Cordray v. Fisher on the Constitutionality of ObamaCare

Today’s Constitution Day program at Case Western Reserve University is a debate on the constitutionality of health care reform between Ohio Attorney General Richard Cordray and Indiana Solicitor General Thomas Fisher.  Indiana is among the states that have challenged the constitutionality of the program; Ohio is not.

I’m liveblogging this event below the fold. I’ll summarize their initial remarks, and as much of the Q&A as I can.  (I may have to leave early.)

UPDATE: A few reflections on the debate I summarize below. First, I was surprised that there was so little discussion of the Necessary and Proper Clause. I understand why Fisher wouldn’t focus on it, as it hurts his case, but what about Cordray? It’s a much stronger argument to say that the mandate is necessary and proper to effectuate other regulations of health insurance argument than to try and argue that not buying health insurance is itself an economic activity subject to the commerce power alone. Without relying on N&P, Cordray was forced to justify a mandate under the commerce clause as equivalent to the draft or other legislative measures enacted pursuant to Congress’ militia-related powers. I was also struck that Cordray effectively conceded Fisher’s argument that the government could mandate the purchase of a health club membership or even a GM car, and that the primary protection against such abuses must be found in the political process, rather than the courts.

Solicitor General Thomas Fisher opens with the essential premise of the various state challenges to the constitutionality of the health care reform: Federal power is limited in scope.  While the Constitution contains many specific protections of individual liberties, as in the Bill of Rights, the primary means of preserving freedom is dividing and limiting federal power.  Whereas states have a residual police power, the federal government only has limited and enumerated powers.  The individual mandate represents the first time in American history that Congress has mandated that all Americans purchase a private product or service as a condition of living in the United States.  According to Fisher, the implications of this mandate for individual liberty are dramatic.  Those defending the mandate, according to Fisher, have yet (and may be unable) to identify a limit to the scope of federal power.

What is the source of the power to impose the individual mandate?  The legislation cites the federal power to regulate commerce among the several states.  Initially, the President (and others) expressly denied that the individual mandate is a tax. Now, however, the federal government claims it has the power to impose the mandate through the power to tax and spend for the general welfare.  Either basis is flawed, Fisher argues.

The commerce clause, as interpreted by the Supreme Court, grants Congress the power to regulate the channels of commerce, things in interstate commerce, and those things that significantly affect interstate commerce.  Only the third of these could plausibly extend to the individual mandate.  Yet looking at cases like Lopez and Morrison suggests that even this power is limited, and denies Congress the ability to regulate non-economic activity too far removed from commerce.  The Court has upheld broad assertions of federal regulatory authority over the conduct of commercial activity, as in Heart of Atlanta Motel, but in the case of the individual mandate there is no underlying economic conduct that Congress is regulating.  There is a difference between telling those who choose to engage in economic conduct that they may not engage in other activities (e.g. racial discrimination), and imposing the mandate on everyone, whether or not they are engaged in economic conduct.  Trying to argue that “illness” (or, for that matter, “wellness”) is an economic activity yields a commerce power without limit.

Fisher also argues that the mandate is unconstitutional if it is a  direct tax because it is imposed directly on the property of those who choose not to purchase health care, but is not apportioned, as all direct taxes must be.  It also cannot be an income tax, under the 16th Amendment, as it is not imposed on “income derived.”  Further, it is not a permissible excise because it applies to all individuals, irrespective of their activities.  So, in sum, if it is an exercise of the taxing power, it is a direct tax and is unconstitutional because it is not apportioned.

Attorney General Richard Cordray opened noting that Fisher had not sought to argue that the health care reform raises 10th Amendment problems, and briefly explained that he believes there are no 10th Amendment problems because it doe snot force states to undertake any particularly activities.  Imposing conditions on spending are not a 10th Amendment violation.

Cordray focused time on the commerce clause, stating that there is no need to reach the tax power questions.  Cordray claims that there are limits to federal power, and that there must be, and pointed to cases in which the AG’s office has sought to defend the state’s sovereignty against the federal government. [Aside: His examples of this are a bit odd, as two involve challenges to federal court grants of habeas corpus petitions to individuals convicted in Ohio courts.]

“We know there are limits because the Supreme Court has told us there are limits,” said Cordray, pointing as well to Lopez and Morrison.  These cases do not prevent Congress from adopting comprehensive regulation of health insurance.  Insurance is inherently an economic business.  The decision whether to purchase insurance now or later is an economic decision about risk, and health care is a major portion of the American economy.  So the question is whether, if you are going to try and regulate health insurance it may be done by the federal government.  According to Cordray, Fisher’s argument would deprive the federal government of any authority to regulate health care, leaving it to be regulated just state-by-state.  This would be “bizarre,” according to Cordray, as health care is not an intrastate market.

Cordray objects to the claim that if someone decides not to purchase health insurance they cannot be said to have engaged in economic conduct.  According to Cordray, this is equivalent to the arguments made (and rejected by the Supreme Court) in Wickard v. Filburn and Gonzales v. Raich.  The decisions by the individuals in these cases may not have been economically significant in isolation, but have a tremendous economic impact when aggregated with all those who might engage in equivalent conduct.  This same dynamic exists in the health care context.  The individual decision to refuse to purchase health insurance may not be economic, but allowing healthy individuals to not purchase health insurance until they are sick has dramatic economic consequences.  Any time Congress tries to address an economic problem in which there is a free rider problem, Congress must have the ability to deal with the free riders.

