Monday, December 13, 2010

Activist Judges

U.S. District Judge Henry Hudson, who was appointed in 2002 by George W. Bush because his name sounds like a cartoon character, ruled that the individual mandate in the health care overhaul unconstitutionally exceeds Congress's power to regulate commerce. When we were all discussing this a while back, the consensus seemed to be that the provision was unlikely to be overturned. Patrick even gave us this alleged Ch*merinsky quote: "There are many close constitutional questions. But this is not among them."

He might be right, but with so many conservative attorneys general challenging the law, it was bound to catch on with at least one federal judge. Next up: the most conservative Supreme Court in decades. Predictions?



Anonymous Anonymous said...

i find it to be a tough question, because the public meaning of the constitution when written clearly had limits and commerce had a fairly narrow sense.

after rehnquist's experiment with reinvigorated federalism died, what should we do? just openly declare that there are no limits to federal power any longer, because we've moved politically away from that? or maybe declare in every case that there really are substantive limits on federal power, but that this case doesn't cross the line?

in any case, i predict 6-3 or better in favor of the statute, if the statute isn't largely gutted before then.

one other possibility: SCOTUS slows things down so that it doesn't have to decide until after 2012, in which case we'll probably have a GOP POTUS and one or two GOP houses in the Congress -- thus mooting the issue because the mandate will be repealed.

12/13/2010 2:37 PM  
Blogger Dan said...

"Soon, I'll have three chickens!"--2:37.

12/13/2010 2:43 PM  
Anonymous Anonymous said...

Right, why shouldn't the federal government tell me what I need to buy? I am clearly not intelligent enough to figure it out on my own. I hope they pass legislation requiring me to wear clean underwear and wipe my ass, too! Both of those are well within the realm of interstate commerce, right?!

12/13/2010 2:49 PM  
Blogger Patrick said...

Thanks for posting on this.

In their rush to hype this decision, the media seems almost deliberate in its effort to shunt the “other two thirds” of this story: i.e., that the Obama administration is actually batting two for three on these challenges. That’s right: federal courts in Michigan and Virginia (that is, the same Virginia in which Judge Hudson sits) have already upheld the law on Commerce Clause grounds. Yet somehow this story is tearing apart the front pages of all the major papers.

I appreciate a lot of what Judge Hudson’s opinion said (or, at least what the AP says it said!), but it is still difficult for me to see how the business of health care does not have “a substantial relation to interstate commerce” or how health insurance does not “substantially affect interstate commerce.” I mean, it is at least as substantial as the effect of a small, private farm on national wheat prices.

I’m not 100% sure what 2:37 is referring to with the phrase “public meaning of the constitution when written” but if the reference is to original intent, who cares? We care about original intent when confronting ambiguity (i.e., when there is no controlling authority on point) but original intent becomes pretty academic once the Court has settled an issue. And the wide-assed scope of the Commerce Clause is one of those issues: it is, for better or worse, utterly stare decisis. Put another way, the Court has already said—unanimously and repeatedly—that the Commerce Clause permits expansive economic intervention by the federal government. I just don’t see how Madison’s understanding of the Clause can overcome a unanimous Supreme Court.

The punting possibly 2:37 raises is pretty interesting. That seems like a restrained and reaosnable to handle it . . . of course, we are talking about several of the same Justices who voted to grant cert in Bush v. Gore.

After all that blah-blah-ing by me, I’m nevertheless going to come down with 2:37: it’ll be 6-3. Thomas will dissent squarely on the issue, for substantially the originals reasons 2:27 outlined. Alito and Roberts will dissent on some arcane procedural point. The remainder will vote to uphold the law. Breyer will concur separately in detail on some relatively unimportant point, and Kennedy will concur separately for no reason other than to express his own view. The entirely of the opinion will run 120+ pages.

12/13/2010 2:51 PM  
Anonymous Anonymous said...

