Free Markets, Free People
The editors of the Washington Examiner consider the probable effects of the new CAFE standards (being imposed by the EPA now instead of NHTSA) and ask a pertinent question:
Getting from the current 35 mpg CAFE standard to 54.5 can be achieved by such expedients as making air conditioning systems work more efficiently. We have a bridge in Brooklyn to sell to anybody who thinks that’s even remotely realistic. There is one primary method of increasing fuel economy — weight reduction. That in turn means automakers will have to use much more exotic materials, including especially the petroleum-processing byproduct known as “plastic.” But using more plastic will make it much more difficult to satisfy current federal safety standards. The bottom-line will be much more expensive vehicles and dramatically fewer kinds of vehicles.
Total costs, as calculated by the EPA, will exceed $157 billion, making this by far the most expensive CAFE rule ever. For comparison, the previous rule in 2010 cost $51 billion, according to the EPA. But the EPA doesn’t include this fact in its calculation: Annual U.S. car sales are 14-16 million units, yet over time, this rule will remove the equivalent of half a year’s worth of buyers. Will that be when the EPA takes a cue from Obamacare and issues an individual mandate that we all must buy Chevy Volts?
I’m just curious, for those who support the individual mandate dictated by Obamacare, what is the argument that such an electric car mandate isn’t possible? If the federal government can force us to purchase insurance from the companies it allows to offer the product based on the idea that health care is a national issue, how is promoting cleaner air and more energy security not the same thing? Indeed, it would seem that the arguments are even stronger for forcing everyone to buy electric cars if furthering the “common good” is the only real restriction on federal power.
So what is the difference from a legal, constitutional standpoint? Is there one?
Ihe 11th Circuit Court of Appeals, based in Atlanta, opened its session examining the federal healthcare law recently passed by Congress and derisively known as ObamaCare with these words from its Chief Judge Joel Dubina:
"I can’t find any case like this," Dubina said. "If we uphold this, are there any limits" on the power of the federal government?
That was followed by:
Judge Stanley Marcus chimed in: "I can’t find any case" in the past, he said, where the courts upheld "telling a private person they are compelled to purchase a product in the open market…. Is there anything that suggests Congress can do this?"
Now frankly, I think some people expected a much more receptive audience among the judges since two of the three are Clinton appointees. Dubina is a George H.W. Bush appointee. What both Dubina and Marcus make clear is this is a case – or at least certain aspects of it are – without precedence.
And we all know how federal justices rely on precedence to guide their rulings. I’m encouraged by those opening remarks. The third judge on the e judge panel repeatedly asked the lawyers about the possible effect of striking down the mandate while upholding the rest of the law.
The administration, represented by U.S. Solicitor Gen. Neal Katyal argued the following about the individual mandate:
Katyal argued that healthcare was unique and unlike the purchase of other products, like vegetables in a grocery store.
"You can walk out of this courtroom and be hit by a bus," he said, and if an ill or injured person has no insurance, a hospital and the taxpayers will have to pay the costs of his emergency care.
Katyal argued that Congress could reasonably decide that because everyone will probably need medical care at some time in their lives, everyone who can afford it should pay part of the cost. And he said the courts should uphold the law under Congress’ broad power to regulate commerce in this country.
Congress could clearly require that a person who shows up at a hospital without insurance buy it on the spot, he said, and requiring the purchase in advance should not be the decisive difference.
What, of course, is not reasonable is Congress deciding how one must “pay part of the cost” or compelling them to do so under the auspices of the government. It is the individual’s responsibility to pay such debt as in all other areas of life. But, argues the administration:
Parts of the overall law should still survive, said government lawyer Katyal, but he warned the judges they’d make a "deep, deep mistake" if the insurance requirement were found to be unconstitutional. He said Congress had the right to regulate what uninsured Americans must buy because they shift $43 billion each year in medical costs to other taxpayers.
So, the case boils down to $43 billion a year being the reason for a gigantic intrusion in the market by the government which claims it will do a better job of holding down costs via mandating coverage. This is the same government which suffers $60 billion a year in Medicare and Medicaid fraud (I’d call that some serious “shift[ing]” of costs to other taxpayers, wouldn’t you?
