ObamaCare and the Constitution: What’s Really at Stake at the Supreme Court?

On March 26, 27, and 28, 2012, the Supreme Court of the United States heard oral arguments in a lawsuit filed by 26 states and the National Federation of Independent Business challenging the constitutionality of the Patient Protection and Affordable Care Act—known informally as ObamaCare. Specifically, the states and the NFIB argued that the Constitution does not give to Congress—either in the Commerce Clause, or through the tax power—the power to require individuals to purchase health insurance or pay a fine to the government. Additionally, the 26 states argued that the law’s redesign of Medicaid transforms the program from a voluntary statefederal partnership into a coercive program that violates the Constitution’s basic principles of federalism. — Editor


TO ANSWER THE QUESTION POSED by our title—What’s really at stake at the Supreme Court?— the Court’s decision in the ObamaCare case could be the hinge on which the nation’s political and economic fortunes turn, and constitute the type of landmark decision that triggers the partial reordering of government power relative to the people. The hinge could swing either way, depending on how the Court rules. The Court’s decision could accelerate our nation’s descent into a constitutional and economic abyss that is increasingly difficult to reverse, or it could apply a constitutional brake just in time to allow our political order to regenerate around limited government ideals, which would eventually direct us back toward the light of day. Or finally, the decision could frustratingly split the constitutional baby in ways that are unsatisfactory to citizens on both sides of the debate, giving little direction or assistance to a country already drifting into the darkness.

To provide such wide-ranging answers to what may seem like a hyped-up question may strike some readers as worthless, but the truth is that very few cases argued in the Supreme Court have such an enormous potential impact. Exceedingly few cases present even the possibility of triggering a small constitutional reordering. Yet there are a handful of cases each century that not only have such potential, but actually do usher in such change.

As explained below, the range of outcomes in the ObamaCare case, and the potential likelihood of some that are monumental, make it one of the most anticipated rulings in decades. Volcanologists who draw attention to a sputtering volcano are not wrong to do so if the volcano does not explode—or only erupts on one side. Likewise, the ObamaCare case is worth careful monitoring and preparation for the most important outcomes.

The Justices’ statements and questioning at oral arguments provide reason for optimism that a bare majority will uphold the Constitution and strike down the individual mandate and perhaps the rest of ObamaCare with it. Tough questioning at oral argument, however, is notoriously unreliable at predicting the outcome of many cases. The nation will have to await the Court’s official decision, expected in late June.

That opinion will direct the future of the health care debate regardless of its result, but is far more significant in its potential to alter, for good or bad, the public understanding of government power during a time when our nation is at a political and economic crossroads. It could play a major role in determining during this period: (1) the continued viability of the “limited government” ideal—a government constrained by a written constitution rather than the whims of politicians alone; (2) the future of economic relations between the national and state governments; and (3) the individual’s practical freedom from increasing government regulation.

What Is a Landmark Decision?

Landmark decisions are not clearly delineated, and even among those most scholars think qualify, not all landmark decisions are equal. In recent years, Bush v. Gore was understood to be terribly important, but it never had the same potential as the ObamaCare case. Presidents matter, some more than others, but Al Gore’s stewardship of the executive branch, even after 9/11, is unlikely to have triggered major constitutional change.

In contrast, three landmark civil rights rulings at roughly 50-year intervals had profound repercussions for the lives and liberties of millions and led to fundamental changes in power between the state and national government and the three branches of the federal government. Decided in 1857, Dred Scott v. Sanford helped trigger the Civil War, the emancipation of the slaves, and the post-Civil War constitutional amendments (Thirteenth, Fourteenth, and Fifteenth). It was also understood to have that potential while the case was pending and soon after it was decided. Both Abraham Lincoln and Stephen Douglas stressed its importance in their famous debates of 1858. They strongly disputed whether the opinion was sound, but Lincoln’s view proved sadly prescient: By ruling that Congress had no authority to stop the spread of slavery, the Court overruled laws enacted to lesson tensions and precluded other political solutions to the sectional crisis that led to war.

Few people know the full story of Plessy v. Ferguson (1896). It involved a railroad that did not want to discriminate based on race and argued that the Fourteenth Amendment allowed it to ignore a state law requiring segregation. The majority opinion in Plessy—that wrongly required the railroad to follow the segregation law—put a brake on the market forces and other social changes that were encouraging integration, and instead, ushered in the Jim Crow era of state-enforced discrimination. That decision not only denied the individual rights of blacks (and railroads), it disabled all courts and the rest of the national government from intervening.

The impact of Brown v. Board of Education (1954) is better known for its role in galvanizing public opinion to end racial discrimination, instructing state and federal courts to do their constitutional duty to strike down unconstitutional laws, and freeing Congress to enact and the President to enforce, civil rights laws to fulfill the promise of the Fourteenth Amendment. The road ahead was not smooth, a “Massive Resistance” movement to the decision took decades to overcome, and subsequent court doctrines that were (mostly) necessary to overcome such resistance helped create an activist judiciary that sometimes exceeds its proper role. Although the Brown decision resulted from underlying social changes, it still served as an accelerant for more change, including the balance between the national and state governments and between the courts and the political branches.

