How Obamacare Will Be Settled: A Primer on the Commerce Clause

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Yet, seven years ago in Gonzales v. Raich, 545 U.S. 1 (2005), the Court revived the expansive language of Wickard. The justices ruled that the federal Controlled Substances Act trumps state-level laws legalizing medical marijuana. They determined that Congress could rationally believe that marijuana produced locally for consumption at home might make its way into the national market. As in Wickard, the Court stressed the importance of intrastate regulation to the integrity and success of the larger regulatory scheme.

The guidelines set in 1937 are still "good law." In 1995's Lopez, the Court cited those guidelines set by NLRB and Wickard in striking down the gun law. They reiterated that Congress's Commerce Clause legislation must be based on regulation of "channels of interstate commerce," "the instrumentalities of interstate commerce," or "activities that substantially affect interstate commerce."

WHAT CHANGES FROM COURT TO COURT

The Court's guidelines for evaluating the exercise of Commerce Clause have remained generally consistent, notwithstanding Lopez and Morrison. However, the composition of the Court will determine how the justices apply these tests to the individual mandate. The Marshall Court expanded Congress's commerce power using the same principles that the Rehnquist Court later cited in limiting Congress.

On the same day the Court agreed to hear the health care appeal, Justices Scalia and Thomas attended a Federalist Society dinner partially sponsored by Bancroft PLLC, the firm that will argue against Obamacare this month.

Since Raich, Justices Rehnquist, Sandra Day O'Connor, David Souter, and John Paul Stevens have been succeeded by Justices John Roberts, Samuel Alito, Sonia Sotomayor, and Elena Kagan. Now, Justice Anthony Kennedy is the Court's swing vote -- and he leans conservative.

In the last five terms, Kennedy sided with the "conservative bloc" of Roberts, Alito (previously O'Connor), Antonin Scalia, and Clarence Thomas in 63 percent of five-four decisions. He joined the "liberal bloc" comprised of Stephen Breyer, Ruth Bader Ginsburg, Sotomayor (previously Souter), and Kagan (previously Stevens) in just 25 percent of these rulings.

It is overwhelmingly likely that all nine justices will participate in the ruling. However, calls for Justices Scalia, Thomas, and Kagan to recuse themselves from the case continue -- carrying varying degrees of weight. The grounds for criticizing Scalia are scant while ethical concerns directed at Justices Thomas and Kagan are more serious.

On the same day the Court agreed to hear the health care appeal, Justices Scalia and Thomas attended a Federalist Society dinner partially sponsored by Bancroft PLLC, the firm that will argue against Obamacare this month. More substantively, Thomas has failed to disclose wife Virginia Lamp Thomas's income for 13 years as she worked for conservative organizations -- including approximately $700,000 from the Heritage Foundation. Mrs. Thomas also founded a Tea Party-linked organization, publicly opposed the passage of the health care bill, appears on Fox News, and contributes to Tucker Carlson's The Daily Caller.

Critics of Justice Kagan are demanding her recusal on the theory that she may have assisted in preparing the defense of Obamacare while serving as Solicitor General. Earlier this month, the Supreme Court denied conservative organization Freedom Watch's request for time to argue for Kagan's recusal or disqualification.

Yet the controversy surrounding Justice Kagan's participation -- and that of Justices Scalia and Thomas -- will likely drag on, fueling speculation about how the absence of any one of the three justices would affect the health care ruling.

WHAT HAPPENS AT THE SUPREME COURT

The principles generated by Commerce Clause cases from 1937 to 2005 shaped parties' Supreme Court briefs for the coming Eleventh Circuit appeal. They will also make up the largest portion of the now-six hours of oral arguments the Court will hear on the individual mandate.

In his January brief, Solicitor General Verrilli states that the individual mandate should be upheld under the Commerce Clause because "the minimum coverage provision ... regulates economic conduct with a substantial effect on interstate commerce." His language mirrors guidelines established in NLRB and Wickard and restated in Lopez.

The Solicitor General's brief echoes Wickard and Raich in his argument that the mandate is "an integral part of a comprehensive scheme of economic regulation" -- meaning that the mandate is constitutional by virtue of its necessity to the larger regulatory scheme that is Obamacare. Without the mandate, younger and healthier individuals will not enter the health insurance market -- dooming provisions meant to expand coverage and make health insurance more affordable to fail. He argues that the individual mandate should be considered as critical to health care reform as the regulation of wheat production was to the Agricultural Adjustment Act -- as essential as restrictions on medical marijuana were to the Controlled Substances Act.

