“No inquiry is more important to public health law,” declares law professor Lawrence Gostin, “than understanding the role of government in the constitutional design.”1 (p25) Gostin is correct. As a threshold matter, all public health activity is predicated on the scope and limits of the legal powers granted to the state and national governments. In part because of the vast expansion of governmental activity in the last half century, and in part because public health concern and discussion understandably focuses on the political challenges of specific legislative initiatives and the operational details of day-to-day implementation, the constitutional foundations of public health activity frequently remain forgotten in the background.
President Barak Obama's March 23, 2010, signing of the Patient Protection and Affordable Care Act (PPACA)2 may rival Medicare and Medicaid as the most dramatic health care reform action in US history. Among its many provisions, the legislation increases access to Medicaid, introduces cost containment mechanisms into the public payer system, and, significantly for this discussion, reforms private insurance.* The most controversial provision of PPACA has been labeled the “individual mandate,” or, the “minimal essential coverage” requirement. Every US citizen who does not meet an exemption must maintain a specified minimum level of health insurance beginning in 2014. Individuals who do not secure the required coverage will be assessed a penalty in their annual US income tax return.†
Patient Protection and Affordable Care Act's passage was followed the same day by the well-orchestrated filing of a series of lawsuits attacking the landmark law. The most prominent and important of these challenges were posed by suits filed in federal district courts by over 2 dozen state attorneys general claiming that the minimal essential coverage provision represents an unconstitutional exercise of federal power. Two federal district courts have upheld the constitutionality of the individual mandate of PPACA.5 Two federal district courts—Cuccinelli v Sebelius 5 and Florida et al v DHHS 6—have declared the provision unconstitutional. These decisions will be reviewed by federal Courts of Appeals and appear increasingly likely to reach the US Supreme Court. The public and legal attention generated by the challenges to the individual mandate of PPACA is of academic and public health interest because it highlights the often overlooked constitutional justification for a broad range of federal activities. More importantly, the ultimate legal resolution of these high-order questions of constitutional law will help define the scope and limits of the national government's authority to act and regulate in the interest of the public's health in this and other future settings.
The Constitutional Origins of Federal Power to Affect the Public's Health
The US Constitution established a “federal” system where 2 governments exist simultaneously; state government and a national government, each having different powers and different sources of power. State power is said to be “plenary” and broad. State government derives its authority to act in the public health arena from its “police power”—the inherent authority of a state sovereign to regulate private interests to promote health, safety, and of the public.7 In contrast, there is no broad, plenary, federal “police power.” Instead, as a matter constitutional law, the power of the national government is limited to the “enumerated” powers granted it in the US Constitution. The national government's authority to act and regulate to protect the public's health is drawn from 2 “enumerated” constitutional powers. Article 1, § 8 grants the power to “regulate commerce ... among the several states.” It also grants Congress the power to collect “taxes” and “provide for the general welfare.” Any action by the federal government designed to benefit the public's health must be based on either the Commerce Clause or the power to tax and provide for the general welfare. These enumerated powers have supported an expansive range of federal activity, regulation and expenditure on behalf of the public's health, but they also represent a genuine legal limitation of national authority.
The View From Congress
Congress explicitly and elaborately predicated the minimal essential coverage provision of PPACA on its constitutional authority to “regulate commerce.” According to the Act, “The individual responsibly requirement provided for in this section is commercial and economic in nature, and substantially affects interstate commerce.”8 Specifically, Congress recognized that health insurance is a national industry that policies are sold in interstate commerce and that claims payments from enrollees flow across state lines. Moreover, health care services are a significant part of a national economy (17.6% in 2009). Medical supplies, equipment and drugs are shipped via interstate commerce. The Act states that “near universal coverage” will improve the employer-based health insurance system and bolster the national economy by decreasing economic losses associated with the “poorer health and shorter lifespan of the uninsured.”
