Monday, March 26, 2012

Legal Analysis: Health Care Reform (The Individual Mandate)

by richmin3000

earlier today, the supreme court of the united states of america began oral argument on the issue of the patient protection and affordable care act (ppaca). the first issue was whether the anti-injunction act prohibited these issues from being decided by the court at this time. i discussed the anti-injunction act two weeks ago, which you can read here.

tomorrow on the court's agenda is the central issue before the court, whether the individual mandate is unconstitutional. i will provide an overview of the arguments to be made on both sides and later this week i'll recap the specific arguments made by counsel during oral argument while laying out my expectations.

the individual mandate
the united states congress had 3 major goals in mind when passing the historic ppaca in 2010. 1) to provide coverage for approximately 50 million uninsured; 2) stop companies from refusing to insure those who are sick or likely to become sick; 3) keep rates affordable.

the method by which the ppaca provides coverage and keeps rates affordable is the individual mandate, which requires that everyone (with exceptions) purchase health insurance by 2014 or face a penalty of up to $3,000 per year. the rationale was that by providing a disincentive to not purchasing health insurance, those uninsured would be forced to purchase insurance thereby creating millions of new consumers in the health care insurance market and in turn keeping rates affordable (a trade off between insurance companies covering riskier consumers [cost] and having a higher number of insured [revenue]).

whether or not this method of reform is economically efficient is besides the point. the morality of providing insurance to the uninsured is also besides the point. the question comes down to one of legality - that is, does the constitution provide congress and the federal government the authority to create a measure like the individual mandate?

in support of the individual mandate
the government points to 3 clauses in the us constitution to support the federal government's authority in creating the individual mandate. 1) the commerce clause; 2) the necessary and proper clause; 3) the general welfare clause (taxes). it's commonly believed that the general welfare clause will not apply here so we will focus on 1/2.

both the commerce clause and the necessary and proper clause can be found in article 1, section 8 of the us constitution, clauses 3 and 18, respectively.

the commerce clause states: "To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes"

the necessary and proper clause states: "To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof"

section 8 of the constitution (which is where both above clauses can be found) are the enumerated powers granted to the congress and thereby to the federal government. all other powers not enumerated here are considered to be solely within the sphere of state and local governments.

the commerce clause is arguably the most important tool in the federal government's arsenal to enact new and expansive legislation. it has been relied upon to create anti-trust laws, fdr's new deal and civil rights laws. the commerce clause gives the federal government broad reach in regulating essentially any arena or market that either affects or is affected by interstate commerce. for example, the civil rights act of 1964 relied upon the notion that restaurants that purchased interstate goods or served customers from other states were engaging in interstate commerce and thereby could be regulated by the federal government (in this case, prohibited from denying service to blacks).

the necessary and proper clause should not be looked at as another enumerated power but as a means to effectuate the powers. as chief justice marshall articulated in McCulloch v. Maryland in 1819, "Let the end be legitimate, let it be within the scope of the constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consist with the letter and -spirit of the constitution, are constitutional."

the last thing is that when a court reviews congress' authority under the commerce clause, they apply what is called the 'rational review' test which is the lowest level of judicial scrutiny (intermediate scrutiny and strict scrutiny are higher). you can think of strict scrutiny like the 'beyond a reasonable doubt' standard in criminal cases and the rational basis test like 'preponderance of evidence' standard in civil cases which is much more flexible (for example, oj simpson got off in criminal court but was found guilty in civil court).

the federal government, in this case, argues that the health care market is approximately 17% of the nation's economy, fundamentally intertwined within interstate commerce. the government stated that in 2008, 116 billion of medical costs went to the uninsured but they only paid 43 billion of it, resulting in $1000 higher premium costs per year to those insured.

using this as a background, the argument is essentially that since the health care industry is inextricably tried to interstate commerce, the federal government has the authority to regulate it and with the goals of expanding coverage and controlling costs, the individual mandate was a rational means of achieving said goal, granted to them by the necessary and proper clause.

against the individual mandate
the argument against the individual mandate is an incredibly emotional one, relying heavily on rhetoric and broad appeals to our american sensibilities. the strongest arguments against the mandate are that the mandate is not the best method by which to achieve the stated goals and that the mandate itself is an overreach of the government's authority and an intrusion into the lives and rights of individual.

the issue of individual liberty is of great concern to the ppaca's opponents. they believe that the government has no right to force individuals into a marketplace they have purposely chosen to avoid (the counter argument is that everyone will at some point enter the health care marketplace). the argument is that the federal government is creating the commerce that they then wish to regulate by forcing individuals to enter into the health care market.

in modern times, it is almost impossible to avoid the reach of the federal government, but one way of doing so is by refraining from entering into commerce (perhaps by living on a farm and growing your own food?). however, if the federal government has the authority to force individuals into interstate commerce then the federal government also has the authority to regulate the conduct of those individuals. ppaca opponents believe that the end result is a granting of limitless police powers to the federal government, which was clearly not the purpose of the us constitution (only granted limited and specific powers).

what it means?
this is clearly new ground for the supreme court and the ramifications of this decision could be far reaching. tomorrow's oral argument will begin at 10am and last for two hours on the issue of the individual mandate. i will recap the oral argument and provide an overview of what occurred. a decision is expected sometime in june.

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