Florida Et Al v. Dept. of Health & Human Services Et Al
Florida Et Al v. Dept. of Health & Human Services Et Al
versus
Soon after Congress passed the Patient Protection and Affordable Care Act,
Pub. L. No. 111-148, 124 Stat. 119 (2010), amended by Health Care and
Education Reconciliation Act of 2010 (HCERA), Pub. L. No. 111-152, 124 Stat.
1029 (2010) (the Act), the plaintiffs brought this action challenging the Acts
constitutionality. The plaintiffs are 26 states, private individuals Mary Brown and
(collectively the plaintiffs).2 The defendants are the federal Health and Human
The district court granted summary judgment (1) to the government on the
state plaintiffs claim that the Acts expansion of Medicaid is unconstitutional and
(2) to the plaintiffs on their claim that the Acts individual mandatethat
1
This opinion was written jointly by Judges Dubina and Hull. Cf. Waters v. Thomas, 46
F.3d 1506, 1509 (11th Cir. 1995) (authored by Anderson and Carnes, J.J.) (citing Peek v. Kemp,
784 F.2d 1479 (11th Cir.) (en banc) (authored by Vance and Anderson, J.J.), cert. denied, 479
U.S. 939, 107 S. Ct. 421 (1986)).
2
The 26 state plaintiffs are Alabama, Alaska, Arizona, Colorado, Florida, Georgia, Idaho,
Indiana, Iowa, Kansas, Louisiana, Maine, Michigan, Mississippi, Nebraska, Nevada, North
Dakota, Ohio, Pennsylvania, South Carolina, South Dakota, Texas, Utah, Washington,
Wisconsin, and Wyoming.
2
individuals purchase and continuously maintain health insurance from private
because it was not enacted pursuant to Congresss tax power and it exceeded
Congresss power under the Commerce Clause and the Necessary and Proper
Clause. The district court also concluded that the individual mandate provision
was not severable from the rest of the Act and declared the entire Act invalid.
The government appeals the district courts ruling that the individual
mandate is unconstitutional and its severability holding. The state plaintiffs cross-
appeal the district courts ruling on their Medicaid expansion claim. For the
INTRODUCTION
important but difficult questions for the courts. Here, that importance and
3
As explained later, unless the person is covered by a government-funded health program,
such as Medicare, Medicaid, and others, the mandate is to purchase insurance from a private
insurer.
4
We review the district courts grant of summary judgment de novo. Sammys of Mobile,
Ltd. v. City of Mobile, 140 F.3d 993, 995 (11th Cir. 1998). We review de novo a constitutional
challenge to a statute. United States v. Cunningham, 607 F.3d 1264, 1266 (11th Cir.), cert.
denied, 131 S. Ct. 482 (2010).
3
difficulty are heightened because (1) the Act itself is 975 pages in the format
published in the Public Laws;5 (2) the district court, agreeing with the plaintiffs,
held all of the Act was unconstitutional; and (3) on appeal, the government argues
that Congress has exceeded its constitutional bounds. United States v. Morrison,
requires knowing what is in the Act. Accordingly, our task is to figure out what
this sweeping and comprehensive Act actually says and does. To do that, we
outline the congressional findings that identify the problems the Act addresses,
and the Acts legislative response and overall structure, encompassing nine Titles
and hundreds of laws on a diverse array of subjects. Next, we set forth in greater
depth the contents of the Acts five components most relevant to this appeal: the
insurance industry reforms, the new state-run Exchanges, the individual mandate,
5
Pub. L. No. 111-148, 124 Stat. 119 (2010), Pub. L. No. 111-152, 124 Stat. 1029 (2010).
Some of the sections of the Act have not yet been codified in the U.S. Code, and for those
sections we cite to the future U.S. Code provision, along with the effective date if applicable.
4
the employer penalties, and the Medicaid expansion.
explicate how Congress exceeded its commerce power in enacting its individual
mandate. We next outline why Congresss tax power does not provide an
mandate is severable from the remainder of the Act. Our opinion is organized as
follows:
I. STANDING
A. Congressional Findings
B. Overall Structure of Nine Titles
C. Terms and Definitions
D. Health Insurance Reforms
E. Health Benefit Exchanges
F. Individual Mandate
5
G. Employer Penalty
H. Medicaid Expansion
A. First Principles
B. Dichotomies and Nomenclature
C. Unprecedented Nature of the Individual Mandate
D. Wickard and Aggregation
E. Broad Scope of Congresss Regulation
F. Governments Proposed Limiting Principles
G. Congressional Findings
H. Areas of Traditional State Concern
I. Essential to a Larger Regulatory Scheme
J. Conclusion
VII. SEVERABILITY
I. STANDING
6
plaintiffs standing to bring this lawsuit. Article III of the Constitution limits the
Party v. Leahy, 145 F.3d 1240, 1244 (11th Cir. 1998) (citations omitted). As we
have explained:
case or controversy requirement. Harrell v. The Fla. Bar, 608 F.3d 1241, 1247
As for the first strand, [i]t is by now axiomatic that a plaintiff must have
standing to invoke the jurisdiction of the federal courts. KH Outdoor, LLC v. City
of Trussville, 458 F.3d 1261, 1266 (11th Cir. 2006). In essence the question of
standing is whether the litigant is entitled to have the court decide the merits of the
7
Inc. v. Broward Cnty., 450 F.3d 1295, 1304 (11th Cir. 2006) (quotation marks
omitted). To demonstrate standing, a plaintiff must show that (1) he has suffered,
or imminently will suffer, an injury-in-fact; (2) the injury is fairly traceable to [the
statute]; and (3) a favorable judgment is likely to redress the injury. Harrell, 608
F.3d at 1253; see also Lujan v. Defenders of Wildlife, 504 U.S. 555, 56061, 112
S. Ct. 2130, 2136 (1992). The plaintiff bears the burden of establishing each of
these elements. Elend v. Basham, 471 F.3d 1199, 1206 (11th Cir. 2006). And
standing must be established for each claim a plaintiff raises. See Harrell, 608
addressed prior to and independent of the merits of a partys claims. Id. at 974
questions of standing regardless of whether the parties have raised them. Id. at
975.
Notably, the government does not contest the standing of the individual
8
Brownhas standing to challenge the individual mandate. See Governments
Opening Br. at 6 n.1 (Defendants do not dispute that plaintiff Browns challenge
The only question raised by the government is whether the state plaintiffs
have standing to challenge the individual mandate. The government claims that the
state plaintiffs do not have standing because they are impermissibly suing the
violation of the rule articulated in Massachusetts v. Mellon, 262 U.S. 447, 48586,
43 S. Ct. 597, 600 (1923).6 The state plaintiffs respond that they are not in
violation of the Mellon rule, but rather have standing to challenge the individual
mandate for three independent reasons: first, because the increased enrollment in
Medicaid spurred by the individual mandate will cost the states millions of dollars
individual mandate cannot be severed; and finally, because the individual mandate
6
In Mellon, the Supreme Court held that states cannot sue the federal government in a
representative capacity to protect their citizens from the operation of an allegedly
unconstitutional federal law. 262 U.S. at 48586, 43 S. Ct. at 600. This has come to be known as
the Mellon rule.
9
intrudes upon their sovereign interest in enacting and enforcing state statutes that
shield their citizens from the requirement to purchase health insurance. States
individual mandate is an interesting and difficult one, in the posture of this case, it
is purely academic and one we need not confront today. The law is abundantly
clear that so long as at least one plaintiff has standing to raise each claimas is
the case herewe need not address whether the remaining plaintiffs have
standing. See, e.g., Watt v. Energy Action Educ. Found., 454 U.S. 151, 160, 102 S.
Ct. 205, 212 (1981) (Because we find California has standing, we do not consider
the standing of the other plaintiffs.); Vill. of Arlington Heights v. Metro. Hous.
Dev. Corp., 429 U.S. 252, 264 & n.9, 97 S. Ct. 555, 562 & n.9 (1977) (Because
of the presence of this plaintiff, we need not consider whether the other individual
and corporate plaintiffs have standing to maintain suit.); ACLU of Fla., Inc. v.
Miami-Dade Cnty. Sch. Bd., 557 F.3d 1177, 1195 (11th Cir. 2009) (Because
Balzli has standing to raise those claims, we need not decide whether either of the
21 F.3d 1531, 1536 (11th Cir. 1994) (In order for this court to have jurisdiction
10
over the claims before us, at least one named plaintiff must have standing for each
of the claims.); Mountain States Legal Found. v. Glickman, 92 F.3d 1228, 1232
(D.C. Cir. 1996) (For each claim, if constitutional and prudential standing can be
shown for at least one plaintiff, we need not consider the standing of the other
plaintiffs to raise that claim.). Because it is beyond dispute that at least one
plaintiff has standing to raise each claim herethe individual plaintiffs and the
NFIB have standing to challenge the individual mandate, and the state plaintiffs
justiciable, and we are permitted, indeed we are obliged, to address the merits of
A. Congressional Findings
The congressional findings for the Act, including those relating to the
7
U.S. Census Bureau, P60-238, Income, Poverty, and Health Insurance Coverage in the
United States: 2009 23 tbl.8 (2010) (Census Report), available at
http://www.census.gov/prod/2010pubs/p60-238.pdf. Although the congressional findings do not
state the precise number of the uninsured, the parties use the 50 million figure, so we will too.
Copies of the Internet materials cited in this opinion are on file in the Clerks Office. See
11th Cir. R. 36, I.O.P. 10.
11
congressional findings focus on these uninsureds, health insurance, and health
care. Id.
and financial decision to forego health insurance coverage and attempt to self-
insure, which increases financial risks to households and medical providers. Id.
18091(a)(2)(F).
consumption of health care: (1) some uninsured persons consume health care; (2)
some fail to pay the full costs; (3) in turn the unpaid costs of that health care$43
billion in 2008are shifted to and spread among medical providers; (4) thereafter
medical providers, by imposing higher charges, spread and shift the unpaid costs
premiums for health policies and shift and spread the unpaid costs to already-
premiums. Id. 18091(a)(2). Also, some uninsured persons continue not to buy
12
The findings state that this cost-shifting scenario increases family premiums
on average by $1,000 per year. Id. 18091(a)(2)(F). Although not in the findings,
premiums.9
In its findings, Congress also points out that national health care spending in
2009 was approximately $2.5 trillion, or 17.6% of the national economy.10 Id.
18091(a)(2)(B). Thus, the $43 billion in shifted costs represents about 1.7% of
total health care expenditures. Of that $2.5 trillion in national health care spending
in 2009, federal, state, and local governments paid $1.1 trillion, or 44%.11
8
Uncompensated care costs translate into a surcharge of $368 for individual premiums
and a surcharge of $1017 for family premiums in 2008. See Families USA, Hidden Health Tax:
Americans Pay a Premium 7 (2009), available at http://familiesusa2.org/assets/pdfs/hidden-
health-tax.pdf (cited by both the plaintiffs and the government).
9
[A] hidden tax on health insurance accounts for roughly 8% of the average health
insurance premium and [t]his cost-shift added, on average, $1,100 to each family premium in
2009 and about $410 to an individual premium. Br. of Amici Curiae Am. Assn of People with
Disabilities, et al., in Support of the Government at 15 (citing Ben Furnas & Peter Harbage, Ctr.
for Am. Progress Action Fund, The Cost Shift from the Uninsured 12 (2009), available at
http://www.americanprogressaction.org/issues/2009/03/pdf/cost_shift.pdf (calculations based on
a 2005 analysis by Families USA)).
10
See Centers for Medicare & Medicaid Services (CMS), National Health Expenditure
Web Tables tbls.1, 5, 11, available at
http://www.cms.gov/NationalHealthExpendData/downloads/tables.pdf (derived from
calculations).
11
See CMS, National Health Expenditure Web Tables, supra note 10, at tbl.5. The
governments health care spending in 2009 included $503 billion for Medicare and $374 billion
for Medicaid and the Childrens Health Insurance Program (CHIP).
13
Private insurers still paid for 32% of health care spending in 2009,12 id.,
through: (1) primarily private employer-based insurance plans, or (2) the private
individual insurance market. The private employer-based health system covers 176
covers 24.7 million people.13 Undisputedly, [h]ealth insurance and health care
Congress also recognized that many of the uninsured desire insurance but
have been denied coverage or cannot afford it. Its findings emphasize the barriers
costs. Id. 18091(a)(2)(J). Private insurers want healthy insureds and try to
Projected Medicare spending is $723.1 billion in 2016 and $891.4 billion in 2019. CMS,
Natl Health Expenditure Projections 20092019 tbl.2, available at
http://www.cms.gov/National HealthExpendData/Downloads/NHEProjections2009to2019.pdf.
With the Acts Medicaid expansion and other factors, projected Medicaid and CHIP
spending is $737.5 billion in 2016 and $896.2 billion in 2019. Id.
12
See CMS, National Health Expenditure Web Tables, supra note 10, at tbl.3 (derived
from calculations).
13
See Census Report, supra note 7, at 2225 & 23 tbl.8 (derived from calculations).
14
health coverage in the individual market but were denied coverage, charged a
condition.14
of premiums in the current individual and small group markets. Id. The findings
state that Congress seeks to create health insurance markets that do not require
underwriting and eliminate its associated administrative costs. Id. The Act
Congress stated that the Act, by eliminating underwriting costs, will lower health
3. Congresss Solutions
$90 billion in underwriting costs, Congress determined these problems affect the
14
HHS, Coverage Denied: How the Current Health Insurance System Leaves Millions
Behind, http://www.healthreform.gov/reports/denied_coverage/index.html (citing
Commonwealth Fund Biennial Health Insurance Survey, 2007); Sara R. Collins, et al., The
Commonwealth Fund, Help on the Horizon: How the Recession Has Left Millions of Workers
Without Health Insurance, and How Health Reform Will Bring Relief xi (2011), available at
http://www.commonwealthfund.org/~/media/Files/Surveys/2011/1486_Collins_
help_on_the_horizon_2010_biennial_survey_report_FINAL_31611.pdf.
15
findings identify what the Act regulates: (1) the health insurance market, (2)
how and when health care is paid for, and (3) when health insurance is
purchased. Id. 18091(a)(2)(A), (H). The findings also state that the Acts
reforms will significantly reduce the number of the uninsured and will lower
To reduce the number of the uninsured, the Act employs five main tools: (1)
insurance products, and restrict their premium pricing structure; (2) creation of
competitively purchase the new insurance products and obtain federal tax credits
and subsidies to do so; (3) a mandate that individuals must purchase and
private employers who do not offer at least some type of health plan to their
The Acts Medicaid expansion alone will cover 9 million of the 50 million
uninsured by 2014 and 16 million by 2016.15 The Acts health insurance reforms
15
CBOs Analysis of the Major Health Care Legislation Enacted in March 2010: Before
the Subcomm. on Health of the H. Comm. on Energy & Commerce 112th Cong. 18 tbl.3 (2011)
16
remove private insurers barriers to coverage and restrict their pricing to make
had their preexisting conditions excluded.16 The Acts new Exchanges, with
significant federal tax credits and subsidies, are predicted to make insurance
together:18
(1) will add millions of new consumers to the health insurance market and
will increase the number and share of Americans who are insured;
(2) will reduce the number of the uninsured, will broaden the health
(3) will build upon and strengthen the private employer-based health
(Statement of Douglas Elmendorf, Director, Cong. Budget Office) [hereinafter CBO, Analysis],
available at http://www.cbo.gov/ftpdocs/121xx/doc12119/03-30-HealthCareLegislation.pdf.
16
See HHS, Coverage Denied, and Collins, supra note 14.
17
CBO, Analysis, supra note 15, at tbl.3.
18
The congressional findings refer six times to the individual mandate requirement,
together with the other provisions of this Act. 42 U.S.C. 18091(a)(2)(C), (E), (F), (G), (I), (J).
17
(4) will achieve near-universal coverage of the uninsured.
Id. 18091(a)(2).
parties briefs and the 52 amici briefs contain, and indeed rely on, additional data
about the uninsured. Before turning to the Act, we review that data.19
So who are the uninsured? As to health care usage, the uninsured do not fall
into a single category. Many of the uninsured do not seek health care each year. Of
course, many do. In 2007, 57% of the 40 million uninsured that year used some
medical services; in 2008, 56% of the 41 million uninsured that year used some
medical services.20
the past two years; 68% of uninsured people had routine checkups in the past five
19
There has been no evidentiary objection by any party to the data and studies cited in the
parties briefs or in any of the amici briefs. In fact, at times the parties cite the same data.
20
HHS, Agency for Healthcare Research and Quality, Medical Expenditure Panel Survey,
Household Component Summary Tables (MEPS Summary Tables), Table 1: Total Health
ServicesMedian and Mean Expenses per Person with Expense and Distribution of Expenses by
Source of Payment: United States, 2007 & 2008, available at
http://www.meps.ahrq.gov/mepsweb/data_stats/quick_tables.jsp (follow Household Component
summary tables hyperlink; then select 2007 or 2008 for year and follow the search
hyperlink; then follow the hyperlink next to Table 1").
The Medical Expenditure Panel Survey (MEPS) is a set of large-scale surveys of
families and individuals, their medical providers (including doctors, hospitals, and pharmacies),
and employers across the United States. It is conducted under the auspices of HHS.
18
years.21 In 2008, the uninsured made more than 20 million visits to emergency
rooms,22 and 2.1 million were hospitalized.23 The medical care used by each
uninsured person cost about $2,000 on average in 2007, and $1,870 on average in
2008.24
When the uninsured do seek health care, what happens? Some pay in full.
Some partially pay. Some pay nothing. Data show the uninsured paid on average
37% of their health care costs out of pocket in 2007, and 46.01% in 2008,25 while
21
June E. ONeill & Dave M. ONeill, Who Are the Uninsured? An Analysis of Americas
Uninsured Population, Their Characteristics and Their Health, EMP T POLICIES INSTITUTE , 21
tbl.9 (2009), available at http://epionline.org/studies/oneill_06-2009.pdf.
