Monday, January 31, 2011
Vinson on The Individual Mandate
I emphasized once before, but it bears repeating again: this case is not about whether the Act is wise or unwise legislation, or whether it will solve or exacerbate the myriad problems in our health care system. In fact, it is not really about our health care system at all. It is principally about our federalist system, and it raises very important issues regarding the Constitutional role of the federal government.The states lost on their claim that the Medicaid provisions of health care reform are unconstitutional. Vinson ruled that participation is voluntary. He concedes the state plaintiffs who are party to the suit have presented claims that trying to conform to it will destroy their ability to eventually fund Medicaid and result in being forced to exit, thus leaving millions entirely without insurance, which the states view as untenable. The states advanced the claim that the further Medicaid spending requirements under the act amounted to "coercion" and thus were unconstitutional. Vinson:
In the absence of an Eleventh Circuit case on point, the state plaintiffs’ claim was “plausible” at the motion to dismiss stage. Thus, the plaintiffs were allowed to proceed and provide evidentiary support and further legal support for a judicially manageable standard or coherent theory for determining when, in the words of the Supreme Court, a federal spending condition “pass[es] the point at which ‘pressure turns into compulsion.’” See Dole, supra, 483 U.S. at 211. The evidentiary support is substantially in dispute, as already noted, and further legal support has not been forthcoming. It is now apparent that existing case law is inadequate to support the state plaintiffs’ coercion claim.Summary ruling on this issue for the administration.
On the individual mandate, Vinson rules that individuals who would be forced to buy insurance have standing, and also that states have standing if they have legislation to forbid forced individual mandates. He also decided that NFIB has standing because some of its members have standing.
The States of Idaho and Utah, through plaintiff Attorneys General Lawrence G. Wasden and Mark L. Shurtleff, have standing to prosecute this case based on statutes duly passed by their legislatures, and signed into law by their Governors.So now we come to the fun part (constitutionality of the individual mandate). And you can tell Vinson enjoyed it. On page 20 of the 78 page ruling, he fluffs out his feathers, settles down on his perch, and starts contentedly cracking away at the sunflower seeds of precedent.
(The most offensive thing about this ruling to those who are deeply invested in the constitutionality of the individual mandate will be the evident enjoyment of the writer. Like the Puritans, they object less to the suffering of the bear than the enjoyment of the spectators.)
Correctly noting that the argument for constitutionality under the Commerce Clause falls under the "substantially affects" category (page 20), the happy parrot settles down to a quotefest.
Before attempting to navigate among these three “hazards,” a full review of the historical roots of the commerce power, and a discussion of how we got to where we are today, may be instructive.The esteemed justice starts with the Constitution, Marshall, and the first Commerce Clause decision. He isn't kidding about the "full review" bit.
If you are at all interested in Commerce Clause cases, reading this decision isn't a bad way to learn. Admittedly, Vinson is something of an originalist, but he's a fair originalist and declares himself at the beginning. By page 30, Vinson has worked his way up to Wickard and the aggregation principle.
To illustrate this principle, as applied in Wickard, even though Filburn’s 239 bushels were presumably for his own consumption and seed, and did not significantly impact interstate commerce, if every farmer in the country did the same thing, the aggregate impact on commerce would be cumulatively substantial.At this point, I began to suspect that Vinson's aim was to get the SC justices really interested in this case. He probably suspects that not one of the nine wishes to be forced to rule on health care reform, and I think he's right!
By page 32, Vinson has arrived at the 1995 Lopez case, in which the SC woke up and decided that damn it all, there must be some limitations to the Commerce Clause power. In Lopez the three broad categories were described:
Consistent with this structure, we have identified three broad categories of activity that Congress may regulate under its commerce power. Perez v. United States, supra, at 150; see also Hodel v. Virginia Surface Mining & Reclamation Assn., supra, at 276-277. First, Congress may regulate the use of the channels of interstate commerce. See, e.g., Darby, 312 U. S., at 114; Heart of Atlanta Motel, supra, at 256 (" `[T]he authority of Congress to keep the channels of interstate commerce free from immoral and injurious uses has been frequently sustained, and is no longer open to question.' " (quoting Caminetti v. United States, 242 U.S. 470, 491 (1917)). Second, 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. See, e.g., Shreveport Rate Cases, 234 U.S. 342 (1914); Southern R. Co. v. United States, 222 U.S. 20 (1911) (upholding amendments to Safety Appliance Act as applied to vehicles used in intrastate commerce); Perez, supra, at 150 ("[F]or example, the destruction of an aircraft (18 U.S.C. § 32), or . . . thefts from interstate shipments (18 U.S.C. § 659)"). Finally, Congress' commerce authority includes the power to regulate those activities having a substantial relation to interstate commerce, Jones & Laughlin Steel, 301 U. S., at 37, i.e., those activities that substantially affect interstate commerce. Wirtz, supra, at 196, n. 27.Page 36 discusses Gonzales v Raich:
In light of the circumscriptial rulings in Lopez and Morrison, many were surprised by the Supreme Court’s subsequent decision in Gonzales v. Raich, 545U.S. 1, 125 S. Ct. 2195, 162 L. Ed. 2d 1 (2005), which was not only seen as a return to the more expansive Commerce Clause jurisprudence [see, e.g., Matthew Farley, Challenging Supremacy: Virginia’s Response to the Patient Protection and Affordable Care Act, 45 U. Rich. L. Rev. 37, 65 (2010)], but was, in fact, viewed by some as even going beyond and “displacing” Wickard as the most far-reaching of all Commerce Clause cases.I could not believe it myself. Note that the conservatives on the court generally advanced the idea that someone growing marijuana plants for his or her own use fell under the reach of the Commerce Clause. It's hard to see what might be excluded given that precedent.
