On Tuesday the U.S. Supreme Court presided over two hours of oral argument on the most publicized aspect of the Affordable Care Act (ACA) under review: whether the individual mandate is constitutional. The minimum coverage provision of the Affordable Care Act provides that, beginning in 2014, non-exempted federal income taxpayers who fail to maintain a minimum level of health insurance for themselves or their dependents will owe a penalty. The key question debated on Tuesday in U.S. Department of Health and Human Services v. Florida was whether this individual mandate provision is a valid exercise of Congress’s power to regulate commerce, or whether – as some justices seemed to suggest – it amounts to an unconstitutional legislative overreach.

Under the Constitution’s Commerce Clause, Congress has the authority “(t)o regulate Commerce . . . among the several states.” The Constitution’s Necessary and Proper clause provides that Congress “shall have power to make all laws which shall be necessary and proper for carrying into execution the foregoing powers, and all other powers vested by this Constitution in the government of the United States, or in any Department or officer thereof.” The government also argued that the individual mandate, although labeled a penalty, was within Congress’s authority under the Tax Clause as well as the Commerce Clause. The question addressed today was whether requiring individuals to purchase insurance falls within these parameters. Today’s argument revealed deep divisions within the Court on the constitutionality of the individual mandate.

According to the administration, the national health care market was facing a growing economic crisis, which the ACA’s enactment was designed to address. The crux of the argument in favor of the individual insurance mandate is that health insurance “has become the predominant means of paying for health care in this country,” and that the current system of private insurance in the individual market is unaffordable for a vast number of citizens. Moreover, all individuals at some point avail themselves of the health care system. By refusing to participate in the purchase of insurance, the argument follows, the uninsured will wreak havoc on the health care market by shifting costs and insurance risks to those who do purchase insurance. Thus, the minimal essential coverage requirement is a vital part of comprehensive health care market reform, as it regulates economic conduct with a substantial effect on interstate commerce. The administration contends that the requirement, therefore, amounts to a valid exercise of Congress’s commerce power, as it helps maintain the national health care industry as a whole.

Another argument in favor of the mandate is that Congress has the power to impose and collect taxes under the Constitution’s General Welfare clause. Since the penalty for failure to purchase insurance is a tax, the government explains, the mandate falls within this broad taxing power.

Those who believe that the individual mandate is unconstitutional, on the other hand, have argued that the commerce clause governs economic activity, not inactivity, which the failure to purchase insurance amounts to. In addition, opponents of the law claim that requiring most Americans to buy insurance is a gross overextension of the government’s powers. As stated in the respondents’ merits brief, “the power to regulate commerce does not include the power to compel individuals to enter into it.” Congress’s power to tax is similarly misplaced, opponents argued, as the failure to purchase insurance results in a penalty, not a tax. This question of whether the penalty constitutes a “tax” for purposes of the Anti-Injunction Act (AIA) was debated during Monday’s oral argument. 

During the first hour of questioning, U.S. Solicitor General Donald Verrilli Jr., who represents the administration in this case, fielded pointed questions about the limits of Congress’s power to regulate individual decision-making. Tellingly, Justice Kennedy, who is widely viewed as a more centrist member of the Court and a potential swing voter, asked Verrilli whether the government “can create commerce in order to regulate it?” In response, Verrilli stated that “what is being regulated is the method of financing health, the purchase of health care. That itself is economic activity with substantial effects on interstate commerce.” At another point during the argument Verrilli reiterated his position that the ACA “is regulating existing commerce, economic activity that is already going on, people's participation in the health care market, and is regulating to deal with existing effects of existing commerce.”

Justice Kennedy seemed also to be of the mind that the government bears a heavy burden in justifying such a substantial involvement in an individual’s purchases: “when you are changing the relation of the individual to the government in this, what we can stipulate is, I think, a unique way, do you not have a heavy burden of justification to show authorization under the Constitution?” He also sought clarification on the limits of the Commerce Clause. “The reason this is concerning, is because it requires the individual to do an affirmative act.”