22
Br. of Amici Curiae Am. Hosp. Assn et al. in Support of the Government at 11 (citing
Press Release, HHS, New Data Say Uninsured Account for Nearly One-Fifth of Emergency
Room Visits (Jul. 15, 2009), available at http://www.hhs.gov/news/press/2009pres/
07/20090715b.html).
23
In 2008, U.S. hospitals reported more than 2.1 million hospitalizations of the uninsured.
Office of the Assistant Secy for Planning and Evaluation, HHS, The Value of Health Insurance:
Few of the Uninsured Have Adequate Resources to Pay Potential Hospital Bills 5 (2011),
available at http://aspe.hhs.gov/health/reports/2011/valueofinsurance/rb.shtml.
24
MEPS Summary Tables, supra note 20. An Economic Scholars amici brief, filed in
support of the government, states: The medical care used by each uninsured person costs about
$2000 per year, on average. Br. of Amici Curiae Economists in Support of the Government at
16 (citing Agency for Health Care Quality and Research, Medical Expenditure Panel Survey,
Summary Data Tables, Table 1" (see MEPS Summary Tables, supra note 20); Jack Hadley, et
al., Covering the Uninsured in 2008: Current Costs, Sources of Payment, and Incremental
Costs, 27(5) HEALTH AFFAIRS W399-415 (2008)).
In contrast, this same amici brief points out: In 2007, the average person used $6,186 in
personal health care services. Id. at 11 (citing Center for Medicare and Medicaid Services,
National Health Expenditure Accounts); see CMS, National Expenditure Web Tables, supra
note 10, at tbl.1.
25
See MEPS Summary Tables, supra note 20.
19
third parties pay another 26% on their behalf.26 Not surprisingly, the poorer
uninsured, on average, consume more health care for which they do not pay.27
Even in households at or above the median income level ($41,214) in 2000, the
uninsured paid, on average, less than half their medical care costs.28
It is also undisputed that people are uninsured for a wide variety of reasons.
As the data show, many of the uninsured have low to moderate incomes and
simply cannot afford insurance. Some of the uninsured can afford insurance and
tried to obtain it, but were denied coverage based on health status.30 Some are
26
See Families USA, Hidden Health Tax, supra note 8, at 2 (cited by both the plaintiffs
and the government).
27
Bradley Herring, The Effect of the Availability of Charity Care to the Uninsured on the
Demand for Private Health Insurance, 24 J. HEALTH ECON . 225, 22931 (2005).
28
Herring, supra note 27, at 231 ([T]he median income for all household[s] in the U.S. is
roughly 300% of poverty, and the poverty threshold was US$13,738 for a family of three in
2000.); see id. at 230 tbl.1.
29
See Census Report, supra note 7, at 23 tbl.8.
30
See HHS, Coverage Denied, and Collins, supra note 14.
20
voluntarily uninsured and self-finance because they can pay for their medical care
or have modest medical care needs. Some may not have considered the issue.
There is no one reason why people are uninsured. It is also not surprising,
therefore, that Congress has attacked the uninsured problem through multiple
The sweeping and comprehensive nature of the Act is evident from its nine
Titles:
21
IX. Revenue Provisions31
The Acts provisions are spread throughout many statutes and different titles in the
United States Code. As our Appendix A demonstrates, the Acts nine Titles
insurance and health care. Appendix A details most parts of the Act with section
numbers. Here, we merely list the broad subject matter in each Title.
Title I contains these four components mentioned earlier: (1) the insurance
industry reforms; (2) the new state-run Exchanges; (3) the individual mandate; and
(4) the employer penalty. Act 10011568. Title II shifts the Acts focus to
publicly-funded programs designed to provide health care for the uninsured, such
as Medicaid, CHIP, and initiatives under the Indian Health Care Improvement Act.
Id. 20012955. Title II contains the Medicaid expansion at issue here. Title IIs
the supply of health care workers through education loans, training grants, and
31
There is also a tenth Title dedicated to amendments to these nine Titles.
22
owned hospitals participating in Medicare and for nursing facilities participating
Title VII extends and expands certain drug discounts in health care facilities
the Act; (2) the multitudinous reforms enacted to reduce the number of the
uninsured; (3) the large number and diverse array of new, or expanded, federally-
funded programs, grants, studies, commissions, and councils in the Act; (4) the
extensive new federal requirements and regulations on myriad subjects; and (5)
how many of the Acts provisions on their face operate separately and
independently.
We now examine in depth the five parts of the Act largely designed to
reduce the number of the uninsured. Because of the Acts comprehensive and
complex regulatory scheme, it is critical to examine what the Act actually does and
23
C. Terms and Definitions
The Act regulates three aspects of health insurance: (1) markets, the
outlets where consumers may purchase insurance products; (2) plans, the
insurance products themselves; and (3) benefits, the health care services or items
1. Markets
Given its focus on making health insurance available to the uninsured, the
Act recognizes and regulates four markets for health insurance products: (1) the
individual market; (2) the small group market; (3) the large group market;
and (4) the new Exchanges, to be created and run by each state.
The term individual market means the market for health insurance
coverage offered to individuals other than in connection with a group health plan.
The term group market means the health insurance market under which
Within the group market, the Act distinguishes between the large group
market and the small group market. The term large group market refers to the
24
market under which individuals purchase coverage through a group plan of a
The term small group market refers to the market under which individuals
with no more than 100 employees. Id. 300gg-91(e)(4), (5), 18024(a)(3), (b)(2).
The term Exchanges refers to the health benefit exchanges that each state
must create and operate.32 Id. 18031(b). Companies (profit and nonprofit)
participating in the Exchanges will offer insurance for purchase by individuals and
employees of small employers. See id.; id. 18042. The uninsured can obtain
significant federal tax credits and subsidies through the Exchanges. See 26 U.S.C.
36B; 42 U.S.C. 18071. In 2017, the states will have the option to open the
Two key terms in the Act are: (1) essential health benefits package and (2)
minimum essential coverage. Although they sound similar, each has a different
meaning.
32
The Act allows a state to opt out of creating and operating an Exchange, in which case
the federal government (or a nonprofit contractor) will establish the Exchange. 42 U.S.C.
18041(c).
25
The term essential health benefits package refers to the comprehensive
benefits package that must be provided by plans in the individual and small group
markets by 2014. Id. 300gg-6(a) (effective Jan. 1, 2014); id. 18022(a). The Act
does not impose the essential health benefits package on plans offered by large
An essential health benefits package must: (1) provide coverage for the
essential health benefits described in 18022(b); (2) limit the insureds cost-
sharing, as provided in 18022(c); and (3) provide either the bronze, silver, gold,
The Act leaves it to HHS to define the term essential health benefits. Id.
26
Id. 18022(b)(1).33 The bronze, silver, gold, and platinum levels of coverage
reflect the levels of cost-sharing (or actuarial value of benefits) in a plan and do
not represent the level or type of services. Id. 18022(d)(1)(2). For example, a
bronze plan covers 60% of the benefits costs, and the insured pays 40% out of
pocket; a platinum plan covers 90%, with the insured paying 10%. Id.
18022(d)(1)(A), (D).
connection with the individual mandate. Minimum essential coverage is the type
of plan needed to satisfy the individual mandate. A wide variety of health plans
health plans, (4) grandfathered health plans, and (5) health plans that qualify for,
Many of these plan types will satisfy the mandate even if they do not have
the essential health benefits package and regardless of the level of benefits or
33
In defining essential health benefits, HHS must ensure that the scope of essential
health benefits is equal to the scope of benefits provided under a typical employer plan. 42
U.S.C. 18022(b)(2). HHS must take additional elements into consideration, such as balance
among the categories of benefits, discrimination based on age or disability, and the needs of
diverse segments of the population. Id. 18022(b)(4).
27
coverage. The requirement of the essential health benefits package is directly
tied to some of the insurance product reforms, but not the individual mandate.
To reduce the number of the uninsured, the Act heavily regulates private
insurers and reforms their health insurance products. We list examples of the
major reforms.
described [in subsection (a)] to open or special enrollment periods.34 Id. 300gg-
must renew or continue coverage at the individual or plan sponsors option in the
34
The Act directs HHS to promulgate regulations with respect to enrollment periods. 42
U.S.C. 300gg-1(b)(3) (effective Jan. 1, 2014). Insurers must establish special enrollment
periods for qualifying events. Id. 300gg-1(b)(2). Qualifying events include, for example:
(1) [t]he death of the covered employee; (2) [t]he termination (other than by reason of such
employees gross misconduct), or reduction of hours, of the covered employees employment;
and (3) [t]he divorce or legal separation of the covered employee from the employees spouse.
29 U.S.C. 1163.
28
insurers discontinuation of coverage in the relevant market. Id. 300gg-2(b).
3. Waiting periods. Under group health plans, insurers may impose waiting
the plan. Id. 300gg-7 (effective Jan. 1, 2014), 300gg-3(b)(4). The Act places no
conditions. The Act prohibits preexisting condition exclusions for children under
19 within six months of the Acts enactment, and eliminates preexisting condition
eligibility rules based on any of the health status-related factors listed in the Act.36
35
For dates effective as to children and then adults, see Pub. L. No. 111-148, Title I,
1255 (formerly 1253), 124 Stat. 162 (2010) (renumbered 1255 and amended, Pub. L. No.
111-148, Title X, 10103(e), (f)(1), 124 Stat. 895 (2010), and codified in note to 42 U.S.C.
300gg-3).
36
Health status-related factors include:
(1) Health status.
(2) Medical condition (including both physical and mental illnesses).
(3) Claims experience.
(4) Receipt of health care.
(5) Medical history.
(6) Genetic information.
(7) Evidence of insurability (including conditions arising out of acts of domestic
violence).
(8) Disability.
(9) Any other health status-related factor determined appropriate by the [HHS]
29
Id. 300gg-4 (effective Jan. 1, 2014).
6. Community rating. In the individual and small group markets and the
Exchanges, insurers may vary premium rates only based on (1) whether the plan
covers an individual or a family; (2) rating area; (3) age (limited to a 3to1
ratio); and (4) tobacco use (limited to a 1.5to1 ratio). Id. 300gg(a)(1). Each
state must establish one or more rating areas subject to HHS review. Id.
market plans must contain comprehensive coverage known as the essential health
18022(a). The Act does not impose this requirement on large group market plans.37
Secretary.
42 U.S.C. 300gg-4(a) (effective Jan. 1, 2014).
37
Rather, the large group market is subject to only a few coverage-reform requirements
that apply broadly to either all insurance plans or group health plans in particular. See Amy
Monahan & Daniel Schwarcz, Will Employers Undermine Health Care Reform by Dumping Sick
Employees?, 97 VA . L. REV . 125, 147 (2011).
30
9. Dependent coverage. Insurers must allow dependent children to remain
11(a)(1)(A), (b). Insurers may retain annual dollar limits on essential health
group health plans, health plans sold in the individual market, and qualified health
18022(a), (c).
38
HHS shall determine what restricted annual limits are permitted on the dollar value of
essential health benefits until 2014. 42 U.S.C. 300gg-11(a)(1), (2). Subsection (a) shall not be
construed to prevent a group health plan or health insurance coverage from placing annual or
lifetime per beneficiary limits on specific covered benefits that are not essential health
benefits . . . . Id. 300gg-11(b).
39
Cost-sharing does not include premiums, balance billing amounts for non-network
providers, or spending for non-covered services. 42 U.S.C. 18022(c)(3)(B).
40
Qualified medical expense is defined in 26 U.S.C. 223(d)(2).
41
Annual limits on cost-sharing are equal to the current limits on out-of-pocket spending
for high-deductible health plans under the Internal Revenue Code (for 2011, $5,950 for self-only
coverage and $11,900 for family coverage), adjusted after 2014 by a premium adjustment
percentage. 42 U.S.C. 300gg-6(b) (effective Jan. 1, 2014), 18022(c)(1); 26 U.S.C.
223(c)(2)(A)(ii), (g); I.R.S. Pub. 969 (2010), at 3.
31
12. Deductibles. Deductibles for any plans offered in the small group
market are capped at $2,000 for plans covering single individuals and $4,000 for
any other plan, adjusted after 2014. Id. 300gg-6(b) (effective Jan. 1, 2014),
18022(c)(2). The deductible limits do not apply to individual plans or large group
13. Medical loss ratio. Insurers must maintain certain ratios of premium
revenue spent on the insureds medical care versus overhead expenses. Id.
300gg-18(a), (b)(1). In the large group market, insurers must spend 85% of their
premium revenue on patient care and no more than 15% on overhead. Id. 300gg-
18(a), (b)(1)(A)(i). In the individual and small group markets, insurers must spend
80% of their revenue on patient care and no more than 20% on overhead. Id.
report to HHS their ratio of incurred claims to earned premiums. Id. 300gg-
18(a).
14. Premium increases. HHS, along with all states, shall annually review
32
coverage except for fraud or intentional misrepresentation of material fact. Id.
300gg-12.
16. Single risk pool. Insurers must consider all individual-market enrollees
18032(c)(1). Small group market enrollees must be considered in the same risk
17. Temporary high risk pool program. To cover many of the uninsured
immediately, the Act directs HHS to establish a temporary high risk health
adults becomes effective in 2014. Id. 18001(a). The premiums for persons with a
high-risk pool. When this temporary program ends in 2014, such individuals will
18. State regulation maintained. States will license insurers and enforce
both federal and state insurance laws. Id. 18021(a)(1)(C). The Act provides for
33
interstate health care choice compacts, which enable qualified health plans to be
creation of Exchanges where the uninsured can buy the new products. We examine
this second component of the Act, also designed to make insurance more
accessible and affordable and thus reduce the number of the uninsured.
Exchanges and Small Business Health Options Program Exchanges, which are
insurance marketplaces where individuals, families, and small employers can shop
for the Acts new insurance products. Id. 18031(b). Consumers can compare
prices and buy coverage from one of the Exchanges issuers. Id. 18031(b), (c).
Exchanges centralize information and facilitate the use of the Acts significant
federal tax credits and other subsidies to purchase health insurance. See 26 U.S.C.
42
Health care choice compacts allow qualified health plans to be offered in the individual
markets of multiple states, yet such plans will only be subject to the laws and regulations of the
State in which the plan was written or issued. 42 U.S.C. 18053(a)(1)(A). The issuer of such
qualified health plans offered through health care choice compacts would continue to be subject
to market conduct, unfair trade practices, network adequacy, and consumer protection standards
. . . of the State in which the purchaser resides and would be required to be licensed in each
State in which it offers the plan under the compact. Id. 18053(a)(1)(B)(i)(ii).
34
36B; 42 U.S.C. 18031, 18071, 1808183. States may create and run the
18031(f). The federal government will provide funding until January 1, 2015 to
establish Exchanges. Id. 18031(a). Insurers may offer their products inside or
regulating the health insurance industry. See id. 18041. The Act allows states
some flexibility in operations and enforcement, though states must either (1)
directly adopt the federal requirements set forth by HHS, or (2) adopt state
regulatory authority, the Act provides that [n]othing in this chapter shall be
construed to preempt any State law that does not prevent the application of the
35
qualified individuals is broadly defined,43 qualified employers are initially
limited to small employers, but in 2017, states may allow large employers to
The Act prescribes the types of plans available in the Exchanges, known as
health plan that: (1) is certified as a qualified health plan in each Exchange
through which the plan is offered; (2) provides an essential health benefits
package; and (3) is offered by an issuer that (a) is licensed and in good standing
in each state where it offers coverage, and (b) complies with HHS regulations and
any requirements of the Exchange. Id. 18021(a)(1). The issuer must agree, inter
alia, to offer at least one plan in the silver level and one in the gold level in
18021(a)(1)(C). The issuer must charge the same premium rate regardless of
43
A qualified individual is a legal resident who (1) seeks to enroll in a qualified health
plan in the individual market through the Exchange, and (2) resides in the state that established
the Exchange. 42 U.S.C. 18032(f)(1), (3). Prisoners and illegal aliens may not purchase
insurance through Exchanges. Id. 18032(f)(1)(B), (3).
36
whether a plan is offered in an Exchange or directly.44 Id.
plans sold in the Exchanges. Id. 18021(a)(1)(B). States may require that a
qualified health plan offered in that state cover benefits in addition to essential
health benefits, but the state must defray the costs of additional coverage through
requirement is the catastrophic plan in the individual market only. In and outside
the Exchanges, insurers may offer catastrophic plans which provide no benefits
$11,900 for family coverage in 2011are incurred. Id. 18022(e); see id.
(2010), at 3. The level of out-of-pocket costs is equal to the current limits on out-
of-pocket spending for high deductible health plans adjusted after 2014. 42 U.S.C.
18022(e), (c)(1).
44
HHS establishes the criteria for certification of insurance plans as qualified health
plans and develops a rating system to rate qualified health plans offered through an Exchange
in each benefits level on the basis of the relative quality and price. 42 U.S.C. 18031(c)(1), (3).
States must rate each health plan offered in an Exchange (in accordance with federal standards)
and certify health plans as qualified health plans. See id. 18031(e).
37
This catastrophic plan exception applies only if the plan: (1) is sold in the
individual market; (2) restricts enrollment to those under age 30 or certain persons
exempted from the individual mandate; (3) provides the essential health benefits
coverage after the out-of-pocket level is met; and (4) provides coverage for at least
considerable federal tax credits for individuals and families (1) with household
incomes between 1 and 4 times the federal poverty level; (2) who do not receive
health insurance through an employer; and (3) who purchase health insurance
45
Specifically, the amount of the federal tax credit for a given month is an amount equal
to the lesser of (1) the monthly premiums for the qualified health plan or plans, offered in the
individual market through an Exchange, that cover the taxpayer and the members of the
taxpayers household, or (2) the excess of: (a) the monthly premium the taxpayer would be
charged for the second lowest-cost silver plan over (b) 1/12 of the taxpayers yearly household
income multiplied by the applicable percentage, a percentage which ranges from 2.0% to 9.5%,
depending on income. 26 U.S.C. 36B(b)(3)(A)(C).
