Monday, April 23, 2012

Another 'limiting principle' to individual mandate: states can opt out

In the Supreme Court arguments over the constitutionality of the individual mandate in the Affordable Care Act, the justices who seemed hostile to the mandate challenged Solicitor General Donald Verrilli to articulate a "limiting principle" -- a rule that would place boundaries on Congress's right to mandate purchases. Verrilli did so, rather awkwardly:
When Congress is regulating -- is enacting a comprehensive scheme that it has the authority to enact that the Necessary and Proper Clause gives it the authority to include regulation, including a regulation of this kind, if it is necessary to counteract risks attributable to the scheme itself that people engage in economic activity that would undercut the scheme.
Much of the oral argument focused on the plaintiff's claims that the mandate exceeded the scope necessary to fulfill this purpose --  that it was was "forcing healthy individuals to immediately start paying inflated premiums that exceed their actuarial risk," as Michael Carvin's brief put it -- an argument that seemed to make a deep impression on Justices Alito, Roberts and Scalia. I have argued in several posts that the drafters of the ACA in fact took care on several fronts to limit the scope of the mandate to the minimum required to create a viable private market for affordable health insurance (e.g., by providing catastrophic coverage and limited-coverage options)-- in effect, that the mandate is self-limiting. I have further suggested that Justice Kennedy, who seemed troubled by the scope of the mandate but also recognized  the need to draw the relatively young and healthy into the insurance market, might either recognize the relatively narrow scope in his ruling or divide the baby by limiting the mandate to catastrophic coverage -- an argument developed with considerably more legal precision by Marty Lederman, who served in Obama's Office of Legal Counsel.

Here I want to focus on an element in Donald Verrilli's reply brief  that provides a complementary path to arguing either that the mandate is already sufficiently limited or that it might be further limited.

In my first post on the subject, I noted that
it could be argued that the ACA already offers sufficient flexibility. States can take waivers if they want to design an alternative plan that offers equivalent coverage. That could perhaps include extending eligibility for the catastrophic care option -- though that would require a kind of waiver within a waiver, since the law as written specifies who's eligible for catastrophic care.  Further, the department of Health and Human Services opted to leave it to the states to determine coverage parameters, in accordance with broad outlines. Might that decision also not provide space for states to seek permission to widen catastrophic care eligibility?
 In fact, as Verrilli's reply brief points out, the states have even more leeway than noted above:
..the Act provides States considerable flexibility. Maryland Amicus Br. 29-36. For example, beginning in 2017*, States may opt out of the minimum coverage provision if they establish an alternative means of affordably providing comprehensive coverage to a comparable number of residents. 42 U.S.C.A. 18052 (p. 12).
Further, while rebutting the notion that upholding the ACA would enable Congress to pass a limitless parade of absurd purchase mandates, Verrilli points out that no states have done so -- noting almost by the way that "Respondents acknowledge that States do have the power to enact purchase mandates" (p. 18) and, further, that no one has challenged the Massachusetts mandate requiring state citizens to carry health insurance in court. Further, "Respondents ignore the principle that "[t]he authority of the federal government over interstate commerce does not differ in extent or character from that retained by the states over intrastate commerce" (p. 12) -- strongly suggesting that if the Massachusetts mandate is constitutional, so is the ACA's.

In in any case, states have the right to impose mandates, and states have the right to opt out of the federal mandate. Add that to the fact that the mandate in the ACA is designed to impose the minimum financial burden and the widest range of options consistent with empowering it "to counteract risks attributable to the scheme itself that people engage in economic activity that would undercut the scheme," and it can be seen, again, to contain its own 'limiting principle.'

*Obama proposed last fall that Congress move the opt-out date up, I believe to 2014; the obstructionist House declined to do so.

See also:
Jonathan Cohn tells the justices: the ACA has catastrophic coverage options
Michael Carvin misrepresented the mandate in oral argument
The ACA offers catastrophic coverage: the AP notices
The bounded, minimalist way to uphold the ACA (Marty Lederman at Balkinization)
Go tell the justices: the ACA has a catastrophic coverage option


  1. I'm not sure that "states can opt out" is the type of limiting principle that the justices were talking about. They were talking about the slippery slope; see, eg, Justice Scalia's comment: "And that's what allthis questioning has been about. What -- what is left?If the government can do this, what, what else can it not do?"

    So, saying that the states can opt out does not seem to me to solve that problem. Suppose Congress passed a law saying that the police can strip search anyone engaged in interstate commerce (ie, everyone in the country). Would it be enough to say, "oh, it's ok; states can opt out"?

  2. Gordon: I think it's true that the state opt-out is not a sufficient 'limiting principle' in itself. But the arguments were multi-pronged on both sides, and the plaintiffs asserted that the mandate impinged on state as well as individual sovereignty. More to my point: the mandate is hedged an limited in various ways that allow maximum choice both to individuals and states. A broader limiting principle, voiced in the reply brief, by Justice Breyer in the oral arguments, and by Scalia himself in prior cases, is that there is no reason to assume that elected bodies will pile on non-viable and unpopular purchase mandates. The various ways in which the individual mandate is hedged and trimmed in the ACA bears that out.

    1. ASP:

      True, some of the other arguments are a bit better. But, I don't buy the argument that elected bodies will limit themselves -- isn't much of the Constitution premised on the notion that majorities cannot be trusted, and therefore must be limited? Indeed, the individual mandate can be seen as a failure of that supposed limiting principle -- as I believe was mentioned at oral argument, the mandate requires mostly young, healthy persons (who would otherwise not buy insurance) to fund insurance for those with pre-existing conditions, who tend to be older. Given that younger persons are less likely to vote (or, given demographic trends, more likely to be non-citizens) than older folks, can't the mandate be seen as a politically powerful group passing a law that benefits them, with the cost paid by a politically less powerful group? Wasn't that one of the dangers inherent in democracy that much of the Constitution is designed to forestall?

  3. No one is suggesting that Congress have carte blanche: its regulation of commerce remains under well defined constraints. The argument is that *this* mandate is a necessary and proper means to make insurance affordable for all; the next mandate might not be judged necessary or proper. Per the next post, the reason this means is appropriate to this end stems from the unique nature of insurance: you must buy it before you need it -- and the unique nature of *health* insurance: if you don't buy it, someone else pays. And the plaintiffs' contention that an overpriced product is being foisted on the young is a lot of hooey: first of all, the truly young (under 30) can buy catastrophic; and second, the number of Americans who would forego decent health coverage if they could afford it is vanishingly small. Most get it from their employers; anyone under 133% of poverty will get it from Medicaid; anyone who's not affluent, not poor and not getting HC from their employers will have the cost subsidized -- the less income, the more subsidy; and those who really don't want it can pay a modest penalty. No oppression in the equation -- no more than paying SS tax to fund current retirees.

    1. I agree that, given the unique characteristics of the insurance market, the mandate is constitutional (I would argue that that is the limiting factor -- the market will collapse in the absence of the mandate. That was actually the case in the 1930s cases re: preventing farmers from growing too much wheat (or was it producing too much milk?).

      But my query wasn't about that. It was about public opinion as a limiting factor. That strikes me as a very odd argument, given the founders' concern with a potential tyranny of the majority.

      PS: I don't understand the relevance of the fact that most people want health insurance, and that under-30s can buy catastrophic insurance. Those are givens. That doesn't change the fact that the mandate transfers wealth from a younger, healthier, and politically less powerful group to an older, less healthy, and politically more powerful group. I happen to think that is OK, in this instance, but it does point out the fallacy of majority rule as a limiting factor.