Before the ink was dry on the Patient Protection and Affordable Care Act (PPACA),1 opponents of the law began filing lawsuits challenging its constitutionality. Although it is easy to lose track of the more than twenty separate challenges on healthcare reform filed in federal district courts across the country, two high-profile cases are most likely to weave their way to the United States Supreme Court.2 While the political motivations of these cases appear clear, the novel constitutional issue involving the broad-sweeping social policy change inherent in PPACA should not be taken lightly—particularly with a newly constructed and conservative-leaning U.S. Supreme Court. This article focuses on the constitutional challenges under the Commerce Clause addressed in the two cases most likely to reach the Supreme Court; Florida ex rel. McCollum v. United States Department of Health and Human Services and the Commonwealth of Virginia ex rel. Cuccinelli v. Kathleen Sebelius, Secretary of Health and Human Services.
Must Buy Minimum Healthcare Coverage
At the heart of the PPACA lawsuits is the so-called individual responsibility requirement found at Section 1501. The requirement, referred to in the Act as “minimum essential coverage,” provides that every citizen must maintain a minimum level of health insurance coverage, with limited exceptions, or pay a penalty, referenced by the Administration as a “tax penalty.” Senior administration officials have acknowledged, at least anonymously, that it would be very difficult to achieve comprehensive healthcare reform if the Supreme Court rules the individual mandate provision is unconstitutional.3 The central question is whether Congress has the power to regulate a citizen’s decision to refrain from participating in interstate commerce.
Status of Federal Court Challenges
Within seven minutes of the healthcare reform bill being signed into law on March 23, 2010, thirteen state attorneys general (AGs) filed suit in Pensacola, FL. In that case, Florida v. HHS, plaintiffs challenge PPACA’s constitutionality on six counts and demand that their states be exempt from certain of its provisions. Since then, several additional states and the National Federation of Independent Business joined the lawsuit, and many national leaders filed supportive amicus briefs.4 On October 14, 2010, Republican-appointed United States District Court Judge Roger Vinson dismissed four counts but allowed the case to proceed on the merits of the remaining two counts, finding that there are constitutional questions about the law’s Medicaid expansion and mandate for individuals to have health insurance.5 The states and HHS argued their respective positions at a summary judgment hearing on December 16, 2010. Judge Vinson stated that he would rule soon, but did not set a particular date for the release of his decision. Despite not providing a specific date for his ruling, he seemed to tip his hand on how he would rule by peppering the government’s lawyers with questions such as: “If [the federal government] decided everybody needs to eat broccoli because broccoli makes us healthy, they could mandate that everybody has to eat broccoli each week?”6
On March 23, 2010, in Commonwealth of Virginia v. Sebelius, Virginia AG Kenneth Cuccinelli made similar arguments challenging PPACA’s individual mandate and Medicaid provisions. This complaint included an additional theory premised on the individual mandate’s direct conflict with the Virginia Health Care Freedom Act. Cuccinelli challenged PPACA for its alleged violation of Virginia’s sovereignty under the Tenth Amendment on the basis that Virginia’s Health Care Freedom Act prohibits individuals from being forced to purchase health insurance. In August, Republican-appointed U.S. District Court Judge Henry E. Hudson rejected the federal government’s motion to dismiss, finding that the state was injured because of the conflict between its own law and PPACA.
On December 13, 2010, Judge Hudson ruled that the individual mandate requiring individuals to purchase health insurance or suffer a tax penalty was unconstitutional, but refused to grant injunctive relief based on the “atypical and uncharted applications of constitutional law interwoven with subtle political undercurrents.” 7 Even Judge Hudson acknowledged that “the final word will undoubtedly reside with a higher court.”8 In refusing to grant the Commonwealth injunctive relief, Judge Hudson notes that there are “no compelling exigencies in this case” given the future implementation date of 2014.9 The U.S. Department of Justice intends to appeal the decision to the Fourth Circuit; thus far, it is unwilling to cooperate with Cuccinelli’s efforts to petition directly to the Supreme Court.
The Decision in Virginia v. Sebelius
There are two aspects of note about Judge Hudson’s decision. One is Judge Hudson’s ruling that only the individual mandate is unconstitutional. He could have decided that the Medicaid Program expansion was also unconstitutional, but declined to do so. Two, Judge Hudson severed the individual mandate from the remainder of the law—allowing implementation to move forward on healthcare reform unabated. This is a very significant part of the ruling, as the healthcare reform law includes no severability clause. Without this specific ruling, the other provisions of PPACA could also have been struck down as unconstitutional. Instead, the ruling affects only the individual mandate provision. As a result, private and public efforts to move forward on developing health insurance exchanges and improving the delivery of healthcare services will be unaffected by Judge Hudson’s decision.