Q&A

Asked whether those who refuse to purchase health care must give up some individual liberty for the benefit of the common good, Fisher responded that the economic costs imposed on others by those who do not obtain health insurance are a result of other policy decisions and government requirements.  The abstract question whether some individuals should have to sacrifice liberty for the public good in this case is an interesting philosophical question, but under the Constitution, Congress is limited in the ways in can address such concerns.  If refusing to purchase health insurance is an economic activity subject to government regulation, then the same would hold for the purchase of a health club membership (so as to make people healthier and reduce health care costs) or a car (so as to reduce the costs of the GM bailout).  Responding, Cordray argued that there would be no problem if those who refuse to purchase health insurance were choosing to remove themselves from the health care system in perpetuity, there might not be an issue, but that is not realistic.  [Aside: Why, in this debate, do was always equate obtaining health insurance with obtaining health care?  One can purchase the latter without the former.] Cordray further equated the power to impose the individual mandate with the power to enact a military draft, and is just “standard fare.”  As to whether you could be forced to buy a car, Cordray responds that we must defer somewhat to the political process to not make particularly stupid decisions.

The next question suggested Justice Anthony Kennedy has shifted rightward (?!?) during his tenure on the Court, and asked how Justice Kennedy may resolve this question, under the assumption that he will cast the deciding vote.  Fisher noted that Kennedy has spoken to the need to limit federal power, but only in the most general terms, concluding that both arguments should have a fair shot.  Cordray, who once clerked for Justice Kennedy, noted that the case may never reach the Supreme Court, and suggested that one should not assume that this case will be decided 5-4.  He also suggested that many of the lawsuits were filed for political reasons.

Asked whether the federal government’s decision to defend the mandate as a tax suggests there are merits to the commerce clause challenge, Cordray said it is simply good legal strategy to defend a law on alternative grounds.  Good lawyers will raise all the available defenses of a law, as the government and the courts may disagree on which argument is most persuasive.  Fisher responded that he thinks the shift to the tax argument does suggest the weakness of the commerce clause argument.  He further suggested that many relied upon the President’s initial claims that the mandate is not a tax, and argued that if the President still believes this — and the tax argument were not necessary — the President has the authority to order the Attorney General not to defend the law on those grounds.  Finally, Fisher suggested, there can be strategic disadvantages to making too many arguments in defense of a position if one argument is much stronger than the others, as it may dilute the force of the primary argument.

Asked whether the President had broken his promise that any health care reform bill would cover abortion services, Cordray demurred, saying it went beyond the scope of the debate, and that he did not want to pass judgment on whether the President had broken a promise.  Fisher did not respond.

Asked how the case can be brought in 2010 if the mandate does not take effect until 2014, and whether states have true standing to litigate this case, Fisher argued that states will bear the brunt of the costs of the health care reform, and that ripeness is not an issue because there is no question as to what will be imposed in 2014, and that this can effect decisions made by states today.  If we cannot bring this case now, Fisher asked, “when could we bring it?”  No contingency is being waited upon other than time; it is a durational issue, not a contingency issue.  Cordray responded that this case illustrates that the doctrine of standing just depends upon “whose ox is being gored.”  He also stressed that courts should presume that all statutes are constitutional, and the burden should be on the plaintiffs both to establish that they have standing and that a statute is unconstitutional.

Asked whether, if there is a constitutional right to refuse medical treatment, how could the government require an individual to purchase insurance to provide for such treatment, Cordray first responded that this argument is not an issue in this case.  He then went on to say that the case is not analogous, because an individual’s decision to refuse medical treatment in a specific instance is not a permanent withdrawal from the health care system, and there may be circumstances in which an individual may need to receive health care even if they would prefer to refuse it (e.g. emergency care for someone who is unconscious) and it is difficult to know who genuinely wishes not to receive care and who is an opportunistic free rider.

Fisher said the law is not a regulation of conduct, as it does not impose any conditions or requirements on conduct, but simply imposes a mandate on all individuals, regardless of their conduct.  Fisher also noted that, contrary to Cordray’s suggestion, his position does not undermine the federal government’s authority to regulate insurance — such authority is well-established.  What is at issue here, he said, is not a regulation of insurance.

Asked whether Wickard and Raich could be distinguished on the grounds that the individuals in question had enetered the market by growing wheat or marijuana, Cordray said that the growing or possession of a substance is not entering the market, but that regulating such activity is necessary to regulate the relevant market.  Fisher responded that the proper analogy would have been a federal law requiring farmer Filburn to grow wheat or requiring Angel Raich to grow marijuana.  Similarly, there would be costs imposed on the government were GM to fail or lay off workers, but this would not justify mandating the purchase of GM cars.

Asked for a legal precedent for a mandate to purchase a private product, Cordray cited a law requiring all members of the militia purchase arms and ammunition enacted by the first Congress.  [Aside: Interesting example, but not an example of the use of the commerce power.]  If Congress can conscript people to enter the military, a requirement that people purchase health care is not, in itself beyond the scope of federal power.  Fisher responded that Congress has a separate power over the militia.  In response to a follow-up, Cordray noted that the requirement to purchase a product or service is not, in itself, unconstitutional.  The question is whether Congress has sufficient basis to impose the requirement.

Asked whether Congress could re-enact the mandate by raising taxes and then offering a a tax credit or deduction for the purchase of health care [Good question!], Fisher says that it would depend.  He noted that there are more forthright ways of providing public benefits, such as health care, through the tax and spending power, but that is not what Congress chose to do.  Instead it imposed a mandate.  In response, Cordray argued that every time Congress prohibits imports it effectivedly mandates that individual purchase private products, and all manner of Congressional actions affect individual purchasing decisions.

Asked whether a single-payer system would have been constitutional, Fisher said that there is precedent for that sort of approach in Medicare and Medicaid, so it would present different questions and depend on the details of the legislation.  Cordray responded this is an interesting response, as it suggests the problem is that Congress did not go far enough.

[Q&A continued beyond this, but I had to go pick up my daughter.]