Constitutionality of Health Law will Hinge on Court’s Interpretation of Interstate Commerce

by Rebecca Farley on March 27, 2012

Supreme Court of the U.S.The biggest decision facing the Supreme Court in its hearings on the health reform law is whether or not the law’s insurance coverage mandate is constitutional. The mandate requires all Americans (with some exceptions for financial hardship) to be covered by health insurance, either through their employer, the newly established State Health Insurance Exchanges, or a government program such as Medicaid. Anyone who does not comply with this new requirement will be subject to a financial penalty.

The constitutionality of the coverage mandate has been bitterly contested by supporters and opponents of the law. The Supreme Court’s decision will hinge on whether the mandate falls within the realm of interstate commerce, which Congress is permitted to regulate under the Commerce Clause of the Constitution. The ruling could have far-reaching effects on the role of government under the Constitution.

What is the Commerce Clause, and why are ACA defenders using it to support the mandate?

The first article of the Constitution gives Congress the power “to regulate Commerce with foreign Nations, and among the several States, and with the Indian tribes.” The government’s case in support of the ACA argues that an individual’s decision to purchase or not purchase health insurance coverage has a direct and substantial effect on interstate commerce. The reason for this, say the mandate’s supporters, is that most people who opt not to be insured are in fact still active in the healthcare market: they simply rely on out-of-pocket payments or free services available in emergency rooms and at safety net clinics rather than insurance-covered services. The net result is approximately $100 billion in health care costs incurred by the uninsured each year, $43 billion of which goes uncompensated. Healthcare service providers are then forced to shift the cost of this uncompensated care to insurers and ultimately consumers, raising insurance premiums for people who do have health insurance. This effect is a clear demonstration of how the mandate falls under the realm of interstate commerce.

Moreover, argue the law’s supporters, Congress has the power under the Constitution’s Necessary and Proper clause to legislate the means necessary for carrying out its laws. Because the decision to purchase health coverage has an impact on interstate commerce – and because the mandate is a reasonable and necessary part of carrying out Congress’ efforts to expand healthcare coverage to all Americans – the mandate is constitutional, say supporters.

What are the opponents’ arguments?

Opponents of the coverage mandate argue that Congress cannot reasonably regulate an individual’s inactivity. That is, the decision not to purchase insurance is the decision to remove oneself from the sphere of economic activity and therefore from the sphere of actions that can be regulated by Congress. Opponents of the law make a “slippery slope” argument: if Congress can require people to purchase insurance, what else can it require you to do that you would not otherwise engage in?

What does the legal precedent in previously decided cases say?

No previous Supreme Court decisions have directly touched on the question of whether economic inactivity can be regulated by Congress. However, in a 1964 civil rights case, the Court upheld an anti-discrimination law on the grounds that motel owners’ decision to refuse accommodations to travelers on the basis of their race – essentially, a voluntary decision not to participate in an economic transaction – can be prohibited under Congress’ Commerce Clause powers.

How did the lower courts decide on the coverage mandate?

Four of the 13 circuit courts have issued a ruling on the coverage mandate. Of these four, two upheld the constitutionality of the mandate, one struck it down, and one threw out the case on the grounds that the mandate is a tax and thus cannot be challenged until it goes into effect in 2014.

The Supreme Court’s decision on the mandate is expected by the end of June. For more information on the ACA challenge, see our previous posts on the 4 main issues at stake; the Medicaid expansion; and the Anti-Injunction Act question.




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