When Verrilli explained that the purchase of health care is unique in that all individuals eventually avail themselves of the health care system at some point, Justice Alito chimed in: “Do you think there is . . . a market for burial services?” Verrilli explained that the difference between the two markets is that with health care, Congress is addressing “the many billions of dollars of uncompensated costs are transferred directly to other market participants.” Justice Alito seemed unconvinced by this argument, as did Chief Justice Roberts.

Roberts took issue with the government’s claim that all individuals will take advantage of health care services at some point in their lives, as this category of services is not clearly defined. In essence, he argued, not all individuals will need all of the health care services governed by the minimal essential coverage provisions. Said Roberts: “your theory is that there is a market in which everyone participates because everybody might need a certain range of health care services, and yet you're requiring people who are not -- never going to need pediatric or maternity services to participate in that market.” The Chief Justice also questioned whether any limits were to remain if the Court accepted the administration’s position. “Once you're -- once you're in the interstate commerce and can regulate it, pretty much all bets are off,” Roberts stated.

Justice Scalia appeared to disagree with some of Verrilli’s arguments as well, particularly about the regulation of the health insurance market: “You're not regulating health care. You're regulating insurance.”

Scalia also challenged the extent of Congress’s reach under the Necessary and Proper clause:

Necessary does not mean essential, just reasonably adapted. But in addition to being necessary, it has to be proper. And we've held in two cases that something that was reasonably adapted was not proper because it violated the sovereignty of the States, which was implicit in the constitutional structure. The argument here is that this also is -- may be necessary, but it's not proper because it violates an equally evident principle in the Constitution, which is that the Federal Government is not supposed to be a government that has all powers; that it's supposed to be a government of limited powers. And that's what all this questioning has been about. What -- what is left? If the government can do this, what, what else can it not do?

Not all of the justices expressed such skepticism of the law, however. Justice Ginsburg, for example, appeared to support the idea that the health insurance market is unique and justifies regulation: “what was unique about this is it's not my choice whether I want to buy a product to keep me healthy, but the cost that I am forcing on other people if I don't buy the product sooner rather than later.”

The next to speak before the Court was former Bush administration Solicitor General Paul Clement, who represents 26 state attorneys general in their challenge to the ACA. Clement began his argument by stating that the individual mandate is an “unprecedented effort by Congress to compel individuals to enter commerce in order to better regulate commerce.”

When Justice Ginsburg likened the mandate to Social Security, Clement countered that there are “other options that are available” for alleviating the occurrence of one group subsidizing another in the health insurance realm.

Clement later took up the point Justice Roberts focused on, which is that he did not believe the government’s argument that all individuals participate in the health care market. According to Clement, “the whole problem is that everybody is not in that market, and they want to make everybody get into that market.” Justice Kagan disagreed with this claim, and accused Clement of “cutting the bologna thin.” She stated that “health insurance exists only for the purpose of financing health care. The two are inextricably interlinked. We don't get insurance so that we can stare at our insurance certificate. We get it so that we can go and access health care.”

Clement also countered the government’s position that the penalty is a “tax”:

It wasn't denominated a tax. It's not structured as a tax. If it's any tax at all, though, it is a direct tax. Article I, Section 9, clause 4, the Framers would have had no doubt that a tax on not having something is not an excise tax but a forbidden direct tax. That's one more reason why this is not proper legislation because it violates that.

Finally, attorney Michael Carvin, representing the National Federation of Independent Business and four private individuals, argued that: “Congress does not have the power to promote commerce. . . . Congress has the power to regulate commerce. And if the power exceeds their permissible regulatory authority, then the law is invalid.”

Links to the audio recording and the written transcript of Tuesday’s oral argument can be found here.

On Wednesday, the Court will hear arguments about the law’s severability – whether and to what extent the remainder of the law will stand should the mandate be deemed unconstitutional – and the legality of the law’s Medicaid expansion.

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