Anyway, back to the story – POLITICO is the only news organization that seemed to find some hope for the administration:
The judges’ questions were mixed enough to give encouragement to both sides in the oral arguments in the multistate lawsuit, the most significant of the legal challenges against Obama’s health care overhaul.
But then, immediately said:
But supporters of the health law cringed as the judges spent a significant amount of time questioning both sides over how much of the law they would have to void if they struck down the most controversial provision at the center of the suit: the requirement to buy insurance.
And that brings us back to our old friend, “severability”:
“The government would obviously be somewhat troubled by the questions about severability, which is something that the court only reaches if it were to invalidate one of the provisions,” said Walter Dellinger, a former acting solicitor general who wrote a brief defending the law for Democratic members of Congress.
This particular case of the many pending is probably the highest profile case as it was brought by a collection of 26 states.
Regardless of how this turns out, however, I think it is pretty clear this one is headed to SCOTUS for final disposition. However, the rulings of the judges involved will indeed be scrutinized by the justices in Washington DC when the time comes. If they find against the administration, I think on has to consider such a ruling, if founded on good legal ground, may create the precedent that SCOTUS needs to follow suit and throw the individual mandate (and thus the law for all intents and purposes) out the window.
There is a new opinion from U.S. District (DC) Judge Kessler ruling that the individual mandate imposed by ObamaCare is constitutional. The primary importance of the ruling is that it is squarely at odds with the Judge Vinson opinion from the District of Florida on one key issue: that deciding not to purchase something is an “activity” that can be regulated under the Commerce Clause. I’m still going through it, and will have more to say, but a few things really leaped out at me.
(1) Kessler places a lot of emphasis on the “free riders” who consume medical services but don’t pay for them. According to the judge, these free rider problems are illuminated by the congressional findings found in the Affordable Care Act (at pp. 39-40):
The findings on this subject could not be clearer: the great majority of the millions of Americans who remain uninsured consume medical services they cannot pay for, often resulting in personal bankruptcy. In fact, the ACA’s findings state that “62% of all personal bankruptcies are caused in part by medical expenses.” ACA § 1501(a)(2)(G), as amended by § 10106. Of even greater significance to the national economy is the fact that these uninsured individuals are, in fact, shifting the uncompensated costs of those services–which totaled $43 billion in 2008–onto other health care market participants, as well as federal and state governments and American taxpayers. See ACA §§ 1501(a)(2)(F), (G),as amended by § 10106; Thomas More Law Ctr., 720 F.Supp.2d at 894.
Because of this cost-shifting effect, the individual decision to forgo health insurance, when considered in the aggregate, leads to substantially higher insurance premiums for those other individuals who do obtain coverage. According to Congress, the uncompensated costs of caring for the uninsured are passed on by health care providers to private insurers, which in turn pass on the cost to purchasers of health insurance. “This cost shifting increases family premiums by on average over $1,000 a year.” ACA §1501(a)(2)(F), as amended by § 10106. Thus, the aggregate effect on interstate commerce of the decisions of individuals to forgo insurance is very substantial.
There are many problems with these “findings” chief among which is an innumeracy problem. According to the first two quoted sentences, we are supposed to infer that 62% of all personal bankruptcies are made up of those “who remain uninsured” and “consume medical services they cannot pay for.” Indeed, according to Kessler’s understanding of the findings, the foregoing population is the “great majority of Americans who remain uninsured.” The only problem is, even if we assume that the 62% statistic is correct (which is a stretch), the number of personal bankruptcies every year does not even reach 2 million. Indeed, 2009 saw personal bankruptcies soar by 32% … to 1.41 million. Sixty-two percent of that is just 874,200, which is far, far fewer people than the “great majority of the millions of Americans who remain uninsured.”
(2) Another glaring issue is that the “cost-shifting” complained of is entirely the fault of the federal government, not “free riders,” thanks to Congress passing EMTALA in 1986, pursuant to which practically every hospital in the nation was forced to accept any and every patient who requested “emergency services.” In short, Congress created the free riders with this legislation.