By page 38 Vinson comes out swinging, having noted that both sides in this case have two strong precedents - the antis cite Lopez and Morrison, and the pros rely on Wickard and Raich. Having therefore indicated that SC precedent in these cases is muddled, to say the least, Vinson comes out swinging. The cheerfully clucking parrot mutates in the space of a paragraph into a Federalist harpy:
These cases (along with the others discussed above) all have something to add to the discussion. However, while they frame the analysis, and are important from a historical perspective, they do not by themselves resolve this case. That is because, as Congress’ attorneys in the Congressional Research Service (“CRS”)and Congressional Budget Office (“CBO”) advised long before the Act was passed into law, the notion of Congress having the power under the Commerce Clause to directly impose an individual mandate to purchase health care insurance is “novel”and “unprecedented.”This sort of just pure meanness is going to continue in episodes nearly through page 78. Vinson's aim during these Harpy incarnations seems to be to point out the essential bad faith of those who were claiming that there was no constitutional question. There was, and it was a topic under discussion before the legislation was framed. The question has a lot to do with language used in the bill itself.
Mutating back into the legal parrot, Vinson now reasonably points out that although this power is unprecedented, Congress has a presumption of constitutionality. So he decides to argue purportedly from the assumption of constitutionality, and addresses two questions that he feels are basic - is activity required for comprehension under the Commerce Clause (beg page 39), and is failure to purchase insurance "activity"?(beg page 44).
Vinson answers "yes" to the first question:
Without doubt, existing case law thus extends only to those “activities”that have a substantial relationship to, or substantially affect, interstate commerce. I am required to interpret this law as the Supreme Court presently defines it. Only the Supreme Court can redefine it or expand it further --- a point implicitly made by one of the defendants’ own cited authorities.On page 44 Vinson resorts to quoting the CRS again, and then launches into a somewhat interesting analysis of the "activity" question. He rebuts the administration's claim that the health care market is unique in that everyone participates by the mere fact of being alive:
For example, everyone must participate in the food market. Instead of attempting to control wheat supply by regulating the acreage and amount of wheat a farmer could grow as in Wickard, under this logic, Congress could more directly raise too-low wheat prices merely by increasing demand through mandating that every adult purchase and consume wheat bread daily, rationalized on the grounds that because everyone must participate in the market for food, non-consumers of wheat bread adversely affect prices in the wheat market. Or, as was discussed during oral argument, Congress could require that people buy and consume broccoli at regular intervals, not only because the required purchases will positively impact interstate commerce, but also because people who eat healthier tend to be healthier, and are thus more productive and put less of a strain on the health care system. Similarly, because virtually no one can be divorced from the transportation market, Congress could require that everyone above a certain income threshold buy a General Motors automobile --- now partially government-owned --- because those who do not buy GM cars (or those who buy foreign cars) are adversely impacting commerce and a taxpayer-subsidized business.This appears designed to cause Nancy Pelosi heartburn. Indeed, one might argue that making such arguments is an interference with Congressional power to regulate under the Commerce Clause free of heartburn and olive pits. But I digress.
The above quote may seem to be unduly contentious, but in support of the apposite nature of the above argument, Vinson refers to an interchange in oral argument during which an administration lawyer claimed that Congress might have the power to mandate that people buy cars, or a certain type of car. Vinson also wonders what the distinction might be between requiring purchase of health insurance and requiring purchase of a home under Commerce Clause power.