An example helps translate. For a family of four with an income of $33,075 per year,
assuming that the premium in the second lowest-cost silver plan covering the family is $4,500
per year ($375 per month), the federal tax credit would be $3,177 per year ($264.75 per month).
See Families USA, Lower Taxes, Lower Premiums: The New Health Insurance Tax Credit 8
(2010), available at http://www.familiesusa.org/assets/pdfs/health-reform/Premium-Tax-
Credits.pdf. Without the federal tax credit, the family pays $375 per month; with the credit, the
family pays $110.25 per month, or a total of $1,323, instead of the full $4,500 premium. Id. The
federal tax credit provides a major incentive for the uninsured (in the individual market) to
purchase insurance from a private insurer but through the Exchange.
38
through an Exchange and report their income to the Exchange. 42 U.S.C.
18081(b). If the individuals income level qualifies, the Treasury pays the
premium tax credit amount directly to the individuals insurance plan issuer. Id.
18082(c)(2)(A). The individual pays only the dollar difference between the
premium tax credit and the total premium charged. Id. 18082(c)(2)(B). The
credit amount is tied to the cost of the second-cheapest plan in the silver level
offered through an Exchange where the individual resides, though the credit may
be used for any plan purchased through an Exchange.46 See 26 U.S.C. 36B(b)(2).
the out-of-pocket expenses for individuals who (1) enroll in a qualified health plan
46
Commentators have explained the operation of the tax credit for households between
one and four times the federal poverty level as follows:
For taxable years after 2013, certain low- and moderate-income individuals who
purchase insurance under a health insurance exchange that the states are required to
create will receive a refundable credit that subsidizes their purchase of that insurance.
. . . According to the Social Security Administration, the current poverty level for a
single individual is $10,830; thus a single individual can have household income of
as much as $43,320 and still qualify to have his insurance cost subsidized by the
government. For a family of four, the current poverty level is $22,050; such a family
can have household income as large as $88,200 and still qualify for a subsidy.
Douglas A. Kahn & Jeffrey H. Kahn, Free Rider: A Justification for Mandatory Medical
Insurance Under Health Care Reform, 109 MICH . L. REV . FIRST IMPRESSIONS 78, 83 (2011).
HHS has since raised the poverty level for 2011 to $22,350 for a family of four and
$10,890 for a single individual. 76 Fed. Reg. 3637, 3638 (Jan. 20, 2011). Thus, a single
individual can have a household income of as much as $43,560 and still be eligible for a federal
tax credit. A family of four can have a household income of as much as $89,400 and still be
eligible for a federal tax credit. See 42 U.S.C. 18071(b).
39
sold through an Exchange in the silver level of coverage, and (2) have a household
income between 1 and 4 times the federal poverty level. 42 U.S.C. 18071.
As noted earlier, the Exchanges, with significant federal tax credits and
million by 2016.47 We now turn to the Acts third component: the individual
mandate.
F. Individual Mandate
The individual mandate and its penalty are housed entirely in the Internal
5000A et seq. The Act mandates that, after 2013, all applicable individuals (1)
shall maintain minimum essential coverage for themselves and their dependents,
or (2) pay a monetary penalty. Id. 5000A(a)(b). Taxpayers must include the
penalty on their annual federal tax return. Id. 5000A(b)(2). Married taxpayers
filing a joint return are jointly liable for any penalty. Id. 5000A(b)(3)(B).
47
CBO, Analysis, supra note 15, at 18 tbl.3. The CBO predicts that by 2019, 24 million
will be insured through the Exchanges, with at least four-fifths receiving federal subsidies to
substantially reduce the cost of purchasing health insurance coverage, on average $6,460 per
person. Id. at 2, 1819 tbl.3.
The CBO estimates that this 9 million increase in 2014 will be partially offset by a 3
million decrease in individual-market coverage outside the Exchanges. Id. The number obtaining
coverage in the individual market outside the Exchanges is projected to decrease because the Act
incentivizes individualsthrough premium tax credits, subsidies, and otherwiseto purchase
policies through the Exchanges. Similarly, the 22 million increase in Exchange-based coverage in
2016 will be partially offset by a 5 million decrease in those covered by individual-market
policies obtained outside the Exchanges. Id.
40
1. Minimum Essential Coverage
Internal Revenue Code, sounds like it refers to a base level of benefits or services.
However, the Act uses a different termthe essential health benefits package in
Title 42to describe health care benefits and services. 42 U.S.C. 300gg-6(a)
broad array of plan types that will satisfy the individual mandate. 26 U.S.C.
5000A(f)(1).
plan; (3) any health plan in the individual market; (4) any grandfathered health
plan; or (5) as a catch-all, such other health benefits coverage that is recognized
by HHS in coordination with the Treasury. Id. The mandate provisions in 5000A
do not specify what benefits must be in that plan. The listed plans, in many
2. Government-Sponsored Programs
41
suffice. Id. 5000A(f)(1)(A)(i). Individuals and families may satisfy the mandate
former military personnel and their families, active Peace Corps volunteers, and
active and retired civilian Defense Department personnel and their dependents
(1) a governmental plan established by the federal, state, or local government for
its employees; (2) any other plan or coverage offered in the small or large group
market. Id. 5000A(f)(2). Health plans of large employers satisfy the individual
48
Because of these looser restrictions, some commentators have found it surprising that
employer-sponsored coverage qualifies as minimum essential coverage under the Act. See
Monahan & Schwarcz, supra note 37, at 157 (Surprisingly, . . . [the Act] appears to define
employer-provided coverage as automatically constituting minimum essential coverage for
42
Whether a self-insured health plan of large employers satisfies the
definition, is not sold or offered in a market. It is thus not clear whether large
in 5000A(f)(2) and thereby satisfy the mandate. It may be that HHS will later
requirement on plans sold in the individual and small group markets. 42 U.S.C.
300gg-6 (effective Jan. 1, 2014). However, in the individual market, insurers can
offer catastrophic plans to persons under age 30 or certain persons exempted from
any group health plan or health insurance coverage in which an individual was
While not subject to many of the Acts product reforms, grandfathered plans
must comply with some provisions, among them the extension of dependent
coverage until age 26, the medical-loss ratio requirements, and the prohibitions on
(1) preexisting condition exclusions, (2) lifetime limits on coverage, (3) excessive
waiting periods, and (4) unfair rescissions of coverage. Id. 18011(a)(2)(4), (e).
Under the interim final regulations issued by HHS, plans will lose their
(2) increase copayments, deductibles, or out-of-pocket costs for their enrollees; (3)
decrease the share of premiums employers contribute for workers in group plans;
50
The Act also allows the enrollment of family members and newly hired employees in
grandfathered plans without losing the plans grandfathered status. 42 U.S.C. 18011(b), (c).
Under the interim final regulations issued by HHS, [a] group health plan or group health
insurance coverage does not cease to be grandfathered health plan coverage merely because one
or more (or even all) individuals enrolled on March 23, 2010 cease to be covered, provided that
the plan has continuously covered someone since March 23, 2010 (not necessarily the same
person, but at all times at least one person). 45 C.F.R. 147.140(a)(1)(i).
44
or (4) decrease annual limits.51 45 C.F.R. 147.140(g).
The individual mandate even provides a catch-all that leaves open the door
met by any other coverage that HHS, in coordination with the Treasury, recognizes
The individual mandate, however, does not apply to eight broad categories
the mandates penalty. The Act carves out these three exemptions from the
individual mandate: (1) persons with religious exemptions; (2) aliens not legally
The Act also excepts five additional categories of persons from the
contribution exceeds 8% of their household income for the taxable year;52 (2)
51
See also HealthReform.gov, Fact Sheet: Keeping the Health Plan You Have: The
Affordable Care Act and Grandfathered Health Plans,
http://www.healthreform.gov/newsroom/keeping_the_health_plan_you_have.html; Families
USA, Grandfathered Plans under the Patient Protection and Affordable Care Act (2010),
available at http://www.familiesusa.org/assets/pdfs/health-reform/Grandfathered-Plans.pdf.
52
The required contribution for coverage means, generally, the amount required to
maintain coverage either in an employer-sponsored health plan or in a bronze-level plan offered
on an Exchange. See 26 U.S.C. 5000A(e)(1)(A).
45
individuals whose household income for the taxable year is below the federal
tribes; (4) individuals whose gaps in health insurance coverage last less than three
many ways allowed, the individual must pay a penalty. Id. 5000A(b)(1). The
annual penalty will be either: (1) a flat dollar amount, or (2) a percentage of the
individuals income if higher than the flat rate. Id. 5000A(c)(1). However, the
The flat dollar penalty amount, which sets the floor, is equal to $95 in 2014,
53
If the individual fails to fulfill the mandate requirement for only certain months as
opposed to a full year, the penalty for each month of no coverage is equal to one-twelfth of the
greater of these figures. 26 U.S.C. 5000A(c)(2)(3).
54
The flat dollar amount applies to each individual and dependent in the taxpayers
household without minimum essential coverage, but will not exceed three times the flat dollar
amount (even if more than three persons are in the household). 26 U.S.C. 5000A(c)(2)(A). A
46
The percentage-of-income number that will apply, if higher than the flat
dollar amount, is a set percentage of the taxpayers income that is in excess of the
any event, the total penalty for the taxable year cannot exceed the national average
additional civil penalties. Id. 5000A(g)(2)(A), (B). The IRSs authority to use
liens or levies does not apply to the penalty. Id. 5000A(g)(2)(B). No interest
accrues on the penalty. The Act contains no enforcement mechanism. See id. All
the IRS, practically speaking, can do is offset any tax refund owed to the
uninsured taxpayer.56
We now review the Acts fourth component aimed at reducing the number
G. Employer Penalty
familys flat dollar penalty in 2016 would not exceed $2,085 ($695 multiplied by 3).
55
The percentage by which the taxpayers household income exceeds the filing threshold
is phased in over three years: 1% in 2014, 2% in 2015, and 2.5% in 2016 and thereafter. 26
U.S.C. 5000A(c)(2)(B)(i)(iii).
56
Of course, the government can always file a civil lawsuit, but the cost of that suit would
exceed the modest penalty amount.
47
The Act imposes a penalty, also housed in the Internal Revenue Code, on
their employees. Id. 4980H(a), (b). The penalty applies to employers with an
employer must pay a penalty if the employer: (1) does not offer its full-time
plan whose share of the total cost of benefits is less than 60% (i.e., does not
provide minimum value); and (3) at least one full-time employee purchases a
qualified health plan through an Exchange and is allowed a premium tax credit or
essential coverage. Id. 4980H(a), (b). Recall that minimum essential coverage
is not the same thing as the essential health benefits package. Thus, a large
employer may avoid the penalty so long as it offers any plan in the large group
market in the state, and the plan is affordable and provides minimum value.
48
benefits package and also be affordable and provide minimum value. 42
Exchange because the employers plan (1) was not minimum essential coverage
or (2) was either unaffordable or did not provide minimum value. The penalty
An employer that does not offer minimum essential coverage to all full-
time employees faces a tax penalty of $166.67 per month (one-twelfth of $2,000)
for each of its full-time employees, until the employer offers such coverage
(c)(1), (c)(2)(D). This particular penalty applies for as long as at least one
57
Employer-sponsored coverage that is not affordable is defined as coverage where the
employees required annual contribution to the premium is more than 9.5% of the employees
household income (as defined for purposes of the premium tax credits in the Exchanges). 26
U.S.C. 36B(c)(2)(C)(i). This percentage of the employees income is indexed to the per capita
49
employer faces a tax penalty of $250 per month (one-twelfth of $3,000) for each
employee who (1) turns down the employer-sponsored plan; (2) purchases a
qualified health plan in an Exchange; and (3) is eligible for a federal premium tax
2. Automatic Enrollment
more than 200 employees and (2) elect to offer coverage to their employees. Id.
218a. Such employers must automatically enroll new and current full-time
employees, who do not opt out, in one of the employers plans. Id. The maximum
90-day waiting period rule applies, however. Id.; 42 U.S.C. 300gg-7 (effective
Jan. 1, 2014).
To reduce the number of the uninsured, the Act provides for immediate
coverage for even retired employees 55 years and older who are not yet eligible for
growth in premiums for the insurance market as determined by HHS. Id. 36B(c)(2)(C)(iv).
Note that the definition of unaffordable for the purposes of obtaining a federal tax credit or
subsidy is not the same standard that is used to determine whether an individual is exempt from
the individual mandate because that individual cannot afford coverage. Compare id.
36B(c)(2)(C)(i), with id. 5000A(e)(1).
58
The employers penalty, in this instance, does not exceed the maximum penalty for
offering no coverage at all. The penalty for any month is capped at an amount equal to the
number of full-time employees during the month multiplied by one-twelfth of $2,000, or $166.67
(subject to the exemption for the first 30 full-time employees). See 26 U.S.C. 4980H(b)(2), (c).
50
Medicare. A federal temporary reinsurance program will reimburse former
employers who allow their early retirees and the retirees dependents and spouses
We turn to the Acts fifth component: the Medicaid expansion, which alone
H. Medicaid Expansion
1396a, the section of the Medicaid Act outlining what states must offer in their
coverage plans. The Act imposes these substantive requirements on the states
(1) States will be required to cover adults under age 65 (who are not
pregnant and not already covered) with incomes up to 133% of the federal poverty
previously the Medicaid Act did not set a baseline income level for mandatory
eligibility. Thus, many states currently do not provide Medicaid to childless adults
59
The plan shall submit claims for reimbursement to HHS, and HHS shall reimburse the
plan for 80% of the costs of claims in excess of $15,000 but not greater than $90,000. 42 U.S.C.
18002(c)(2). The reimbursements will be available until January 1, 2014. Id. 18002(a)(1).
This federally-subsidized temporary program closes the gap between now and 2014, when the
Exchanges, with their federal tax credits and subsidies, become operational.
51
and cover parents only at much lower income levels.
families earn up to 133% of the FPL, including children currently covered through
with family income up to 133% of the FPL and children ages 6 through 18 with
1396a(l)(1)(B)(D), 1396a(l)(2)(A)(C).
levels for adults and children (that were in place as of March 23, 2010) until a
previously had the option to raise or lower their eligibility levels, states cannot
institute more restrictive eligibility standards until the new policies take place. Id.
(4) Children under age 26 who were receiving Medicaid but were aged
out of foster care will be newly eligible to continue receiving Medicaid. Id.
(5) The new law will increase Medicaid payments for primary care services
provided by primary care doctors to 100% of the Medicare payment rates for 2013
and 2014. Id. 1396a(a)(13)(C). States will receive 100% federal funding for the
52
cost of the increasing payment rates for 2013 and 2014.60 Id. 1396d(dd).
Having covered the Acts five major components, we examine the two
The state plaintiffs challenge the district courts grant of summary judgment
in favor of the government on the state plaintiffs claim that the Acts expansion of
coercive under South Dakota v. Dole, 483 U.S. 203, 211, 107 S. Ct. 2793, 2798
sovereigns that has been in place for nearly half a century. In 1965, Congress
enacted the Medicaid Act, 42 U.S.C. 1396 et seq., as Title XIX of the Social
Security Act. Moore ex rel. Moore v. Reese, 637 F.3d 1220, 1232 (11th Cir.
2011); see also Harris v. McRae, 448 U.S. 297, 301, 100 S. Ct. 2671, 2680 (1980).
states furnish medical treatment to their needy citizens. Reese, 637 F.3d at 1232.
60
See also Julie Stone, et al., Cong. Research Serv., R41210, Medicaid and the State
Childrens Health Insurance Program (CHIP) Provisions in the PPACA 24 (2010).
53
The Medicaid Act prescribes substantive requirements governing the scope of
each states program. Curtis v. Taylor, 625 F.2d 645, 649 (5th Cir. 1980).61
Section 1396a provides that a State plan for medical assistance must meet
services. Reese, 637 F.3d at 1232 (citing 42 U.S.C. 1396a). Some of these
categories are discretionary, while others are mandatory for participating states.
Under the Act, the Medicaid program serves as a cornerstone for expanded
health care coverage. As explained above in Section II(H), the Act expands
of the 50 million uninsured will be covered for health care by 2014 (and 16
The federal government will pay 100% of the fees associated with the
increased Medicaid eligibility and subsidies beginning in 2014 and until 2016;
that percentage will then drop gradually each year until reaching 90% in 2020. 42
61
In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc), this
Court adopted as binding precedent all decisions of the former Fifth Circuit issued before the
close of business on September 30, 1981.
62
CBO, Analysis, supra note 15, at 18 tbl.3.
54
U.S.C. 1396d(y)(1). The federal government will not cover administrative
expenses associated with implementing the new Medicaid policies. See id. Under
42 U.S.C. 1396c, a state whose plan does not comply with the requirements
payments will not be made to the State (or, in [HHSs] discretion . . . payments
will be limited to categories under or parts of the State plan not affected by such
failure), until [HHS] is satisfied that there will no longer be any such failure to
The Spending Clause provides that Congress shall have Power . . . to pay
the Debts and provide for the common Defence and general Welfare of the United
States. U.S. CONST. art. I, 8, cl. 1. The Spending Clause permits Congress to
fix the terms on which it shall disburse federal money to the States. Pennhurst
State Sch. & Hosp. v. Halderman, 451 U.S. 1, 17, 101 S. Ct. 1531, 1539 (1981).
contract: in return for federal funds, the States agree to comply with federally
Spending Clause. First, the exercise of the spending power must be in pursuit of
55
the general welfare. See Helvering v. Davis, 301 U.S. 619, 640, 57 S. Ct. 904, 908
(1937). Second, the conditions on the receipt of federal funds must be reasonably
related to the legislations stated goal. Dole, 483 U.S. at 207, 107 S. Ct. at 2796.
unambiguous and must enable the states to knowingly exercise their choice
whether to participate. Pennhurst, 451 U.S. at 17, 101 S. Ct. at 1540. Finally, the
federal legislation cannot induce the States to engage in activities that would
themselves be unconstitutional. Dole, 483 U.S. at 210, 107 S. Ct. at 2798. The
state plaintiffs do not contend the Acts Medicaid expansion violates any of these
restrictions.63
Rather, the state plaintiffs argue that the Medicaid expansion violates an
legislation, one that derives not from the spending power alone, but also from the
63
The state plaintiffs suggest that the conditions imposed here violated the second Dole
restriction because they have no reasonable relationship to the size of the federal inducement.
