ObamaCare, the Mandate, and the Limits of Congressional Power Under the Commerce Clause


Last week's 11th Circuit appeals court ruling that individual mandate to purchase health insurance is unconstitutional begins its discussion of the provision's constitutionality by stressing that the Constitution grants Congress limited powers, and that the Commerce Clause, which the mandate's defenders say gives Congress the power to compel individuals to purchase health insurance, does not offer Congress unlimited power to regulate human activity:

In enforcing these limits, we recognize that the Constitution established a federal government that is "'acknowledged by all to be one of enumerated powers."…In describing this constitutional structure, the Supreme Court has emphasized James Madison's exposition in The Federalist No. 45: "'The powers delegated by the proposed Constitution to the federal government are few and defined. Those which are to remain in the State governments are numerous and indefinite.'"

In what looks suspiciously like a rebuke to the recent decision by a 6th Circuit appeals court to uphold the mandate largely out of deference to Congress, the judges point that it is their task to explain and define those limits if it appears that Congress has breached them:

While the substantial growth and development of Congress's power under the Commerce Clause has been well documented, the Court has often reiterated that the power therein granted remains "subject to outer limits." When Congress oversteps those outer limits, the Constitution requires judicial engagement, not judicial abdication.

The court further notes, however, that the goal of those limits isn't merely to protect the rights of state governments to do as they please: "While these structural limitations [on the power granted by the Commerce Clause] are often discussed in terms of federalism, their ultimate goal is the protection of individual liberty." So far, so good.

How, then, to determine the exact borders of the clause's outer limits? Critics of the mandate have argued that the line can be drawn by distinguishing between "activity," which has been a factor in every prior exercise of the Commerce Clause's power, and "inactivity," which Congress has never attempted to regulate before.

And that's where the decision takes a slightly odd turn: The court agrees that upon examination of of "the diverse fact patterns" of all the relevant court precedents, it's clear that "all involved attempts by Congress to regulate preexisting, freely chosen classes of activities." It's a clear-enough acknowledgment that the mandate's regulation of inactivity is not just unusual but unprecedented. Yet the court nonetheless it declares that it doesn't view the distinction as an effective measure of whether the mandate is truly out of bounds:

Nevertheless, we are not persuaded that the formalistic dichotomy of activity and inactivity provides a workable or persuasive enough answer in this case. Although the Supreme Court's Commerce Clause cases frequently speak in activity-laden terms, the Court has never expressly held that activity is a precondition for Congress's ability to regulate commerce—perhaps, in part, because it has never been faced with the type of regulation at issue here.

Yet later, the ruling seems to suggest that the novelty of regulating inactivity by forcing individuals to engage in commerce when they otherwise might not have done so, is important. The court notes that the Supreme Court's precedent-setting decision in Wickard v. Filburn, widely viewed as lying "at the outer bounds of the commerce power" was nonetheless a "limitation" rather than a mandate, and still left open a variety of individual choices. Not so with the mandate:  

"The Act's economic mandate to purchase insurance, on the contrary, leaves no choice and is more far-reaching….Individuals subjected to this economic mandate have not made a voluntary choice to enter the stream of commerce, but instead are having that choice imposed upon them by the federal government."

Perhaps this is quibbling, but this seems rather like an admission that when considering the regulation of commerce, the distinction between activity and inactivity matters. When Congress regulates commercial activity, it's regulating an individual's affirmative decisions. But in the case of the mandate, it is compelling an individual to engage in commercial activity. The heart of the activity/inactivity distinction is the question of whether an individual can be forced to either engage in commerce or not.

So why did the 11th Circuit ultimately reject the mandate? The Obama administration's case rests on the notion that it is not compelling economic activity so much as regulating when and how individuals pay for health care. But the administration's legal team was never able to persuasively make the case that a health insurance mandate would not eventually justify compulsory purchase of other sorts of private products. As the majority writes:

Given the economic reality of our national marketplace, any person's decision not to purchase a good would, when aggregated, substantially affect interstate commerce in that good. From a doctrinal standpoint, we see no way to cabin the government's theory only to decisions not to purchase health insurance.

…Every day, Americans decide what products to buy, where to invest or save, and how to pay for future contingencies such as their retirement, their children's education, and their health care. The government contends that embedded in the Commerce Clause is the power to override these ordinary decisions and redirect those funds to other purposes. Under this theory, because Americans have money to spend and must inevitably make decisions on where to spend it, the Commerce Clause gives Congress the power to direct and compel an individual's spending in order to further its overarching regulatory goals, such as reducing the number of uninsureds and the amount of uncompensated health care.

The mandate, in other words, was defeated by the broccoli argument: If Congress can make someone purchase health insurance, then what can't it make them buy? The Obama administration has argued repeatedly that the broccoli argument has no merit: The market for health insurance is unique, they say, because most everyone will need health care at some point, and because the government already bears the burden of "uncompensated care"; mandating the purchase of health insurance merely regulates when and how it is purchased. The court responds that the government's "uniqueness" argument is not relevant because it is based in the health insurance market's "ad hoc factors" and not "rooted in any constitutional understanding of the commerce power."

Where the 6th Circuit appeals court that upheld the mandate stressed deference to Congress, the 11th Circuit stresses Congress's legislative limits. It's a ruling that says that although the Constitution gives Congress many powers, each must have clear boundaries: Even powers that have been interpreted expansively, such as the power granted by the Commerce Clause, require limits rooted not merely in convenient circumstances but in broadly applicable constitutional principle.

The odd thing, then, is that the 11th Circuit declines to accept the activity/inactivity standard, and instead rules against the mandate primarily because of the administration's inability to come up with a standard of its own. Indeed, at one point, the majority actually suggests methods by which Congress might achieve similar effects to the mandate that pass constitutional muster. It's a subtler sort of deference, but deference all the same.