Congress determined, as well, that an individual who foregoes the purchase of health insurance “increases financial risks to households and medical providers” through the so-called “free rider” phenomenon. Some individuals forego coverage when they are healthy, only to rely on emergency care or other services when they are injured or ill. The cost of the resulting uncompensated care is typically shifted to insured individuals nationwide in the form of higher health care costs and higher premiums. Health care providers who provide care without reimbursement are impacted, further increasing health care costs. According to Congress, mandated insurance will also decrease the phenomenon known as “adverse selection.” Many uninsured persons are younger and healthier than the rest of the population. Encouraging them to join national insurance pools will help decrease premium costs for all by more efficiently spreading insurance risks and increasing “economies of scale.” Congress concluded its commerce clause justification by noting that the Supreme Court has long decreed that insurance is interstate commerce and subject to federal regulation under the commerce clause.
Congress also based PPACA on its constitutional power to tax and provide for the general welfare. The House Joint Committee on Taxation's “Technical Explanation of the Revenue Provisions of the Reconciliation Act of 2010,” explains that the Internal Revenue Service will level an excise tax as a penalty for those individuals who fail to maintain the required minimum level of health insurance coverage.9 The tax penalty collected from those who do not acquire insurance can be committed to the expanded Medicaid coverage that is also part of PPACA.
The Case for Unconstitutionality
The case against the constitutionality of PPACA's insurance requirement has been made in the courts and in print. Opponents argue that neither the Commerce Clause, nor the power to tax and provide for the general welfare, provide Congress the legal authority to mandate insurance purchase. The Cuccinelli v Sebelius 10 complaint asserts simply and directly that:
The Act [PPACA] is directed to a lack or failure to engage in activity that is driven by the choices of individual Americans. Such inactivity by its nature cannot be deemed to be commerce or to have any substantial effect on commerce, whether interstate or otherwise. As a result, the Act cannot be upheld under the Commerce Clause, Const. art. I, § 8.
Likewise, the Florida et al v USDHHS 11 suit argues that uninsured individuals are not engaged in activities “arising out of or connected with a commercial transaction,” and, this noncommercial activity does not affect interstate commerce. In fact, opponents PPACA content that the individual mandate focuses on inaction in a way that has never been supported by Commerce Clause jurisprudence. It represents an attempt to use the national power to compel action or commercial activity. As Randy Barnett, explains: “By its own plain terms, the individual mandate provision regulates no action. To the contrary, it purports to “regulate” inactivity by converting the inactivity of not buying insurance into commercial activity.”12 (pp1-2) To support their position opponents of the individual mandate rely on recent Supreme Court cases limiting the reach of the Commerce Clause. US v Lopez 13 invalidated a federal statute that criminalized possession of a firearm within 1000 feet of a school. The Lopez court concluded that the prohibited activity did not substantially affect interstate commerce and therefore could not be justified on the basis of the Commerce Clause.13 Similarly, in US v Morrison, 14 the Supreme Court declared the “Violence Against Women Act” unconstitutional. The Court ruled that the Act, which allowed victims of gender-based violence to file suit in federal court, exceeded Congress' Commerce Clause powers because the regulated activity was noneconomic and did not have a substantial impact on interstate commerce.14 Finally, both the Cuccinelli and Florida et al v USDHHS complaints contend that the Commerce Clause has never been “used to require citizens to buy goods or services.” “Permit[ing] the national government to require the purchase of goods or services,” the suits warn, “would deprive the Commerce Clause of any effective limits.”
