, in Wickard v. Filburn, 317 U.S. 111, 125 (1942), the Supreme Court held that even grain grown for home consumption qualified: "But even if appellee's activity be local and though it may not be regarded as commerce, it may still, whatever its nature, be reached by Congress if it exerts a substantial economic effect on interstate commerce and this irrespective of whether such effect is what might at some earlier time have been defined as 'direct' or 'indirect.'" Thus, there is no reason to believe that a court suddenly would reverse a precedent established for 2/3rds of a century.

    • Commerce: The more serious claim is that, while the purchase of goods or services may be commerce, an obligation to purchase is beyond the scope of the provision. It is true that the Supreme Court never has interpreted the commerce clause to "require the purchase of something." But, in modern Supreme Court opinions, the only circumstances not considered commerce are those not involving a genuine commercial transaction. Take, for example, United States v. Morrison, 529 U.S. 598, 613 (2000), striking down a Federal private right of action for victims of gender-motivated violence: "[G]ender-motivated crimes are not, in any sense of the phrase, economic activity." By contrast, the purchase of insurance, no matter if compelled, unquestionably is economic activity. Some argue that upholding jurisdiction over non-activity would vitiate "any limitation on the commerce power of Congress." But, the Congressional power has never been confined to voluntary exchanges, as the Third Circuit observed in United States v. Bishop, 66 F.3d 569 (3d. Cir.), cert. denied, 516 U.S. 1032 (1995) (citations omitted):
      The Supreme Court has never before used this definition and the dissent does not state how or from where it is derived, nor how the definition accounts for prior Supreme Court cases which involved no voluntary economic exchange. Where the Court has used a potentially ambiguous term, as "commercial" arguably is, we prefer to apply the definitions used by the court itself. Thus, we are content to rely on Lopez to define commercial as including those activities which form a part of an economic enterprise.
      This is especially true here, given that insurance already is firmly considered interstate and commerce.

  3. Taxing power: Congress has the power "to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States; but all duties, imposts and excises shall be uniform throughout the United States." This is relevant, because the penalty for not purchasing insurance is (page 33) "assessed through the [Internal Revenue] Code and accounted for as an additional amount of Federal tax owed." So, Congress seemingly also relied on its taxing power, also contained in the Sixteenth Amendment.

    To me, this supports the Constitutionality of the health insurance mandate:
    Look at payroll taxes, for example. We require employees to contribute to Social Security, Medicare/Medicaid. In effect, we require the purchase of services (pension and medical insurance). Yes, these are government services, but why should private services be different?
    Put differently, is Social Security Constitutional? Yes--Helvering v. Davis, 301 U.S. 619, 640-45 (1937). Would it be unconstitutional had Congress chosen to fund old-age and disability payments via private investments? I doubt it--George W. Bush proposed limited (and, admittedly optional) private investment five years ago. Indeed, by analogy, see Berman v. Parker, 348 U.S. 26, 33-34 (1954) (upholding condemnation for private urban renewal programs) ("The public end may be as well or better served through an agency of private enterprise than through a department of government -- or so the Congress might conclude. We cannot say that public ownership is the sole method. . .").

    Still, others argue that Printz v United States, 521 U.S. 898, 922 (1997), limits Congress' ability to command state legal authority: "[t]he power of the Federal Government would be augmented immeasurably if it were able to impress into its service--and at no cost to itself--the police officers of the 50 States." If the states are right that the new law includes "unfunded mandates," this has some merit. Yet, as I read the new act, that would be difficult to establish as a matter of law (i.e., for lawyer-readers, on summary judgment or a motion to dismiss before the law is enforced (the mandate doesn't begin until 2014 and isn't fully phased-in until 2016)). If the mandate is accompanied by a subsidy -- as the law purports to say -- then it's not apparent on its face that the law establishes an unfunded mandate. Thus, a Printz claim might succeed only "as applied"--after a few years of experience and a full development of facts at trial.
Conclusion: Last year, the Congressional Research Service called the legality of a health insurance purchase mandate "a challenging question." While it's true that it would be a case of first impression, I'm not as troubled.

A mandate to buy health insurance is a valid regulation of interstate commerce and not contrary to the taxing power. Given that, the provision is within Federal jurisdiction. So, under New York v. United States, 505 U. S. 144, 156 (1992), "[i]f a power is delegated to Congress in the Constitution, the Tenth Amendment expressly disclaims any reservation of that power to the States." Thus, the new "mandate" to buy health insurance will be upheld as Constitutional.

That being said, I hope the exercise of such power convinces the voters to elect a Republican majority this fall.


Marc said...

This can't be what our forefathers had in mind.

Where does it stop? What else can the government force us to buy?