Prior Healthcare Reform Litigation Decisions
Although other cases have considered similar issues, including Thomas More Law Center v. Obama and Liberty University v. Geithner, those cases have already been dismissed following rulings by two Democrat-appointed judges, Judges Steeh and Moon respectively. Both Judges Steeh and Moon ruled that the individual mandate to maintain health insurance coverage was constitutional.10 In addition to raising similar commerce clause challenges, the Thomas More and Liberty cases also raised tangential issues, such as religious freedoms and unconstitutional taking, which are not discussed herein.11 The Liberty ruling is also notable for having arisen from the same circuit as the Virginia v. Sebelius case.
Can Congress Regulate an Individual’s Choice to Purchase Health Insurance?
Anticipating a constitutional challenge, the drafters of the legislation elucidated—within the Act itself—how the Commerce Clause affords Congress the authority to mandate an individual’s purchase of a minimum level of health insurance coverage.12 The legislative text outlines in considerable detail the reasons why the drafters believe that the individual requirement to purchase insurance may substantially affect interstate commerce and be considered commercial and economic in nature. In fact, Judge Steeh refers to this explanation when he dismissed Thomas More’s complaint.13 In contrast, Judge Hudson refused to rely on these congressional findings, relying instead upon “whether the statute constitutes a means that is rationally related to the implementation of a constitutionally enumerated power.”14
The Federal Government’s Rationale
In its briefs, the federal government argues that the Act constitutes a carefully crafted scheme to correct the health insurance industry’s systemic failure to provide affordable health insurance. 15 Rejecting the notion that uninsured individuals are engaged in “inactivity” that may not be regulated, the government argues that an individual’s choice about how to finance their health needs is an economic decision. Such decisions, according to the government, constitute economic actions that Congress may regulate when they substantially affect interstate commerce.16 This argument relies on an aggregation theory that “the sum of individual decisions to participate or not in the health insurance market has a critical collective effect on interstate commerce” providing Congress with sufficient authority under the Commerce Clause to regulate the health insurance market.17
In the alternative and relying upon Gonzales v. Raich, the government argues that Congress has broad authority to regulate a class of activities so long as there is a rational basis for concluding that the “class of activities” has a substantial effect on interstate commerce. Under this theory, Congress has the power under the Necessary and Proper Clause to adopt a regulatory scheme that effectuates those activities in the aggregate. Here, the argument is that the healthcare insurance reform measures, including the individual responsibility requirement and its associated tax penalty, may be considered such a class of activities.18
The Rationale of Healthcare Reform Opponents
PPACA opponents argue that requiring an individual, who is otherwise unwilling, to purchase insurance goes beyond the boundaries of the Commerce Clause powers. Refusing to purchase health insurance does not, opponents contend, constitute economic activity subject to federal regulation under the Commerce Clause.19 Moreover, they argue that the “tax penalty” imposed for failing to maintain health insurance is not a legitimate exercise of Congress’ power of taxation under the General Welfare Clause because the tax is “in actuality, a penalty untethered to an enumerated power.”20 By penalizing individuals who fail to maintain health insurance, opponents argue, Congress is regulating “passive inactivity.”21
Past Decisions Do Not Point to Obvious Outcome
Prior Supreme Court decisions interpreting the Commerce Clause powers provide at least two possible paths for an ultimate ruling. Some cases allow Congress to regulate individual conduct in local matters that “substantially affect interstate commerce.”22 For example, in Wickard and Gonzales, the Court interpreted the Commerce Clause to support federal laws that regulated individual conduct—such as the personal cultivation and consumption of wheat on a private farm and the personal growth and consumption of marijuana for medicinal purposes—based upon the aggregate effect such individual instances could have on the price and market conditions in interstate commerce.23
Notwithstanding Wickard and Gonzales, other Supreme Court decisions have limited the boundaries of Commerce Clause jurisdiction to activities it determines are truly economic in nature and with a demonstrable affect on interstate commerce.24 In United States v. Lopez and United States v. Morrison, the Court struck down two federal laws on constitutional grounds—one banning guns in close proximity to public schools, and another creating civil liability for gender-motivated violent crimes— holding that the existence of congressional findings is insufficient, by itself, to sustain the constitutionality of Commerce Clause legislation.25 Moreover, the Morrison court rejected the argument “that Congress may regulate noneconomic, violent criminal conduct based solely on the conduct’s aggregate effect on interstate commerce.”26
The Unprecedented Conclusion
So what is the likely outcome? There is no question that Congress has the power to regulate a class of activities that in the aggregate has a substantial and direct effect on interstate commerce.
Nor is there any question that this power extends to noneconomic activity closely connected to the intended market. The novel question is whether these regulatory powers must be triggered by voluntary, self-initiated action, or whether congressional Commerce Clause power is expansive enough to compel an individual to involuntarily enter the stream of commerce by purchasing a commodity in the private market. If the answer to the latter question is no, then what may be more interesting to health lawyers is how Congress, in the future, resolves the ongoing problems associated with the uninsured and uncompensated care absent an individual mandate to purchase insurance.