Day 2 analysis: The Supreme Court justices debate the health insurance mandate

By Chelsea Conaboy, Globe Staff

The Supreme Court hearing on the Affordable Care Act got to the heart of the matter Tuesday morning: Is it constitutional for the federal government to require most Americans to purchase health insurance?

The debate was heated at times, meandering at others. We asked our panel of health law professors to help us dissect the arguments. (We’ll have more from professors Einer Elhauge and Wendy Parmet later this evening. In the meantime, see Abigail Moncrieff’s instructive comments below.)

Justice Anthony Kennedy pressed the solicitor general on whether such a requirement takes an unprecedented step, allowing the federal government to require individuals to do something -- to buy insurance. Can you break down that point for us? Is it unprecedented? What are the implications? And how is that distinct from other ways we are compelled to do things, such as pay taxes or pay into Social Security?

Abigail Moncrieff/Courtesy photo

Abigail Moncrieff, associate professor at Boston University School of Law, who focuses on constitutional and health law and wrote two briefs supporting constitutionality of the Affordable Care Act: Much as I hate to sound like a law professor here, the answer to that question really depends on high-level theories of constitutional meaning. On a very basic level, the individual mandate is utterly ordinary, not at all unprecedented.

As Justice [Ruth Bader] Ginsburg pointed out in questions to both of the respondents’ lawyers, Social Security forces people to buy old-age and disability insurance, and regulations on emissions reductions for cars force us to buy emissions-reduction equipment whenever we buy a car. Furthermore, all basic taxes that end up supporting private industry (like agriculture subsidies, for example) are essentially purchase mandates; they simply travel through the middle-man of the government instead of going directly from consumers to private parties. And on top of all of that, we have countless tax credits and deductions (which might or might not be constitutional “taxes”) that incentivize us in the exact same way that the mandate does to buy private products.

The first-time homebuyer’s tax credit, for example, caused me to pay $8,000 more in taxes than I otherwise would have in 2010 because I refused to buy a house, the same way that I might pay $695 more in taxes than I otherwise would in 2020 if I refuse to carry health insurance. Finally, the individual mandate gives individuals the option of either paying some money into a private insurance pool or paying an equal or lesser amount to the government. Because the penalty is capped at the cost of the least-generous kind of private insurance, nobody will end up paying more to be self-insured than they will to be fully-insured.

In that sense, the individual mandate is entirely indistinguishable from an ordinary tax for support of private industry; it is a uniform obligation for financial contribution to the United States health care infrastructure. If the only thing that matters for the Constitution is the practical impact of the law, then, the individual mandate is not at all unprecedented and does not in any way alter the relationship between individual and government.

What’s different about the individual mandate, though, is that it creates a perception – quite intentionally – that we all have a legal obligation to purchase a private product, whether we want to or not. Congress called it the individual “mandate,” and it called the consequence for failure to buy insurance a “penalty.” Throughout the debates during and since the ACA’s passage, there has been an extensive rhetoric of obligation surrounding the “minimum essential coverage provision.” Citizens, thus, are left with a strong sense that government is forcing them to buy something, a feeling that they don’t usually have when they pay taxes or even when they choose a mortgage over some other kind of loan in order to take advantage of the mortgage interest deduction.

There is an element of the individual mandate that legal theorists call “expressive”; the law serves an expressive function beyond its practical impact, attempting to channel people into the insurance market by persuading them that they really should have insurance. And that strong expressive attempt to get people to buy something may well be unprecedented. Surely the other examples discussed above, with the possible exception of Social Security, were not accompanied by the same strong rhetoric of obligation. Should that expressive feature of the individual mandate matter? Expressive harms often matter in other areas of constitutional law, particularly in First Amendment cases about religious liberty, and it is possible that they should matter for Commerce Clause analysis as well. My fear in this case is that five justices will be psyched out by the expressive features of the individual mandate, blinded to the practical similarities between the mandate and many other laws, and will write an opinion deeming the mandate novel and unconstitutional without limiting their holding to laws with this kind of expressive force. In that case, the Court will open itself (or, really, the lower federal courts) to challenges against all of the other countless laws that incentivize people to buy things.