States Opening Br. at 48, 53. In so arguing, the plaintiffs misinterpret Dole. The Supreme Court
made clear that the required relationship is between the conditions imposed and the federal
interest in particular national projects or programs, Dole, 483 U.S. at 207, 107 S. Ct. at 2796
(quotation marks omitted)that is, the purpose of federal spending. New York v. United
States, 505 U.S. 144, 167, 122 S. Ct. 2408, 2423 (1992). The state plaintiffs mistakenly assert
that the required relationship is between the conditions imposed and the size of the federal
inducement. States Opening Br. at 53. The condition Congress imposes here on the receipt of
federal fundsrequiring Medicaid coverage of certain newly eligible individualsis undeniably
related to the purpose of the Medicaid Act, which is to provid[e] federal financial assistance to
States that choose to reimburse certain costs of medical treatment for needy persons. McRae,
448 U.S. at 301, 100 S. Ct. at 2680.
56
Tenth Amendments reservation of certain powers to the states. U.S. CONST.
amend. X; see Charles C. Steward Mach. Co. v. Davis, 301 U.S. 548, 585, 57 S.
Ct. 883, 890 (1937); West Virginia v. HHS, 289 F.3d 281, 28687 (4th Cir. 2002).
Congress may not employ the spending power in such a way as to coerce the
states into compliance with the federal objective. See Dole, 483 U.S. at 211, 107 S.
Ct. at 2798; Steward Mach., 301 U.S. at 58991, 57 S. Ct. at 89293; cf. Coll. Sav.
Bank v. Fla. Prepaid Postsecondary Educ. Expense Bd., 527 U.S. 666, 687, 119 S.
Ct. 2219, 2231 (1999) (holding that a states waiver of its sovereign immunity is
not voluntary where Congress has made it a condition of the states participation
stemming from the spending power because it addresses whether the legislation,
while perhaps an appropriate use of the spending power, goes beyond the
Printz v. United States, 521 U.S. 898, 117 S. Ct. 2365 (1997) (holding that
Congress may not enact a law pursuant to one of its enumerated powers and then
compel state officers to execute those federal laws); see also Steward Mach., 301
U.S. at 585, 57 S. Ct. at 890. That is, the coercion test asks whether the federal
scheme removes state choice and compels the state to act because the state, in fact,
57
The coercion doctrine was first discussed at length by the Supreme Court in
the imposition of an employment tax under the newly enacted Social Security Act.
coerced states into participation in the Social Security program, the Supreme Court
stated:
301 U.S. at 58990, 57 S. Ct. at 892 (quotation marks and citation omitted)
(emphasis added).
This discussion of the coercion doctrine was later revived by the Supreme
Court in South Dakota v. Dole. In Dole, the state of South Dakota challenged 23
58
percentage of federal highway funds otherwise allocable to the states if states
205, 107 S. Ct. at 2795. The Court noted that Congress may attach conditions on
the receipt of federal funds to meet certain policy objectives, including those that
Congress could not otherwise meet through direct regulation. Id. at 20607, 107 S.
Ct. at 279596. After analyzing whether the minimum drinking-age condition met
the four restrictions on the Spending Clause discussed above, the Court noted,
pressure turns into compulsion. Id. at 211, 107 S. Ct. at 2798 (quoting Steward
Id. (emphasis added). Thus, the Court once again recognized the coercion
The limited case law on the doctrine of coercion and the fact that the
59
Supreme Court has never devised a test to apply it has left many circuits with the
conclusion that the doctrine, twice recognized by the Supreme Court, is not a
viable defense to Spending Clause legislation. See, e.g., Pace v. Bogalusa City
Sch. Bd., 403 F.3d 272, 278 (5th Cir. 2005) (en banc) (It goes without saying that,
because states have the independent power to lay and collect taxes, they retain the
federal funds.); A.W. v. Jersey City Pub. Schs., 341 F.3d 234, 24344 (3d Cir.
2003) (noting that the states freedom to tax makes it difficult to find a federal law
coercive, even when that law threatens to withhold all federal funding in a
particular area); Kansas v. United States, 214 F.3d 1196, 120102 (10th Cir. 2000)
(The cursory statements in Steward Machine and Dole mark the extent of the
Supreme Courts discussion of a coercion theory. The Court has never employed
the theory to invalidate a funding condition, and federal courts have been similarly
reluctant to use it. (footnote omitted)); id. at 1202 (observing that the theory is
unclear, suspect, and has little precedent to support its application); California v.
United States, 104 F.3d 1086, 1092 (9th Cir. 1997) (noting in a Medicaid
expansion case that to the extent that there is any viability left in the coercion
theory, it is not reflected in the facts of this record); Nevada v. Skinner, 884 F.2d
445, 448 (9th Cir. 1989) (The difficulty if not the impropriety of making judicial
60
judgments regarding a states financial capabilities renders the coercion theory
highly suspect as a method for resolving disputes between federal and state
governments.); Oklahoma v. Schweiker, 655 F.2d 401, 414 (D.C. Cir. 1981)
(The courts are not suited to evaluating whether the states are faced here with an
offer they cannot refuse or merely a hard choice. . . . We therefore follow the lead
of other courts that have explicitly declined to enter this thicket when similar
funding conditions have been at issue.) (pre-Dole); N.H. Dept of Empt Sec. v.
Marshall, 616 F.2d 240, 246 (1st Cir. 1980) (Petitioners argue, however, that this
option of the state to refuse to participate in the program is illusory, since the
severe financial consequences that would follow such refusal negate any real
choice. . . . We do not agree that the carrot has become a club because rewards for
conforming have increased. It is not the size of the stakes that controls, but the
Even in those circuits that do recognize the coercion doctrine, it has had
little success. See West Virginia v. HHS, 289 F.3d at 290, 29495 (rejecting a
that the Secretary may choose to withhold only some funds); Jim C. v. United
States, 235 F.3d 1079, 108182 (8th Cir. 2000) (en banc) (holding that loss of all
federal education funds, in that case amounting to 12% of the states education
61
budget, was politically painful but not coercive). Indeed, our review of the
relevant case law indicates that no court has ever struck down a law such as this
There are two cases in which the Supreme Court has struck down a statute
New York v. United States, the Court struck down as unduly coercive a portion of
the Low-Level Radioactive Waste Policy Amendments Act that required states to
take title to waste created within the state, noting that Congress has ample
opportunity to create incentives for states to act the way that Congress desires. 505
U.S. 144, 17677, 112 S. Ct. 2408, 242829 (1992); see also Printz, 521 U.S. 898,
117 S. Ct. 2365 (holding, in accord with New York, that Congress cannot compel
64
The Supreme Court has also briefly discussed coercion in another context. In Florida
Prepaid, the Court held that federal courts lack jurisdiction over a Lanham Act suit against a
state, despite a law purporting to abrogate the states sovereign immunity under the Lanham Act.
527 U.S. at 691, 119 S. Ct. at 2233. While the holding rested on Eleventh Amendment immunity
grounds, Justice Scalia noted: [W]e think where the constitutionally guaranteed protection of
the States sovereign immunity is involved, the point of coercion is automatically passedand
the voluntariness of waiver destroyedwhen what is attached to the refusal to waive is the
exclusion of the State from otherwise lawful activity. Id. at 687, 119 S. Ct. at 2231.
62
two cases that Congress cannot directly compel a state to act, nor can Congress
hinge the states right to regulate in an area that the state has a constitutional right
unconstitutionally coercive.
complicated in application. But this does not mean that we can cast aside our duty
to apply it; indeed, it is a mystery to us why so many of our sister circuits have
done so. To say that the coercion doctrine is not viable or does not exist is to
ignore Supreme Court precedent, an exercise this Court will not do. As the district
court noted, The reluctance of some circuits to deal with this issue because of the
potential legal and factual complexities is not entitled to a great deal of weight,
because courts deal every day with the difficult complexities of applying
Constitutional principles set forth and defined by the Supreme Court. Florida ex
rel. McCollum v. HHS, 716 F. Supp. 2d 1120, 1160 (N.D. Fla. 2010).65 If the
government is correct that Congress should be able to place any and all conditions
65
In Florida ex rel. McCollum v. HHS, 716 F. Supp. 2d 1120 (N.D. Fla. 2010), the district
court granted in part and denied in part the governments motion to dismiss. In Florida ex rel.
Bondi v. HHS, No. 3:10-CV-91-RV/EMT, __ F. Supp. 2d __, 2011 WL 285683 (N.D. Fla. Jan.
31, 2011), the district court ruled that (1) the Medicaid expansion did not exceed Congresss
Spending Clause powers and (2) the individual mandate is beyond Congresss commerce powers
and is inseverable from the rest of the Act.
63
it wants on the money it gives to the states, then the Supreme Court must be the
For now, we find it a reasonable conclusion that Dole instructs that the
that Congress cannot place restrictions so burdensome and threaten the loss of
funds so great and important to the states integral function as a statefunds that
the state has come to rely on heavily as part of its everyday service to its
the point where pressure turns into compulsion. Dole, 483 U.S. at 211, 107 S.
Ct. at 2798 (quoting Steward Mach., 301 U.S. at 590, 57 S. Ct. at 892).
conclude that the Acts expansion of Medicaid is not unduly coercive under Dole
and Steward Machine. There are several factors, which, for us, are determinative.
First, the Medicaid-participating states were warned from the beginning of the
Medicaid program that Congress reserved the right to make changes to the
program. See 42 U.S.C. 1304 (The right to alter, amend, or repeal any provision
of this chapter is hereby reserved to the Congress.); McRae, 448 U.S. at 301, 100
optional, once a State elects to participate, it must comply with the requirements
64
that Congress sees fit to impose). Indeed, Congress has made numerous
amendments to the program since its inception in 1965. 42 U.S.C. 1396a Note
given the option to comply with the changes, or lose all or part of their funding. Id.
1396c. None of these amendments has been struck down as unduly coercive.
Second, the federal government will bear nearly all of the costs associated
with the expansion. The states will only have to pay incidental administrative costs
associated with the expansion until 2016; after which, they will bear an increasing
percentage of the cost, capping at 10% in 2020.67 Id. 1396d(y)(1). If states bear
little of the cost of expansion, the idea that states are being coerced into spending
66
The government discusses the various Medicaid expansions at length:
Congress has amended the Medicaid Act many times since its inception, and,
between 1966 and 2000, Medicaid enrollment increased from four million to 33
million recipients. Klemm, Medicaid Spending: A Brief History, 22 Health Care Fin.
Rev. 106 (Fall 2000). For example, in 1972, Congress required participating states
to extend Medicaid to recipients of Supplemental Security Income, thereby
significantly expanding Medicaid enrollment. Social Security Act Amendments of
1972, Pub. L. No. 92-603, 86 Stat. 1329 (1972). In 1989, Congress again expanded
enrollment by requiring states to extend Medicaid to pregnant women and children
under age six who meet certain income limits. Omnibus Budget Reconciliation Act
of 1989, Pub. L. No. 101-239, 103 Stat. 2106 (1989).
Governments Reply Br. at 4647.
67
At oral argument, the state plaintiffs expressed a concern that Medicaid costs would be
even larger because the individual mandate would greatly increase the number of persons in
Medicaid who are currently eligible but for one reason or another do not choose to participate.
This argument is not persuasive, however, as to whether the expansions themselves are coercive,
because the increase in enrollment would still occur if the mandate were upheld, even if the
Medicaid expansions were struck down.
65
money in an ever-growing program seems to us to be more rhetoric than fact.
Third, states have plenty of noticenearly four years from the date the bill
was signed into lawto decide whether they will continue to participate in
Medicaid by adopting the expansions or not. This gives states the opportunity to
develop new budgets (indeed, Congress allocated the cost of the entire expansion
to the federal government initially, with the cost slowly shifting to the states over a
program in their own states if they decide to do so. Fourth, like our sister circuits,
we cannot ignore the fact that the states have the power to tax and raise revenue,
and therefore can create and fund programs of their own if they do not like
Congresss terms. See Pace, 403 F.3d at 278; Jersey City Pub. Schs., 341 F.3d at
24344.
Finally, we note that while the state plaintiffs vociferously argue that states
who choose not to participate in the expansion will lose all of their Medicaid
funding, nothing in the Medicaid Act states that this is a foregone conclusion.
Indeed, the Medicaid Act provides HHS with the discretion to withhold all or
also West Virginia v. HHS, 289 F.3d at 29192; Dole, 483 U.S. at 211, 107 S. Ct.
66
at 2798 (finding no coercion when all South Dakota would lose if she adheres to
states have a real choicenot just in theory but in factto participate in the Acts
Medicaid expansion. See Dole, 483 U.S. at 211, 107 S. Ct. at 2798. Where an
entity has a real choice, there can be no coercion. See Steward Mach., 301 U.S. at
590, 57 S. Ct. at 892 (noting that in the absence of undue influence, the law has
been guided by a robust common sense which assumes the freedom of the will as a
acted within its commerce authority in enacting the individual mandate: the
Commerce Clause and the Necessary and Proper Clause. U.S. CONST. art. I, 8,
67
cls. 3, 18.
the several States, id. art. I, 8, cl. 3have spawned a 200-year debate over the
permissible scope of this enumerated power. For many years, the Supreme Court
(1824). Under this early understanding of the Clause, Congress could not reach
commerce that was strictly internal to a state. See id. at 19495 (The enumeration
language or the subject of the sentence, must be the exclusively internal commerce
of a State.).
society, the New Deal decisions of the Supreme Court charted an expansive
doctrinal path. See, e.g., United States v. Darby, 312 U.S. 100, 61 S. Ct. 451
(1941); NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1, 57 S. Ct. 615 (1937).
These Supreme Court decisions adopted a broad view of the Commerce Clause, in
tandem with the Necessary and Proper Clause, and permitted Congress to regulate
68
commerce. The substantial effects doctrine, along with the related aggregation
Nonetheless, the Supreme Court has staunchly maintained that the commerce
power contains outer limits which are necessary to preserve the federal-state
our analysis of the difficult question before us. Although extensive, this survey is
Commerce Clause doctrines that we, as an inferior Article III court, must apply.
A. Wickard v. Filburn
U.S. 111, 63 S. Ct. 82 (1942), where the Supreme Court held that Congresss
1938 (AAA) sought to control the volume of wheat in interstate and foreign
commerce by placing acreage limits on farmers. Id. at 115, 63 S. Ct. at 84. This
scheme was intended to prevent wheat surpluses and shortages, attendant price
Plaintiff Filburn operated a small farm raising wheat. Id. at 114, 63 S. Ct. at
69
84. Filburn sold some of this wheat crop, allocated a portion as feed for livestock
and poultry on his farm, used another portion as flour for home consumption, and
preserved the remainder for future seedings. Id. Although his AAA allotment was
only 11.1 acres, Filburn sowed and harvested 23 acres of wheat11.9 excess
acres that the Supreme Court treated as home-consumed wheat.68 Id. at 11415, 63
S. Ct. at 84. This violation subjected him to a penalty of 49 cents a bushel.69 Id.
wheat exceeded its commerce power because the regulated activities were local in
nature and their effects upon interstate commerce were indirect. Id. at 119, 63 S.
Ct. at 86.
Congresss regulatory scheme if not controlled. The Court declared that home-
consumed wheat constitutes the most variable factor in the disappearance of the
wheat crop, since [c]onsumption on the farm where grown appears to vary in an
amount greater than 20 per cent of average production. Id. at 127, 63 S. Ct. at 90.
68
See also Gonzales v. Raich, 545 U.S. 1, 20, 125 S. Ct. 2195, 2207 (2005) (noting that
Wickard Court treated Filburns wheat as home-consumed, not part of commercial farming
operation).
69
These penalties were levied regardless of whether any part of the wheat either within
or without the quota, is sold or intended to be sold. Wickard, 317 U.S. at 119, 63 S. Ct. at 86.
70
Filburns home-consumed wheat therefore compete[d] with wheat sold in
commerce, since it supplies a need of the man who grew it which would
otherwise be reflected by purchases in the open market. Id. at 128, 63 S. Ct. at 91.
includes the power to regulate the prices at which commodities in that commerce
are dealt in and practices affecting such prices and it can hardly be denied that a
9091. Therefore, the objectives of the AAA acreage quotasto increase the
market price of wheat and to that end to limit the volume thereof that could affect
Despite the fact that Congresss commerce power has been held to have
great latitude, id. at 120, 63 S. Ct. at 86, the Supreme Court recognized the
novelty of its decision, remarking that there is no decision of this Court that such
activities may be regulated where no part of the product is intended for interstate
8687. However, the Wickard Court concluded that even if [Filburns] activity be
local and though it may not be regarded as commerce, it may still, whatever its
71
interstate commerce and this irrespective of whether such effect is what might at
some earlier time have been defined as direct or indirect. Id. at 125, 63 S. Ct.
at 89. The Court declared that questions of the power of Congress are not to be
the actual effects of the activity in question upon interstate commerce. Id. at 120,
63 S. Ct. at 87; see also id. at 12324, 63 S. Ct. at 88 (stating that the relevance
of the economic effects in the application of the Commerce Clause . . . has made
itself, this was not enough to remove him from the scope of federal regulation
where, as here, his contribution, taken together with that of many others similarly
situated, is far from trivial. Id. at 12728, 63 S. Ct. at 90. Since Filburns home-
grown wheat slackened demand for market-based wheat and placed downward
pressures on price, Congress may properly have considered that wheat consumed
on the farm where grown if wholly outside the scheme of regulation would have a
substantial effect in defeating and obstructing its purpose to stimulate trade therein
The Supreme Court noted that restricting Filburns acreage could have the
72
effect of forcing Filburn to buy wheat in the market: It is said, however, that this
Act, forcing some farmers into the market to buy what they could provide for
growers. Id. at 129, 63 S. Ct. at 91. Rejecting this, the Supreme Court stated, It
the regulated and that advantages from the regulation commonly fall to others. Id.