Now let’s follow the logic here: (a) hospitals refuse to treat patients who can’t afford their medical services, therefore Congress must force hospitals to treat regardless of ability to pay (i.e. costs shifted to hospitals); (b) Patients who can’t afford the medical services, but who hospitals must treat, raise costs of medical services, which are mostly paid by insurers who raise their rates and pass them on to paying patients (i.e costs shifted to service-providers, then insurers, then paying patients); (c) insurance costs are entirely too high because uninsured patients, who can’t afford insurance or medical services, but whom hospitals must treat anyway, which drives up the costs of services and therefore the costs of insurance, and therefore Congress must force everyone to buy insurance (i.e. costs shifted from paying patients to those who can’t afford services or insurance); (d) because some people can’t afford insurance, they must be subsidized in their mandated purchase of insurance by taxpayers (i.e. costs re-shifted back to paying patients).
Putting it all together, according to Kessler’s opinion, Congress must be able to force individuals to purchase insurance because individuals who can’t afford insurance, but still consume health services (thanks to Congress), are causing the health insurance market to become distorted. (Oh, and by the way, those who can afford insurance are going to have to subsidize those who can’t and are therefore responsible for this whole mess in the first place.) Does that make any sense?
(3) The one other thing that really struck me as worrisome is Kessler’s emphasis on the infamous Wickard v. Filburn case (at p. 40):
In this case, the link [between the activity and the market being regulated] is strikingly similar to that described in Wickard: individuals are actively choosing to remain outside of a market for a particular commodity, and, as a result, Congress’s efforts to stabilize prices for that commodity are thwarted. As Wickard demonstrates, the effects of such market-distorting behavior are sufficiently related to interstate commerce to justify Congress’s efforts to stabilize the price of a commodity through its Commerce Clause power.
This is the reasoning underpinning Kessler’s holding (at p. 38) that “[b]oth the decision to purchase health insurance and its flip side–the decision not to purchase health insurance–therefore relate to the consumption of a commodity: a health insurance policy.” In this view, any decision made about an arguably economic subject, even the decision not to participate in a market concerning that economic subject, is subject to regulation by Congress.
Accordingly, should Congress decide to regulate the market for U.S automobiles, your decision to not purchase a vehicle can be regulated and even penalized by federal law. In fact, if Kessler’s view of the Constitution is correct, then Congress could require that you purchase a GM or Chrysler vehicle in order to stabilize the price of that commodity. Or perhaps, because of free rider problems, you can be penalized for choosing not to have children who would grow up, enter the labor force and pay the Social Security and Medicare taxes necessary to support you in your older years. If Kessler is correct, then the only limit on Congressional power is the inability to conjure up a market to be regulated, since any decision (participate/not participate) will have a substantial effect on that market when considered in the aggregate.
I would submit that this cannot be the correct view. The Commerce Clause power has already been distended far beyond what was intended when it written. If the Supreme Court adopts this decision, or something similar, the Congress would effectively have carte blanche to regulate whatever it desires.
In any event, those three things stood out to me. I’ll try to have some more on the opinion itself by tonight.
When is a penalty not a penalty? Ask Rep Shelia Jackson-Lee (D-TX). Yesterday she told the House Judiciary Committee that the requirement imposed on individuals to buy health insurance doesn’t really constitute a penalty for non-compliance:’
“I would make the argument, one, that instead it is an incentive to do right–that it is not penalizing because penalty is punishment,” Jackson-Lee told the Judiciary Committee.
“You’re not punished if you have health insurance, in fact. And so you are, in fact, incentivized to have health insurance, rather than take the negative which is to suggest that because we have a penalty you are being punished,” Rep. Jackson-Lee said.
“I am helping you. I am helping you not to have 26 percent un-insurance in the state of Texas. I’m helping children be insured. I’m helping diverse minorities be insured,” said Rep. Jackson-Lee. “And I know during the civil rights argument–even though we were arguing under the Constitution–there were many policy statements being made: Do we want to live in a nation that discriminates against a person because of the color of their skin? In addition to the constitutional argument, do we want to live in a nation where there are people being uninsured causing catastrophic costs unto the nation and others have to pay. I think that is the question that needs to be considered by the courts.”