There's got to be a point where forcing us to buy something is unconstitutional.

If this isn't it, what is?

OBloodyHell said...

> This can't be what our forefathers had in mind.

Marc, we're LONG outside of that realm.

It's one reason I don't have a lot of faith in anything short of violence as a solution.

That doesn't mean I'm ready to get violent, but it does mean I see little opportunity to fix the problem without it.

They're getting more and more arrogant, and less and less controlled each and every term.

"We live in interesting times", in the apocryphal Chinese curse sense of the term.

We shall experience Adventure.

Marc said...

> Marc, we're LONG outside of that realm.

I'm naive.

OBloodyHell said...

> I'm naive.

By all means, be correct. I'd love to be wrong. I personally think we lost the chance to stop this twice --
1) when we elected Woodrow Wilson (and passed the various Constitutional Amendments of the time enabling the income tax, etc., along with weakening state power),
and later
2) when we re-elected FDR the very first time (though the affect of not having him there in re: WWII might have resulted in a larger catastrophe if we'd gone isolationist) -- Not sure a second Hoover term would have been better than the first FDR one... most of the stuff FDR did would have been the same as Hoover. At the time the economists had no idea WTF they were doing.

bobn said...

At the time the economists had no idea WTF they were doing.

Yeah, thank god they've got it totally together now.

There's a reason it's called "the dismal science".

It's one reason I don't have a lot of faith in anything short of violence as a solution.

That doesn't mean I'm ready to get violent, but it does mean I see little opportunity to fix the problem without it.

I feel the same. I also think I know what might move a lot of people that way.

OBloodyHell said...

> Yeah, thank god they've got it totally together now.


Since I've been over the whole "IP & Services Economy" concept right in front of you more than once.

You happen to be stating something I've been maintaining for more than 15 years -- Economists are just as clueless NOW about the nature of an IP & SE as they were THEN about an Industrial Economy. Which is at least part of the reason why none of them really grasp what is going on -- the Austrians or the Monetarists are closer, of course, than neoKeynesian idiots like Krugman, but neither one of the former shows any real sign of grasping how the very different nature of IP vs. "RP" affects every aspect of wealth, income, growth, and money. They don't even see how seriously it alters the entire nature of "assets" (for anyone wanting a primer, see the addendum, below).

The Austrians have been predicting collapse for almost all the last 15-20 years, and never quite seemed to be able to explain why it hadn't happened yet. It finally did happen, but hasn't been anywhere near as bad as they expected it to be. Even the compounding and insande garbage that's happened since The One got elected hasn't driven it into the total collapse mode that they've been chicken littling about for the last 20 years (not to suggest it won't happen, just that, if they were FULLY right they'd know why, and they don't -- they're still just as confused as they were 15-odd years ago about the exact reason why it hasn't tanked ala Weimar).

In short, the reason for the chaos is, inarguably, partly the ridiculously incompetent (or deliberately malfeasant) actions of the Dems and Obama, but the reason it hasn't completely failed is because the things that WOULD collapse an Industrial Economy are not adequate to collapse an IP&SE.

(see next missive)

OBloodyHell said...

The Economy of Ideas

That's not specifically about economic systems, it's about the very different nature of IP as opposed to Real Property. You cannot just extend RP concepts into the IP domain, while both are "property", they are very different aspects of that thing, just as steam and ice are particularly different aspects of the thing we call "water". Just because ice is hard and cold does not mean steam is either. And any technical analysis of the "chemistry" of IP (i.e., economics) needs to grasp that it's inherently different from the "chemistry" of manufactured goods. There will no doubt be things they have in common, but assuming that any specific property/reaction extends from one domain into the other is categorically stupid.

Once you fully understand that, you can start to consider the implications it has on assets, for example -- If I sell you a widget, I no longer have that widget. If I sell you a digitized movie, I still have that movie. All I've lost, at most, is the ability to sell it to YOU again (and there are even ways around this -- you have Terminator 2 on DVD? What about the Gold Edition? And the Special Deluxe Director's Cut? And The Boxed set of both of Cameron's Terminator movies? And the Deluxe Boxed set including those two and the two abortion called sequels?

... and now we've got the remastered Blu-ray versions of at least one or more of the above...?

In short, I've made money selling you mostly the same ephemeral bits over and over again.

Guess what? There's at least two or three more tech upgrades (1620p? 2160p? 3240p?) before we run into the limits of the original film quality. And around that time the ability to do things with computers that we can barely guess at now should make still more interesting things possible using the original source material... let's see -- how about a true holographic film version of Terminator 2?

And note that all the above will provide a lot of well-paid jobs for people that aren't menial labor at all.