Hudson On Healthcare

U.S. District Judge Henry E. Hudson of the Eastern District of Virginia has found that the “individual mandate” portion of the healthcare reform act is unconstitutional. His is sure to not be the last word on this issue. What makes it interesting is the grounds — not buying health insurance is not interstate commerce and therefore beyond the ability of Congress to regulate under the Commerce Clause.

To my knowledge, only two other kinds of human activity have been found to not be interstate commerce in the modern era. Those things are 1) a high school student carrying a concealed pistol while at school, absent specific Congressional findings about the effect on commerce of such activity (United States v. Lopez (1995) 514 U.S. 549) , and 2) a Federal civil lawsuit for nonconsensual sexual contact (United States v. Morrison (2000) 529 U.S. 598). Note that the state court grand jury found insufficient evidence to authorize a charge of rape in Morrison, denying us the ability to describe what sounds like “rape” with that word. More importantly, note how these two kinds of activities are criminal and indeed likely violent in nature.

Compare this to growing and eating wheat rather than selling it under a comprehensive scheme of economic regulation (Wickard v. Filburn (1942) 317 U.S. 111) and smoking marijuana given away for free for medicinal purposes (Gonzales v. Raich (2005) 545 U.S. 1), which the Court has ruled do affect interstate commerce, under the “aggregation theory” — the idea be being that while an individual transaction has no perceptible economic effect on commerce, if everyone did it, there would be a significant effect on commerce.

As between these four seminal cases, I would have thought that not buying health insurance in the 2010’s was most similar to not selling wheat in the 1930’s. But Judge Hudson’s key reasoning is this:

The power of Congress to regulate a class of activities that in the aggregate has a substantial and direct effect on interstate commerce is well settled. Gonzales, 545 U.S. at 22, 125 S.Ct. at 2209. This even extends to noneconomic activity closely connected to the intended market. Hoffman v. Hunt, 125 F.3d 575, 587-88 (4th Cir. 1997). But these regulatory powers are triggered by some type of self-initiated action. Neither the Supreme Court nor any federal circuit court of appeals has extended Commerce Clause powers to compel an individual to involuntarily enter the stream of commerce by purchasing a commodity in the private market.7 In doing so, enactment of the Minimum Essential Coverage Provision exceeds the Commerce Clause powers vested in Congress under Article I.

Slip op. at 23-24. By Judge Hudson’s logic, then, noneconomic activity closely connected to the intended market, triggered by some sort of self-initiated action on the part of the person thus regulated, is a valid thing for Congress to regulate — which would seem to suggest that taking a gun to school ought to be within Congress’ powers to regulate. There is little doubt that Lopez “self-initiated” bringing his gun to school and there seems little doubt that if a teacher is thus deterred from going to school for fear of being shot by Lopez, there is an economic effect (the teacher isn’t paid) which if repeated and aggregated over a large pool of people, would drag on the economy.

What’s more, footnote 7 in the opinion reads: “The collective effect of an aggregate of such inactivity still falls short of the constitutional mark.” Here, I just can’t see where Judge Hudson is coming from. The larger the pool of insured in an insurance market, the more diluted individual risks become and thus the amount of premium per policyholder needed to cover claims decreases. If large numbers of people voluntarily abstain from purchasing a particular kind of insurance, the premium per policyholder rises. This is not a hugely complex concept — and even if it is ultimately proven incorrect, Congress is clearly within its discretion and authority to be thus incorrect because the idea is not so far out of left field as to be “irrational.”

As an alternative, the Government argued that the individual mandate is enforced by a “penalty” that should be considered a “tax,” but Judge Hudson looked at the exact meaning of those phrases — a “penalty” is levied in response to an unlawful act or omission, while a “tax” is a burden imposed to generate revenue for the government — and concluded from legislative history, legislative text, and political statements of both Congressional leaders and the White House that the claim that this enforcement mechanism is a “tax” is a “transparent afterthought” and therefore not to be credited. It is a penalty, according to the Court, a penalty designed to punish conduct deemed undesirable by Congress, viz., not buying health insurance — and since the conduct deemed undesirable is not itself something that Congress can regulate, Congress lacks power to impose a penalty for it. This portion of the reasoning seems sound to me.

As I noted above, this is not the end of the road for the individual mandate provision of the healthcare reform act. It does demonstrate that the idea that the law exceeds Federal power is not a crazy one, it is persuasive and serious and should be carefully weighed. To damn modern commerce clause jurisprudence as “unprincipled” is only to say that it is like much other Constitutional jurisprudence, in that much depends on the policy desirability of the law, the political mood at the time of the decision, and the general philosophical cast of the nine Justices who eventually and inevitably will render a final decision.

I don’t particularly want the individual mandate to be Constitutional. And I’m pleased that the bench is taking seriously the notion that there are Constitutional limits on Congress’ powers. But I have a hard time squaring Judge Hudson’s reasoning with the outstanding jurisprudence. Unless there is going to be a new contour in Commerce Clause jurisprudence written in by this case, I would have ruled that this was near the limits of, but still within, Congress’ Commerce power.

Burt Likko

Pseudonymous Portlander. Homebrewer. Atheist. Recovering litigator. Recovering Republican. Recovering Catholic. Recovering divorcé. Recovering Former Editor-in-Chief of Ordinary Times. House Likko's Words: Scite Verum. Colite Iusticia. Vivere Con Gaudium.