Constitutionality of the Health Care Reform Act

Between discussions of the holiday plans, the Patriots, and the weather my morning coffee buddies have recently discussed the constitutional challenges to the Affordable Care Act.  For my friends I read and summarized the court decisions in two the challenges as follows.


The Executive Summary (with my spin):

  • CON–The decision not to purchase health insurance, like any decision about how to live one’s life, is an aspect of individual liberty. It’s my choice whether to drink, smoke cigarettes, exercise, and purchase health insurance. Congress’s Commerce Clause power may be expansive, but it does not authorize the federal government to tell me what I must buy. If Congress can require me to purchase health insurance, where does its power end? Can it require that I join a health club? Eat more broccoli and fewer french fries? Listen to NPR?
    • I think of this as the So what’s it to you if I’m passive/aggressive? argument.
  • PRO–If you are not part of the solution you are part of the problem. Not to decide is to decide. One’s decision not to purchase health insurance has economic consequences that are not limited to the individual. When you don’t purchase health insurance, or when you purchase it only on the day you get sick, your shift the cost of your care to health care providers, insurance companies, and third parties like me. This cost-shifting has a substantial economic effect and is therefore within Congress’s Commerce Clause power.
    • This is the No Man is an Island argument.

The Details:

Two federal district court judges in Michigan and Virginia have upheld the Affordable Care Act; another federal district court judge in Virginia struck it down. I’ve read the Michigan and latter Virginia decisions, which deal with the same issue–whether the provision (effective in 2014) requiring all Americans (with limited exceptions) to purchase defined minimum health insurance or pay a penalty is beyond Congress’s power under the Commerce Clause. The issue can be defined simply, but its resolution rests on one’s conception of individual liberty and the relationship between individual actions and societal consequences.

The Commerce Clause’s language is not helpful. It states The Congress shall have power . . . to regulate commerce with foreign nations, and among the several states, and with the Indian tribes. The Supreme Court has interpreted the Clause to grant Congress three broad categories of power, including the power to regulate “activities that substantially effect interstate commerce,” The issue is whether an individual’s decision not to purchase health insurance is an activity that substantially effects interstate commerce. The Court has never decided whether inactivity meets the substantial economic effect requirement. Its cases that are closest to on point (all cited by the Michigan court) deal with affirmative acts: growing more wheat than permitted under a New Deal wheat quota, thereby disrupting Congress’s legislative scheme to support wheat prices; growing marijuana for private medical consumption, thereby disrupting Congress’s regulation of marijuana trafficking; and refusing to rent motel accommodations to blacks, thereby raising barriers to the flow of interstate commerce. Virginia, opposing the ACA, argued that “a decision not to purchase a product, such as health insurance, is not an economic activity.” It distinguished–

what was deemed to be “economic activity” in Wickard and Gonzales, namely a voluntary decision to grow wheat or cultivate marijuana, from the involuntary act of purchasing health insurance as required by the Provision. In Wickard and Gonzales, individuals made a conscious decision to grow wheat or cultivate marijuana, and consequently, voluntarily placed themselves within the stream of interstate commerce. Conversely, the Commonwealth maintains that the Minimum Essential Coverage Provision compels an unwilling person to perform an involuntary act and, as a result, submit to Commerce Clause regulation.

The judge agreed. He concluded that Congress’s regulatory powers “are triggered by some type of self-initiated action.” Because there is no federal court precedent that extends Commerce Clause power “to compel an individual to involuntarily enter the stream of commerce by purchasing a commodity in the private market” he held that the minimum coverage provision exceeds Congress’s power.