Patient Protection and Affordable Care Act opponents also claim that the insurance mandate cannot be justified on the basis of Congress' power to tax and provide for the general welfare. First, they assert that the money charged to uninsured individuals is in fact not a “tax” at all, but rather a “penalty” (and is described as a “penalty” in the text of PPACA). Instead, PPACA's challengers argue, this penalty is, in actuality, a social policy regulation posing as a tax. As a mere regulation, it cannot be justified under Congress' taxing power. Second, the Cuccinelli complaint, and like-minded academic critics argue that PPACA's tax penalty violates Article 1 §9 of the US Constitution which states that “No capitation, or other direct, tax shall be laid, unless in proportion to the census.” According to this line of reasoning, the tax penalty is applied “without regard to property, profession, or any other circumstance, and is unrelated to any taxable event or activity.” As a result, it is argued, the penalty is an unconstitutional “capitation” or “direct” tax on the individual prohibited by the Constitution. Third, as in the Commerce Clause debate, opponents of the mandate contend that there is no other example in which the federal government taxes “inaction.” Fourth and finally, opponents of PPACA claim that congressional supporters of the mandate “changed the argument” once the Commerce Clause defense was imperiled adding the tax justification only belatedly. The courts, the suits argue, should not allow a “switch in constitutional theories.”12,15
On December 13, 2010, in Cuccinelli v Sebelius, the federal District Court for the Eastern District of Virginia ruled that the individual mandate provision of PPACA was unconstitutional. Judge Henry Hudson declared that the provision “goes beyond the historical reach” of Supreme Court rulings and exceeds the Commerce Clause powers granted Congress. In addition, Hudson rejected the argument that the individual mandate was a legitimate exercise of the congressional power to tax and provide for the general welfare. The provision, according to Hudson was penalty rather than a tax. In addition, Hudson ruled that the constitutionality of the action must be evaluated on the basis of Congress' intent, which was clearly to regulate commerce.5
Six weeks later, on January 31, 2011, in Florida et al v USDHHS, the federal District Court for the Northern District of Florida declared the entire PPACA unconstitutional. In a detailed opinion, judge Rodger Vinson ruled that the individual mandate exceeds Congress' powers because it regulates “inactivity.” According to Vinson, “activity” is an “indispensible” requirement of federal commerce clause regulation. Vinson observed that acceptance of PPACA expanded version of federal power would mean that Congress could require people to “buy and consume broccoli at regular intervals” or “require that everyone above a certain income threshold buy a General Motors automobile.” Vinson reasoned that the individual mandate provision was so inextricably connected to the rest of PPACA that it could not be invalided and severed from the Act. Therefore, Vinson concluded the entire body of PPCA should be considered unconstitutionally invalid in the 26 states that had joined the suit as plaintiffs.6 Both Cuccinelli and Florida et al v USDHHS will be appealed to Federal Courts of Appeal for the 4th and 11th Circuits.
The Case for Constitutionality
The arguments in favor of the legality of the “minimal essential coverage provision” rest on the extensive and long-standing constitutional jurisprudence that has assigned Congress broad powers to regulate commerce and to “tax and promote the general welfare.”
A half-century of nearly unbroken line of Supreme Court cases support expansive federal government regulation and activity under the Commerce Clause. Wickard v Filburn 16 and Gonzales v Raich 17 both provide strong legal and analogical support for PPACA's health insurance mandate. In Wickard the Supreme Court upheld a New Deal regulation fining a farmer who cultivated wheat solely for his intrastate personal use in excess of that which was stipulated by federal production controls. The Wickard court reasoned that Congress could regulate solitary individual action because the “accumulated effect” of the individual actions of many similarly situated wheat farmers could affect the national market and thus interstate commerce. In Raich, the Court declared that federal laws prohibiting the cultivation of small amounts of marijuana, entirely for personal use were a constitutional exercise of Congress' Commerce Clause powers. Again, the Court reasoned that homegrown marijuana, even for person and local use only, could in the aggregate affect the interstate market which Congress had chosen to implement a comprehensive regulatory scheme (in this instance prohibiting the interstate illegal drug market). As Justice Anton Scalia explained in a concurring opinion in Raich:
Where necessary to make a regulation of interstate commerce effective, Congress may regulate even those intrastate activities that do not themselves substantially affect interstate commerce... to facilitate interstate commerce by eliminating potential obstructions, and to restrict it by eliminating potential stimulants.
