broccoli.png“Could you define the market — everybody has to buy food sooner or later, so you define the market as food, therefore, everybody is in the market; therefore, you can make people buy broccoli.”

—Supreme Court Justice Antonin Scalia questioning Solicitor General Donald B. Verrilli, March 27, 2012

The U.S. Supreme Court on Tuesday March 27 heard oral arguments on the constitutionality of the Patient Protection & Affordable Care Act—the landmark  healthcare reform President Obama signed into law two years ago.

At issue is the so-called “Individual Mandate,” the provision of the 2010 law, scheduled to take effect in 2014 that would require almost all Americans to buy health insurance. Read more.

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Healthcare Reform and the Supreme Court: Please Pass the Broccoli

Mon Apr 2, 2012

broccoli.png“Could you define the market — everybody has to buy food sooner or later, so you define the market as food, therefore, everybody is in the market; therefore, you can make people buy broccoli.”

—Supreme Court Justice Antonin Scalia questioning Solicitor General Donald B. Verrilli, March 27, 2012

The U.S. Supreme Court on Tuesday March 27 heard oral arguments on the constitutionality of the Patient Protection & Affordable Care Act—the landmark  healthcare reform President Obama signed into law two years ago.

At issue is the so-called “Individual Mandate,” the provision of the 2010 law, scheduled to take effect in 2014 that would require almost all Americans to buy health insurance.

The specific question before the Supreme Court is whether Congress, in enacting the Patient Protection & Affordable Care Act’s individual mandate, exceeded its authority under the Constitution to regulate interstate commerce.

The mandate imposes a financial penalty, actually a tax, of up to 2 ½ % of taxable income, on individuals who fail to comply with this law. In other words, the individual mandate compels Americans, such as healthy young people, to purchase a product, in this case health insurance that they might otherwise choose not to purchase. Such a federal requirement is unprecedented, thus raising the question whether the Constitution allows the federal government to impose it.

The “Commerce Clause” of Article One, Section 8 of the U.S. Constitution gives Congress certain “enumerated powers,” among them the power “to regulate commerce with foreign Nations, and among the several States, and with the Indian tribes.” The Solicitor General of the U.S., staunchly defending the healthcare reform law, argued that the individual mandate is permissible under the Commerce Clause, telling the justices that Congress is merely “regulating existing commerce, economic activity that is already going on—people’s participation in the healthcare market.”

Mr. Paul Clement, representing the 26 states and the National Federation of Independent Business that are challenging the law, argued that “The Commerce Clause gives Congress the power to regulate existing commerce. It does not give Congress the far greater power to compel people to enter commerce.”

The argument over the constitutionality of the individual mandate turns, of course, on a central question: what is the limiting principle of the Commerce Clause? Put another way, granting that Congress has the power to regulate “interstate commerce,” what if any are the limits of that power? Is there any kind of commerce that is beyond the legislative reach of the federal government?

Clearly an unprecedented federal government mandate on individuals to buy health insurance tests the outer limits of Congress’ power to regulate interstate commerce—if the federal government can mandate this, the question goes, what can it not mandate?

Which explains Justice Scalia’s question about broccoli: paraphrasing, since there is an existing market for food, and since vegetables are nutritious, why couldn’t a future Congress, invoking the Commerce Clause, impose a mandate on individuals to purchase broccoli?

From the standpoint of interstate commerce regulation, therefore, what’s the difference between the market for health insurance and the market for broccoli? As Justice Scalia observed, “The federal government is not supposed to be a government that has all powers. If the government can do this…what else can it not do?”

The response of the Solicitor General, Mr. Donald Verrilli, was essentially that the market for healthcare is unique; that everyone is in that market sooner or later; and that by failing to purchase health insurance, the uninsured are transferring costs of their care to others who do have health insurance. Government is already regulating the healthcare market in many ways, suggested Mr. Verrilli, and the individual mandate is merely an extension of existing regulation.

In their questioning, the nine justices appeared divided along predictable ideological lines, with the four liberals seemingly comfortable that the new mandate was well within the outer boundaries of the Commerce Clause and the four conservatives seemingly convinced that the mandate was outside Constitutional limits. Justice Anthony Kennedy, the Court’s usual “swing” vote, seemed undecided, though at one point he told Mr. Verrilli that “When you are changing the relation of the individual to the government in this unique way, do you not have a heavy burden of justification to show authorization under the Constitution?”

A decision on the constitutionality of the individual mandate is expected by the end of June. If the Court upholds the mandate then implementation of the Patient Protection & Affordable Care Act, including its employer “Play or Pay” mandate, its state health insurance exchanges and its ten-year $1 trillion federal tax credit subsidies and Medicaid program expansion will proceed as scheduled.

If the Supreme Court decides that the individual mandate is unconstitutional, which is possible given Justice Kennedy’s questions, the consequences would be dramatic. In many ways the healthcare reform law is unworkable without the mandate—the ban on preexisting condition exclusions, for example, would not be viable if people could buy health insurance after they became ill.  State health insurance exchanges too might be in jeopardy if too many of the uninsured decided not to enroll.

In any event, should the high Court decide to invalidate the individual mandate, no doubt justices would toss the ball back to the Congress to either replace the mandate with some other requirement that would pass constitutional muster or remove provisions that cannot stand on their own merits, i.e., without the individual mandate.

To be sure, sending the law back to the Congress for amendment would reopen old wounds festering since original enactment in 2010—in particular a perception that Hill democrats muscled the legislation through without any republican support. It’s not clear that a bipartisan compromise could be achieved to salvage the controversial law.

All eyes will be on the Supreme Court come late June—right in the middle of a heated presidential election. The Court’s decision on the healthcare reform law will have implications for the law itself; but it will also have implications for Election 2012.