Einer Elhauge/Courtesy photo

Einer Elhauge, founding director of the Petrie-Flom Center for Health Law Policy, who maintains that the mandate is bad policy but is constitutional: Although the Solicitor General had other good arguments, to me the most disappointing thing about his argument is that he never offered a direct rebuttal to the assertion that it would be unprecedented for Congress to compel individuals to buy something. In fact, this assertion is quite false. In 1790, the very first Congress, which contained 20 Constitutional framers, enacted a law requiring shipowners to buy medical insurance for seaman. It was signed by another framer, President George Washington.

Congress followed this with a 1792 statute requiring all able-bodied citizens to buy a firearm, and a 1798 statute requiring seamen to buy hospital insurance for themselves. I cannot see why the Solicitor General did not raise these precedents in order to rebut the claim that it would be unprecedented for Congress to require purchases, especially since these examples indicate the original framers had no trouble with doing so.

Moreover, there are a host of affirmative federal duties to buy things under current law. For example, federal law requires corporations to hire independent auditors. Federal law requires unions to buy insurance bonds in case their officers engage in fraud. The list goes on. To be sure in all these cases (other than the firearms case), one could say the duty is imposed on persons who are already engaged in some commerce. But that is also true of everyone subject to the health insurance mandate because all of us buy or sell something.

In all these precedents, Congress required persons to enter into commerce in a different market than the one in which they voluntarily operate, which is precisely what the challengers claim makes this mandate unprecedented. In the firearms case, one cannot even say the law was limited to individuals engaged in some commerce. One might say that law was justified under a different constitutional clause authorizing Congress to call for a militia, but the precedent still shows that the framers did not think there was any general limitation against requiring purchases that could be read to limit powers.

I also don’t think any of this is distinct from having to pay taxes or pay into Social Security. The mandate is just an obligation to pay money, either for insurance or to the IRS. Indeed, the challengers ultimately concede that the precise same substantive effect could have been achieved had Congress just called it a tax or tax credit. Because this means that the distinction is just about the language used, it shows the case clearly is not about fundamentally changing the relationship between the individual and the government. I wish the Solicitor General had pointed that out as well.

Wendy Parmet/Courtesy photo

Wendy Parmet, associate dean for academic affairs at Northeastern University School of Law, who wrote briefs supporting the mandate on behalf of seven Massachusetts organizations: Justice Kennedy’s comment showed that he had considerable sympathy for the argument that the mandate will change the relationship between individuals and the government, in other words, for the claim made by those challenging that the law that if the federal government can require people to buy health insurance, it could regulate them in new and scary ways, for example, by making them purchase broccoli.

But of course, governments already compel people to do all sorts of things they might not wish to do. For example, the federal government already requires individuals to pay for health insurance through Medicare and people over 65 who receive Social Security benefits to belong to Medicare. The federal government also requires, and the Supreme Court upheld back in the 1960s, hotels and restaurants to serve African Americans. States require people to buy automobile insurance if they own a car; states also require children to be vaccinated, and newborns to be screened for a variety of illnesses. Affirmative mandates are surprisingly common.

The challengers distinguish these other mandates by arguing that the civil rights laws apply only to people who are already participating in commerce, and all of the rest of the examples I gave don’t rely on Congress’ power to regulate interstate commerce. Medicare, like Social Security, is authorized by Congress’ taxing power. And state governments, in contrast to the federal government, aren’t limited to the enumerated powers set forth in the Constitution. That’s true, but it doesn’t respond to Justice Kennedy’s concern about the relationship between individuals and government.

Once we recognize that affirmative mandates already exist, the claim that the health insurance mandate will fundamentally change the relationship between individuals and government erodes. Moreover, the so-called broccoli problem appears in a new perspective. Everyone agrees that a state could compel someone to purchase broccoli without being subject to any limitation under the commerce clause; most also concede that the federal government could create a taxing scheme that effectively compelled people to purchase broccoli. Thus the argument “but they could make you buy broccoli” ignores the fact that they could do it now. They don’t. And they won’t if the mandate survives this constitutional challenge.

Some justices asked whether this mandate would make it possible for Congress to compel us to buy other things -- burial insurance, broccoli, gym memberships, etc. What do you make of that line of questioning?

