Responding to the Eleventh Circuit and to Richard Epstein
The Eleventh Circuit's August 12 opinion in Florida v. Dept. of Health and Human Services, although striking down the individual mandate as an exercise of congressional power under the Commerce Clause, purports to reject the activity/inactivity distinction on which many have relied to reach the same conclusion. But it smuggles that distinction into its artificial way of interpreting and applying the Supreme Court's own distinction, framed in the decisions striking down the ban on gun possession near schools and creating a federal cause of action for violence against women, between "economic" activities and "noneconomic" activities.
According to the Eleventh Circuit, the decision to forgo health insurance is "noneconomic" because it is "defined by the absence of . . . commerce." For this reason, according to the Eleventh Circuit, decisions not to purchase health insurance are not economic activities subject to the aggregation principle of Wickard v. Filburn but are instead non-economic activities indistinguishable from the possession of a gun or a violent attack on a woman. This bizarre conclusion neglects the fact that a decision to forgo health insurance is equivalent to a decision that someone else will eventually pay for one's inevitable consumption of health care. Gonzales v. Raich expressly holds that "consumption" is economic activity. It follows plainly from this characterization that decisions about how one's consumption of health care will be funded are indeed economic decisions subject to regulation under the commerce power. The fundamental fallacy in the Eleventh Circuit's approach is to view the decision not to purchase health insurance in what the dissent properly described as "a freeze-framed still, captured, like a photograph, in a single moment in time." But nothing in the Commerce Clause "“ in its text, its structure, its history, or the precedents construing it "“ justifies any such insistence on stopping time in its tracks.
The Eleventh Circuit also worries that, if Congress were permitted to impose the individual mandate, there would be no limiting principle demarcating the boundary of its commerce power. This worry is overstated. The Supreme Court has already articulated significant limiting principles in United States v. Lopez and United States v. Morrison: under those decisions, Congress may not regulate noneconomic activity based solely on the aggregate effects of such activity on interstate commerce. Recognizing that decisions to forgo health insurance are economic when viewed not in a freeze-frame but over time, and that the individual mandate accordingly falls within the power of Congress to regulate those economic activities that, in the aggregate, have a significant impact on interstate commerce, in no way detracts from this already extant limiting principle.
Accordingly, the Eleventh Circuit was wrong to worry that Congress could impose all manner of mandates if the health insurance mandate were upheld. For example, it does not follow that Congress could also require everyone to keep a firearm in his home or apartment "“ a mandate of the form that the City of Kennesaw, Georgia, has adopted "“ on the theory that would-be burglars would be deterred from invading homes to steal what they might otherwise purchase commercially. This is so because, just as a decision to possess a gun in a school zone is "noneconomic" under Lopez, so too is a decision not to possess a firearm in one's home "noneconomic"; accordingly, the aggregate effects of refusals to possess guns do not bring those refusals within Congress's commerce power. Nor does it follow that Congress could compel everyone to purchase liability insurance. Decisions to forgo health insurance are decisions about who will pay for one's inevitable consumption of health care. Decisions to forgo liability insurance, for example, are not of this character even though, as the Eleventh Circuit noted, all of us are subject to a risk of eventually causing harm through a reckless or negligent act at a time when we might not have the means to make the injured party whole.
One might certainly argue, as the Eleventh Circuit does, that factors such as "inevitability" are not "constitutional" in character. But this objection misses the point. The purpose of talking about such criteria as "inevitability" is not to establish new "constitutional principles" that delineate the boundaries of the commerce power. That task has already been accomplished by Lopez and Morrison, which together supplied the key limiting principle: Congress may not regulate purely noneconomic activity based solely on its aggregate effects on interstate commerce. The point of talking about such factors as "inevitability" is simply to explore whether this already articulated limiting principle enables one to distinguish the reach of the Affordable Care Act from that of other imagined federal legislation requiring all citizens to purchase particular goods or services. And the answer is that it does, for the tight link between an individual's decision not to purchase health insurance and that individual's eventual consumption of uninsured health care establishes that the individual's decision to forgo health insurance is an "economic" one.
To be sure, some uninsured individuals will ultimately be able to pay for health care when they need it; they will not, at the point of consumption, shift costs onto others. Thus, the individual mandate might be said to be "overinclusive." But in Raich, the Supreme Court held that Congress need not "legislate with scientific exactitude" when using the commerce power. To the contrary, when "the total incidence of a practice poses a threat to a national market," Congress "may regulate the entire class." Congress properly concluded that the "total incidence" of the practice of going without health insurance poses a threat to the health-care services market; it may therefore regulate the "entire class" of that activity, even if particular instances in that class do not contribute to that threat. As Judge Marcus's dissent from the Eleventh Circuit's ruling puts it, "The fact that an exceedingly small set of individuals can afford to go it alone poses no obstacle to Congress' ability under the Commerce Clause to regulate the uninsured as a class."