Unfortunately for Rep. Jackson-Lee, who may have never actually read the bill, the law is quite specific about non-compliance.
“If an applicable individual fails to meet the requirement of subsection (a) [having a government-approved health-insurance policy]… there is hereby imposed a penalty with respect to the individual.”
Elsewhere, in a section entitled “Payment of Penalty,” it says that individuals failing to carry a government-approved health insurance policy must pay a maximum penalty of $750.
Meanwhile back in the runaway logic train of Ms. Jackson-Lee:
“But I also need to say whether or not it is more an incentive than it is a punishment,” said Rep. Jackson-Lee. “I am more inspired by incentive. And I welcome it being a parking ticket. We get parking tickets all the time, and no one complains about being required to do the right thing.”
One of those bright stars – because of the level of intrusion we’re allowed this government to make – who are making decisions about your life.
A bill has been introduced in the South Dakota legislature that would require any adult over 21 to buy a gun “sufficient to provide for their ordinary self-defense.”
The hook – the purpose of the bill is to demonstrate that government shouldn’t be requiring anyone to buy health insurance. Really. Or so say the sponsors:
“Do I or the other cosponsors believe that the State of South Dakota can require citizens to buy firearms? Of course not. But at the same time, we do not believe the federal government can order every citizen to buy health insurance,” he said.
So now our liberal friends are free to tell us why requiring all the citizens of a state to buy a gun is bad and different than telling all citizens of the United States they have to buy health insurance. If they believe in the power of the Commerce Clause to require citizens buy what the government demands they buy, why not a gun?
I’m not a lawyer nor do I pretend to be, although I do enjoy discussing legal matters very much.
Anyway, as you might imagine, Judge Vinson’s ruling has created a bit of a stir with the left, of course, accusing him of “extreme activism” and the right saying “right on”. In reality, all it means is the future of the law depends on what Justice Kennedy is feeling like when the SCOTUS hears it because they are going to have to review it now.
So, back to me not being a lawyer, I’d like to turn to someone who is and who has followed this closely and, in fact, wrote amicus briefs for two of the governors involved in the lawsuits – Hans Bader who is a senior attorney with the Competitive Enterprise Institute. Here’s his opinion of the ruling:
A judge in Florida just declared the health care law known as “Obamacare” unconstitutional, ruling it void in its entirety. Judge Vinson rightly declared the health care law’s individual mandate unconstitutional, since the inactivity of not buying health insurance is not an “economic activity” that Congress has the power to regulate under the Interstate Commerce Clause. (Under the Supreme Court’s decision in United States v. Morrison (2000), which I helped litigate, only “economic activity” can be regulated under the Commerce Clause, with the possible exception of those non-economic activities that harm instrumentalities of interstate commerce or cross state lines.)
Judge Vinson also rightly declared the law as a whole unconstitutional. The health care law lacks a severability clause. So if a major provision like the individual mandate is unconstitutional — as it indeed was — then the whole law must be struck down.
The absence of a severability clause meant that, at a minimum, the burden of proof shifted to the government to prove (among other things) that the law would have passed even without the individual-mandate provision that the court has just ruled unconstitutional. The government could not, and did not, meet that burden of proof, given the incredibly narrow margin by which the health care law passed in the House, and the fact that it circumvented a filibuster with no votes to spare in the Senate.
As I noted earlier in The Washington Examiner, “To justify preserving the rest of the law, the judge” in the earlier Virginia case “cited a 2010 Supreme Court ruling [Free Enterprise Fund v. PCAOB] that invalidated part of a law — but kept the rest of it in force. But that case involved a law passed almost unanimously by Congress, which would have passed it even without the challenged provision. Obamacare is totally different. It was barely passed by a divided Congress, but only as a package. Supporters admitted that the unconstitutional part of it — the insurance mandate — was the law’s heart. Obamacare’s legion of special-interest giveaways that are ‘extraneous to health care’ does not alter that.” In short, Obamacare’s individual mandate is not “volitionally severable,” as case law requires.
