Another Conservative Judge Finds that Health Care Reform is Constitutional

Saturday, November 12th, 2011

There was good news out of Washington DC earlier this week when another federal court upheld the constitutionality of President Obama’s historic health care reform legislation.  In the case of Seven-Sky v. Holder, the U.S. Court of Appeals for the D.C. Circuit, which is one of twelve appellate courts that are the last stop before the U.S. Supreme Court, rejected the argument that health care reform’s individual mandate provision exceeded Congress’ authority under the Commerce Clause provision of the U.S. Constitution.  the decision, authored by Judge Laurence Silberman, is the second time in the past few months that a conservative, Republican appointed Judge has upheld the constitutionality of President Obama’s signature legislative victory.

As we’ve previously explained, the 2009 Patient Protection and Affordable Care Act made numerous fundamental reforms to our nation’s broken health care system.  These reforms will expand health insurance coverage to 32 million more Americans, provide substantial assistance of individuals and small businesses seeking to purchase insurance, end abusive insurance industry practices such as pre-existing condition denials, and close the Medicare prescription drug coverage doughnut hole. While a single-payer Medicare-for-all system combined with an aggressive effort to rationalize health care spending is necessary to truly fix our broken health care system, the 2009 health care reform legislation represented real progress that will save lives and money.

The biggest political hurdle facing health care reform is the “shared responsibility” provision of the Act, which is more frequently referred to as the “individual mandate.”  Under this provision, all Americans are required to purchase health insurance or to pay a penalty if they fail to do so.  While many people do not like the thought of the government being able to tell them that they have to purchase something, the reality is that the individual mandate is necessary for health care reform to work.  Without such a mandate, pre-existing condition exclusions could not be eliminated, because otherwise people would simply refuse to purchase insurance until they get sick knowing that they could not then be denied coverage.  In addition, the mandate is necessary to reducing overall costs because it brings more people into the system and, therefore, increases the number of healthy people paying in.

Ever since health care reform was signed into law, conservative activists have sought to have the courts declare it unconstitutional with the individual mandate as the focus of those challenges.  As the DC Circuit stated in Seven-Sky v. Holder:

Appellants’ central objection to the mandate is that Congress, for the first time, has actually commanded that all Americans purchase a product, health insurance, that many of them have never purchased before, never wish to purchase, and may never need. Appellants do not question that Congress can regulate the interstate health care and health insurance markets, or that Congress reasonably could conclude that decisions about whether to purchase health insurance substantially affect interstate commerce. The contested issue here is whether the Government can require an immensely broad group of people–all Americans, including uninsured persons with no involvement in the health insurance and health care markets–to buy health insurance now, based on the mere likelihood that most will, at some point, need health care, thus virtually inevitably enter that market, and consequently substantially affect the health insurance market.  (p. 28).
In analyzing this issue, the Court concluded that the mandate was a constitutional exercise of Congressional power under the Commerce Clause found in the U.S. Constitution.  The Commerce Clause provides that the federal government may regulate interstate activity, including activity that substantially affects interstate activity.  The Court began its analysis by explaining that the Commerce Clause authorizes Congress to address national economic problems by regulating the actions of millions of individuals that, combined, can impact national economics:
The shift to the “substantial effects” doctrine in the early twentieth century recognized the reality that national economic problems are often the result of millions of individuals engaging in behavior that, in isolation, is seemingly unrelated to interstate commerce.  [  ]  That accepted assumption undermines appellants’ argument; its very premise is that the magnitude of any one individual’s actions is irrelevant; the only thing that matters is whether the national problem Congress has identified is one that substantially affects interstate commerce. Indeed, in case after case, a version of appellants’ argument–that Congress’s power to regulate national economic problems, even those resulting from the aggregated effects of intrastate activity, only extends to particular individuals if they have also affirmatively engaged in interstate commerce–has been rejected on that basis. (p. 35)

While acknowledging that the individual mandate posed a unique situation because normally Congress seeks to regulate activity, not inactivity, the Court noted that health insurance also presents unusual circumstances:

It suffices for this case to recognize, as noted earlier, that the health insurance market is a rather unique one, both because virtually everyone will enter or affect it, and because the uninsured inflict a disproportionate harm on the rest of the market as a result of their later consumption of health care services.
. . . .
Congress, which would, in our minds, clearly have the power to impose insurance purchase conditions on persons who appeared at a hospital for medical services–as rather useless as that would be–is merely imposing the mandate in reasonable anticipation of virtually inevitable future transactions in interstate commerce (pp. 32-33)

The Court then when on to explain that Congress clearly has the constitutional authority under the Commerce Clause to regulate the health insurance industry, and that the individual mandate was a key part to carrying out that authority:

Similarly, it is irrelevant that an indeterminate number of healthy, uninsured persons will never consume health care, and will therefore never affect the interstate market. Broad regulation is an inherent feature of Congress’s constitutional authority in this area; to regulate complex, nationwide economic problems is to necessarily deal in generalities. Congress reasonably determined that as a class, the uninsured create market failures; thus, the lack of harm attributable to any particular uninsured individual, like their lack of overt participation in a market, is of no consequence. (p. 36)
The Court closed by finding that the individual mandate was ultimately a political question to be decided by Congress and the President, not a Constitutional one to be decided by the judiciary:
That a direct requirement for most Americans to purchase any product or service seems an intrusive exercise of legislative power surely explains why Congress has not used this authority before–but that seems to us a political judgment rather than a recognition of constitutional limitations.
. . . .
The right to be free from federal regulation is not absolute, and yields to the imperative that Congress be free to forge national solutions to national problems, no matter how local–or seemingly passive–their individual origins. (pp. 36-37)

In short, the Court held that the shared responsibility required by health care reform legislation falls squarely within Congress’ authority to regulate interstate commerce under the Commerce Clause of the U.S. Constitution.  In doing so, the D.C. Circuit joined the 6th Circuit Court of Appeals in upholding the Constitutionality of health care reform in Thomas More Law Center v. Obama.  On the other hand, one federal appellate court has found that health care reform is unconstitutional in Florida v. U.S. Dept. of Health and Human Services.

With federal appellate courts split on the scope of the Commerce Clause and its authorization of the individual mandate, the ultimate decision regarding the validity of health care reform will undoubtedly be made by the U.S. Supreme Court.  Given that almost certain occurrence, it is noteworthy that the Judge who wrote the D.C. Circuit decision discussed here – Judge Laurence H. Silberman – is a well-known conservative jurist who was nominated by Ronald Reagan and who is close friends with Justice Clarence Thomas.   Similarly, the 6th Circuit decision in Thomas More v. Obama was authored in part by Judge Jeffrey Sutton, a conservative judge appointed to the bench by President George W. Bush.  The rulings of these two conservative judges provide powerful evidence that health care reform is fully consistent with the longstanding application of the Commerce Clause of the Constitution, and will hopefully help to persuade Justice Anthony Kennedy or at least one of the other conservatives on the Supreme Court to uphold Congress’ exercise of its authority.