Although not concerning the substantial effects doctrine, the 1944 case
1162 (1944), is important to our analysis, as it marked the Supreme Courts first
by Congress.70 Id. at 553, 64 S. Ct. at 1173. The Supreme Court emphasized the
70
Prior to 1944, the Supreme Court consistently upheld the power of the states to regulate
insurance. During those early years, Congress had not regulated insurance, but the states had. The
operative question concerned whether Congresss power to regulate interstate commerce
deprived states of the power to regulate the insurance business themselves. Since Congress had
not sought to regulate insurance, an invalidation of the states statutes would entail that insurance
companies could operate without any regulation. The earlier Supreme Court decisions held that
insurance is not commerce, thereby skirting any constitutional problem arising from the
Constitutions grant of power to Congress to regulate interstate commerce. See Paul v. Virginia,
75 U.S. (8 Wall.) 168 (1868); see also N.Y. Life Ins. Co. v. Deer Lodge Cnty., 231 U.S. 495, 34
S. Ct. 167 (1913); Hooper v. California, 155 U.S. 648, 15 S. Ct. 207 (1895).
73
continuous and indivisible stream of intercourse among the states composed of
insurances policies covered not only all kinds of fixed local properties, but also
. . . movable goods of all types carried in interstate and foreign commerce by every
may not exercise regulatory control over the industry. Id. at 548, 64 S. Ct. at 1171.
Nevertheless, the Court pronounced that [n]o commercial enterprise of any kind
which conducts its activities across state lines has been held to be wholly beyond
the regulatory power of Congress under the Commerce Clause. We cannot make
United States, 379 U.S. 241, 85 S. Ct. 348 (1964), the Supreme Court held that
Congress acted within its commerce authority in enacting Title II of the Civil
74
The plaintiff owned and operated a 216-room motel whose guests were primarily
out-of-state visitors. Id. at 243, 85 S. Ct. at 35051. The motel refused to rent
discrimination by hotels and motels impedes interstate travel. Id. at 253, 85 S. Ct.
at 355. The Court noted that it had long been settled that transportation of
Congress to promote interstate commerce also includes the power to regulate the
local incidents thereof . . . which might have a substantial and harmful effect upon
The Heart of Atlanta Motel Court acknowledged that Congress could have
such obstructions are within the sound and exclusive discretion of the Congress
and are subject only to one caveatthat the means chosen by it must be
75
reasonably adapted to the end permitted by the Constitution. Id. at 26162, 85 S.
Ct. at 360. The means chosen by Congress in Title II clearly met this standard.71
For the next thirty years, the Supreme Court applied an expansive
statutes. See, e.g., Preseault v. ICC, 494 U.S. 1, 110 S. Ct. 914 (1990) (upholding
statute amending National Trails System Act in facial challenge); Hodel v. Va.
Surface Mining & Reclamation Assn, 452 U.S. 264, 101 S. Ct. 2352 (1981)
Perez v. United States, 402 U.S. 146, 91 S. Ct. 1357 (1971) (sustaining Title II of
U.S. 183, 88 S. Ct. 2017 (1968) (upholding validity of amendments to Fair Labor
League of Cities v. Usery, 426 U.S. 833, 96 S. Ct. 2465 (1976), overruled by
Garcia v. San Antonio Metro. Transit Auth., 469 U.S. 528, 105 S. Ct. 1005 (1985).
These cases reflect a practical need to allow federal regulation of a growing and
71
In Katzenbach v. McClung, 379 U.S. 294, 85 S. Ct. 377 (1964), a companion case, the
Court also upheld Title IIs prohibition on discrimination in restaurants serving food to interstate
travelers or serving food that had moved in interstate commerce.
76
In 1995, the Supreme Court decided United States v. Lopez, 514 U.S. 549,
115 S. Ct. 1624 (1995), the first Supreme Court decision since the 1930s to rule
that Congress had exceeded its commerce power. Lopez concerned the Gun-Free
School Zones Act of 1990, which made it a federal offense for any individual
a concealed handgun to his Texas school. Lopez, 514 U.S. at 551, 115 S. Ct. at
1626.
delegated, and thus limited powers. Id. at 552, 115 S. Ct. at 1626. Although the
Supreme Courts New Deal precedents expanded Congresss commerce power, the
Lopez Court recognized that this power is subject to outer limits. Id. at 557, 115
S. Ct. at 1628. The Lopez Court then enumerated the three broad categories of
activity that Congress may regulate under its commerce power: (1) the use of the
may come only from intrastate activities; and (3) those activities that
77
substantially affect interstate commerce.72 Id. at 55859, 115 S. Ct. at 162930.
After determining that 922(q) could be sustained only under this third category,
the Lopez Court identified four factors influencing its analysis of whether gun
activity, stressing how prior cases utilizing the substantial effects test to reach
intrastate conduct had all involved economic activity. The Supreme Court stated
that Section 922(q) is a criminal statute that by its terms has nothing to do with
commerce or any sort of economic enterprise and was not an essential part of a
undercut unless the intrastate activity were regulated. Id. at 561, 115 S. Ct. at
163031. The Court opined that [e]ven Wickard, which is perhaps the most far
economic activity in a way that the possession of a gun in a school zone does not.
Id. at 560, 115 S. Ct. at 1630 (emphasis added). The Lopez Court acknowledged
72
The third Lopez prong is the broadest expression of Congress commerce power.
United States v. Ballinger, 395 F.3d 1218, 1226 (11th Cir. 2005) (en banc).
78
outer limits, congressional legislation under the Commerce Clause always will
Second, the Lopez Court found it significant that 922(q) did not contain a
possession in question affects interstate commerce. Id. at 561, 115 S. Ct. at 1631.
Instead, the Act penalized mere possession and lacked any requirement that
demonstrating the purported nexus between gun possession around schools and its
Fourth, the Lopez Court examined the actual relationship between gun
government posited three effects: (1) violent crime, even when purely local,
generates substantial costs that are spread to the wider populace through
73
In this respect, the Lopez Court contrasted the Gun-Free School Zones Act of 1990 with
the firearm possession statute at issue in United States v. Bass, 404 U.S. 336, 92 S. Ct. 515
(1971). In Bass, the Supreme Court construed legislation making it a federal crime for a felon to
receiv[e], posses[s], or transpor[t] in commerce or affecting commerce . . . any firearm. Lopez,
514 U.S. at 56162, 115 S. Ct. at 1631 (emphasis added) (quoting former 18 U.S.C. 1202(a)).
The Lopez Court stated that [u]nlike the statute in Bass, 922(q) has no express jurisdictional
element which might limit its reach to a discrete set of firearm possessions that additionally have
an explicit connection with or effect on interstate commerce. Id. at 562, 115 S. Ct. at 1631.
79
insurance; (2) individuals are deterred from traveling to areas beset by violent
crime; and (3) guns in schools imperil the learning environment, which in turn
crime theory, Congress could regulate not only all violent crime, but all
activities that might lead to violent crime, regardless of how tenuously they relate
to interstate commerce. Id. at 564, 115 S. Ct. at 1632. Likewise, the national
learning environment, then, a fortiori, it also can regulate the educational process
directly. Id. at 566, 115 S. Ct. at 1633. Indeed, Congress could regulate any
citizens, including marriage, divorce, and child custody. Id. at 564, 115 S. Ct.
at 1632.
The Supreme Court pronounced that these links were too attenuated to
[I]f we were to accept the Governments arguments, we are hard pressed to posit
80
uphold the Governments contentions, the Supreme Court continued, we would
have to pile inference upon inference in a manner that would bid fair to convert
the sort retained by the States. Id. at 567, 115 S. Ct. at 1634.
Lastly, the Lopez Court acknowledged that some of the Supreme Courts
the broad language of these precedents any further, since [t]o do so would
dissolve the distinction between what is truly national and what is truly local
and subvert constitutional notions of federalism. Id. at 56768, 115 S. Ct. at 1634.
Although both joined the majority opinion in full, two justices wrote
separately and echoed the majoritys emphasis on the significance of the federal-
state balance in the structure of the Constitution, and the need for judicial
intervention when Congress has tipped the scales too far. See id. at 56883, 115
74
In a concurring opinion, Justice Kennedy explained why he joined the Lopez majority
opinion in full and what he characterized as its necessary though limited holding. 514 U.S. at
568, 115 S. Ct. at 1634 (Kennedy, J., concurring). Justice Kennedy noted the imprecision of
content-based boundaries used without more to define the limits of the Commerce Clause,
referring to earlier dichotomies that distinguished between manufacturing and commerce,
direct and indirect effects, and other formalistic categories. Id. at 574, 115 S. Ct. at 1637. He
stressed that the Supreme Court is often called upon to resolve questions of constitutional law
81
164251 (Thomas, J., concurring).75
529 U.S. 598, 120 S. Ct. 1740 (2000), reapplied the Lopez principles and
U.S.C. 13981, which provided a federal civil remedy for victims of gender-
motivated violence.76
gender motivated violence and to promote public safety, health, and activities
not susceptible to the mechanical application of bright and clear lines. Id. at 579, 115 S. Ct. at
1640.
Justice Kennedy found that 922(q) upsets the federal balance to a degree that renders it
an unconstitutional assertion of the commerce power, and our intervention is required. Id. at
580, 115 S. Ct. at 1640. Much like the majority opinion, Justice Kennedy emphasized the far-
reaching implications of the governments position: In a sense any conduct in this
interdependent world of ours has an ultimate commercial origin or consequence, but we have not
yet said the commerce power may reach so far. If Congress attempts that extension, then at the
least we must inquire whether the exercise of national power seeks to intrude upon an area of
traditional state concern. Id. Such an interference was present in Lopez, as it is well established
that education is a traditional concern of the States. Id. Justice Kennedy added that courts have a
duty to recognize meaningful limits on the commerce power of Congress. Id.
75
See discussion of Justice Thomass concurring opinion infra note 78.
76
The VAWA provided that a person who commits a crime of violence motivated by
gender . . . shall be liable to the party injured, in an action for the recovery of compensatory and
punitive damages, injunctive and declaratory relief, and such other relief as a court may deem
appropriate. 42 U.S.C. 13981(c).
82
affecting interstate commerce.77 Id. 13981(a).
The Morrison Court observed that since the New Deal case of Jones &
conduct and transactions under the Commerce Clause than our previous case law
permitted. Morrison, 529 U.S. at 608, 120 S. Ct. at 1748. Lopez clarified,
however, that Congress regulatory authority is not without effective bounds. Id.
The Supreme Court stated that a fair reading of Lopez shows that the
noneconomic, criminal nature of the conduct at issue was central to our decision in
that case. Id. at 610, 120 S. Ct. at 1750. The Morrison Court pointed out that
economic activity. Id. at 613, 120 S. Ct. at 1751. While we need not adopt a
order to decide these cases, the Supreme Court reiterated that our cases have
upheld Commerce Clause regulation of intrastate activity only where that activity
77
The Morrison plaintiff was a college student allegedly raped by two football players.
529 U.S. at 602, 120 S. Ct. at 174546. The plaintiff filed suit in federal court under 13981(c).
Id. at 604, 120 S. Ct. at 1746. The defendants motion to dismiss argued that Congress lacked
authority to enact the VAWAs federal civil remedy provision under either the Commerce Clause
or 5 of the Fourteenth Amendment. Id. at 604, 120 S. Ct. at 174647.
83
element. It commented that another provision of the VAWA, which similarly
hook. Id. at 613 n.5, 120 S. Ct. at 1752 n.5 (discussing 18 U.S.C. 2261(a)(1),
which at the time applied only to an individual who travels across a State line or
regarding the serious impact that gender-motivated violence has on victims and
their families. Id. at 614, 120 S. Ct. at 1752. Nonetheless, the Morrison Court
stated that congressional findings were not dispositive, echoing Lopezs statement
substantially affects interstate commerce does not necessarily make it so. Id.
(alteration in original) (quoting Lopez, 514 U.S. at 557 n.2, 115 S. Ct. at 1624 n.2).
weakened by the fact that they rely so heavily on a method of reasoning that we
enumeration of powers. Id. at 615, 120 S. Ct. at 1752. The congressional findings
productivity, and increased medical costs. Id. According to the Morrison Court,
84
[t]he reasoning that petitioners advance seeks to follow the but-for causal chain
from the initial occurrence of violent crime (the suppression of which has always
been the prime object of the States police power) to every attenuated effect upon
interstate commerce. Id. The logical entailment of this but-for causal chain of
reasoning would allow Congress to regulate any crime as long as the nationwide,
powers traditionally reposed in the states.78 Id. at 61516, 120 S. Ct. at 1753.
F. Gonzales v. Raich
Next came Gonzales v. Raich, 545 U.S. 1, 125 S. Ct. 2195 (2005), where the
Supreme Court, in a 63 vote, concluded that Congress acted within its commerce
marijuana, even though California state law approved the drugs use for medical
78
Although joining the majority opinion in full in both Lopez and Morrison, Justice
Thomas wrote separately in both cases to reject the substantial effects doctrine. In Morrison,
Justice Thomas wrote only to express my view that the very notion of a substantial effects test
under the Commerce Clause is inconsistent with the original understanding of Congress powers
and with this Courts early Commerce Clause cases. 529 U.S. at 627, 120 S. Ct. at 1759
(Thomas, J., concurring). Characterizing the substantial effects test as a rootless and malleable
standard, Justice Thomas remarked that the Supreme Courts present Commerce Clause
jurisprudence had encouraged the federal government to operate under the misguided belief that
the Clause has virtually no limits. Id. Unless the Supreme Court reversed its course,we will
continue to see Congress appropriating state police powers under the guise of regulating
commerce. Id.
85
purposes. The legislation at issue was the Controlled Substances Act (CSA), 21
U.S.C. 801 et seq., in which Congress sought to conquer drug abuse and to
prevent the diversion of drugs from legitimate to illicit channels. Raich, 545
possess any controlled substance except in a manner authorized by the CSA. Id.
at 13, 125 S. Ct. at 2203. Under the CSA, marijuana is classified as a Schedule I
medical purposes, as well as patients and primary caregivers who possess and
cultivate marijuana for doctor-approved medical purposes.79 Id. at 56, 125 S. Ct.
at 2199. The two California plaintiffs, Angel Raich and Diane Monson, suffered
from serious medical conditions and used marijuana as medication for several
Monson cultivated her own marijuana, while Raich relied upon two caregivers to
79
Proposition 215 is codified as the Compassionate Use Act of 1996, CAL. HEALTH &
SAFETY CODE 11362.5.
86
provide her with locally grown marijuana at no cost. Id. at 7, 125 S. Ct. at 2200.
After federal agents seized and destroyed Monsons cannabis plants, the
Raich plaintiffs sued. Id. They acknowledged that the CSA was within Congresss
commerce authority and did not contend that any section of the CSA was
unconstitutional. Id. at 15, 125 S. Ct. at 2204. Instead, they argued solely that the
consumption of cannabis for personal medical use. Id. at 78, 125 S. Ct. at 2200.
Court stated that its case law firmly establishes Congress power to regulate
purely local activities that are part of an economic class of activities that have a
substantial effect on interstate commerce. Id. at 15, 17, 125 S. Ct. at 220405.
The Supreme Court emphasized that, in assessing Congresss commerce power, its
but only whether a rational basis exists for so concluding. Id. at 22, 125 S. Ct. at
2208. The Raich Court commented that [w]hen Congress decides that the total
entire class, and it need not legislate with scientific exactitude. Id. at 17, 125 S.
Ct. at 2206 (quotation marks omitted). [W]e have reiterated, the Supreme Court
87
continued, that when a general regulatory statute bears a substantial relation to
The Supreme Court found similar regulatory concerns underlying both the
CSA in Raich and the AAA wheat provisions in Wickard. Just as rising market
prices could draw wheat grown for home consumption into the interstate market
grown for home consumption in the CSA is the likelihood that the high demand in
the interstate market will draw such marijuana into that market. Id. at 19, 125 S.
Ct. at 2207. In both cases, there was a threat of unwanted commodity diversion
that could disrupt Congresss regulatory control over interstate commerce. Id.
regulate purely intrastate activity that is not itself commercial, in that it is not
produced for sale, if it concludes that failure to regulate that class of activity
would undercut the regulation of the interstate market in that commodity. Id. at
18, 125 S. Ct. at 2206. Characterizing the similarities between the plaintiffs case
and Wickard as striking, the Raich Court explained that [i]n both cases, the
88
the commodity meant for home consumption, be it wheat or marijuana, has a
substantial effect on supply and demand in the national market for that
The Raich Court opined that the failure to regulate intrastate production and
between locally cultivated marijuana and out-of-state marijuana, and the marijuana
authorized by state law could be diverted into illicit channels. Id. at 22, 125 S.
Ct. at 2209. The Raich Court rejected the notion that California had surgically
excised a discrete activity that is hermetically sealed off from the larger interstate
marijuana market. Id. at 30, 125 S. Ct. at 2213. Accordingly, even though the
CSA ensnares some purely intrastate activity, the Raich Court refuse[d] to
judgment that an exemption for such a significant segment of the total market
The Raich Court concluded that the statutory challenges in Lopez and
Morrison were markedly different from the plaintiffs statutory challenge to the
CSA. Id. at 23, 125 S. Ct. at 2209. Whereas the Raich plaintiffs sought to excise
89
individual applications of a concededly valid statutory scheme, the Supreme
Court noted that in both Lopez and Morrison, the parties asserted that a particular
statute or provision fell outside Congress commerce power in its entirety. Id.