The individual mandate provision also was not “functionally” severable from the rest of the law, since the very Congress that passed deemed it absolutely “essential” to the Act’s overarching goals (as Judge Vinson in Florida correctly noted).
(In our amicus brief in the Florida case for Governors Tim Pawlenty and Donald L. Carcieri, we also argue that Obamacare violates the Tenth Amendment by exceeding Congress’s power under the Spending Clause, a so-called Pennhurst argument.)
In footnote 27, the judge cited with approval the thoughtful brief of legal scholar Ken Klukowski explaining why Obamacare should be struck down in its entirety under settled principles of severability.
So there it is with all the links. I’m hoping that’s how the SCOTUS sees it as well. So for the lawyers among us – have at it guys.
That is precisely the take that Josh Marshall and much of the left have, amusingly, expressed:
A year ago, no one took seriously the idea that a federal health care mandate was unconstitutional. And the idea that buying health care coverage does not amount to "economic activity" seems preposterous on its face.
I’m not sure how Marshall actually believes "no one" took seriously the idea that the health care mandate was unconstitutional, unless he really means "no one who matters". And even then he’s wrong. So let’s boil it down to its real meaning – no one on the left, who consistently ignore the Constitution and matters relating to constitutionality, took the idea seriously.
I’m shocked – shocked I tell you.
Obviously a whole lot of people in the middle and on the right took it very seriously. So much so that at least a plurality of states have initiated law suits against it and/or passed laws rejecting it.
Marshall also claims that the “idea that buying health care coverage does not amount to "economic activity" seems preposterous on its face.” Uh, OK, who exactly is claiming that? What is being discussed is not buying insurance. And the decision to not buy something has nothing to do with “economic activity” does it? So let’s turn Marshall’s sentence around: “the idea that not buying health care coverage does amount to “economic activity” seems preposterous on its face”.
Yes, I would agree – and so did Judge Hudson.
Speaking of Judge Hudson, Richard Epstein gives a pretty good summary of the key point in his ruling:
The key successful move for Virginia was that it found a way to sidestep the well known 1942 decision of the Supreme Court in Wickard v. Filburn, which held in effect that the power to regulate commerce among the several states extended to decisions of farmers to feed their own grain to their own cows. Wickard does not pass the laugh test if the issue is whether it bears any fidelity to the original constitutional design. It was put into place for the rather ignoble purpose of making sure that the federally sponsored cartel arrangements for agriculture could be properly administered.
At this point, no District Court judge dare turn his back on the ignoble and unprincipled decision in Wickard. But Virginia did not ask for radical therapy. It rather insisted that “all” Wickard stands for is the proposition that if a farmer decides to grow wheat, he cannot feed it to his own cows if a law of Congress says otherwise. It does not say that the farmer must grow wheat in order that the federal government will have something to regulate.
It is just that line that controls this case. The opponents of the individual mandate say that they do not have to purchase insurance against their will. The federal government may regulate how people participate in the market, but it cannot make them participate in the market. For if it could be done in this case it could be done in all others.
Read all of Epstein’s opinion piece by the way. There’s a lot more to this than just the point I made and he explains it very well. The usual suspects disagree.
Anyway, assuming this somehow stands and makes it to the Supreme Court, where after a good breakfast and a good night’s sleep Justice Anthony Kennedy decides “what the hell, Judge Hudson is right” and the court rules the mandate unconstitutional, what would be the ramifications?
Without the individual mandate, the whole Obamacare edifice crumbles. The judge did not rule that the entire law must be invalidated. But if the individual mandate goes, the insurance regulations — and most especially the requirement that insurers must take all comers without regard to their health status — will never work. Patients could simply wait to enroll in health coverage until they needed some kind of expensive treatment or procedure, and thus pocket the premiums they would have paid when they were not in need of much medical attention.
Or said more simply – without the mandate the whole of the law is unworkable. Without the mandate, repeal will seem to be the best option.
Oh, and watch the GOP on that point. When it was first passed, all I heard was “repeal, repeal”. Now I’m hearing “repeal and replace”. Uh, no – no “replace”. Fix the government side of things that are in such horrendous shape and driving the cost of health care up, but stay out of people’s private insurance.