After knowing you for some time, 2:43, I doubt the power of any government authority is sufficient to make you wear clean underwear or wipe your ass.

12/13/2010 2:51 PM  
Anonymous Anonymous said...

i didn't say "i" will have. i said "we." for all you know i voted for obama.

and i said "probably," that's all.

and fwiw, using your metaphor, we already have one chicken when recently we had none. we shall see, we shall see.

12/13/2010 2:56 PM  
Anonymous Charlie said...

Patrick, who's going to write the majority decision then? I'd put money on Kennedy, personally.

12/13/2010 2:59 PM  
Blogger Patrick said...

God, I hope not.

12/13/2010 3:06 PM  
Anonymous Anonymous said...

To add to Patrick's list of clarifying points, I also think it noteworthy that the good Judge Hudson found the challenged portion (mandatory purchase of health insurance) to be completely severable from the rest of the law. This is an important provision, but it doesn't deny the government's ability to require employers to provide health insurance. Or to subsidize health insurance for the poor.

So even if this decision stands, it basically gets rid of a provision designed to reduce health care costs by bringing more people into risk pools rather than have them simply go to emergency rooms when they get sick.

So I think crotchety libertarians have won the day, but that's about it. Am I missing something? Does anyone else (other than Ken Cuccinelli) benefit from this holding?

12/13/2010 3:09 PM  
Blogger Patrick said...

John Boehner's political momentum going into his stint as speaker of the house benefits. Heck, when he read this news I bet he got all choked up and shed a little teardrop for liberty.

12/13/2010 3:11 PM  
Anonymous Anonymous said...

is the plan viable if there's no mandate that the "young and healthy" buy a plan? i thought that was the only way to make the plans affordable enough overall. i'm not arguing, just asking.

12/13/2010 3:14 PM  
Blogger Patrick said...

That's my understanding, too. The law gets most of its bite from the mandate, because the idea is that forcing young and healthy people to buy in will drive down the cost for everyone. Witout the mandate, young healthy poeple will opt out -- particularly if they have means -- and the result will be that poor, sick people will not be able to afford medical care. I.e., " the status quo."

12/13/2010 3:24 PM  
Anonymous Anonymous said...

yeah, but let's be precise. it won't "drive down the cost for everyone." the whole concept is to drive up, way up, the cost for tens of millions (the young and healthy) so that it will be affordable for the rest.

12/13/2010 3:30 PM  
Anonymous Anonymous said...

Thank God. No more WikiLeaks talk for awhile.

12/13/2010 5:14 PM  
Anonymous Anonymous said...

Can somebody that knows how to make a poll make one on here? I am curious to know how many people that read N&B (or at least check it while this post is near the top) actually believe that Congress has the power under the CC to force Americans to buy something. You can phrase that a little more neutrally/precisely.

Then ask those people that say yes whether they are in favor of getting punched in the balls every morning when they wake up. I guess only men can take this survey.

12/13/2010 5:41 PM  
Anonymous Anonymous said...

yes; no.

12/13/2010 6:22 PM  
Blogger Beetle Aurora Drake said...

Patrick, I think the argument is not that health care as a whole isn't part of interstate commerce, but that particular individual health care decisions (i.e. not buying health insurance) are not. (It's a distinction that will be at least good enough for the Supreme Court, if they feel inclined to make it) Which is why the requirement to not raise premiums for pre-existing conditions "survives." Of course, it doesn't really survive. I'm sure that, even if the Supreme Court sides with Virginia, either they'll overrule Hudson on severability, or Congress will eliminate the provision (or, I suppose, they could theoretically go for the public option, but not for at least two years).

I predict 8-1 on this, though. Roberts dissenting on an arcane procedural point seems like something he'd do to avoid ruling on an issue, rather than as a reason to overturn a law.

12/13/2010 10:21 PM  
Blogger Armen said...