The Raich Court considered this distinction between facial and as-applied
challenges pivotal because [w]here the class of activities is regulated and that
class is within the reach of federal power, the courts have no power to excise, as
trivial, individual instances of the class. Id. (alteration in original) (quoting Perez,
402 U.S. at 154, 91 S. Ct. at 1361). Additionally, since the CSA was a lengthy
was at the opposite end of the regulatory spectrum from the statutes in Lopez
Once again central to the Courts analysis was whether the regulated
at 2526, 125 S. Ct. at 2211 (quoting WEBSTERS THIRD NEW INTL DICTIONARY
720 (1966)). In contrast to the activities regulated in Lopez and Morrison, the
Raich Court concluded that the activities regulated by the CSA are
quintessentially economic. Id. at 25, 125 S. Ct. at 2211. Indeed, the activities
90
since they involved the production, distribution, and consumption of marijuana.
under his understanding of the commerce power, the authority to enact laws
necessary and proper for the regulation of interstate commerce is not limited to
may regulate even those intrastate activities that do not themselves substantially
affect interstate commerce. Id. at 3435, 125 S. Ct. at 2216 (Scalia, J.,
concurring).
intrastate activities may be necessary to and proper for the regulation of interstate
commerce. Id. at 35, 125 S. Ct. at 2216. First, the commerce power permits
Congress not only to devise rules for the governance of commerce between States
to restrict it by eliminating potential stimulants. Id. at 35, 125 S. Ct. at 2216. Yet,
[t]his principle is not without limitation, as the cases of Lopez and Morrison
made clear. Id. at 3536, 125 S. Ct. at 221617. Second, Justice Scalia submitted
that Congress may regulate even noneconomic local activity if that regulation is a
necessary part of a more general regulation of interstate commerce. Id. at 37, 125
91
S. Ct. at 2217. The relevant question then becomes whether the means chosen
are reasonably adapted to the attainment of a legitimate end under the commerce
power. Id.
In addition to relying on these Commerce Clause cases, both parties and the
district court conducted a separate analysis of the Necessary and Proper Clauses
implications for the Act. We review some foundational principles relating to that
Clause, focusing our attention on United States v. Comstock, 560 U.S. __, 130 S.
Congress has the power [t]o make all Laws which shall be necessary and
proper for carrying into Execution its enumerated power. U.S. CONST. art. I, 8,
cl. 18. The Necessary and Proper Clause is intimately tied to the enumerated
power it effectuates. The Supreme Court has recognized that the Necessary and
Proper Clause is not the delegation of a new and independent power, but simply
Colorado, 206 U.S. 46, 88, 27 S. Ct. 655, 663 (1907). It is merely a declaration,
for the removal of all uncertainty, that the means of carrying into execution those
[powers] otherwise granted are included in the grant. Kinsella v. United States,
361 U.S. 234, 247, 80 S. Ct. 297, 304 (1960) (alterations in original) (quoting VI
92
WRITINGS OF JAMES MADISON 383 (Gaillard Hunt ed., 1906)). It reaffirms that
Congress has the incidental powers necessary to carry its enumerated powers into
effect.
The Supreme Courts most definitive statement of the Necessary and Proper
Maryland: 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. 17 U.S. (4 Wheat.) 316, 421 (1819). Thus, when legislating within
its enumerated powers, Congress has broad authority: the Necessary and Proper
Clause makes clear that the Constitutions grants of specific federal legislative
authority are accompanied by broad power to enact laws that are convenient, or
bound up the Necessary and Proper Clause with its substantial effects analysis.80
80
For instance, the Court formulated the question in Raich as whether the power vested
in Congress by Article I, 8, of the Constitution to make all Laws which shall be necessary and
proper for carrying into Execution its authority to regulate Commerce with foreign Nations, and
among the several States includes the power [asserted]. 545 U.S. at 5, 125 S. Ct. at 219899
(alteration omitted). Although the Wickard Court did not expressly invoke the Necessary and
Proper Clause, the Raich Court clearly assumed as much. See id. at 22, 125 S. Ct. at 2209.
93
As Justice Scalia noted in Raich, Congresss regulatory authority over intrastate
activities that are not themselves part of interstate commerce (including activities
that have a substantial effect on interstate commerce) derives from the Necessary
and Proper Clause. 545 U.S. at 34, 125 S. Ct. at 2216 (Scalia, J., concurring).
of Necessary and Proper Clause doctrine. In Comstock, the Supreme Court held
that Congress acted pursuant to its Article I powers in enacting a federal civil-
to detain mentally ill, sexually dangerous prisoners beyond the term of their
the statutes constitutional validity: (1) the breadth of the Necessary and Proper
Clause, (2) the long history of federal involvement in this arena, (3) the sound
reasons for the statutes enactment in light of the Governments custodial interest
in safeguarding the public from dangers posed by those in federal custody, (4) the
statutes accommodation of state interests, and (5) the statutes narrow scope.
On the breadth of the Necessary and Proper Clause, the Comstock Court
noted that (1) the federal government is a government of enumerated powers, but
(2) is also vested with ample means for the execution of those powers. Id.
94
(quoting McCulloch, 17 U.S. at 408). The Supreme Court must determine whether
inquiry is simply whether the means chosen are reasonably adapted to the
attainment of a legitimate end under the commerce power or under other powers
that the Constitution grants Congress the authority to implement. Id. at __, 130 S.
Ct. at 1957 (quotation marks omitted) (quoting Raich, 545 U.S. at 37, 125 S. Ct. at
the duration of their sentences. Id. at __, 130 S. Ct. at 1959. Since 1949, Congress
had also authorized the postsentence detention of federal prisoners who suffer
from a mental illness and who are thereby dangerous. Id. at __, 130 S. Ct. at
1961. The Supreme Court observed that [a]side from its specific focus on
95
interestthe Supreme Court concluded that Congress reasonably extended its
dangerous persons who are already in federal custody, even if doing so detains
them beyond the termination of their criminal sentence. Id. The federal
government: (1) is the custodian of its prisoners and (2) has the power to protect
the public from the threats posed by the prisoners in its charge. Id.
Comstock Court ruled that 4248 properly accounts for state interests. Id. at __,
130 S. Ct. at 1962. The Supreme Court found persuasive that the statute required
the Attorney General (1) to allow (and indeed encourage) the state in which the
prisoner was domiciled or tried to take custody and (2) to immediately release the
Court found the statute not too sweeping in its scope and the link between
4248 and an enumerated Article I power not too attenuated. Id. at __, 130 S.
Ct. at 1963. The Supreme Court concluded that Lopezs admonition that courts
81
The Attorney General must make all reasonable efforts to cause the state in which the
prisoner is domiciled or tried to assume responsibility for his custody, care, and treatment.
Comstock, 560 U.S. at __, 130 S. Ct. at 1954 (quoting 18 U.S.C. 4248(d)). If the state consents,
the prisoner will be released to the appropriate official in that state. Id. at __, 130 S. Ct. at
195455. If the state declines to take custody, the Attorney General will place the person for
treatment in a suitable facility until the state assumes the role or until the person no longer poses
a sexually dangerous threat. Id. at __, 130 S. Ct. at 1955 (quoting 18 U.S.C. 4248(d)).
96
should not pile inference upon inference did not present any problems with
respect to the civil-commitment statute. Id. (quoting Lopez, 514 U.S. at 567, 115
S. Ct. at 1634). Specifically, the Comstock Court discerned that the same
enumerated power that justifies the creation of a federal criminal statute, and that
justifies the additional implied federal powers that the dissent considers legitimate,
justifies civil commitment under 4248 as well. Id. at __, 130 S. Ct. at 1964. The
Supreme Court rejected the notion that Congresss authority can be no more than
one step removed from a specifically enumerated power. Id. at __, 130 S. Ct. at
1963.
Lastly, the Supreme Court emphasized that 4248 had been applied to
only a small fraction of federal prisoners. Id. at __, 130 S. Ct. at 1964 (citing
evidence that 105 individuals have been subject to 4248 out of over 188,000
system and thus did not endow Congress with a general police power. Id. at __,
82
Justice Alito wrote separately to express concern[] about the breadth of the Courts
language, and the ambiguity of the standard that the Court applies. 560 U.S. at __, 130 S. Ct. at
97
did not join the Courts majority opinion. Because Justice Kennedys concurring
treatment of it here.
rationally related and rational basis must be employed with care, particularly if
either is to be used as a stand-alone test. Id. at __, 130 S. Ct. at 1966 (Kennedy,
J., concurring). Justice Kennedy observed that the phrase rational basis is
typically employed in Due Process Clause contexts, where the Court adopts a very
deferential review of congressional acts. Id. Under the Lee Optical test applied in
such due process settings, the Court merely asks whether it might be thought that
the particular legislative measure was a rational way to correct an evil. Id.
(quoting Williamson v. Lee Optical of Okla., Inc., 348 U.S. 483, 48788, 75 S. Ct.
461, 464 (1955)). By contrast, Justice Kennedy asserted, under the Necessary and
1968 (Alito, J., concurring) (citation omitted). Justice Alito stressed that the Necessary and
Proper Clause does not give Congress carte blanche. Id. at __, 130 S. Ct. at 1970. While the
word necessary need not connote that the means employed by Congress be absolutely
necessary or indispensable, the term requires an appropriate link between a power
conferred by the Constitution and the law enacted by Congress. Id. It is the Supreme Courts
duty, he declared, to enforce compliance with that limitation. Id. Like Justice Kennedy, Justice
Alito suggested that the Necessary and Proper Clause context of the case did not warrant an
analysis in which it is merely possible for a court to think of a rational basis on which Congress
might have perceived an attenuated link between the powers underlying the federal criminal
statutes and the challenged civil commitment provision. Id. In Comstock, by contrast, the
government had demonstrated a substantial link to Congress constitutional powers. Id.
98
Proper Clause, application of a rational basis test should be at least as exacting as
it has been in the Commerce Clause cases, if not more so. Id.
Optical. Id. at __, 130 S. Ct. at 1967. The rational basis referred to in the
interstate commerce does not necessarily make it so. Id. (quoting Lopez, 514
U.S. at 557 n.2, 115 S. Ct. at 1629 n.2). In this regard, [w]hen the inquiry is
whether a federal law has sufficient links to an enumerated power to be within the
scope of federal authority, the analysis depends not on the number of links in the
congressional-power chain but on the strength of the chain. Id. at __, 130 S. Ct. at
1966.
findings, and the Supreme Courts Commerce Clause precedents, we turn to the
In this Section, we begin with first principles. We then examine the subject
matter the individual mandate seeks to regulate, and whether it can be readily
categorized under the classes of activity the Supreme Court has previously
power.
A. First Principles
100
As the Supreme Court has observed, The judicial authority to determine the
the powers of the legislature are defined and limited; and that those limits may
Flores, 521 U.S. 507, 516, 117 S. Ct. 2157, 2162 (1997) (quoting Marbury v.
Madison, 5 U.S. (1 Cranch) 137, 176 (1803)). The judiciary is called upon not
only to interpret the laws, but at times to enforce the Constitutions limits on the
problem.
powers. Comstock, 560 U.S. at __, 130 S. Ct. at 1956 (quoting McCulloch, 17
U.S. at 405). In describing this constitutional structure, the Supreme Court has
emphasized James Madisons exposition in The Federalist No. 45: The powers
delegated by the proposed Constitution to the federal government are few and
defined. Those which are to remain in the State governments are numerous and
indefinite. Gregory v. Ashcroft, 501 U.S. 452, 458, 111 S. Ct. 2395, 2399 (1991)
(quoting THE FEDERALIST NO. 45, at 29293 (James Madison) (Clinton Rossiter
ed., 1961)); see also Lopez, 514 U.S. at 552, 115 S. Ct. at 1626 (quoting same). In
101
that same essay, Madison noted that the commerce power was one such
that seems to be an addition which few oppose, and from which no apprehensions
are entertained. THE FEDERALIST NO. 45, at 289 (James Madison) (E.H. Scott ed.,
1898). The commerce power has since come to dominate federal legislation.
Court instructs us, The power of Congress in this field is broad and sweeping;
where it keeps within its sphere and violates no express constitutional limitation it
has been the rule of this Court, going back almost to the founding days of the
Republic, not to interfere. Katzenbach v. McClung, 379 U.S. 294, 305, 85 S. Ct.
377, 384 (1964). In fact, if the object of congressional legislation falls within the
sphere contemplated by the Commerce Clause, [t]hat power is plenary and may
be exerted to protect interstate commerce no matter what the source of the dangers
which threaten it. Jones & Laughlin Steel Corp., 301 U.S. at 37, 57 S. Ct. at 624
It is because of the breadth and depth of this power that even when the
Commerce Clause, it has done so with a word of warning: Undoubtedly the scope
102
of this power must be considered in the light of our dual system of government
indirect and remote that to embrace them, in view of our complex society, would
effectually obliterate the distinction between what is national and what is local and
flexible approach to its application, one that is often difficult to apply. As Chief
Santa Cruz Fruit Packing Co. v. NLRB., 303 U.S. 453, 467, 58 S. Ct. 656, 660
(1938); see also Lopez, 514 U.S. at 566, 115 S. Ct. at 1633 (But, so long as
103
Thus, it is not surprising that Lopez begins not with categories or substantial
protection of our fundamental liberties. 514 U.S. at 553, 115 S. Ct. at 1626
(citing Gregory, 501 U.S. at 458, 111 S. Ct. at 2400). While the substantial growth
and development of Congresss power under the Commerce Clause has been well-
documented, the Court has often reiterated that the power therein granted remains
subject to outer limits. Id. at 557, 115 S. Ct. at 1628. When Congress oversteps
those outer limits, the Constitution requires judicial engagement, not judicial
abdication.
between what is truly national and what is truly local. Id. at 56768, 115 S. Ct. at
1634. Second, the Court has repeatedly warned that courts may not interpret the
Commerce Clause in a way that would grant to Congress a general police power,
which the Founders denied the National Government and reposed in the States.
Morrison, 529 U.S. at 618, 120 S. Ct. at 1754; see also Lopez, 514 U.S. at 584,
115 S. Ct. at 1642 (Thomas, J., concurring) ([W]e always have rejected readings
104
of the Commerce Clause and the scope of federal power that would permit
Congress to exercise a police power; our cases are quite clear that there are real
Commerce Clause, we must look not only to the action itself but also its
implications for our constitutional structure. See Lopez, 514 U.S. at 56368, 115
S. Ct. at 163234. While these structural limitations are often discussed in terms of
federalism, their ultimate goal is the protection of individual liberty. See Bond v.
United States, 564 U.S. __, __, 131 S. Ct. 2355, 2363 (2011) (Federalism secures
the freedom of the individual.); New York v. United States, 505 U.S. at 181, 112
S. Ct. at 2431 (The Constitution does not protect the sovereignty of States for the
contrary, the Constitution divides authority between federal and state governments
83
As a preliminary matter, we note that the parties appear to agree that if the individual
mandate is to be sustained, it must be under the third category of activities that Congress may
regulate under its commerce power: i.e., those activities that substantially affect interstate
commerce. Lopez, 514 U.S. at 559, 115 S. Ct. at 1630.
105
congressional enactment only upon a plain showing that Congress has exceeded its
The parties contend that the answer to the question of the individual
Congress intended to regulate the health insurance and health care markets to
yet at some time in the future seek health care for which they cannot pay. 42
U.S.C. 18091(a)(1)(A), (H). One of the tools Congress employed to solve that
continuously maintain health insurance. The government argues that the individual
Lopez and Morrison touched on criminal conduct, which is not in any sense of
the phrase, economic activity. Morrison, 529 U.S. at 613, 120 S. Ct. at 1751. The
government submits that Congress has mandated only how Americans finance
The plaintiffs respond that the plain text of the Constitution and Supreme
106
congressional regulation under the commerce power. The plaintiffs stress that
into commerce so that the federal government may regulate them. The plaintiffs
point out that by choosing not to purchase insurance, the uninsured are outside the
stream of commerce. Indeed, the nature of the conduct is marked by the absence of
Beginning with the plain language of the text, the Commerce Clause gives
Congress the power to regulate Commerce. U.S. CONST. art. I, 8, cl. 3. The
commercial intercourse between nations, and parts of nations, in all its branches,
107
22 U.S. at 18990 (emphasis added). The nature of Chief Justice Marshalls
However, the Supreme Court has always described the commerce power as
Congress has the power to regulate it, that power must be exercised whenever the
subject exists. If it exists within the States, if a foreign voyage may commence or
terminate at a port within a State, then the power of Congress may be exercised
within a State. Id. at 195 (emphasis added). In its recent cases, the Supreme Court
In Lopez, the Court identified three broad categories of activity that Congress
may regulate under its commerce power and concluded that possession of a gun
in a local school zone is in no sense an economic activity. 514 U.S. at 558, 567,
115 S. Ct. at 1629, 1634 (emphasis added); see also Raich, 545 U.S. at 26, 125 S.
Ct. at 2211 ([T]he CSA is a statute that directly regulates economic, commercial
activity. (emphasis added)); Morrison, 529 U.S. at 611, 120 S. Ct. at 1750
(Lopezs review of Commerce Clause case law demonstrates that in those cases
where we have sustained federal regulation of intrastate activity based upon the
108
activitys substantial effects on interstate commerce, the activity in question has
Commerce Clause cases run the gamut of possible regulation. But the diverse fact
Morrison, and Raich share at least one commonality: they all involved attempts by
case. Although the Supreme Courts Commerce Clause cases frequently speak in
activity-laden terms, the Court has never expressly held that activity is a
because it has never been faced with the type of regulation at issue here.
mandate and the subject matter it seeks to regulate. The uninsured have made a
some other item or need than health insurance. Congress described the activity it
sought to regulate as economic and financial decisions about how and when
health care is paid for, and when health insurance is purchased. 42 U.S.C.