As goes wheat and marijuana, PPACA's proponents argue, so goes health insurance. Recall that Congress' extensive statutory justification for PPACA included a determination that the cumulative effect of individuals' decision to forgo the purchase of health insurance plays a role the national insurance market and affects national medical costs thereby impacting interstate commerce.18,19
Opponents of PPACA have responded that reliance on Wikard and Raich is unfounded and argue that in these cases “activity” is penalized whereas PPACA penalizes “inactivity.” Despite its apparent rhetorical power, the “action-inaction distinction” characterization is formalistic and proves too much. After all, as constitutional law scholar Balkin19 has explained, the decision to forego health insurance is itself an economic activity. It represents the decision to spend one's income in one way rather than another, to self-insure. If uninsured individuals are injured or become ill they will likely receive care through the emergency department or other sources and shifting the costs to others, increasing prices, and disrupting the insurance markets. These are economic activities with a cumulative effect on interstate commerce.19
Moreover, the “activity/inactivity distinction” consistently made by opponents of the individual mandate and the district courts, is not an essential feature of Commerce Clause jurisprudence. Instead, the key analysis is whether the regulated matter has an impact on interstate commerce. As a matter of law Congress is given presumptive authority to make that decision and courts must accept it if the finding has a “rational basis.” Under this test courts may rule against a congressional finding only if there is no rational reason for the action. The Civil Rights Act of 1964,20 for example, relies on Commerce Clause authority to prohibit racial discrimination in restaurants and other public accommodations.21 Discrimination in public accommodations involves nonaction (ie, the refusal to serve African Americans), not action. But in drafting the Civil Rights Act, Congress determined that discrimination by restaurants and public accommodations cumulatively affected interstate commerce. As a result, the Supreme Court has consistently supported Congress' authority under the Commerce Clause to prohibit this species of “nonaction.”22,23 Likewise, in PPACA, Congress has determined that individuals who forgo the purchase of insurance will affect commerce across state lines. As long as there is “rational basis” for that determination, it should be accepted by the Supreme Court as a legitimate exercise of congressional power to regulate commerce.
Defenders of the insurance mandate have responded cogently as well to claims that the tax penalty is an unconstitutional exercise of power. First, the penalty, they explain, is administered by the Internal Revenue Service and represents a tax based on income. It is not, as argued, a direct tax on individuals which is explicitly prohibited by the Constitution. After all the tax does not apply to every citizen, as would a direct tax. Second, PPACA opponents also claim that that the fine for foregoing insurance is in actuality “regulatory penalty” posing as a “tax.” In response, PPACA supporters explain that constitutional law does not require that taxes be devoid of regulatory purpose. As long as the congressional action produces some revenue, courts have allowed tax penalties to serve complementary regulatory purposes. As the Supreme Court recognized in US v Sanchez (1950):
It is beyond serious question that a tax does not cease to be valid merely because it regulates, discourages, or even definitely deters the activities taxed. The principle applies even though the revenue obtained is obviously negligible, or the revenue purpose of the tax may be secondary.24
Third, echoing their Commerce Clause arguments, PPACA opponents claim that individuals are being taxed or penalized for “inaction,” a consequence they claim is unprecedented. However, individuals are frequently taxed for failing to perform an act through so-called “play or pay” penalties. Monetary penalties are levied by federal statue and regulation for failing to file tax returns in a timely manner and for the failure to register for the selective service. Corporations may choose between paying tax penalties, and employing designated pollution-control equipment. In these and other instances, individual inaction that Congress views as harmful to the general welfare can be taxed.18,19 Thus, PPACA proponents argue, even without the support of the Commerce Clause, the individual mandate penalty can be justified by Congress' authority to tax individuals to promote the general welfare. Improving the health of individuals, expanding access to insurance, controlling the costs medical care and health insurance, and enhancing the productivity of the US workforce—the aims specifically identified by Congress in the text of PPACA—are indisputably legitimate contributions to the “general welfare.”
There is no guarantee that the Cuccinelli and Florida et al v USDHHS rulings will reach the US Supreme Court. Much depends on the actions of the 4th and 11th Federal Courts of Appeals to which they will first be appealed. In the meantime there will be much speculation, and trepidation, regarding the Court's likely action. A number of factors should be taken into account as this constitutional drama unfolds.
The debate over the appropriate shape of health care reform and whether mandatory universal insurance coverage is advisable are matters on which reasonable people of good will disagree. One's position on PPACA or any other potential health reform will be influenced by personal and political philosophy and by one's evaluation of which approach is likely to represent the most wise and effective social policy. It might also be influenced by one's view of what the Constitution should say. The deep ideological schisms and continuing debates in both Congress and the public regarding health reform are testament to the fact that there is widespread honest disagreement on how these issues should be resolved.
But while the legal battle over the individual mandate will of course be influenced by these factors, it is important to remember that Cuccinelli and Florida et al v USDHHS will (and should) unfold primarily as a matter of constitutional law, not constitutional philosophy.