The judge in the Michigan case reached the opposite conclusion on the same issue. (Ain’t law great?!) His opinion cites Congress’s legislative findings regarding the minimum coverage provision:

Congress determined that the Individual Mandate “is an essential part of this larger regulation of economic activity,” and that its absence “would undercut Federal regulation of the health insurance market.” Congress found that without the Individual Mandate, the reforms in the Act, such as the ban on denying coverage based on pre-existing conditions, would increase the existing incentives for individuals to “wait to purchase health insurance until they needed care,” which in turn would shift even greater costs onto third parties. Conversely, Congress found that by “significantly reducing the number of the uninsured, the requirement, together with the other provisions of this Act, will lower health insurance premiums.” Congress concluded that the Individual Mandate “is essential to creating effective health insurance markets in which improved health insurance products that are guaranteed issue and do not exclude coverage of pre-existing conditions can be sold.”

After reviewing the cases noted above the judge concluded that an individual’s decision not to purchase health insurance has a substantial effect on interstate commerce and that the minimum coverage provision is essential to implementing the ACA’s objectives. He states that the “phenomenon of cost-shifting is what makes the health care market unique.”

The health care market is unlike other markets. No one can guarantee his or her health, or ensure that he or she will never participate in the health care market. Indeed, the opposite is nearly always true. The question is how participants in the health care market pay for medical expenses – through insurance, or through an attempt to pay out of pocket with a backstop of uncompensated care funded by third parties.

Here’s the money quote:

The plaintiffs have not opted out of the health care services market because, as living, breathing beings, who do not oppose medical services on religious grounds, they cannot opt out of this market. As inseparable and integral members of the health care services market, plaintiffs have made a choice regarding the method of payment for the services they expect to receive. The government makes the apropos analogy of paying by credit card rather than by check. How participants in the health care services market pay for such services has a documented impact on interstate commerce. Obviously, this market reality forms the rational basis for Congressional action designed to reduce the number of uninsureds.

I agree with the Michigan judge that the economic consequences of an individual’s decision not to purchase health insurance extend beyond the individual and come within existing interpretations of the Commerce Clause. If the Supreme Court reaches the same conclusion I hope it explicitly limits the scope of its ruling to the health care act, because inviting Congress to require us to do whatever it thinks is good for us is scary.

10 thoughts on “Constitutionality of the Health Care Reform Act”

  1. When reading this post I was reminded of a similar situation with flu vaccines. Theyre not required by law, but as the demand for them rose the cost to each individual would go down according to economies of scale (isnt this the same thing the federal government is talking about with insurance premiums, and trying to decrease the cost to the average citizen?– i know there are probably some kind of federal subsidies on flu vaccines, so maybe the whole economies of scale thing doesnt pan out).

    1. I think it's great to take into consideration economies of scale here to really help "the average citizen," but it's also important to take into consideration affordability. If health care becomes a citizen's legal obligation, then what happens when the 'below-average' guy needs to get health care? How can the government really expect him to contribute to society in such a way that it takes away from his ability to sustain himself, perhaps his family?

  2. I agree that the decision to purchase healthcare isnt necesarily an economic activity, because it can be engaged in voluntarily or involuntarily. For the "healthcare as an economic activity" to be fairly applied, wouldnt the government have to distinguish between people who made a conscious choice not to buy healthcare, and those who were simply oblivious?
    It is intimidating that Congress could eventually tell us what to and what not to buy. If there is a large enough majority to follow, isnt any purchase having a significant economic effect great enough to influence interstate commerce? Or what about a large majority that chooses NOT to purchase something– like the boycott of a certain well known agricultural or consumer product. Couldn't that also have a significant influence on interstate commerce? So if Congress can require us to buy certain things (like healthcare) they also take away our power to boycott certain products?

  3. I understand the con's of the reform, and I think you make a great argument with your 'spin' by saying that it's your decision, just as it's a personal decision whether or not to "smoke, drink and even exercise." Isn't the reform similar to arguing then, as you propose, that everyone should sort of get a health club membership so maybe it's less costly for the average citizen. Some people don't feel as though they need to work out for "30 minutes a day" until their cardiologist tells them that they're headed down the wrong path. I don't think that everyone needs to get health care just to help with the grand scheme of things. I think its important to take into consideration the statistics that involve the number of individuals without healthcare who end up getting it, and how it plays out in terms of the numbers. It's important to look at how it would impact your "not so average Joe" as well.

