Outside the Beltway

Health Care Reform Faces First Courtroom Challenge

The health care reform law faced it's first legal test in a Courtroom in Virginia yesterday.

Doug Mataconis · Friday, July 2, 2010 · 6 comments

Yesterday in a courtroom in Richmond, Virginia, the recently passed health care reform bill faced the first of what is likely to be many legal challenges:

RICHMOND — The legal challenge to the nation’s new health-care law was launched Thursday in a courtroom in Richmond, where the office of Virginia Attorney General Ken Cuccinelli II argued that the measure is an unprecedented overreach by Washington that violates the founders’ intention of a limited federal government.

Arguing the case for Virginia, Solicitor General E. Duncan Getchell Jr. told a judge that it would be “unprecedented,” “ahistorical” and “radical” for the federal government to require an individual to buy a private product — in this case, health insurance.

In front of a packed courtroom — with spectators overflowing into a second room and supporters of the federal law demonstrating outside — attorneys for the Obama administration responded that the Virginia suit has no merit and should be tossed out of court. They said the law’s mandate that Americans buy health insurance was well within Congress’s constitutional power.

District Court Judge Henry E. Hudson said he will decide within 30 days whether to allow the case to proceed.

There are a variety of legal arguments at stake, but the case centers mostly on the Constitutionality of the individual mandate, a provision which also happens to conflict with a new Virginia law that makes it illegal to force residents of the Old Dominion to buy health insurance:

As a first hurdle, Virginia must convince the judge that the state has standing to sue. Acting on behalf of the Obama administration, Deputy Attorney General Ian Heath Gershengorn argued that a state suit is not appropriate because the provision of the law that Cuccinelli has challenged — the requirement that people buy insurance or pay a fine — affects individuals. At least 15 other suits have been filed by individuals or groups challenging the same provision.

Getchell responded that Virginia’s statute prohibiting the mandate means that the state has a sovereign interest to protect.

Assuming the judge considers the suit valid, he will weigh a more central question: whether there is reason to think that Congress exceeded its constitutional authority by commanding individuals to buy health insurance. At its core, the legal debate will turn on whether a person who has chosen not to buy insurance is engaged in economic activity that can be regulated by Congress as interstate commerce.

Getchell argued that a person who has chosen to go without insurance is not engaging in economic activity and cannot be forced into the insurance marketplace. “No post-modernist playing with language can turn inactivity into economy activity affecting interstate commerce,” he said.

The Federal Government’s argument generally can be summarized as follows — (1) Virginia lacks standing to challenge the law, (2) The health care reform law, specifically including the insurance mandates, is a property exercise of Congressional power under the Commerce Clause and the Necessary and Proper Clause, (3) The insurance mandate is a proper exercise of Congressional power under the taxation power.

It’s entirely possible that the Court could rule that Virginia loses on the first ground, which means the suit would get dismissed without ruling on the actual substances of the lawsuit, but Virginia’s law barring insurance mandates may be enough in itself to allow the court to find that it does have standing to challenge the law, at which point the debate moves to the substance of the law.

On that point, the ultimate fate of the challenges seems grim, as Law Professor Orin Kerr noted several months ago:

With all this blogging here at the VC about whether the courts will invalidate the individual mandate as exceeding Congress’s Article I authority, I thought I would add my two cents by estimating the odds of that happening. In my view, there is a less than 1% chance that courts will invalidate the individual mandate as exceeding Congress’s Article I power. I tend to doubt the issue will get to the Supreme Court: The circuits will be splitless, I expect, and the Supreme Court will decline to hear the case. In the unlikely event a split arises and the Court does take it, I would expect a 9-0 (or possibly 8-1) vote to uphold the individual mandate.

Blogging about such issues tends to bring out some unhappy responses, so let me be clear about a few things: (a) I don’t like the individual mandate, (b) if I were a legislator, I wouldn’t have voted for it, (c) I don’t like modern commerce clause doctrine, (d) if I were magically made a Supreme Court Justice in the mid 20th century, I wouldn’t have supported the expansion of the commerce clause so that it covers, well, pretty much everything, (e) I agree that the individual mandate exceeds an originalist understanding of the Commerce Clause, and (f) I agree that legislators and the public are free to interpret the Constitution differently than the courts and to vote against (or ask their legislator to vote against) the legislation on that basis.

But with all of these caveats, I’ll stand by my prediction.

Moreover, if the Courts accept the Federal Government’s argument that the individual mandate is actually a tax, there’s absolutely no chance that health care reform will be found unconstitutional:

The individual mandate, which amends the Internal Revenue Code, is not actually a mandate at all. It is a tax. It gives people a choice: they can buy health insurance or they can pay a tax roughly equal to the cost of health insurance, which is used to subsidize the government’s health care program and families who wish to purchase health insurance.

The Constitution gives Congress the power to tax and spend money for the general welfare. This tax promotes the general welfare because it makes health care more widely available and affordable. Under existing law, therefore, the tax is clearly constitutional.

The mandate is also not a “direct” tax which must be apportioned among the states by population. Direct taxes are taxes on land or “head” taxes on the general population. The individual mandate does not tax land. It is not assessed on the population generally but only on people who don’t buy insurance and aren’t otherwise exempt. It is a tax on behavior, like a tax on businesses that don’t install anti-pollution equipment.

Many important and popular government programs are based Congress’s ability to give incentives through taxation and redistribute tax revenues for public purposes. To strike down the individual mandate the Supreme Court would have to undermine many years of precedents justifying these programs that stretch back to the New Deal (and in the case of the rules for direct taxes, to the very founding of the country).

However Judge Hudson rules, this case will be appealed to the Fourth Circuit Court of Appeals, which happens to be among the more conservative Courts in the Federal system and, eventually, to the Supreme Court. Ultimately, I think we’ll end up seeing the law upheld, much to the chagrin of it’s opponents.

Legal Resources:

Complaint filed by Virginia Attorney General Ken Cuccinelli
Motion to Dismiss filed by United States Government
Opposition to Motion to Dismiss filed by Virginia.