As a matter of constitutional law, it is unlikely that the Supreme Court will declare the individual mandate requirement beyond the powers of Congress. Federal courts have supported nearly unrestricted power to regulate and raise revenue under these provisions for at least 50 years. To stop, and in fact reverse, this legacy would be according to law professor Balkin, tantamount to a “constitutional revolution.”25 Charles Fried, Solicitor General under Ronald Reagan characterized that suits as “simply a political ploy and a pathetic one at that.”26 Constitutional scholar Laurence Tribe declared that the law's constitutionality is “open and shut.”27 Indeed, before the Cuccinelli and Florida et al v USDHHS district court rulings many Supreme Court observers predicted that the high court would uphold PPACA by a margin of at least 7 to 2.28
The legal arguments provided by the states' attorney generals' suits are not sufficiently compelling to spark a revolution. It is the number of states' attorney generals that have joined the fray that has given the suits gravitas, not the strength of their constitutional reasoning. My own view is that the dramatic number of state challenges to PPACA has been driven primarily by 2 forces. The suits have been spearheaded predominantly by Republican attorney generals and their administrations who not surprisingly oppose the legislation on policy and ideological grounds. But the individual mandate requirement itself does not directly impact state government. It is aimed at individuals. In contrast, other provisions of PPACA will have a dramatic impact on state government, especially the requirement expanding access to Medicaid. The required expansion of Medicaid is virtually unassailable on constitutional grounds. States can only avoid the substantial additional financial burdens associated with expanded access by forgoing all Medicaid funds. An attack on the constitutionality of the insurance mandate, however, in effect allows states to attack the expanded Medicaid requirement by proxy. Recall that the district court's ruling in Florida et al v USDHHS, while based on a finding against the constitutionality of the individual mandate, invalidated the entire bill including the mandated expansion of state Medicaid rolls.
After the negative district court rulings some court watchers have apparently shifted their projections suggesting that PPACA is likely to be upheld by a smaller margin. Patient Protection and Affordable Care Act-supporters' growing apprehension is likely based on the losses at the district court level and the concern that the Supreme Court will be influenced by ideology and politics. It is wrong to place too much credence on the Cuccinelli and Florida et al v USDHHS opinions. They are both single-judge rulings that carry no precedential weight. Given the coordinated efforts of PPACA's opponents it is not surprising that they were able to steer their court filings toward friendly judges. It is also frequently noted that the current Supreme Court is demonstrably more conservative than its predecessors and as a result may be open to a limitation of the heretofore-expansive view of commerce clause powers.29 The ideological predispositions of the justices should not be overlooked; but nor should they be overemphasized. A common view is that judges typically follow clearly established law, but are more likely to revert to their ideological roots when existing law is less definitive. If this perspective is valid, the Court's ideological predispositions are unlikely to rule the day because as the above discussion suggests doing so would require a rewriting of constitutional law. In short, it is unlikely that the court will rule against the individual mandate merely because some justices may have Republican sympathies, because some justices may harbor libertarian sentiments, or because some justices may believe that PPACA is unwise social policy. Even Laurence Tribe, whose views are frequently at odds with more conservative justices, has declared that “[o]nly a crude prediction that justices will vote based on politics rather than principle”27 would lead anyone to believe that the Court would rule against PPACA.
It is true that the Supreme Court is capable of leading a revolution and has done so in other contexts, but those cases are rare. The Court's actions in Lopez and Morrison do suggest that some justices might be willing to limit Congress' Commerce Clause powers. It is true as well that some justices might view Cuccinelli and Florida et al v USDHHS as an opportunity to further narrow the range of the Commerce Clause. But the Lopez and Morrison decisions involved comparatively minor legislation that had attracted little public attention, rebuke, or support. In contrast, PPACA is a major initiative the invalidation of which will not go unnoticed. Indeed the Court may very well endanger its own political position and cultural authority if it rules against PPACA. It may also reap the blame for a health care system that faces dark days ahead even under the best of circumstances. A reversal of PPACA would be dramatic and historic from a constitutional perspective. The Court, far more frequently favors evolution over revolution. These comments do not mean that finding against PPACA is impossible. They only suggest that the burden that must be overcome before the Court is likely to take such action is very high.