Impact on the Health Care Debate

At a minimum, the Supreme Court’s opinion in the ObamaCare case will have a catalyzing effect on the health care debate. Any result will force one side to press for major legislative action, and the most likely outcomes will cause both sides to seek new legislation. The National Federation of Independent Business (NFIB) and 26 states are challenging the constitutionality of the mandate that requires virtually every individual to purchase a health insurance policy with “minimum essential coverage” (as determined by the Secretary of Health and Human Services). Moreover other provisions of the law would require most of the uninsured who buy a private policy to pay inflated prices to subsidize insurers and others. The 26 states and NFIB argue that the unconstitutional mandate is not severable from the rest of the Act, and therefore the entire law must be struck down. In addition, the 26 states claim that new Medicaid funding conditions exceed Congress’s spending power, also requiring the entire Act to be struck down.

Robert Alt and Ed Haislmaier provide more detail on these challenges in their Heritage Foundation paper “The Obamacare Challenge: Questions Before the Supreme Court and Their Portents for Congress,” (Backgrounder No. 2669, March 22, 2012), but their conclusion is that more legislation will be needed regardless of the outcome. Here is a simplified version of the outcome matrix: If the Court strikes down ObamaCare in its entirety, which is both legally proper and increasingly likely based on the severability argument in the High Court on March 28, then the status quo at the beginning of 2010 would largely return (although a few reimbursement decisions would have to be reversed and/ or updated). Both sides of the debate would clamor for major new legislation. Liberals would push for either greater government control (e.g., universal Medicare) or ways to achieve ObamaCare and its mandate through the tax code. Conservatives would, or at least should, push to enact market-based reforms to fix problems that the prior laws created and promote market-oriented solutions to coverage and free-rider problems.

If the Court strikes down the individual mandate, even the government agrees the Court should strike down at least some closely-related insurance provisions—the guaranteed issue and community ratings provisions. Those changes would have their own negative economic consequences, which is a powerful reason several justices indicated that the more “restrained” course for the Court would be to strike down the entire law and let Congress decide how to sort out the economic and policy tradeoffs. If an “activist” majority decides to pick and choose which provisions to strike down with the mandate, however, the insurance companies and states saddled with taking care of more and costlier patients would push for change. Thus, liberal and conservative reformers again would agree on the need for legislation, and again disagree on its substance. A state Medicaid victory would trigger a similar fight over a restructuring of that program.

Finally, ObamaCare could survive unscathed with either of two rulings. The Court could hold that the Anti-Injunction Act bars the mandate challenge until the penalties are collected in 2015. That is an especially unlikely ruling based on the law and the first day of oral argument on March 26. However, it is possible the Court could reach the merits, get it wrong, and uphold the entire law. If the law is upheld, conservatives would face a new imperative to repeal ObamaCare, with a renewed awareness that further delay will make that exceedingly difficult.

Impact on Constitutional Law

Assuming the Court rules on the merits of the challenges, and the odds are very high that it will, its separate constitutional pronouncements on the Medicaid funding conditions and the individual mandate (and especially its reasoning thereon) are the potentially “landmark” rulings with far-reaching consequences. As a matter of constitutional law, it doesn’t matter what the Court does with the rest of ObamaCare, because severability is a statutory issue.

If the Court addresses only one substantive issue, it will be the individual mandate. The 26 states’ challenge to the Medicaid funding conditions is quite important as most constitutional issues go—questioning whether Congress can withhold all Medicaid funds, rather than a portion of them, if the states don’t accept new terms to that joint program in operation for decades. But the challenge to the individual mandate is both more likely to succeed under current precedents and would have the biggest impact on the power of the national government against the states and the people. (The actual Constitution doesn’t change, but practical perceptions about it do.) And if the Court strikes down the mandate and the rest of the Act with it, the Court need not rule on the Medicaid issue—which seems quite possible after oral argument.

The offensive individual mandate is defended on two grounds, but no court yet has accepted the argument that it is justified under Congress’s tax power—for good reason. For one, the fine for violating the mandate is not called a tax, the stated “penalty” is fixed and not in the form of a tax on income or consumption (even if the Internal Revenue Service collects it), and President Obama and legislative sponsors vociferously denied it was a tax. Second, if it is a tax, it could only be a “capitation” tax, and the constitutional rules for capitation taxes were violated, i.e., such a tax must be apportioned among the states according to their respective populations. Almost no justices seemed to buy the tax argument, so that route is blocked.

The only other path to defend the individual mandate is to use what the Supreme Court has called the “last, best hope of those who defend ultra vires [unconstitutional] congressional action”: to invoke the combined power of the Commerce and Necessary and Proper Clauses, then stretch them beyond all possible, honest, straight-faced meaning. Sophists (and law professors are the best ones) have come up with clever theories of how Congress’s limited power to “regulate Commerce … among the several states” includes the power to compel commerce into being. One theory is that Congress is regulating “self insurance,” if you can redefine both conscious and unconscious inaction as “self insurance.” No one should buy such sophistry.