Moncrieff: Those questions are by far the most frustrating to me. Practically speaking, Congress already “requires” many purchases, including electric cars through tax incentives and special access to carpool lanes, to the same extent that the individual mandate “requires” a purchase of health insurance. Of course, the expressive content of those tax incentives and carpool lanes is different, as discussed above, but it’s very unlikely that Congress would use the same kind of obligatory rhetoric when passing a law about electric cars or broccoli.

Second, the way that self-insurance impacts commerce is very different and much more direct than the way that failure to buy a car impacts commerce. One of the worst points that Paul Clement [attorney for the states opposing the law] made, I thought, was that the failure to buy a car causes the price of cars to go up. If supply and demand work at all, that’s simply not true! A drop in demand for cars will cause a drop in supply of cars, and the price will remain basically stable.

Michael Carvin [attorney for the National Federation of Independent Businesses] then tried to resurrect the point by arguing that failure to buy a car might cause American car companies to go out of business, increasing unemployment in Detroit, and costing taxpayers money for unemployment and Welfare. That’s more plausible, but it’s a kind of argument that the Supreme Court has explicitly rejected in prior Commerce Clause cases.

In both United States v. Lopez and United States v. Morrison, the Supreme Court held that a law is not constitutional under the Commerce Clause if the regulated activity impacts commerce only through a long but-for causal chain. This argument about failing car manufacturers in Detroit depends on exactly that kind of prohibited causal chain. The impact of failure to buy insurance is *much* more direct and occurs through a totally different economic mechanism.

The point about insurance is that waiting until you’re sick to buy insurance directly distorts the insurance pool and directly distorts your own lifelong health care financing. Instead of spending a small amount every month over the course of your life for health care, you’re spending zero for many months and then a whole lot later in life. That impact on commerce does not require a long but-for causal chain; it is a direct result of the refusal to buy insurance. Third and finally, there is a big difference between making you take possession of a [General Motors] car and making you contribute money to an insurance pool. The insurance mandate requires everyone to give money to private health insurers in exactly the same way that the Ford bailout required everyone to give money to a private car company or that agriculture subsidies require everyone to give money to private farmers. The insurance mandate does *not* require anyone to go to the doctor for an annual checkup in the way that a purchase mandate for broccoli would require someone to go the grocery store and bring home a head of broccoli.

One of the biggest problems in this case from the very beginning is that all of the lawyers and judges involved misunderstand the nature of private health insurance – and this is related to the justices’ questions about whether the mandate regulates health insurance or health care. Unlike most insurance products, health insurance is not merely a risk-regulating tool that’s an optional, separate product from health care.

Because even basic health care is so expensive in this country, health insurance is really a compulsory savings bank for buying all kinds of health care, from appendectomies to diabetes management to preconception counseling. That makes a health insurance mandate very different from a broccoli mandate – and more akin to a mandatory savings account for food of whatever kind one chooses. It’s a payment structure, not a risk management product.

Elhauge: Those questions raised the challengers’ argument that those consequences could follow, and thus there was no limiting principle to the government’s position. The solicitor general had two main distinctions. First, health insurance is different because though the uninsured hope not to buy health care, ultimately they predictably have to because we all get sick eventually and when the uninsured end up needing medical care, others pay most of the cost. Ordinary products differ because if we decide we don’t want to buy broccoli or a GM car next year, we are in full control of whether we will do so. We do not find ourselves surprised by events that give us an irresistible compulsion to buy such products, and even if we did, no one else would feel obliged to cover those costs if we could not afford them. We can thus be inactive in ordinary markets in a way we cannot be for health care, where illness alas thrusts activity upon the uninsured and most of the costs upon the rest of us.

Second, in health care, Congress has adopted regulations prohibiting discrimination against the sick by either denying them coverage or charging them higher rates. Absent a mandate, those prohibitions would give the healthy an incentive to put off buying insurance until they are sick. Premiums would go higher and the insured pool would get sicker, until the market collapses. Thus, whether or not the mandate is authorized by the Commerce Clause, it would be constitutional under the Necessary and Proper Clause because it is reasonably related to exercising the constitutional power to prevent insurer discrimination. For ordinary goods, there is no comparable reason why forcing purchases is necessary to prevent this sort of free riding problem from causing market collapse.