So maybe Vinson was provoked into this; if the defenders of the constitutionality of the act couldn't draw a meaningful distinction, it was probably unwise to assume that Vinson would, and he did not. On page 49 Vinson brings up Breyer's dissent in Lopez, and rejects it, concluding that the link to commerce claimed by the defendants (the administration) "piles inference upon inference".
In short, the defendants’ argument that people without health insurance are actively engaged in interstate commerce based on the purported “unique” features of the much broader health care market is neither factually convincing nor legally supportable.The rest is pretty boilerplate, except that Vinson disposes of the administration's argument that Congress can mandate the purchase of insurance under the Necessary and Proper Clause by quoting from the Federalist papers. In some legal circles, this is considered a crime. I have gathered that in progressive legal circles, even having read the Federalist papers is considered treason and the only possible viable grounds for the death penalty, i.e. impeachment.
Because I find both the “uniqueness” and “economic decision” arguments unpersuasive, I conclude that the individual mandate seeks to regulate economic inactivity, which is the very opposite of economic activity. And because activity is required under the Commerce Clause, the individual mandate exceeds Congress’ commerce power, as it is understood, defined, and applied in the existing Supreme Court case law.
If these advocates for ratification had any inkling that, in the early twenty-first century, government proponents of the individual health insurance mandate would attempt to justify such an assertion of power on the basis of this Clause, they probably would have been the strongest opponents of ratification. They would have recognized how such an interpretation and application of the Necessary and Proper Clause would eviscerate the bedrock enumerated powers principle upon which the Constitution rests.Beginning on page 58, there is a prolonged discussion of the Necessary and Proper clause. To my mind, this is one of the more interesting constitutional questions involved in this debate. Vinson notes that accepting the administration's argument could have very negative consequences:
Such an application of the Necessary and Proper Clause would have the perverse effect of enabling Congress to pass ill-conceived, or economically disruptive statutes, secure in the knowledge that the more dysfunctional the results of the statute are, the more essential or “necessary”the statutory fix would be. Under such a rationale, the more harm the statute does,the more power Congress could assume for itself under the Necessary and Proper Clause. This result would, of course, expand the Necessary and Proper Clause far beyond its original meaning, and allow Congress to exceed the powers specifically enumerated in Article I. Surely this is not what the Founders anticipated, nor how that Clause should operate.No one is a pure originalist; part of this argument approaches some of Breyer's arguments for his "active liberty" concept. Vinson quotes Thomas Jefferson and Marshall again.
The Necessary and Proper Clause is one of the more interesting "hooks" that might cause the SC justices to be less reluctant to take this case, and Vinson quotes Kennedy in what may be a strategic manner on page 62:
(“It is of fundamental importance to consider whether essential attributes [of federalism embodied in the Constitution] are compromised by the assertion of federal power under the Necessary and Proper Clause; if so, that is a factor suggesting that the power is not one properly within the reach of federal power.”) (Kennedy, J., concurring).Vinson then addresses severability, and concludes that the individual mandate cannot be severed. I find his argument unconvincing. However he does not grant injunctive relief, meaning that the administration can continue carrying out the act while appeals continue. ( Theoretically, anyway. Technically the theory is that this ruling prevails, but of course it only prevails in this district, and the act has a national scope. This is why this has to go all the way. For more. In banking law, we have some cases in which district judges have invalidated regulatory rulings. But those same rulings are enforced in other districts. I am sure that the administration will get a stay - there are other contradictory rulings out there. For example, another district judge nixed the individual mandate but not the rest of it. It should take about 20 minutes to get a stay. Ilya Shapiro. )
On page 78, he quotes Obama on the individual mandate not being necessary to health care reform. Of course that is true. By now I bet the Supreme Court is just praying that Congress will revisit this issue so that they don't have to take it up. However Obama will not turn, so the SC is stuck with it. Vinson states several times that only the Supreme Court can change the current interpretation of the Commerce Clause (under which he believes he has properly ruled). It's an effort to send on the hot potato, and it is certainly not disrespectful of the SC.
I don't know how the SC will eventually rule, but I do know that Vinson has just earned the Scarlet Progressive Legal Letter, and is a marked man. He would never be confirmed for a higher position as justice after this opinion.
Somin writing at Volokh. Kopel at Volokh.
Everyone needs to file income tax?
maybe the way this law was written the supremes will agree but the idea that individual mandate is unconstitutional seems a stretch.
Anyone who thinks health care will get better and cheaper by raising demand without raising supply is an idiot.
The penalty for not having insurance is variously described within the law and within the the arguments presented to various courts during this spate of litigation. But most courts seem to be skeptical of the tax argument.