109
18091(a)(2)(A) (emphasis added). It deemed such decisions as activity that is
commercial and economic in nature. Id. Congress linked the individual mandate
make an economic and financial decision to forego health insurance coverage and
is not surprising. In Morrison, the Supreme Court acknowledged that thus far in
our Nations history our cases have upheld Commerce Clause regulation of
intrastate activity only where that activity is economic in nature. 529 U.S. at 613,
120 S. Ct. at 1751. Raich confirmed the continued viability of this distinction
The parties here disagree about where the individual mandate falls within
not to purchase insurance and to self-insure for health care is a financial decision
that has more of an economic patina than the gun possession in Lopez or the
is not so clear, nor do we find this sort of categorical thinking particularly helpful
110
in assessing the constitutionality of such an unprecedented congressional action.
After all, in choosing not to purchase health insurance, the individuals regulated
by the individual mandate are hardly involved in the production, distribution, and
provided by the Raich Court.84 545 U.S. at 25, 125 S. Ct. at 2211 (citation and
quotation marks omitted). Rather, to the extent the uninsured can be said to be
active, their activity consists of the absence of such behavior, at least with
respect to health insurance.85 Simply put, the individual mandate cannot be neatly
headings.
This confirms the wisdom in the conclusion that the Courts attempts
that were commerce and those that were not are doomed to fail. Lopez, 514 U.S.
at 569, 115 S. Ct. at 1635 (Kennedy, J., concurring). Compare United States v.
84
The fact that conduct may be said to have economic effects does not, by that fact alone,
render the conduct economic activity, at least as defined by the Supreme Court. Lopez and
Morrison make this observation apparent. Even the fact that conduct in some way relates to
commerce does not, by itself, convert that conduct into economic activity. Indeed, the regulated
activity in Lopez (firearm possession) directly related to an article of commerce (the firearm
being possessed). The Supreme Court has emphasized that the relevant inquiry is the link
between the regulated activity and its effects on interstate commerce.
85
The government correctly notes that many of the uninsured do actively consume health
care, even though they are not participants in the health insurance market. We address this point
at length later.
111
E.C. Knight Co., 156 U.S. 1, 13, 15 S. Ct. 249, 254 (1895) (approving
dichotomy unsound). See also Lopez, 514 U.S. at 572, 115 S. Ct. at 1636
practical conception of the commerce power); Wickard, 317 U.S. at 120, 63 S. Ct.
reference to any formula which would give controlling force to nomenclature such
as production and indirect); Swift & Co. v. United States, 196 U.S. 375, 398,
25 S. Ct. 276, 280 (1905) (observing that commerce among the states is not a
technical legal conception, but a practical one, drawn from the course of
have been, they appear animated by one overarching goal: to provide courts with
federal government can issue a mandate that Americans purchase and maintain
health insurance from a private company for the entirety of their lives.86 These
86
Whether one describes the regulated individuals decision as the financing of health
care, self-insurance, or risk retention, the congressional mandate is to acquire and continuously
112
types of purchasing decisions are legion. Every day, Americans decide what
products to buy, where to invest or save, and how to pay for future contingencies
such as their retirement, their childrens education, and their health care. The
override these ordinary decisions and redirect those funds to other purposes.
Under this theory, because Americans have money to spend and must inevitably
make decisions on where to spend it, the Commerce Clause gives Congress the
overarching regulatory goals, such as reducing the number of uninsureds and the
power to issue a mandate for Americans to purchase health insurance from private
the individual mandate; (2) whether Congresss exercise of its commerce authority
affords sufficient and meaningful limiting principles; and (3) the far-reaching
maintain health coverage. And unless the person is covered by a government-financed health
program, the mandate is to purchase insurance from a private insurer.
113
defining the scope of the Commerce Clause. Economic mandates such as the one
contained in the Act are so unprecedented, however, that the government has been
unable, either in its briefs or at oral argument, to point this Court to Supreme
Court precedent that addresses their constitutionality. Nor does our independent
lines, The Lottery Case, 188 U.S. 321, 23 S. Ct. 321 (1903); and carrying a woman
across state lines for immoral purposes, Hoke v. United States, 227 U.S. 308,
320, 33 S. Ct. 281, 283 (1913). Through the Commerce Clause, Congress may
prevent the interstate transportation of liquor, United States v. Simpson, 252 U.S.
465, 40 S. Ct. 364 (1920); punish an automobile thief who crosses state lines,
Brooks v. United States, 267 U.S. 432, 45 S. Ct. 345 (1925); and prevent diseased
herds of cattle from bringing their contagion from Georgia to Florida, Thornton v.
In the modern era, the Commerce Clause has been used to regulate labor
practices, Jones & Laughlin Steel Corp., 301 U.S. 1, 57 S. Ct. 615; impose
minimum working conditions, Darby, 312 U.S. 100, 61 S. Ct. 451; limit the
production of wheat for home consumption, Wickard, 317 U.S. 111, 63 S. Ct. 82;
114
regulate the terms of insurance contracts, South-Eastern Underwriters, 322 U.S.
Atlanta Motel, 379 U.S. 241, 85 S. Ct. 348, and restaurant services, Katzenbach,
379 U.S. 294, 85 S. Ct. 377; and prevent the home production of marijuana for
medical purposes, Raich, 545 U.S. 1, 125 S. Ct. 2195. What the Court has never
done is interpret the Commerce Clause to allow Congress to dictate the financial
insurance was first floated in 1994, the CBO stated that a mandate requiring all
federal action. SPEC. STUDIES DIV., CONG. BUDGET OFFICE, THE BUDGETARY
[hereinafter CBO MANDATE MEMO]. The CBO observed that Congress has never
the United States, noting that mandates typically apply to people as parties to
115
Despite the breadth of powers that have been exercised under the
Commerce Clause, it is unclear whether the clause would provide a solid
constitutional foundation for legislation containing a requirement to
have health insurance. Whether such a requirement would be
constitutional under the Commerce Clause is perhaps the most
challenging question posed by such a proposal, as it is a novel issue
whether Congress may use this clause to require an individual to
purchase a good or a service.
ANALYSIS 3 (2009).
The fact that Congress has never before exercised this supposed authority is
telling. As the Supreme Court has noted, the utter lack of statutes imposing
U.S. at 90708, 117 S. Ct. at 2371; see also Va. Office for Prot. & Advocacy v.
Stewart, 563 U.S. __, __, 131 S. Ct. 1632, 1641 (2011) (Lack of historical
precedent can indicate a constitutional infirmity.); Alden v. Maine, 527 U.S. 706,
74344, 119 S. Ct. 2240, 2261 (1999). Few powers, if any, could be more
attractive to Congress than compelling the purchase of certain products. Yet even
if we focus on the modern era, when congressional power under the Commerce
Clause has been at its height, Congress still has not asserted this authority. Even in
the face of a Great Depression, a World War, a Cold War, recessions, oil shocks,
116
inflation, and unemployment, Congress never sought to require the purchase of
vehicle.87 See Printz, 521 U.S. at 905, 117 S. Ct. at 2370 ([I]f . . . earlier
Congresses avoided use of this highly attractive power, we would have reason to
favors while discouraging what it does not. This is instructive. Not only have prior
congressional actions not asserted the power now claimed, they contain some
indication of precisely the opposite assumption. Id. at 910, 117 S. Ct. at 2372.
Instead of requiring action, Congress has sought to encourage it. The instances of
such encouragement are ubiquitous, but the example of flood insurance provides a
that from time to time flood disasters have created personal hardships and
economic distress which have required unforeseen disaster relief measures and
87
Compare the lack of legislation compelling activity to the long history of Congress
forbidding activity.
117
4001(a)(1). Despite considerable expenditures on public programs designed to
prevent floods, those programs had not been sufficient to protect adequately
this problem, however, Congress did not require everyone who owns a house in a
flood plain to purchase flood insurance. In fact, Congress did not even require
anyone who chooses to build a new house in a flood plain to buy insurance.
before the home owner could receive federal financial assistance or federally
been a failure. See Bryant J. Spann, Note, Going Down for the Third Time:
Senator Kerrys Reform Bill Could Save the Drowning National Flood Insurance
Program, 28 GA. L. REV. 593, 597 (1994) (One of the most astounding facts to
surface from the Midwestern flood of 1993 was that so few homeowners eligible
for flood insurance actually had it. Of the states impacted by the flood, Illinois had
the highest percentage of eligible households covered, with 8.7%.). One key
reason for this low participation is not surprising. Disaster relief, as a political
118
disaster relief, particularly for his or her own constituents. Id. at 602. People
living in a flood plain know that even if they do not have insurance, they can count
unpredictability of flooding, the inevitability that floods will strike flood plains,
and the cost shifting inherent in uninsured property owners seeking disaster relief
funds, Congress has never taken the obvious and expedient step of invoking the
power the government now argues it has and forcing all property owners in flood
Contrast flood insurance with the very few instances of activity in which
citizens living in the United States. Given the attractiveness of the power to
mandates: serving on juries, registering for the draft, filing tax returns, and
responding to the census. These mandates are in the nature of duties owed to the
88
Compare this with the Emergency Medical Treatment and Active Labor Act
(EMTALA), 42 U.S.C. 1395dd, which ensures public access to emergency medical services
without regard to ones ability to pay.
89
The contrast with the individual mandate is even more stark when we consider that
property owners in flood plains have actually entered the housing market.
119
constitutional text.90 Additionally, all these mandates involve a citizen directly
respects, the individual mandate is a sharp departure from all prior exercises of
federal power.
upon which the Supreme Court has spoken. In the Selective Draft Law Cases, the
Supreme Court reviewed challenges to the draft instituted in 1917 upon the entry
of the United States into World War I. 245 U.S. 366, 38 S. Ct. 159 (1918). The
Court rejected these challenges on several grounds, primarily based on the long
history of the draft both in the United States and other nations. Id. at 37987, 38 S.
Ct. at 16264. But it also pointed to the relationship between citizens and
government and its duty to the citizen includes the reciprocal obligation of the
citizen to render military service in case of need and the right to compel it. Id. at
90
See, e.g., U.S. CONST . art. I, 2 ([An] Enumeration shall be made within three Years
after the first Meeting of the Congress of the United States, and within every subsequent Term of
ten Years, in such Manner as they shall by Law direct.); id. art. I, 8, cl. 1 (The Congress shall
have Power To lay and collect Taxes); id. art. I, 8, cl. 12 (providing Congress with power [t]o
raise and support Armies); id. art. III, 2 (The Trial of all Crimes, except in Cases of
Impeachment, shall be by Jury.).
120
It is striking by comparison how very different this economic mandate is
from the draft. First, it does not represent the solution to a duty owed to the
basis in the history of our nation, much less a long and storied one. Until Congress
passed the Act, the power to regulate commerce had not included the authority to
issue an economic mandate. Now Congress seeks not only the power to reach a
new class of activityfinancial decisions whose effects are felt some time in the
mandate.
the lack of any Supreme Court case addressing this issue, we are left to apply some
perhaps the most far reaching example of Commerce Clause authority over
intrastate activity,91 514 U.S. at 560, 115 S. Ct. at 1630, provides perhaps the best
91
Some have argued that Raich now represents the high-water mark of Congresss
commerce authority. We discuss Raich in more detail below.
121
wheat acreage potentially forced him to purchase wheat on the open market. In
doing so, Congress was able to artificially inflate the price of wheat by
not for its similarity to our present case, but in how different it is. Although
Wickard represents the zenith of Congresss powers under the Commerce Clause,
the wheat regulation therein is remarkably less intrusive than the individual
mandate.
Despite the fact that Filburn was a commercial farmer92 and thus far more
act did not require him to purchase more wheat. Instead, Filburn had any number
of other options open to him. He could have decided to make do with the amount
agricultural endeavors that required less wheat. He could have even ceased part of
though it lies at the outer bounds of the commerce power, was a limitationnot a
mandateand left Filburn with a choice. The Acts economic mandate to purchase
92
In enacting the Agricultural Adjustment Act at issue in Wickard, Congress apparently
sought to avoid reaching subsistence farmers whose production did not leave surplus for sale.
Thus, it exempted small farms from the quota. See Wickard, 317 U.S. at 130 n.30, 63 S. Ct. at 92
n.30. In other words, Congresss regulation only applied to suppliers operating in the stream of
commerce, even though some of those market suppliers also consumed a portion of wheat at
home.
122
insurance, on the contrary, leaves no choice and is more far-reaching.
Congress has acted within its enumerated power. Individuals subjected to this
economic mandate have not made a voluntary choice to enter the stream of
commerce, but instead are having that choice imposed upon them by the federal
government. This suggests that they are removed from the traditional subjects of
Congresss commerce authority, in the same manner that the regulated actors in
Lopez and Morrison were removed from the traditional subjects of Congresss
This departure from commerce power norms is made all the more salient
cumulative effect of this class of activity (i.e., the intrastate activity taken
93
Among other counts, the district court dismissed the plaintiffs substantive due process
challenge under the Fifth Amendment. Florida v. HHS, 716 F. Supp. 2d at 116162. That ruling
is not on appeal.
123
a doctrine that allows Congress to apply an otherwise valid regulation to a class of
the noneconomic activity at issue, reasoning that in every case where we have
at 611 n.4, 120 S. Ct. at 1750 n.4. The Court thereby resisted additional
expansion of the substantial effects and aggregation doctrines. Lopez, 514 U.S. at
outside the stream of commerce, on the theory that those economic and financial
product would expand the substantial effects doctrine to one of unlimited scope.
Given the economic reality of our national marketplace, any persons decision not
94
Although not made explicit in Wickard, the courts have come to recognize aggregation
as flowing from Congresss powers to enact laws necessary and proper to effectuate its power
under the Commerce Clause. See, e.g., Raich, 545 U.S. at 22, 125 S. Ct. at 2209; id. at 34, 125 S.
Ct. at 2216 (Scalia, J., concurring); Katzenbach, 379 U.S. at 301302, 85 S. Ct. at 382.
124
commerce in that good.95 From a doctrinal standpoint, we see no way to cabin the
Congress could not mandate under this line of argument.96 Although any decision
not to purchase a good or service entails commercial consequences, this does not
warrant the facile conclusion that Congress may therefore regulate these decisions
pursuant to the Commerce Clause. See id. at 580, 115 S. Ct. at 1640 (Kennedy, J.,
concurring) (In a sense any conduct in this interdependent world of ours has an
ultimate commercial origin or consequence, but we have not yet said the
Thus, even assuming that decisions not to buy insurance substantially affect
interstate commerce, that fact alone hardly renders them a suitable subject for
95
Perhaps we can conceive of a purely intrastate good that is wholly insulated from the
interstate market and, therefore, whose purchase Congress may not mandate even under the
governments sweeping extension of Wickards aggregation principle. To the extent such
hypothetical goods exist, their number is vanishingly small.
96
The CBO suggested the possibility of this perilous course when it warned that an
individual mandate to buy health insurance could open the door to a mandate-issuing
government taking control of virtually any resource allocation decision that would otherwise be
left to the private sector . . . . In the extreme, a command economy, in which the President and
the Congress dictated how much each individual and family spent on all goods and services,
could be instituted without any change in total federal receipts or outlays. CBO MANDATE
MEMO , supra p.115, at 9.
125
regulation. See, e.g., Morrison, 529 U.S. at 617, 120 S. Ct. at 1754 (We
accordingly reject the argument that Congress may regulate noneconomic, violent
decision to forego insurance. Under any framing, the regulated conduct is defined
by the absence of both commerce or even the the production, distribution, and
U.S. at 25, 125 S. Ct. at 2211. To connect this conduct to interstate commerce
would require a but-for causal chain that the Supreme Court has rejected, as it
would allow Congress to regulate anything. Morrison, 529 U.S. at 615, 120 S. Ct.
at 1752.
Indisputably, the health insurance and health care industries involve, and
must be careful not to sweep too broadly by including within the ambit of its
126
regulation activities that bear an insufficient nexus with interstate commerce. See
Morrison, 529 U.S. at 613 & n.5, 120 S. Ct. at 175152 & n.5 (distinguishing
In this regard, the individual mandates attempt to reduce the number of the
language of the mandate is not tied to those who do not pay for a portion of their
health care (i.e., the cost-shifters). It is not even tied to those who consume health
care. Rather, the language of the mandate is unlimited, and covers even those who
do not enter the health care market at all. Although overinclusiveness may not be
fatal for constitutional purposes, the Supreme Court has indicated that it is a factor
For example, in Lopez the vast majority of the regulated behavior (firearm
97
A staggering proportion of the firearms in America have been transported across state
lines, and thus the possessions at issue in Lopez likely did have a sufficient nexus to interstate
commerceand thus, were within Congresss regulatory authority. In the wake of Lopez, many
defendants challenged their prosecutions under the felons-with-firearms statute18 U.S.C.
1202(a), later recodified as 18 U.S.C. 922(g)that the Supreme Court distinguished from
922(q) by virtue of its jurisdictional element. In one such case, the governments own expert
witness testified that 95% of the firearms in the United States were transported across state lines.
See Brent E. Newton, Felons, Firearms, and Federalism: Reconsidering Scarborough in Light of
Lopez, 3 J. APP . PRAC. & PROCESS 671, 68182 & n.53 (2001).
Instructively, Congress took its cue from the Supreme Court after Lopez and amended the
Gun-Free School Zones Act to require an explicit interstate nexus on an individualized basis.
127
ultimately found this fact insufficient to save the statute. Rather, the Supreme
interstate tie or any case-by-case inquiry. See id. Aside from the categories of
uncompensated careor, indeed, seek any care at all, either now or in the future.99
Thus, the Act contains no language which might limit its reach to a discrete set of
The individual mandate sweeps too broadly in another way. Because the
Specifically, Congress added a jurisdictional element to ensure that the charged individuals
particular firearm had moved in interstate or foreign commerce (or otherwise affected such
commerce). See 18 U.S.C. 922(q)(2)(A) (It shall be unlawful for any individual knowingly to
possess a firearm that has moved in or that otherwise affects interstate or foreign commerce at a
place that the individual knows, or has reasonable cause to believe, is a school zone. (emphasis
added)).