Turning to the argument that the individual mandate is in any event supported by the Necessary & Proper Clause, the Eleventh Circuit suggested that the individual mandate cannot be "Necessary and Proper" to the broader regulatory scheme because the enforcement mechanism Congress established is "toothless." (In effect, all the government can do under the Act as drafted is reduce any tax refund owed to an uninsured individual; it may not use criminal or civil sanctions, or even impose levies or liens.) This argument is wide of the mark. Whenever Congress wishes to encourage particular behavior, it has available to it a wide variety of mechanisms, ranging from tax credits or subsidies for engaging in the desired conduct to criminal sanctions for failing to engage in it. Of course a penalty that is enforceable only through the reduction of tax refunds will not provide as powerful an incentive as a criminal law. But it provides an incentive to get insured nonetheless. And it is therefore a means rationally related to a constitutionally permissible end, which is all that the Necessary & Proper Clause has been understood to require ever since John Marshall's landmark interpretation of the clause in McCulloch v. Maryland in 1819.
Finally, the Eleventh Circuit's conclusion that the individual mandate cannot be upheld as an exercise of Congress's power to tax rests entirely on the proposition that the penalty through which the mandate is enforced cannot be appropriately characterized as a "tax" in light of Congress's intent in enacting it and Congress's way of describing it in the Affordable Care Act. This is at bottom an argument not about congressional power but about statutory interpretation. But fundamental questions of congressional authority vis-Ã -vis the reserved powers of the states turn not on what Congress had in mind but on what Congress did and on whether its exercise of power fell within the boundaries of Article I. Here, what Congress did was to adjust the income tax liability of certain taxpayers in accord with whether they have or have not purchased the health insurance mandated by the Act. This means of measuring the tax liability of individuals cannot serve to turn the law from a valid exercise of the taxing power into something else. As the Supreme Court held in United States v. Sanchez, "a tax does not cease to be valid merely because it regulates, discourages, or even definitely deters the activities taxed." This continues to be true "even though the revenue obtained is obviously negligible." The revenue that the CBO projects will be obtained from the individual mandate (about five billion dollars a year by the decade's end) is far from negligible, so the proposition that a tax may also be a regulation has even more force in this context.
More importantly still, the scheme established by the ACA is functionally identical to another scheme that would be plainly constitutional. The constitutionality of the Social Security System (see Steward Machine Co. v. Davis) would of course be a decisive precedent for the constitutionality of a system under which Congress creates a single-payer health-care system funded by a tax on everyone with incomes above a given threshold. And if Congress could constitutionally institute such a single-payer health-care system operated by the federal government itself, then why may it not also authorize private insurers, regulated by federal statute, to administer the same system with the money raised by the tax? And if it may do that, then why may it not eliminate the federal middleman and simply increase the income tax liability of anyone who fails to purchase a qualified insurance plan from a regulated private insurer?
The Eleventh Circuit, reflecting what appears to be a widely held public sentiment, opined that Congress cannot "mandate that individuals enter into contracts with private insurance companies for the purchase of an expensive product from the time they are born until the time they die." Shorn of the rhetorical flourish "“ and viewed in terms of the power of Congress to "lay and collect Taxes" under Article I, including "taxes on incomes," as specified by the Sixteenth Amendment "“ this is simply an objection to the form in which Congress has chosen to use the federal tax structure to encourage insurance coverage that it could have directly compelled just as it compels participation in Social Security and Medicare through payroll taxes that the Supreme Court upheld decades ago in Steward Machine. It's not as though Congress has sent a swarm of federal bureaucrats into individual homes to drag citizens kicking and screaming into the offices of federally specified insurance executives and forced those citizens at gunpoint to sign lifelong agreements with the companies that those executives operate! Those who would prefer to meet their health-care financial obligations through paying the tax penalty levied by Congress are left entirely free to do so "“ the very feature of the Affordable Care Act that the Eleventh Circuit found objectionable when analyzing the ability of the measure to survive challenge under the Necessary & Proper Clause.
Put otherwise, Congress may undoubtedly use its taxing power to mandate that individuals pay for coverage supplied by private insurers, so long as it acts in two steps: step 1, impose a tax, and step 2, use the proceeds of the tax to fund privately provided health insurance for each individual. If Congress may accomplish this objective in two steps, why not in one? No federalism or liberty-related concern, whether the dignity of the states or that of individuals, is served by denying Congress that authority.
As a Yiddish saying has it, it is often true that one cannot leap a chasm in two jumps. But the converse would be a perverse principle indeed"”when one is permitted to reach a particular destination (here, a state of the world in which an individual's money goes to private insurance companies and the individual receives health insurance in return) in two leaps, it would make no constitutional sense, even though it may make sense politically, to say that one may not reach the same destination in a single bound.
