Monday, March 26, 2012

Interstate Commerce & the Health Insurance Mandate

Today the Supreme Court begins three days of oral argument with respect to judging the constitutionality of the Affordable Care Act (ACA), which is often referred to as either "health care reform" or "Obamacare." The Constitution is conceptually constructed on the idea of "we the people" granting specific powers to Congress by writing a list of "enumerated powers" in Article 1, Section 8 of the Constitution. Congress is supposed to have only the powers that are specifically enumerated, and when Congress creates a statute that falls outside the enumerated powers such a statute is supposed to be declared to not be law.

Thus, a key issue before the Supreme Court is whether or not the Constitution includes an enumerated power by which members of Congress (along with the President who also swears an oath to protect and defend the Constitution) have the power to create various statutory provisions in the ACA. Specifically, the question is whether Congress has the enumerated power to require every person to purchase government defined "minimum" health insurance coverage.

It is clear that such a power is not directly enumerated in the Constitution. The Congress may still have the power to act as it has in the ACA if the power to require the purchase of insurance can be said to fall within one of the enumerated powers. Congress and the President have asserted that the power does in fact fall within the enumerated power to regulate interstate commerce. Here is the relevant constitutional text:
The Congress shall have Power . . . . To regulate Commerce . . . among the several States . . . .
Notice that the words in the Constitution do not say "Congress shall have the power to regulate interstate commerce." However, I do think "interstate commerce" is a good modern statement of the meaning of the words "among the several states."

Does this enumerated power mean that Congress has the power to compel a person to purchase health insurance with certain "minimum" coverage? Former Senator Tom Daschle says yes:
"From both a legal and practical perspective, the choice is clear. Congress was well within its authority in passing the individual mandate to regulate the interstate effects of an industry that is almost 20 percent of our nation’s economy— more than $2.5 trillion each year."
It seems to me Mr. Daschle must think the interstate commerce clause of the Constitution is: Congress shall have the power to regulate economic activity. In addition, Mr. Daschle must think that the word "regulate" includes the meaning of the word "mandate." Mr. Daschle is not alone in this view of the interstate commerce clause, and many decades of Supreme Court constitutional jurisprudence has, at times, come very close to explicitly writing just what Mr. Daschle writes in this quote. So, if your reading of the Constitutional text suggests to you that Congress does not have the power to compel a person to purchase anything, not even health insurance, don't be quick to assume that the Supreme Court will say the Congress does not have this power.

In my view, such conclusions about the meaning of the interstate commerce clause amount to the Court's constitutional jurisprudence having essentially amended the Constitution to say something like: Congress shall have the power regulate, compel and prohibit economic activity. Well, maybe the Court hasn't yet said that Congress has the power to compel economic activity, but if it decides that the health insurance mandate is constitutional, then I suggest the Court's own copy of the Constitution must read as I suggest.

What does the power to regulate interstate commerce mean? First, I suggest commerce means an exchange between two persons, one being the buyer and the other the seller. Commerce does not mean any and all economic activity. For example, commerce does not include production activities (and the Court said this was so for many, many years, but not often now). Second, interstate commerce would mean an exchange such that the buyer is in one state and the seller is in another state. It does not mean an exchange between a buyer and a seller in the same state (and the Court said this for many years, but not so much now). Third, regulate means to specify rules, not to compel or to prohibit. It doesn't make sense to specify rules for commerce, or for exchanges, when there are no exchanges, regardless of whether there are no exchanges because there are people who do not want to exchange or there are people who want to exchange that have been prohibited from doing so because of government's prohibition (and the Court has said this at times with respect to prohibition).

Therefore, it seems to me that Congress has the constitutional power to specify rules for the interactions between a buyer and a seller who are located in different states.

Contrary to Mr. Daschle's apparent view of the Constitution, Congress does not have the power to regulate or to compel any economic activity just because such activity, in aggregate, can be said to involve a big number for the money that changes hands in all exchanges combined. There can be only exchanges by persons in one state that when accounted for in aggregate involve a large dollar figure.

The Court should say the Congress has the power to specify rules by which a buyer in one state and a seller in another state will exchange money for a health insurance contract. The Court should also say that this is the extent of the constitutional power of Congress with respect to health insurance. Of course, many today will say this limits Congress far too much. Such an understanding of the Constitution does indeed imply a Congress, and a President, with little power to intervene in our economic affairs. But, this is what the words in the Constitution actually say, and it is a view of limited government that the constitutional framers put before "we the people" to be ratified. If many today think the words in the Constitution should be different, then these words should be made different by a proper amending of the Constitution. After all, regardless of Court opinions, unless the words are amended, the words in the Constitution are still "The Congress shall have Power to regulate commerce among the states."

1 comment:


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I introduce a Economics student in Islamic University of Indonesia Yogyakarta

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