Parmet: The solicitor general argued that health insurance is unique from all other goods in commerce because everyone will use health care at some point. People can’t predict when they will use it, and if they use it without insurance, the cost is passed on to others. Therefore, a decision upholding the mandate would not open the door to laws compelling the purchase of other goods. The solicitor general had trouble defending his argument that health insurance is unique. Perhaps the hardest questioning on this point came from Justice Alito who raised the case of burial insurance. As the Justice noted, everyone is going to die someday, and if people don’t have insurance, the cost is passed on to others, as in the case of health care.

The government may have been better off not relying so heavily on the argument that health care is unique. Instead, as Justice Breyer offered, the distinction that the challengers raised between laws that compel action and laws that regulate action is not found in the commerce clause or in the Court’s commerce clause cases. The government, however, seemed to concede that the distinction was a meaningful one and would prohibit government mandates that apply to goods other than health insurance. After today’s argument, the Obama administration may wish it hadn’t made that concession.

Timing was a major issue this morning: Can Congress require purchase of insurance before it’s needed or only at the point when an individual shows up in the emergency room? How much of this case hinges on that difference?

Moncrieff: The theory here is that the Commerce Clause allows Congress to regulate commerce that exists in the world, but it does not allow Congress to regulate commerce that does not exist in the world. When I buy a car, I’m already engaging in commerce, and Congress can therefore require me to buy an airbag for that car. It can regulate the commerce that I voluntarily created. It cannot, however, simply force me to buy an airbag, without the car purchase, because that would not be a regulation of commerce. It would be a creation of commerce where none otherwise existed.

In this case, the respondents’ theory is that when I buy health care, I’m engaging in commerce, and Congress can therefore require me to buy insurance for that care. It can regulate – can impose conditions on – the commerce that I voluntarily created. It cannot, however, force me to buy insurance in the first place, without the health care purchase, because that would be a creation of commerce rather than a regulation of commerce.

The government’s response to this argument is two-fold. First, the government argued that individuals without insurance are engaging in commerce by self-insuring. They know that they will consume health care at some point in their lives, and they are making an active choice to bear their own risk rather than purchasing insurance against that risk. Congress may legitimately forbid self-insurance and require third-party insurance.

Solicitor General [Donald Verrilli] did not particularly emphasize that argument today, though I think that’s the better response here. Instead, General Verrilli focused on the second argument, which is that all individuals will eventually engage in the health care market, and Congress may regulate that commerce preemptively, before it occurs. This is the “health care is unique” argument. The idea is that although Congress may not create commerce, it may regulate commerce that it knows is coming. And in this case, we know that the vast majority of people, whether insured or not, will engage in commerce in health care at some point in their lives.

The respondents’ asserted distinction is not one that has ever appeared in Commerce Clause cases or in any other constitutional case that I’m aware of. It is the crux of the respondents’ argument, though. If the justices either reject the distinction between regulating and creating commerce or accept the government’s arguments that those without insurance are engaging in commerce or inevitably will, then the government will win.

Elhauge: Timing was a major problem for the challengers because they conceded an obligation to buy insurance could be imposed at the point of buying health care. This meant that the question was not whether an obligation to buy insurance could be imposed, but whether it could be imposed in advance or not. Courts generally defer to Congress on matters of timing like this. Moreover, it clearly seems more sensible to have insurance purchased earlier.

The challengers tried to say you could have a spot market to buy insurance when you went to the emergency room. But while this technically might be possible, it has an insuperable problem – the cost of that insurance would necessarily be at least the cost of care the person was about to get. And the very problem underlying the act is that when the uninsured get sick, they often cannot afford that cost of care, so they are equally going to be unable to buy the cost of spot insurance.

Parmet: The timing issue was important because no one questions that health care financing is interstate commerce. When an individual goes to the doctor or an emergency room, the individual is purchasing a service and is subject to regulation by Congress. The challengers agree that Congress could require individuals to purchase insurance at that point in time.

That raises the question whether Congress can require individuals to purchase insurance before they seek health care, in effect, to pre-pay for care. The challengers say “no,” because that would compel someone to enter a market. The federal government says when people decide not to buy insurance they aren’t outside of the market, they are simply making a decision to pay later, and that decision is subject to regulation.

The government adds that the commerce clause shouldn’t be read to force Congress to regulate at the point of purchase; in other words to impose penalties on people when they need health care. Instead, the Constitution should be read to allow the government to adopt the more effective, and less offensive, regulation prior to the point of sale.