Verrilli also draws a parallel between legislation restricting households from growing crops that could affect interstate markets -- as in Wickard and Raich -- and requiring individuals to buy health insurance in order to regulate the national health insurance market. In his brief, he writes that the "constitutional foundation for Congress's action is considerably stronger" than it was in Wickard.

The Solicitor General also explicitly anticipates and responds to Lopez and Morrison-derived attacks on the individual mandate as insufficiently tied to interstate commerce. Verrilli goes to great lengths -- seven-plus pages of a 62-page brief -- to argue that "the minimum coverage provision is fully consistent with Lopez and Morrison." He declares, "Its links to interstate commerce are tangible, direct, and strong."

The Obama administration's careful argumentation should meet even the more stringent Rehnquist Court Commerce Clause criteria. The interstate impact of health care decision-making is clear. Thus, the primary Lopez caution against legislation that requires "pil[ing] inference upon inference" to establish a relationship to interstate commerce does not apply. Instead of the mandate's effect on interstate commerce, the type of "activity" regulated becomes the central point of contention.

The major unknown that distinguishes this case from its Commerce Clause predecessors is the question of how the Court will rule on what Obamacare opponents call the "inactivity" issue. The inactivity argument against the mandate contends that questions of whether buying health insurance is an economic activity and whether that activity affects interstate commerce are moot because not buying health insurance is not activity. They argue Congress cannot force individuals to act, to enter interstate commerce.

The answer to the inactivity argument for supporters of Obamacare is that individuals who do not buy insurance are still active in the health care market. The Sixth Circuit was persuaded by this logic, citing the $100 billion in health care costs incurred by the uninsured each year. Of that $100 billion, $43 billion goes uncompensated. Cost-shifting results in this cost being passed from providers to insurers to consumers, raising family premiums by approximately $1,000.

There are no doctrines -- or statistics -- to presage the Court's likely stance on "inactivity." However, Heart of Atlanta offers a telling parallel. Just as the mandate would regulate "inactivity," the Civil Rights Act regulated so-called inactivity: It forced individuals not engaging in economic activities and transactions because of race to do so to prevent the disruption and distortion of interstate commerce.

The Court will also hear one hour of arguments as to whether or not it should rule on constitutionality at all. The justices may decide as the Fourth Circuit did that the individual mandate's penalty is a tax that triggers the Anti-Injunction Rule. If so, the Court will shelve the issue until the first penalties are paid in 2015. In this scenario, neither side gets a "win." However, a Supreme Court ruling characterizing the penalty as a "tax" would support the argument for constitutionality under the Taxing and Spending Clause.

The sole path to full victory for the U.S. -- protecting Obamacare and the individual mandate -- is through the Commerce Clause. A ruling holding the mandate constitutional under the Taxing and Spending Clause but unconstitutional under the Commerce Clause would preserve the statute but complicate or limit Congress's commerce power. Finding the mandate unconstitutional but severable would simply guarantee a slow and painful death rather than an immediate end for health care reform.

The Supreme Court case on health care will almost certainly result in another seminal Commerce Clause ruling. Unless the Court dismisses the case altogether, its ruling will expand, limit, or qualify Congress's exercise of commerce power -- setting an important precedent that will affect future federal legislation in areas from health care to criminal law to civil rights.

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Rebecca Buckwalter-Poza is a writer and political consultant. She has worked on campaigns and policy projects on five continents, most recently with the Asian Human Rights Commission and Asian Legal Resources Center in Hong Kong. More

Rebecca Buckwalter-Poza is a writer and political consultant. She has worked on campaigns and policy projects on five continents, most recently with the Asian Human Rights Commission and Asian Legal Resources Center in Hong Kong. Rebecca contributed to James Carville’s 40 More Years: How Democrats Will Rule the Next Generation as well as Paul Begala's Third Term. Previously, Rebecca served as deputy national press secretary of the Democratic National Committee during the 2008 election. She has also worked for the Progressive Accountability Office, the Center for American Progress, and the Office of James Carville.
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