Beetle, that argument was rejected very recently by the Court in Raich. In particular, Scalia's concurrence is worth reading on that point. It also runs afoul of 70 years of commerce clause jurisprudence. And it completely disregards the "necessary and proper" clause. That's not a dead letter in the constitution, despite libertarians' wishes to the contrary.

12/13/2010 10:34 PM  
Anonymous Anonymous said...

Can I ask a stupid question? Why, oh why, isn't the mandate clearly a tax?

I understand that Obama said that it wasn't a "tax" during the public debate of the healthcare bill, but if we analyzed politicians' rhetoric every time we studied a legal issue, we'd be able to argue anything.

It's a set amount of money, collected by the IRS, and paid to the government when people file their taxes on April 15. Just because Obama doesn't want to call it a "tax" doesn't mean that it's not a tax.

This seems to be a much easier way to settle the issue.

12/14/2010 1:17 AM  
Anonymous Anonymous said...

Patrick and Armen,

To be fair, I don't think the argument is as simple as you make it out to be. I think it is fairly clear that the government could mandate that anyone who consumes healthcare must do so using an approved insurance plan. Such a mandate would fall well within Wickard and Raich's aggregation doctrine.

The current law, arguably, does not do that. Instead, it requires every person--whether or not they consume healthcare--to participate in a federally approved healthcare plan. The district court found that while the government can restrict participation in an activity that affects interstate commerce (Raich, Wickard), it cannot require participation in that activity.

I'm not saying that this is a particularly good argument, but it does provide a way to distinguish the healthcare legislation from the last fifty years of commerce clause jurisprudence. At least two district courts have recognized this possibility: this judge and the judge in Florida who rejected the government's motion to dismiss.

If the Court is looking for a way to find some limiting principle to the commerce clause, this could well be the line it draws. I can just see it on some class of 2015 Boaltie's conlaw outline: "Exception: Fed. Gov. may not mandate participation in interstate commerce in the absence of a pre-existing nexus."

In addition, it is interesting to think of the implications of allowing the government to mandate participation in interstate commerce, or activities that affect interstate commerce. If the federal government can mandate healthcare insurance, can it also pass a law that declares that anyone with healthcare insurance may not possess a gun within 100 feet of a school? Would this effectively provide the jurisdictional nexus that was absent in Lopez? Probably not... but it's fun to speculate.

12/14/2010 1:20 AM  
Blogger Armen said...

That's not a stupid question. First, I will say I have no clue how the health care law uses the tax code to implement the mandate. I would really like an informed discussion on that topic. So all you Big Rak*wski groupies, feel free to opine.

That said, I think the problem is that Congress did not organize the "mandate" like every other program that is "mandated" by the tax code, such as marriage, home ownership, and electric cars. In a sense, I am as obligated to purchase health insurance as I am to enter/purchase any of the above. But I think the actual language might implement the health care mandate by withholding a tax credit if you don't do x while all of the above provide a tax credit if you do x. Is there a difference between those two? I don't know.

But that just highlight's the absurdity of today's ruling. If Congress increased taxes by $500 across the board, then provided a $500 credit for those with health care, voila. No problem.

12/14/2010 1:30 AM  
Anonymous Anonymous said...


If Congress clearly disavowed reliance on its taxation powers and instead, for political reasons, relied on its commerce powers, then it make sense that a court should read the statute as written and intended--as a penalty pursuant to the commerce power.

12/14/2010 1:32 AM  
Blogger Armen said...

1:20 fair point. 1:32, a) there is a presumption against unconstitutionality. If the law is constitutional under any Congressional power, then it is constitutional. I won't bother pointing out the absurdity of relying on Congressional findings that have no binding effect on anyone or anything to restrict a court's ability to analyze the constitutionality of a law. b) See Scalia on every case relation to statutory construction. So really, that's a non-starter.

12/14/2010 1:35 AM  
Anonymous Anonymous said...