There seems to be a lot of chatter Tuesday afternoon about how Verrilli performed today. What is your assessment?

Moncrieff: He did seem quite a bit less confident than yesterday. I noted with approval yesterday Verrilli’s confident assertion that the individual mandate doesn’t actually force anyone to buy anything – that it doesn’t create a true obligation to purchase insurance. That argument would have been highly relevant and useful today (for the reasons outlined in my answer to the first question), but he didn’t repeat it at all.

He also generally seemed nervous, coughing and stuttering more than yesterday. It was a bit nerve-wracking for fans of the law like myself, but I doubt very much that his performance will impact the outcome of the case. And overall he did fine.

Elhauge: Solicitor General Verrilli is a gifted advocate who had an excellent day Monday. Tuesday, he found himself boxed in by the strategic judgment, which I am sure was made at the highest level of government, to concede that Congress could not just force the purchase of any product, which got him into lots of problems. There were sound litigation and political reasons for that judgment, but I think conceding it ended up allowing the challengers to control how the case was framed.

It also left the solicitor general seeming too defensive and reliant solely on the argument that not buying insurance equals commercial activity, which is counter-intuitive even though it is ultimately correct. It would have been better to argue in the alternative that (1) Congress has in fact always had the power to force the purchase of any product that significantly affects interstate commerce but (2) the Court could decide this case on more narrow grounds, like the ones the solicitor general offered. However, even though I think his strategy was too timid, I think his cautious approach likely did pick up six votes to sustain the act.

Parmet: No question the justices were tough on the solicitor general. Almost from the start, he faced hard questions and deep skepticism. For the most part, he held his own, but at times he seemed to have trouble clearly articulating why the health insurance market is unique. He tried to provide the justices with a limiting principle that could distinguish the Affordable Care Act’s mandate from other hypothetical mandates, but he had trouble doing so.

In response to Justice Sonia Sotomayor, attorney Clement said the states could choose to pass this mandate, as Massachusetts has. Lay people may look at that and say, why not then let the federal government do it, so that it is more efficient or more uniformly applied. So, why not?

Moncrieff: When the framers of the Constitution sat down at the constitutional convention, they were worried about two things: the Articles of Confederation and King George III. They didn’t want the states to have too much power because that would get in the way of efficiency and uniformity, as you note and as had happened in the early days of the Union under the Articles of Confederation.

But they also didn’t want the federal government to have too much power because that could lead to too much consolidation of authority in one government, giving rise to the kind of tyranny that colonial Americans experienced under King George III. So the framers created a federal government that had a lot more power than the first United States federal government, but they still made a pretty short list of the things that the national government was allowed to do, reserving all other regulatory powers to the states.

That’s what we mean when we say that the federal government is a government of “enumerated powers” (that the Constitution explicitly enumerates the things that the federal government is allowed to do) but that the states have a general “police power” (that the states are allowed to regulate everything else).

The question in this case is whether the individual mandate fits into one of the powers that the Constitution lists for the federal government or whether it’s something else, not on the list. If it’s something else, then the states can do it (assuming it doesn’t violate the freedom of speech or something like that), but the federal government can’t. The government’s argument here is that the individual mandate fits under *two* of Congress’s listed powers: the power to regulate interstate commerce and the power to lay and collect taxes. If the government wins on either of those arguments, the mandate is constitutional.

The respondents (including Clement) argue that the mandate is neither a regulation of interstate commerce nor a constitutionally permissible tax. They have to win both of those arguments in order to get the mandate struck down. Even if they succeed, though, the states can come in and pass insurance mandates all they want because there are no limits on the states’ regulatory powers except substantive limits like religious freedoms, the freedom of speech, and things like that.

Elhauge: Clement is right on this. The states have plenary power, unlike Congress, which only has the powers enumerated in the Constitution. However, I think this concession also reveals that the case clearly is not about fundamentally changing the relationship between the individual and the government because even if you buy all the claims, the states could impose precisely the same mandate. Again, this is something one wishes the solicitor general had pointed out.

Parmet: Without question states can pass insurance mandates under their police power. Paul Clement’s response, on behalf of the states, rightly noted that states, unlike Congress, do not need to rely on the commerce clause. What he failed to note was the very fact that states can and do impose mandates undermines his contention that the government will have a terrifying new power to force people to purchase goods, like broccoli, if the mandate is upheld. The states already have the ability to require everyone to buy broccoli and they don’t.