And should repeal actually happen the insurance industry better get their heads out of their posterior and get busy finding ways to insure more people more cheaply (like creating products where employers could indeed move their workers to that would be outside the work place making insurance portable (thus no “pre-existing conditions”), affordable (large pool) and deliver quality care. Because, as is obvious, if they don’t someone will again try to do it for them.
I’ve been waiting on this one and today a US District Judge in Virginia issued his ruling about ObamaCare:
A federal judge in Virginia has declared the Obama administration’s health care reform law unconstitutional.
U.S. District Judge Henry Hudson is the first judge to rule against the law, which has been upheld by two others in Virginia and Michigan.
Virginia Attorney General Ken Cuccinelli filed the lawsuit challenging the law’s requirement that citizens buy health insurance or pay a penalty starting in 2014.
He argues the federal government doesn’t have the constitutional authority to impose the requirement.
I’m not sure the AP description is entirely accurate. I believe he ruled only the individual mandate was unconstitutional. However, I don’t believe he ruled the entire law unconstitutional.
U.S. District Judge Henry Hudson in Richmond, Virginia, said today that the requirement in President Barack Obama’s health-care legislation goes beyond Congress’s powers to regulate interstate commerce. While severing the coverage mandate, which was to become effective in 2014, Hudson didn’t address other provisions such as expanding Medicaid.
Hudson, appointed by President George W. Bush found the minimum essential coverage provision of the act “exceeds the constitutional boundaries of congressional power.”
Regardless, if the ruling stands, it cripples ObamaCare. The mandate is one of the principle ways that the administration and Democrats “justified” the cost of the law. And by the way:
Constitutional scholars said unless Congress changes the law, its fate on appeal will probably hinge on the views of the U.S. Supreme Court’s more conservative members.
Hello lame duck Congress? That’s not going to happen in the 111th and it certainly won’t happen 112th.
Oh, this is going to be fun to watch. More to come as it continues breaking.
UPDATE: Pertaining to the “severability” argument put forward in the comment section, Judge Hudson said specifically when talking about the individual mandate:
"The Court will sever only Section 1501 [the individual mandate] and directly-dependent provisions which make specific reference to 1501.
U.S. District Court Judge George Steeh has ruled that the individual mandate to purchase health insurance is a constitutional exercise of Congress’ power under the commerce clause.
The plaintiffs have not opted out of the health care services market because, as living, breathing beings, who do not oppose medical services on religious grounds, they cannot opt out of this market…
As inseparable and integral members of the health care services market, plaintiffs have made a choice regarding the method of payment for the services they expect to receive. The government makes the apropos analogy of paying by credit card rather than by check. How participants in the health care services market pay for such services has a documented impact on interstate commerce…
Obviously, this market reality forms the rational basis for Congressional action designed to reduce the number of uninsureds.
The Supreme Court has consistently rejected claims that individuals who choose not to engage in commerce thereby place themselves beyond the reach of the Commerce Clause. See, e.g., Raich, 545 U.S. at 30 (rejecting the argument that plaintiffs’ home-grown marijuana was “entirely separated from the market”); Wickard, 317 U.S. at 127, 128 (home-grown wheat “competes with wheat in commerce” and “may forestall resort to the market”); Heart of Atlanta Motel v. United States, 379 U.S. 241 (1964) (Commerce Clause allows Congress to regulate decisions not to engage in transactions with persons with whom plaintiff did not wish to deal).
The logical extensions of this ruling, if it were to stand, are obvious. For instance, since everyone inevitably dies, Congress can require you to purchase life insurance, or a pre-paid funeral services. Similarly, we all eat, wear clothes, etc.
Essentially, this decision gives power the Congress to regulate practically any area of human necessity.
Here’s something I’ve been re-reading a lot, lately:
Prudence, indeed, will dictate that governments long established should not be changed for light and transient causes; and accordingly all experience hath shown that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same object evinces a design to reduce them under absolute despotism, it is their right, it is their duty, to throw off such government, and to provide new guards for their future security.