Had Congress done this another way - changed the mandate and penalty to a tax credit - I think it would survive. But to do so, Congress would have had to raise income tax rates considerably, which would have shifted far more of the cost to high income earners. That was not going to be popular with a portion of the Democratic base that has a lot of influence within the party. If you had told the average college professor that he or she would be paying 15K more in income taxes, the NY Times would exploded in outrage. Also about 20% more of mortgages would have rolled into default.
The reality is that the cost of buying insurance plus paying for the non-covered expenses is a much higher proportion of income for mid-low and median range workers, so doing this as a straight tax would work out absolutely differently.
Basically, if it had been done that way, we'd be setting up some sort of socialized health care system. The health care reform bill creates a weird hybrid.
The way the law is now structured, this is not an income tax. Because of the bottom tier, it is a regressive tax - the amounts lower income persons who exceed the 150% FPL limit qualification for Medicare are forced to pay are far in excess of the amounts a 2nd highest quintile person is forced to pay.
This makes it de facto not an income tax.
Once the penalty is fully phased in, the penalty will be a minimum of $695 annually or 2.5% of income, whichever is greater. But the penalty is maxed at $2,085 per family.
Now use the calculator above to see what the real costs will be for a 55 year old making 30K and a 55 year old making 100K (presuming no employer health insurance).
To get the net costs you add the person's share of the premium plus the maximum out of pocket.
So a 55 year old making 30K is responsible for $3,125 in out of pocket costs and $2,509 in premiums. $5,634 in total, or nearly 19% of income.
Realistically, because the plan only covers 70% of cost until the out of pocket is reached, this person is going to have to forego certain types of health care.
Now run it for that 55 year old with a 100K income. There is no subsidy - that person has to pay the total premium, estimated at $8,495 plus a net out of pocket cost of $6,250, or 14.7% of income.
Considering total penalty for non-insurance, the 100K earner pays $2,085 (2.09% of income) and the 30K earner pays $750 (2.5% of income).
See, if more people had ever run the numbers, this health bill would be acutely unpopular in democratic circles.
In other words, what I am trying to tell you is that this bill doesn't actually give lower income people access to health care, and the sicker they are the less likely they will be able to get it.
It is very similar to the "deal" announced in December which gave tax breaks of $2,000 to earners making 100K and tax breaks of $300 to earners making 15K, thus actually raising federal taxes in comparison to 2010 on about 40% of earners.
This sort of regressive stuff will not work in practice.
Also, the premiums the Kaiser calculator contains are far too low - cost shifting will increase, not decrease under the bill. So the federal subsidy cost is going to be much higher than calculated. The only way to make it work is to cut coverage under the basic plan, which means that lower income earners are going to be even deeper in the soup.
that is my question and why I think this particular ruling is a stretch. That the Congress created a Wolfe in sheep cloths, sure, given special interest driven political culture that dominate both parties that is a given.
You've done yeoman work for all of us who are watching this with bated breath and trying to read the tea leaves.
After having been rebuffed on the income tax analogy, it would be more than a little interesting to see why Type 2 thinks the ruling is a stretch. My take is Type 2 thinks the ruling s a stretch because he does not want the ruling to be correct. This is kind of the ostrich approach to court decisions. My second opinion is Type 2 did not actually read the post or Vinson's opinion. He kind of wandered over here to give us his belief in this decision being a "stretch" (even if SCOTUS agrees) in lieu of having any actual counter argument.
E.G. NY Times got it wrong that the Vinson judgment doesn't affect implementation. It does, but the reality is that implementation, for now, is only halted in this district. The administration needs to go get a stay pending appeal, and I don't think it will have any problem doing so.
The individual mandate was ruled out in one district in VA, but ruled valid in another district that crosses VA. So in the one district, if the controversy lasted until 2014, the individual mandate couldn't go into effect, but almost all the rest of the bill could.
If that's not confusing, what is? Any one who is not confused isn't very bright or has spent a huge amount of time reading and thinking about this. Well, most of us have other things to do....
If the income tax argument were truly valid, the authority given in the bill would involve it, and the administration wouldn't be making these arguments. Nor would the Commerce Clause have been a topic of debate in the papers the CRS wrote about this issue.
The authority to tax income really doesn't extend to the authority to impose a penalty for something a person hasn't done. Nor is the tax treated like income tax in the law.
So, pretty much every left/libtard and a smattering of conservatives...?
Or is that connection not symmetric?
So, they're fully and utterly qualified to become standing members of Congress, then...
"What possible contortion of reasoning got this bull///// sorry, 'bill' -- passed in the first place?"
What's my prize?