I agree with most of what you said. The problem is that in the statutory text Congress is careful to label this fee as a "penalty" and not a tax. The statute contains other taxes, so a Court could conclude that the use of the term "penalty" was intentional. In addition, prior versions of the bill explicitly used the word "tax" to describe this fee. That word was later stripped and replaced with "penalty."

Under standard approaches to statutory construction, it would not be surprising if a Court concluded that Congress intended some effect with the careful choice of words.

I think I would disagree with this attempt to elevate form over substance. However, from what I can remember, the Court has cared about this formal distinction in other cases.

12/14/2010 1:42 AM  
Blogger Armen said...

Thank you for that explanation. I guess the question is whether the presumption of constitutionality trumps the construction of a tax as a penalty.

12/14/2010 1:45 AM  
Blogger Patrick said...

Armen: very small point, but I doubt the presumption of constitutionality trumps the construction of a tax as a penalty because to do so would kind of beg the question; whether a tax is excessively regulatory is a constitutional question. Every time. To apply a presumption of constitutionality would be to make penalty-tax cases very, very easy.

1:20 is completely right – there is something out of whack in my characterization of “you must buy X” as commercial regulation. Sure, it qualifies under the letter of the so-called commerce clause test, but a “you must buy X” command is pretty far afield from what the commerce clause was meant to accomplish, which was fair and free trade among the states. It is also, however, pretty wacky to suggest that “you must buy X” is radical and unprecedented. In fact, you all are forced to buy X every day. The mechanism for forcing the public to buy those things is the tax code.

So, if you want to characterize the legal issue with the health care law as “you must buy X” then the only fair rejoinder is to characterize the law as a tax. That makes sense, because (5:41’s aching balls aside) it is actually very similar in operation to all the other stuff the government makes you buy. You must by highways, body armor for troops in Iraq, the paper the health care bill was written on, the occasional Central American dictator, the cigars in Bill Clinton’s office, etc., etc., etc. Similarly this law will force the public to buy an insurance program that covers everyone. Under that approach, it really isn’t that different than a highway.

Indeed, and as 1:42 pointed out: from the beginning, the health care law actually was framed as a tax. The house bill said as much, right here, and the Senate version used substantially the same language. Last minute word changes aside, it doesn’t “command” or “require” individuals to buy insurance, or "punish" in a penal way those who opt out – at least not in the most precise sense of those words. What it does is “tax” individuals who do not buy insurance. As anyone who has been through Structural Issues knows, the days of limits on Congress’s power to regulate via the tax code are long gone – they left about when Lochner left – and I don’t think that merely changing the word “tax” to “penalty” controls the analysis. In fact, I’m pretty sure many parts of the tax code describe penalties (e.g., early withdraw of funds from an IRA incurs a 10% “penalty” . . . ) without a constitutional hitch.

In short, to those who want to frame the issue as a “you must buy X” problem, that’s fine. But the question you raise isn’t about commerce at all – it is about the power to tax and spend. And the test there is whether legislators could have concluded that this law is “necessary and proper” to further the “general welfare.” Pretty squishy stuff.

In understand the anger and frustration and pissed-off-ed-ness over the bill. I actually don’t think libertarian is a bad word. Nor do I trust nor even have much faith in our government’s ability to do anything with reliable competence. I’m pretty sure we are collectively headed off a giant economic cliff, and the size of our government is largely responsible. I get it. I promise, I really do get it.

But that doesn’t make the law unconstitutional. Misconceived, unwise, or dangerous to the future of our country? All of those are up for debate. But any competent, fair appellate judge – and I am not saying they all will be – will take one look over his or her shoulder at the precedent and feel absolutely bound to uphold the law. As a legal question, it just isn’t very close.

12/14/2010 9:30 AM  
Blogger Dan said...

Slow. Clap. Slow. Clap.

12/14/2010 10:04 AM  
Blogger McTwo said...

