March 27 2012

Obamacare at the Supreme Court: Day Two Preview

Anna Rittgers

The Supreme Court will resume oral arguments in U.S. Department of Health and Human Services v. Florida at 10 AM. The justices will hear two hours of arguments regarding the constitutionality of the individual health insurance mandate in Obamacare.

Solicitor General Donald B. Verrelli Jr., representing the federal government, will argue that the individual mandate is a constitutional exercise of Congress’ power granted by the Commerce Clause.  The government’s chief argument is that the Commerce Clause grants Congress the power “to regulate commerce…among the States.” The health insurance mandate is within Congress’ power because it is an essential component of a broader scheme to regulate the national health care market.   Furthermore, since people who choose not to buy health insurance will participate in the health care market whenever they get sick, the mandate is “necessary and proper” way for Congress to regulate how people will pay for health care in order to reduce or eliminate the free-rider problem currently plaguing the nation’s health system, where the high costs of health care are shifted to people who have insurance. 

While the government relies heavily on the Commerce Clause, they also provide an alternative argument for why they individual mandate is constitutional.   They claim that the individual mandate is also a valid exercise of Congress’ taxation power as provided by the General Welfare clause (even though they argued that the penalty for non-compliance was not a tax in order to avoid the Anti-Injunction Act).

The challengers—with attorney Paul Clement representing the 26 states opposing Obamacare, and attorney Michael Carvin representing the National Federation of Independent Business and four individuals—will argue that the Constitution does not give Congress power to compel people as a condition of living the United States to purchase a product or service from a private company.   They argue that the individual mandate is a fundamental threat to individual liberty.  If the individual mandate is allowed to stand, then there will be virtually no limit to Congress’ power over individuals, as the general police powers reserved to the states under the 10th Amendment to the Constitution will be extended to the federal government.   Congress would have the power to mandate individuals purchase anything, such as mandating the purchase of specific cars in order to help American automobile manufacturers.

The challengers recognize that Congress has the power to regulate the interstate market for health insurance. However, they argue that the individual mandate is neither necessary nor proper way for Congress to regulate the health insurance market because it compels individual behavior by penalizing them for choosing not to participate in the insurance market.   They argue that the individual mandate will not work to address the health care industry’s free-rider problem, because most of the health care services consumed by individuals who are currently not paying for that care are the same individuals who aren’t covered by the mandate.  They either qualify for other benefits and programs outlined in Obamacare (ie expansion of Medicaid), or Congress specifically exempted them from the mandate and/or the corresponding penalties.  The challengers claim that the individual mandate is nothing more than a way to subsidize insurers for the provisions in Obamacare that prohibit insurance companies from denying coverage to people with preexisting conditions.

Furthermore, they argue that the individual mandate and penalties for noncompliance with the mandate do not fall under Congress’ taxation powers under the General Welfare clause because Congress as well as the Obama Administration have gone to great lengths to specify in the legislation as well as the debate about that legislation that the penalty for noncompliance was a penalty, not a tax.

There have been 78 amicus briefs filed with the Supreme Court on this particular issue of Obamacare.  Thirty support the government’s position, while 47 briefs (including a brief submitted by IWF) support the view that the individual mandate is unconstitutional.  One brief supports neither party.

According to the polls, an overwhelming majority of Americans believe the individual mandate is unconstitutional.  Let’s hope the Supreme Court agrees.

Once I listen to the audio recording of this morning’s proceedings, I’ll return to the blog with a recap of today’s argument, and a preview of the remaining two issues that will be argued before the Court tomorrow.

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