What’s your best guess at where the justices stand, based on their reactions today?

Moncrieff: As expected, justices Elena Kagan, Sonia Sotomayor, Stephen Breyer, and Ruth Bader Ginsburg all seemed highly sympathetic to the government’s argument and highly skeptical of the respondents’ arguments. Also as expected, Justice Samuel Alito seemed skeptical of the government’s argument and sympathetic to the respondents’ argument, and equally expected, Justice Anthony Kennedy and Chief Justice John Roberts were hard to read.

(Justice Clarence Thomas was even harder to read since he stuck to his vow of silence on the bench, though I think it’s safe to assume that he’ll vote to invalidate the law.) The one disappointing surprise for me was Justice Antonin Scalia. Given his prior writings on the Commerce Clause and Necessary and Proper Clause, I was expecting Justice Scalia to be at least a little bit sympathetic to the government’s case, even if he didn’t ultimately vote to uphold the statute. He was not.

So my best guess is that it comes down to Justice Kennedy. He made one comment towards the end indicating that he thought the connection between uninsurance and commerce was much closer than the connection between failing to buy a car and commerce – and that the health care market seems unique in ways that matter. That comment made me think that he might vote with the liberal justices to uphold the law, in which case I would guess that the Chief Justice will join the five-vote majority. That said, Justice Kennedy is awfully unpredictable.

Elhauge: It is of course hazardous to guess from oral arguments, in part because justices often deliberately argue positions they do not hold, just to see what the good responses to them are. However, from their comments, I think justices Breyer, Ginsburg, Kagan, and Sotomayor are going to sustain the act under the Commerce Clause.

My best guess is also that justices Kennedy and Roberts are likely to do so as well, notwithstanding their early skeptical questions to the solicitor general, because they later expressed sympathy with the solicitor general’s position that the uninsured were inevitably active in the health care market. Both could go the other way, but they seemed more likely to sustain the act.

Justices Scalia and Alito seemed unlikely to sustain the act under the Commerce Clause, and I think from prior opinions Thomas will not either. Scalia seemed negative on the necessary and proper clause argument, but no one else expressed a view on that critical issue.

Generally, the justices seemed skeptical the mandate could be sustained under the taxing power, though they were not that definitive on that. Kennedy never expressed a view. Roberts and Alito today seemed mildly skeptical it was a tax, but yesterday seemed more likely to find it a tax. One thing it is important to realize is that a justice would vote to sustain the mandate if the justice finds it authorized by any one of (1) the Commerce Clause, (2) the Necessary and Proper Clause, or (3) the taxing power.

I think Justices Breyer, Ginsburg, Kagan, and Sotomayor will sustain the mandate and Scalia and Thomas will strike it down. On the three remaining justices, the challengers will have to sweep all three on all three issues, which gives them an uphill climb. The government would, for example, win even if only four justices think the mandate is authorized under the mandate if at least one other justice thinks the mandate was authorized either under the Necessary and Proper Clause or the Taxing Power. My best guess is that the mandate will be sustained 6-3 or 7-2.

Parmet: The four justices appointed by Democratic presidents, Justices Breyer, Ginsburg, Sotomayor and Kagan all seemed ready to accept the mandate’s constitutionality. Indeed at times Justices Ginsburg and Breyer offered the solicitor general arguments in support of the law.

In contrast, Justices Scalia and Alito seemed to accept the challenger’s positions. Although Justice Thomas did not ask any questions, as is his custom, I think it is safe to assume that he will vote to find the mandate unconstitutional. The positions of Chief Justice Roberts and Kennedy are more difficult to characterize. They both seemed very skeptical of the mandate during the solicitor general’s argument, but they also had some problems with the arguments presented by the challengers. In different ways each of these justices signaled that they saw some merit in the government’s arguments about the nature of the health insurance market, and the complexity of regulating it. They clearly have problems with the mandate. But they may not be eager to strike it down.

The very fact that we had this heated an argument today shows how far the legal debate has moved in less than two years. Two years ago, almost all legal experts assumed that the mandate was constitutional. Tonight that is very much in question.