After reading the decision, and sitting through Prof. Y*o's structural issues course (which surely pushed me in a specific angle of interpretation) I fall on the side that the individual penalty probably goes beyond the scope of the Commerce Clause, but is tenable under the power to tax and the general welfare clause. I think this puts me largely in agreement with Patrick’s analysis, although I do not think that characterizing the tax power as forcing citizens to buy things is really tenable.

The analysis on the issue of whether or not the Commerce Clause allows the regulation of inactivity is compelling. No case has allowed the Government to compel individuals to do things beyond the specific enumerations in the Constitution (Congress's power to raise armies (draft), collect taxes etc.).

However, it seems like the argument the individual mandate could be implemented as a tax would work. Had the bill simply said "for all uninsured individuals, a $1,000 tax shall be collected to fund emergency care facilities" then this would not be a close question. However, Congress's decision to change the word tax to penalty in its final revision (for seemingly purely political purposes) muddied the waters enough for judges to find that the tax is not a tax.

The interesting issue I think, politically, would be if the SCOTUS overruled the health care law making the point I raised above, providing a clear avenue to implementing a constitutional version of the law. The result would be placing the health care bill before a Congress which is no longer a vast democrat majority. The sad part about it is that the Democrats wanted to pass a version that was constitutional, and had the elected representatives in place to do it, but failed.

12/14/2010 10:47 AM  
Anonymous Anonymous said...

McTwo (or anyone), can you give me one example of a tax that has ever existed in the United States that taxed someone for not purchasing/doing something?

12/14/2010 11:29 AM  
Blogger Patrick said...

Example: the penalty for failing to file, or filing late, a 1040 tax return.

12/14/2010 11:32 AM  
Anonymous Anonymous said...

If I express an intent to die before I reach retirement age, does that make my social security taxes unconstitutional? Does it matter that I may live to reach that age despite my intention? Similarly, does it matter that one who vows not to get sick becomes sick?

12/14/2010 11:32 AM  
Anonymous Anonymous said...

Patrick, I think that is different considering there is a constitutional amendment permitting the federal government to levy a federal income tax. The penalty would be necessary and proper to enforcing that amendment. Also, that is a penalty, not a tax.

12/14/2010 11:34 AM  
Blogger Patrick said...

11:34, I disagree. In this context, distinguishing between penalty and tax is like pointing out a difference between "six" and "a half dozen": sure we can call it a penalty, but the actual punishment is . . . a tax. So is there a difference in this context between a penalty and a tax? Only in name.

Similarly, although it is true that the Sixteenth Amendment permits Congress to levy an income tax, that doesn't really answer whether it is permissible for Congress to require participation in a health insurance program. You are absolutely right that a tax on people who file late 1040's (i.e., a "penalty") is "necessary and proper" to facilitating an income tax system. But having an income tax system is NOT a legitimate reason to tax -- to cross the T's and dot the I's, Congress needs to connect the tax to "the general welfare" of the United States. So long as the healthcare program is for the general welfare, then congress can use any of its taxing and spending power to facilitate it. Including the power to "spend" on the program, and "tax" (or penalize) non-participants.

12/14/2010 11:43 AM  
Blogger McWho said...

Patrick, it may be a technical, rather than substantive, distinction, but it is nonetheless a real one. Congress may tax and spend, but it may not punish under the same authority.

Here, the language in the law is fairly clearly a penalty.

It seems to me that the way to avoid the problem would be to modify the law so that it taxes anyone who does not enroll in an insurance plan in order to compensate for society's extra costs. Explaining that in the law itself would go a long ways to establishing legitimacy.

12/14/2010 12:39 PM  
Anonymous Anonymous said...

Clearly I did not understand Con Law as well as I thought I did.

12/14/2010 12:56 PM  
Anonymous Anonymous said...

Additionally, the 8th Am would apply to penalties whereas it would not apply to taxes. I don't think it is enough to simply say they are 6 of one, half dozen of the other; penalties and taxes are quite different, even if they have a similar end result.

12/14/2010 1:29 PM  
Blogger Beetle Aurora Drake said...

