The Affordable Care Act (ACA) was passed into law in 2010. This 906 page tome makes a substantial number of changes to the national health care law, but much attention has been focused on the individual health care mandate which is found in section 5000A (codified at 26 U.S.C. 5000A) of the law. This section requires that “an applicable individual shall for each month beginning after 2013 ensure that the individual, and any dependent of the individual who is an applicable individual, is covered under minimum essential coverage for such month.” If that applicable individual does not have “minimum essential coverage,” that person is subject to a penalty which cannot exceed 300% of $750 ($95 in 2014 and $350 in 2015), or $2,250 in 2016, and which will increase based on a cost of living adjustment in subsequent years.
People are not happy about this requirement to either buy health insurance or face a penalty at tax time that could eat up a family’s federal tax refund. At least some people are not happy as there have been at least four different challenges to the Affordable Care Act filed in federal court which have made there way up the various federal circuit courts where these cases were filed. In three of these cases, the administration (defending the constitutionality of the law) was the winner, but in the 11th circuit, the challengers of the law won (in the sense that the court in that case decided to not dismiss their challenge to the law).
In the U.S. today, we generally take for granted that Congress can legislate as it believes it should, and the average person most likely does not think much about whether an act of Congress is constitutional. However, in our system of government, the Congress is empowered to legislate pursuant to specific enumerated powers found in the Constitution. The one in play in this case is the interstate commerce clause, which is found in Article I, section 8, clause 3 of the Constitution. This clause permits Congress to regulate activities that affect commerce between states. Section 1501 of the ACA discusses how the individual insurance mandate is related to interstate commerce. There are a number of findings written into the law where Congress has identified:
- how important health care, as an industry is, to the nation ($2.5 trillion in GDP);
- that this insurance requirement will add millions of new consumers to the health insurance market across the country;
- that half of all personal bankruptcies are caused, in part, by medical expenses (which presumably could have been avoided if the medical issue was covered by health insurance); and
- people don’t buy health insurance when they are healthy, which causes adverse selection in the existing health insurance pool, driving up insurance costs for everyone that does buy insurance.
The challengers to this particular section of the law essentially are arguing that Congress has exceeded its authority in trying to mandate that individuals buy health insurance. The idea that powers not enumerated to the Congress are reserved to the individual states and the citizens of the country is discussed in the Tenth Amendment and in the history surrounding the nation’s adoption of our Constitution in the late 18th century. If individuals that purchase health insurance are not impacting interstate commerce, Congress arguably exceeded its authority.
There are Supreme Court decisions that have investigated the limits of the commerce clause. Federal legislation based on the commerce clause probably hit its high water mark over the buying and selling of wheat in the 1940’s in a case cited as Wickard v. Filburn, 317 U.S. 111 (1942). In Wickard, the plaintiff had sought injunctive relief against the secretary of the department of Agriculture to prevent the collection of a tax against him for growing more wheat than permitted by federal law which set, at the time, quotas for the amount of wheat a farmer might grow. The plaintiff alleged that Congress’ attempt at regulating the amount of wheat that a farmer might grow and consume on the farm exceeded its authority to regulate interstate commerce, as this wheat for local use was not in the commerce between states, and could only indirectly affect such commerce. The Court rejected this argument.
The market for wheat, at the time of Wickard, exceeded any single state in the union. According to the Court, every state, but one, grew wheat, and all states consumed it. The market the Congress attempted to regulate was, therefore, a national and not a local one. That Congress had the authority to regulate such a market was, from the Court’s perspective, squarely found in the Constitution. “The stimulation of commerce is a use of the regulatory function quite as definitely as prohibitions or restrictions thereon. This record leaves us in no doubt that Congress may properly have considered that wheat consumed on the farm where grown, if wholly outside the scheme of regulation, would have a substantial effect in defeating and obstructing its purpose to stimulate trade therein at increased prices.” Id. at 129.
Since Wickard, there has been some retreat from the relatively expansive view of the regulation of interstate commerce by Congress. Notably, the Court indicated that a federal law aimed at criminalizing the possession of a firearm on a school campus exceeded Congress’ power. See U.S. v. Lopez, 514 U.S. 549 (1995). However, a divided Court decided more recently that the regulation of controlled substances, even when these drugs are only used locally as in the case of medical marijuana, may still be properly regulated by the federal government pursuant to the commerce clause. See Gonzales v. Raich, 545 U.S. 1 (2005).
The Court today faces a number of challenges to ACA which share a commerce clause challenge as to the requirement that citizens buy health insurance or face a tax penalty annually. To claim that health care, a $2.5 trillion market within the U.S., is not a national market, simply cannot pass the giggle test. To further claim that making people buy health care or face a penalty, in light of the fact that most health care costs are paid for by insurance, exceeds the authority of Congress also does not pass the same test. To the contrary – the act of not buying insurance inherently means that the risk pool for those with insurance is smaller, and therefore, increases the cost of insurance to those that carry it, plainly and directly impacts the national health care market. If there ever was an example of local activity impacting a national industry, this would be it, given that there are between 30 and 40 million people who are uninsured in the U.S. The challenge made, then, to ACA on this ground is to just misunderstand what Congress is supposed to be doing, and misstates an entire body of law on the enumerated powers of Congress.