  4. I think that the impact on the individual who is "below average" is an interesting case, because couldn't this essentially create a new segment of cost shifting because of the regulation? For instance Michigan's argument discusses that the regulation would help the "cost shifting to 3rd parties". But what if a person is indeed below average, in which case, the government could need to then again regulate another part of health care in order to help maintain their initial regulation of all people having to have a min. insurance plan. I think its a slippery slope, because sure the cost shifting may stop, but then what really are the boundaries to the Commerce regulation? Because initially this regulation is trying to help out all those individuals who don't have coverage, but then again the regulation could come to the point where the only concern is to try to create economic activity. This case also reminds me of the "Aetna Student Plan" that BU students are offered. That's the plan that college students are offered, and its interesting because through my experience this insurance isn't great at all, and its offered to a segment of the population who are most vulnerable to sickness (college dorms, etc), so essentially the regulation doesn't actually take into consideration the different segments of individual.

  5. Also, I began thinking of the idea of "unwilling, involuntary action." Its interesting because, as the article mentions that the health care market is a "unique" market because issues with health is almost unavoidable. I think its so interesting trying to regulate this market because they are essentially trying to take the individuals whom are in the "involuntary" category and make it "mandatory." I think the example of cigarettes is interesting because the government taxed them to provide an incentive to stop smoking. I don't think regulation of voluntary action is as effective as creating incentives.

  6. I did not have the chance to speak about this issue during class but I will say that I am equally torn on this issue as I'm sure many others are as well. If the millions of lower/middle class citizens who are uninsured all of a sudden are forced to purchase healthcare, wouldn't this cause overall consumer spending on other items to decline. This would in turn, affect the economy because people have more mandatory things to spend on and have less money to put into businesses such as retail and other unnecessary commodities. This ripple effect could be more harmful to everyone than just the fees already placed on people who already purchase healthcare insurance.
    However I do not believe every citizen is financially able to purchase this insurance because some people do not even have enough money to put food on the table every night, therefore it should not be required.

  7. Why do people keep calling it health care? It isn't. It is medical treatment. Medical education is about disease. Why does anyone assume that an education is disease is an education in health?

    The ultimate issue is: Why is treatment of medical conditions so expensive that it must be insured? It wasn't always so expensive. Don't try to give me that "Today's medicine is expensive because it's so much better"" My allergy shots have been the same process for thirty years. Progress? No: More expensive, yes.

  8. I think they do miss a certain point. I can simply pay for my healthcare costs with cash. I do not require healthcare in order to receive medical treatment. When I enter the workforce and continue to live without a family, the choice may not even make sense to me. I am not statically threatened by things such as cancers or Alzheimer or chronic diseases and thereby the cost of paying for my own medical care is cheaper then an insurance contract. Would me (as a group) entering into the healthcare insurance market make an impact? Yes. But on that same logical vein congress could regulate almost anyone into purchasing anything because in some way it effects the market.

    For example, I choose not to own a car. I am sure that at some point I will own a car, but for now it does not financially make sense. Should congress have the power to make me buy a car or drivers liability insurance because the low cost to the insurance companies will lower everybody’s premiums and average cost?

    One could point to the fact that insurance is required to drive on the roads, but I think there is a key difference. I can simply make the personal choice not to drive and take a bus or get rides from friends. On the healthcare side what other choice do I have? Simply refusing to breathe? I think it is important that the Supreme Court draws a line in the sand that congress may not force the purchase of an item which every individual in the country will have no choice but to purchase by the very virtue of their existence.

    1. You may not be at risk for those things but what if you have appendicitis? Or get hit by a car? You’ll receive medical care and the rest of us will subsidize at least some portion of its cost.


      David Randall
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