The cynical engineer in me (who is not and never has been a law student) finds the discussion of which interpretation (necessary and proper or not? Tax or penalty?) is more correct fairly tangential to the question posed in the original post about what the law will actually be. After all, there's no one left to tell the Supreme Court that the reasoning used was wrong. It seems that the way to determine if something like this is constitutional is to:

First, identify all possible results for which a justification that is plausible enough to allow the justices to sleep at night exists, and

Second, identify which of those results each justice prefers.

For those of you more scholarly inclined in the law, do you look at it differently?

12/14/2010 1:44 PM  
Blogger Dan said...

Beetle, I have a pretty cynical view of the way the Supreme Court works, but not quite that cynical.

Your analysis might be what is happening at a subconscious level, but at least consciously, most judges do try to uphold the rule of law. At least when a presidential election is not on the line.

12/14/2010 1:51 PM  
Blogger Patrick said...

To be clear, the criticisms to the stuff I have said here are all very fair.

McWho, I’m confused by your comment. You would make the law “legitimate” by correcting a “substantive” distinction between a tax and a penalty. To do that, you would change the language of the law (so that it says it will tax anyone who does not enroll in an insurance plan in order to compensate for society's extra costs) without changing what the law actually does (because the language you propose describes what the law actually already does). So, your proposal strikes me as a technical solution to a substance-less problem. It would have no effect on what the law does, and it therefore no effect on the question of whether Congress has the authority to do it.

At any rate, I am not sure haranguing over whether this is a tax or a penalty is very helpful, because in 2010 Congress can use its tax authority to punish, so long as there is independent regulatory authority in the same field. The Court arrived at this conclusion after having a great deal trouble with drawing a principled line between “tax” and “penalty.” The reason it was so much trouble is that there is a sense in which all taxes are regulatory (and therefore have a penalty-like element) and there is a sense in which almost any fine can be viewed as a tax.

The old line of SCOTUS cases (like the Drexel Furniture child labor case) spent a lot of energy examining and trying to distinguish whether Congress was "taxing" or "punishing." But the Court has since backed away from that, choosing to avoid questioning Congress's motives by looking for any reason to uphold such laws. That is why the Court generally holds that tax/penalty is constitutional if it is levied against an industry or in any area Congress has the power to regulate anyway. Thus, in Kahriger the SCOTUS upheld a direct tax against gamblers, even though the tax (1) was a punishment and (2) did not in any way resemble a tax on “income.” The Court’s rationale was that Congress had the power to regulate gambling under its Commerce authority, so it didn't really matter whether the levy was a "tax" or a regulatory "penalty."

In this case, if Congress has commerce authority, then even if the law is more “penalty” than “tax” it is not a problem. Whether Congress has commerce authority in this case brings us, of course, right back to square one.

I am becoming convinced by the thoughtful comments here that the issue is not as cut-and-dried as I had supposed. I still think, however, that the tax/penalty on individuals here is very similar to the SCOTUS-approved tax/penalty on gamblers, and ought to be upheld for similar reasons.

Obviously, I'll eat a lot of crow if more than four members of the Court agree with you.

12/14/2010 2:11 PM  
Blogger Beetle Aurora Drake said...

Dan, I didn't mean to suggest they don't care about the law. Certainly, the result they prefer is going to include consideration for the consistency of the result with existing precedent. But at the same time, it feels like this is a realm where there are no "totally right" answers, and arbitrary distinctions have to be made, and there's not much to favor one arbitrary distinction over another. For example, the tax/penalty distinction could be anywhere from a critical factor in the legality of the law to totally irrelevant, and I'm not sure on what objective basis a justice can favor one approach over another.

12/14/2010 2:48 PM  
Blogger Dan said...

Fair enough. I am not sure either, but I do think the justices will at least try to find some such objective basis, even if in reality it is only post hoc.

12/14/2010 3:24 PM  

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