In sum, the constitutional debate over PPACA will serve as a robust public review of the constitutional basis of federal action to promote the public's health. It should also stand as a reminder that philosophical, policy, and legal debates, whereas intertwined still remain discrete. The discussion and refinement of what constitutes the most appropriate and effective form of health care reform should continue in public forums and by elected representatives in government. If PPACA needs be repealed, repaired, or reaffirmed that decision will be best made after honest and open debate in public and in Congress not the courts.
1. Gostin LO Public Health Law: Power, Duty, Restraint. Berkeley, CA: University of California Press; 2000 25.
2. Patient Protection and Affordable Care Act (PPACA) Pub. L. No. 111-148, 124 stat. 119 (2010).
3. Liberty University, Inc. v Geithner, Case No. 6:10-cv-00015-nkm, November 30, 2010, Western District of Virginia, Opinion by Norman K. Noon.
4. Thomas More Law Center v Obama, 720 F. Supp.2d 882 (E.D. Mich. 2010).
5. Commonwealth of Virginia ex rel. Kenneth Cuccinelli v. Kathleen Sebelius, Secretary of the Department of Health and Human Services 728 F. Supp. 2d 768 (E.D. Va. 2010).
6. State of Florida, et al. v United States Department of Health and Human Services, et al., Case No.: 3:10-cv-91-RV/EMT, Opinion by Roger Vinson, January 31, 2011.
7. Grad FP The Public Health Law Manual. 3rd ed. Washington, DC: Public health Association; 2005: 9–37.
8. PPACA Pub. L. No. 111-148, 124 stat. 119 (2010), Section 1501(1); Section 1501(2) (A-J); and Section 1501 (3).
10. Commonwealth of Virginia ex rel. Kenneth T. Cuccinelli v. Kathleen Sebelius, Complaint, No.3:10CV188, Filed March 23, 2010, Federal District Court, Southern District of Virginia, Richmond Division.
11. State of Florida, et al. v. United State Department of Health and Human Services, et al., Complaint, No. 3:10-cv-00091-RV-EMT, Filed March 23, 2010, Federal District Court, Northern District of Florida, Pensacola Division.
13. US v Lopez, 514 US 549 (1995).
14. US v Morrison, 529 US. 598 (2000).
15. Rivkin DB, Casey LA Debate: health care purchase mandate: unconstitutional and likely to be struck down by the courts. Univ Penn Law Rev. 2009 158 94–101 109-113.
16. Wickard v Filburn 317 U.S. 111 (1942).
17. Gonzales v Raich, 545 U.S. 1 (2005).
19. Balkin JM Debate: the constitutionality of an individual mandate for health insurance. Univ Penn Law Rev. 2009 158 102–108 114-118.
20. The Civil Rights Act of 1964 Pub.L. 88-352, 78Stat.; 241 42 U.S.C. § 1973.
22. Heart of Atlanta Motel v U.S., 379 U.S. 241 (1964).
23. Katzenbach v McClung, 379 U.S. 294 (1964).
24. Sanchez 340 U.S. 42 at 43 (1950), quoted in: Balkin JM. Debate: the constitutionality of an individual mandate for health insurance. Univ Penn Law Rev. 2009;158:102-108, 114–118.
25. Balkin JM The constitutionality of the individual mandate for health insurance. N Engl J Med. 2010 362(6), 482–483.
28. Lithwick D. Gaming the System: at the Supreme Court, could legal precedent be less important than popular opinion? Slate. February 2, 2011 http://www.slate.com/id/2283415/
. Accessed February 8, 2011.
*Pre-existing condition limitations are prohibited, as are annual and lifetime caps on individual insurance coverage. In addition, the legislation mandates the proportion of the insurance premium that must be spent on health care (80%–85%) and designates minimum levels of care, including preventive care coverage, for basic health insurance packages. Tax credits and subsidies for individuals and families making less than 400% of the poverty level are provided to offset insurance and other health care costs.
†PPACA Pub. L. No. 111-148, 124 stat. 119 (2010), Section 5000A Requirement to Maintain Minimum Necessary Coverage. The penalty will be phased-in until 2016 when an uninsured individual who does not meet an exemption will be subject to a tax penalty of 2.5% of the individual's taxable income, or $695 for each uninsured adult in the household. See PPACA Pub. L. No. 111–148, 124 stat. 119 (2010), Section 5000A (c) 1–3.