This last point demonstrates that it is ultimately not important whether the individual mandate is labeled a "tax" or a "penalty." What is important is recalling that the clauses enumerating Congress's powers are not distinct pigeonholes subject to a "neatness" requirement that every exercise of federal legislative authority must fit tidily into one and only one pigeonhole. Instead, congressional power to enact a law may derive from the cumulative effect of several different clauses. The text of the Constitution confirms as much: the Necessary and Proper Clause and the Tenth Amendment both speak capaciously of the federal government's "powers" as a collective whole, rather than using a more discrete reference such as "each power." Accordingly, in McCulloch v. Maryland, Chief Justice Marshall relied on the combined powers of Congress to lay and collect taxes, to borrow money, to regulate commerce, to declare war, and to raise armies and navies, in concluding that the Constitution empowers Congress to charter a national bank. Likewise, in the Legal Tender Cases, the Supreme Court relied on the powers of Congress to lay and collect taxes, to borrow money, and to coin money in concluding that the Constitution empowers Congress to make paper money legal tender for the payment of private debts. If the Taxing Clause can serve as one of several pillars of national power to support congressional authority to create a national bank or to pass legal tender laws, then it surely also supports (at least in conjunction with the Commerce Clause) the power to enact a provision of the Internal Revenue Code that reduces the tax refunds that may be received by individuals with incomes above a particular threshold who refuse to obtain health insurance.
Some opponents of the individual mandate would reject all of these arguments because the precedents on which they are based are supposedly inconsistent with the "true" or "original" meaning of the Constitution. Richard Epstein, for example, has written a post arguing that we should return to "first principles." These first principles, he contends, would clearly show that the individual mandate is a violation of individual rights, inconsistent with the Due Process Clause and (of all things!) the Takings Clause of the Fifth Amendment. This theory, however, is so discredited that even the plaintiffs challenging the individual mandate in the Eleventh Circuit abandoned that theory on appeal.
"[W]ith sadness," Professor Epstein "let[s] this point pass." He has in his quiver another arrow: even if the individual mandate does not violate individual rights, he argues, it is far beyond Congress's powers. On this view, there is no need to worry about activity and inactivity, or about economic and noneconomic activity. Rather, the individual mandate is impermissible under the Commerce Clause simply because it goes beyond regulating "transportation, communication, and the shipment of goods across state lines." This is a truly radical view. If the enumerated powers were interpreted as stingily as Professor Epstein suggests, the constitutionality of everything from the Federal Reserve to the Social Security System to paper money would be called into question.
In one sense, I have no quarrel with Professor Epstein's theory. Like him, I believe that the constitutionality of challenged exercises of power should not be determined wholly by the logic of the latest judicial precedents, with scarcely a nod to the constitutional text or to the basic principles that it was originally meant to embody. To the contrary, I agree that the text and its original meaning in that principled sense (although not in the sense of what the Framers or Ratifiers or others specifically expected the clauses would cover) should guide "“ even if they cannot algorithmically determine "“ the interpretive process from beginning to end.
But thereafter Professor Epstein and I part ways. For I believe that he is wrong to suggest that the best reading of the Commerce Clause and of the basic principles it originally embodied is a reading that would doom the individual mandate. To the contrary, as Yale's Jack Balkin has persuasively argued, the Commerce Clause was originally meant to confer on Congress a broad power to govern "interactions" and "transactions" involving, as Chief Justice John Marshall famously said in Gibbons v. Ogden, "more states than one" "“ including, by the way, the kind of interstate travel that even Professor Epstein might concede the Commerce Clause was originally meant to cover whether or not it involved "economic activity" of the sort the modern Supreme Court cases insist on finding as a predicate of applying the aggregation principle of Wickard v. Filburn. And more generally, the enumerated powers as a whole were meant to permit the federal government to address problems that states were individually incompetent to solve, a criterion plainly met by the healthcare problem this nation faced before the ACA's passage. Thus, if anything, modern Commerce Clause doctrine is more restrictive of congressional power than the framing generation would have understood, not less.
Also deeply troubling to me is Professor Epstein's justification for rejecting the precedent of Wickard v. Filburn. According to him, Wickard should be limited or overruled for the fundamental reason that it "twist[ed] the Commerce Clause beyond recognition in order to sustain the Agricultural Adjustment Acts whose cartel maintenance activities have done so much harm to the overall welfare of this nation, " because "small government instincts should win out," because "the ship of state" threatens to "consume the economy," and because "the progressive mindset is the single greatest threat to limited government." I find it dismaying that a scholar who seeks to maintain fidelity to the Constitution's text would consider these ideological commitments "“ which are nowhere expressed in or genuinely implicit in that text "“ an adequate basis for a court exercising the "judicial Power" to overrule a precedent that is so well-established and to clip the wings of a Commerce Clause whose original purpose, applied to modern circumstances, has yielded what some might think an unwisely "big" government. The kinds of concerns that Professor Epstein expresses are properly directed to the politicians who make legislation, not to the judges who review it for conformity with the Constitution.
Recommended Citation: Larry Tribe, Responding to the Eleventh Circuit and to Richard Epstein, SCOTUSblog (Aug. 16, 2011, 12:52 PM), http://www.scotusblog.com/2011/08/responding-to-the-eleventh-circuit-and-to-richard-epstein/