There are many problems with the proponents’ reading of the Commerce Clause, but there is space to address only a few here. Congress has never before tried to compel those not already in commerce to buy something. That itself is constitutionally significant. More importantly, any Commerce Clause reading broad enough to save the mandate would sanction any law Congress could imagine—and render virtually all other congressional powers redundant. For example, why would the Framers expressly grant power to collect taxes, coin money, grant patent protections, borrow money, or about 50 other powers if the Commerce Clause conferred power to regulate anything that substantially affected commerce? Doesn’t almost everything? Reading one clause to incorporate 50 others is a ridiculous construction of the Framers’ careful list of enumerated powers.

The oral argument on March 27 was both fascinating and instructive. Four Justices seemed willing to accept any expansion of federal power. Yet four other Justices expressed grave doubt about the government’s theory, with Justice Clarence Thomas’s likely, if silent, agreement. Justice Anthony Kennedy twice expressed concern that accepting the government’s theory of its Commerce Clause powers “changes the relationship of the federal government to the individual in a very fundamental way.” He’s right that it would, and his questions are also the best indication that he and four others may vote to save the bedrock principles of our Constitution that limit federal government power.

The Hinge That Swings Both Ways

Regardless of who is right, however, we can now return to why the case could result in a monumental ruling at a critical time in our history. The civil rights cases discussed above illustrate that such epoch-making decisions can change history in either direction. If the Dred Scott decision had upheld Congress’s power to cabin the spread of slavery, it might have encouraged other political solutions short of war. If Plessy had properly enforced the right of the railroad not to discriminate, the rate of integration would have increased rather than been reversed. Brown was unanimous. A closely divided vote might have given credence to the Massive Resistance movement and stalled major civil rights advances for a decade or more.

If the government wins the ObamaCare suit, there simply will be no meaningful limit to Congress’s power, at least not any enforceable by courts. As a practical matter, the Constitution’s limited government ideal will end, perhaps forever. Individuals might retain some of their rights in the Bill of Rights, but no others if Congress says otherwise. Sovereign state power will also end whenever Congress says so, since national power (now unlimited) would trump all state laws. In short, if Congress can make us buy things, it could make us do anything.

Although the government loudly proclaims there would still be limits on congressional power if it wins, with its “health care is unique” argument, there is no substance to that distinction—and everyone knows it. Honest liberal and conservative legal scholars agree it would end enforceable limits on national power; we disagree only over whether this is a good or tragic end to the Constitution’s original design. The right answer: It would be tragic.

So the fate of the nation could hinge on the ruling during times when politicians show no internal discipline to control the growth and power of government. If the Court abdicates its responsibility to enforce the Constitution’s limits on Congress, there is nothing to stop Congress from “drawing all power into its impetuous vortex” as James Madison feared. Our descent into the constitutional and economic abyss will accelerate. Our ultimate fate under a written Constitution would not necessarily be sealed, but it could be. It would take an even greater effort for principled conservatives to turn things around, but the difficult path would be clear: work even harder to build the political and intellectual coalition necessary to repeal ObamaCare, elect Representatives who will clog the vortex, and elect Presidents who appoint Justices who are faithful to, and will act to restore, the real meaning of the Constitution.

But if the Court does its duty and strikes down the individual mandate, it will put some temporary brakes on our descent into the abyss. The court wouldn’t need to overrule older cases like Wickard v. Filburn, and that is highly unlikely anyway. Thus, principled conservatives would have plenty of work left to do, but there would be more hope. The correct ruling in ObamaCare would help nurture the growing recommitment to limited-government ideals, which could eventually direct us back toward the constitutional government bequeathed by the Framers.

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The briefs for the state challengers and the National Federation of Independent Business powerfully counter the government’s chaos-like Commerce Clause theory. Other amicus briefs that are particularly relevant to the original meaning of the Commerce and Necessary and Proper Clauses include: Ted Olson’s for former Justice Department officials (including former Attorney General Ed Meese); one by Richard Epstein and Mario Loyola for the Texas Public Policy Foundation; Ilya Somin’s for the Washington Legal Foundation; and David Kopel’s for the Independence Institute. Erik Jaffe and Steven Bradbury each provide strong support on both economic and constitutional issues in separate briefs. You can find these and over 100 other legal briefs filed in the case at acalitigationblog.blogspot.com. For a short primer on the basic issues, see Randy Barnett, Nathaniel Stewart, and Todd Gaziano’s “Why the Personal Mandate to Buy Health Insurance Is Unprecedented and Unconstitutional,” (Heritage Legal Memorandum No. 49, December 9, 2009), which was cited several times in congressional debates challenging the mandate. Among other things, the paper explains four reasons why state laws that require drivers to buy accident liability insurance aren’t relevant. You also can read transcripts of the oral arguments before the Supreme Court at www.supremecourt.gov/oral_arguments/ argument_transcripts.aspx.

Mr. Gaziano is Director of the Center for Legal & Judicial Studies at The Heritage Foundation.