98
The Lopez Court never stated that such an element was required, and nor do we.
However, it is clearly a relevant constitutional factor that the Supreme Court instructs us to
consider. The governments argument ignores it completely.
99
Although health care consumption is pervasive, the plaintiffs correctly note that
participation in the market for health care is far less inevitable than participation in markets for
basic necessities like food or clothing.
128
Supreme Courts prior Commerce Clause cases all deal with already-existing
activitynot the mere possibility of future activity (in this case, health care
the governments positionthat most people will, at some point in the future,
consume health carereveals that the individual mandate is even further removed
It is true that Congress may, in some instances, regulate individuals who are
consuming health care but not themselves causing the cost-shifting problem. Cf.
Raich, 545 U.S. at 17, 125 S. Ct. at 2206 (We have never required Congress to
legislate with scientific exactitude.); id. at 22, 125 S. Ct. at 2209 (That the
plaintiffs acknowledged at oral argument, when the uninsured actually enter the
100
The dissent attempts to sidestep the temporal leap problem by citing Consolidated
Edison Co. v. NLRB for the proposition that Congress may take reasonable preventive
measures to avoid future disruptions to interstate commerce. 305 U.S. 197, 222, 59 S. Ct. 206,
213 (1938). Consolidated Edison, of course, is wholly inapposite to this case, since Congress was
regulating the labor practices of utility companies (1) fully engaged in the stream of commerce
and (2) presently supplying economic services to instrumentalities of interstate commerce, such
as railroads and steamships. Id. at 22022, 59 S. Ct. at 213. Even so, the dissents argument
proves far too much. After all, by the dissents reasoning, Congress could clearly reach the gun
possession at issue in Lopez, since firearms are (1) objects of everyday commercial transactions
and (2) are daily used to disrupt interstate commerce. See Lopez, 514 U.S. at 60203, 115 S. Ct.
at 1651 (Stevens, J., dissenting) (Guns are both articles of commerce and articles that can be
used to restrain commerce. Their possession is the consequence, either directly or indirectly, of
commercial activity.). Indeed, Antonio Lopez himself was paid $40 to traffic the gun for which
he was charged under 922(q). United States v. Lopez, 2 F.3d 1342, 1345 (5th Cir. 1995).
129
stream of commerce and consume health care, Congress may regulate their activity
But the individual mandate does not regulate behavior at the point of
consumption. Indeed, the language of the individual mandate does not truly
regulate how and when health care is paid for. 42 U.S.C. 18091(a)(2)(A). It
does not even require those who consume health care to pay for it with insurance
when doing so. Instead, the language of the individual mandate in fact regulates a
related, but different, subject matter: when health insurance is purchased. Id. If
regulates those who have not entered the health care market at all. It regulates
those who have entered the health care market, but have not entered the insurance
it conflates those who presently consume health care with those who will not
consume health care for many years into the future. The governments position
them at every point of their life. This theory affords no limiting principles in
130
which to confine Congresss enumerated power.
Lopez, 514 U.S. at 564, 115 S. Ct. at 1632. The government clearly appreciates the
to avoid the conclusion that Congress may order Americans other economic
compel a person to purchase insurance solely on the basis of his financial decision
to spend his money elsewhere. Rather, the government seems to view an economic
mandate as an emergency tool of sorts, for use in extreme and unique situations
and only to the extent the underlying regulated conduct meets a number of fact-
based criteria.
The government submits that health care and health insurance are factually
unique and not susceptible of replication due to: (1) the inevitability of health care
need; (2) the unpredictability of need; (3) the high costs of health care; (4) the
101
See EMTALA, 42 U.S.C. 1395dd. In this regard, the plaintiffs point out that the
governments contention amounts to a bootstrapping argument. Under the governments theory,
131
associated cost-shifting.
The first problem with the governments proposed limiting factors is their
industries. They speak more to the complexity of the problem being regulated than
the regulated decisions relation to interstate commerce. They are not limiting
regulation, the government acknowledged at oral argument that the mere presence
Congress can enlarge its own powers under the Commerce Clause by legislating a market
externality into existence, and then claiming an extra-constitutional fix is required.
102
The Supreme Court has rejected similar calls for a reprieve from Commerce Clause
restraints based upon the ostensible uniqueness or gravity of the problem being regulated. For
instance, Justice Breyers dissent in Lopez attempted to deflect the majoritys focus on limiting
principlesspecifically, its statement that upholding 922(q) would enable the federal
government to regulate any activity that it found was related to the economic productivity of
individual citizens, 514 U.S. at 564, 115 S. Ct. at 1632by arguing that 922(q) is aimed at
curbing a particularly acute threat and that guns and education are incompatible in a special
way. Id. at 624, 115 S. Ct. at 1661 (Breyer, J., dissenting) (emphasis added). The dissent further
opined that gun possession in schools embodied the rare case . . . [when] a statute strikes at
conduct that (when considered in the abstract) seems so removed from commerce, but which
(practically speaking) has so significant an impact upon commerce. Id. at 624, 115 S. Ct. at
1662 (emphasis added). The majority dismissed these suggested limitations, however,
characterizing them as devoid of substance. Id. at 564, 115 S. Ct. at 1632 (majority opinion).
132
industries characterized by some or all of these market deficiencieselder care,
other types of insurance, and the energy marketthe government argued that an
However, virtually all forms of insurance entail decisions about timing and
theft, flood, tornado, and other natural disasters, long-term nursing care
principles, there is no reason why Congress could not similarly compel Americans
to insure against any number of unforeseeable but serious risks.103 High costs and
cost-shifting in premiums are simply not limited to hospital care, but occur when
individuals are disabled, cannot work, experience an accident, need nursing care,
This gives rise to a second fatal problem with the governments proposed
103
The government essentially argues that anyone creates a cost-shifting risk by virtue of
being alive, since they may one day be injured or sick and seek care that they do not pay for.
Therefore, Congress can compel the purchase of health insurance, from birth to death, to protect
against such risks. This expansive theory could justify the compelled purchase of innumerable
forms of insurance, however. To give but one example, Congress could undoubtedly require
every American to purchase liability insurance, lest the consequences of their negligence or
inattention lead to unfunded costs (medical and otherwise) passed on to others in the future.
133
that the Supreme Court has repeatedly emphasized as necessary to that enumerated
power. Lopez, 514 U.S. at 566, 115 S. Ct. at 1633; see also Morrison, 529 U.S. at
608 n.3, 120 S. Ct. at 1749 n.3 (rejecting dissents remarkable theory that the
the role that the Court would take were we to adopt the position of the government
the government, courts would sit in judgment over every economic mandate issued
But the commerce power does not admit such limitations; rather it is
limitations, other than are prescribed in the constitution. Gibbons, 22 U.S. at 196.
company, it may similarly compel the purchase of other products from private
industry, regardless of the unique conditions the government cites as warrant for
134
findings underscores the lack of any judicially enforceable stopping point to the
company. The government apparently seeks to set the terms of the limiting
principles courts should apply, and then asks that we defer to Congresss judgment
about whether those conditions have been met. The Supreme Court has firmly
rejected such calls for judicial abdication in the Commerce Clause realm. See
Lopez, 514 U.S. at 557 n.2, 115 S. Ct. at 1629 n.2 ([W]hether particular
question, and can be settled finally only by this Court. (quoting Heart of Atlanta
sleight of hand to deflect attention from the central issue in the case: what is the
nature of the conduct being regulated by the individual mandate, and may
commerce power, the government attempts to limit the individual mandates far-
135
reaching implications. Accordingly, the government adroitly and narrowly re-
defines the regulated activity as the uninsureds health care consumption and
consumption.104
inevitable that an individual in the future will consume in a related market), then
aggregation, and such no-purchase decisions of all Americans would fall within
the federal commerce power. Consequently, the government could no longer fall
104
The dissent adopts the governments position. See Dissenting Op. at 227 (describing
the relevant conduct targeted by Congress as the uncompensated consumption of health care
services by the uninsured); id. at 235 (stating that many of the[] uninsured currently consume
health care services for which they cannot or do not pay and [t]his is, in every real and
meaningful sense, classic economic activity); id. at 214 (In other words, the individual mandate
is the means Congress adopted to regulate the timing and method of individuals payment for the
consumption of health care services.).
136
of whole cloth a five-factor test that lacks any antecedent in the Supreme Courts
Commerce Clause jurisprudence. Thus, not only do the uniqueness factors lack
G. Congressional Findings
findings begin with the statement that the individual insurance mandate is
whether the regulation itself substantially affects interstate commerce but rather
commerce.
137
Later on, the findings do ground the individual mandate in Congresss effort
health care; (2) in turn, some of them do not pay their full medical costs and
instead shift them to medical providers; (3) medical providers thereafter shift these
costs to private insurers; and (4) private insurers then shift them to insureds
increase is $1,000 for insured families, id., and $400 for individuals.106 The
findings state that the mandate will reduce the number of the uninsured and the
$43 billion cost-shifting and thereby lower health insurance premiums.107 Id.
18091(a)(2)(F).
105
The parties and amici use the shorthand terms cost-shifting, cost-shifters, or free-
riders to describe these problems.
106
See Families USA, supra note 8.
107
Experts debate whether the Act will accomplish its premium-lowering objective.
According to even the CBO, Under PPACA and the Reconciliation Act, premiums for health
insurance in the individual market will be somewhat higher than they would otherwise be . . .
mostly because the average insurance policy in that market will cover a larger share of enrollees
costs for health care and provide a slightly wider range of benefits. CONG . BUDGET OFFICE , AN
ANALYSIS OF HEALTH INSURANCE PREMIUMS UNDER THE PATIENT PROTECTION AND
AFFORDABLE CARE ACT 8 (2009).
The CBO estimates the Act will cause costs for health insurance in the individual market
to rise by 27% to 30% over current levels in 2016, due to the broadened coverage achieved by the
insurance market reforms. Id. at 6. For the purpose of our analysis, however, we accept the
congressional finding that cost-shifters lead to higher premiums.
138
529 U.S. at 614, 120 S. Ct. at 1752. Rather, the Supreme Court has insisted that
514 U.S. at 557 n.2, 115 S. Ct. at 1629 n.2 ([S]imply because Congress may
not necessarily make it so. (quoting Hodel, 452 U.S. at 311, 101 S. Ct. at 2391
cost-shifting effects of the uninsured. To the extent the data show anything, the
data demonstrate that the cost-shifters are largely persons who either (1) are
exempted from the mandate, (2) are excepted from the mandate penalty, or (3) are
For example, illegal aliens and other nonresidents are cost-shifters ($8.1
billion, or 18.9% of the $43 billion),108 but they are exempted from the individual
segment of cost-shifters ($15 billion, or 34.8% of the $43 billion),109 but they are
covered by the Acts Medicaid expansion or excepted from the mandate penalty.
108
See Br. of Amici Curiae Economists in Support of Plaintiffs at 11 & app. A
(summarizing their calculations based on the MEPS data set).
109
See Br. of Amici Curiae Economists in Support of Plaintiffs at 11 & app. A
(summarizing their calculations based on the MEPS data set).
139
Id. 5000A(e)(1), (2) (excepting individuals (1) whose premium contribution
specified income tax filing threshold). Previously, the uninsured with preexisting
health conditions sought, but were denied, coverage and ended up in the past cost-
shifting pool ($8.7 billion, or 20.1%).110 However, the Acts insurance reforms
now guarantee them coverage and move them out of the future cost-shifting pool.
Already-insured persons who do not pay their out-of-pocket costs (such as co-
payments and deductibles) are cost-shifters ($3.3 billion, or 7.6%),111 but they are
uninsureds who cannot pay the average $2,000 medical bill also cannot pay the
In reality, the primary persons regulated by the individual mandate are not
cost-shifters but healthy individuals who forego purchasing insurance. The Act
110
See Br. of Amici Curiae Economists in Support of Plaintiffs at 11 & app. A
(summarizing their calculations based on the MEPS data set).
111
See Br. of Amici Curiae Economists in Support of Plaintiffs at 11 & app. A
(summarizing their calculations based on the MEPS data set).
112
As noted earlier, the uninsureds average medical care costs were $2,000 in 2007 and
$1,870 in 2008. Some uninsureds incur a larger expense, some a smaller expense, and some no
expense at all. We use the average cited in the Brief of the Amici Curiae Economists in Support
of the Government, at 16, which is based on the MEPS tables. The CBO estimates that in 2016
the annual premium for a bronze level plan, even in the Exchanges, will average $4,5005,000
for individuals and $12,00012,500 for a family policy. Letter from Douglas Elmendorf,
Director, Cong. Budget Office, to Olympia Snowe, U.S. Senator (Jan. 11, 2010), available at
http://www.cbo.gov/ftpdocs/108xx/doc10884/01-11-Premiums_for_Bronze_Plan.pdf.
140
confirms as much. To help private insurers, the congressional findings
acknowledge that the individual mandate seeks to broaden the health insurance
U.S.C. 18091(a)(2)(I), (J). The individual mandate forces healthy and voluntarily
premiums now in order to subsidize the private insurers costs in covering more
unhealthy individuals under the Acts reforms. Congress sought to mitigate its
outside the insurance market to enter the private insurance market and buy the
insurers products. This starkly evinces how the Act is forcing market entry by
Nevertheless, we need not, and do not, rely on the factual disparity between
the persons regulated by the individual mandate and the cost-shifting problem.
113
Distinguished economists have filed helpful briefs on both sides of the case. While
they disagree on some things, they agree about the theory of adverse selection. They agree some
relatively healthy people refrain from, or opt out of, buying health insurance more often than
people who are unhealthy or sick seek insurance. This results in a smaller and less healthy pool
of insured persons for private insurance companies. Br. of Amici Curiae Economists in Support
of the Government at 1718; Br. of Amici Curiae Economists in Support of Plaintiffs at 1316.
114
As explained above, the Act requires private insurers (1) to cover the unhealthy and (2)
to price that coverage, not on actuarial risks or basic economic pricing decisions, but on
community-rated premiums without regard to health status. 42 U.S.C. 300gg-1(a).
141
After all, courts need not determine whether respondents activities, taken in the
rational basis exists for so concluding.115 Raich, 545 U.S. at 22, 125 S. Ct. at
2208 (emphasis added). The government would have this be the end of the
constitutional inquiry.
But the government skips important analytical steps. Rational basis review
rather, the Supreme Court has applied rational basis review to a more specific
question under the Commerce Clause: whether Congress has a rational basis for
subsection D, supra, courts must initially assess whether the subject matter
115
Notably, the Lopez Court recognized the same rational basis level of review as
Raich. See Lopez, 514 U.S. at 557, 115 S. Ct. at 1629 (stating that, since the New Deal, the
Supreme Court has undertaken to decide whether a rational basis existed for concluding that a
regulated activity sufficiently affected interstate commerce). Raich did not adopt a more
deferential review of congressional legislation than prior cases, as the Supreme Court itself
acknowledged. See 545 U.S. at 22, 125 S. Ct. at 2208 (collecting cases).
116
Every case the Raich Court cited for rational basis review is a substantial effects case.
See 545 U.S. at 22, 125 S. Ct. at 2208 (citing Lopez, 514 U.S. at 557, 115 S. Ct. 1624; Hodel,
452 U.S. at 27680, 101 S. Ct. 2352; Perez, 402 U.S. at 15556, 91 S. Ct. 1357; Katzenbach,
379 U.S. at 299301, 85 S. Ct. 377; Heart of Atlanta Motel, 379 U.S. at 25253, 85 S. Ct. 348).
In such contexts, courts will accord significant deference to Congresss assessment of whether an
activitys cumulative effect on interstate commerce is substantial or some lesser quantum. This
is an altogether separate question from (1) whether a regulated activity is amenable to
aggregation analysis at all and (2) the extent of the inferential leap needed to connect the
regulated activity to the effects on interstate commerce.
142
targeted by the regulation is suitable for aggregation in the first place. Relatedly,
courts, in the rational basis inquiry, must also examine whether the link between
the regulated activity and interstate commerce is too attenuated, lest there be no
discernible stopping point to Congresss commerce power.117 See Lopez, 514 U.S.
The wholesale deference the government would have us apply here cannot
be squared with the Supreme Courts decisions in Morrison and Lopez. Here,
Congress findings are substantially weakened by the fact that they rely so
Morrison, 529 U.S. at 615, 120 S. Ct. at 1752. It is highly instructive that the
117
Compare Raich, 545 U.S. at 22, 125 S. Ct. at 2209 ([W]e have no difficulty
concluding that Congress had a rational basis for believing that failure to regulate the intrastate
manufacture and possession of marijuana would leave a gaping hole in the CSA.), Heart of
Atlanta Motel, 379 U.S. at 253, 85 S. Ct. at 355 (referring to overwhelming evidence that
discrimination by hotels and motels impedes interstate travel), and Wickard, 317 U.S. at 128, 63
S. Ct. at 91 ([A] factor of such volume and variability as home-consumed wheat would have a
substantial influence on price and market conditions.), with Morrison, 529 U.S. at 615, 120 S.
Ct. at 1752 (rejecting the governments invitation to follow the but-for causal chain from the
initial occurrence of violent crime . . . to every attenuated effect upon interstate commerce), and
Lopez, 514 U.S. at 564, 115 S. Ct. at 1632 ([I]f we were to accept the Governments arguments,
we are hard pressed to posit any activity by an individual that Congress is without power to
regulate.).
143
possession and interstate commerce, the Lopez Court refused to accept what it
referred to as the governments cost of crime theory. 514 U.S. at 564, 115 S. Ct.
at 1632. It did so despite the governments argument that the costs of violent
crime are substantial, and, through the mechanism of insurance, those costs are
spread throughout the population. Id. at 56364, 115 S. Ct. at 1632 (emphasis
added).
congressional findings attesting to the link between domestic violence and medical
costs frequently borne by third parties. See, e.g., 529 U.S. at 62936, 120 S. Ct at
176064 (Souter, J., dissenting); see also id. at 632, 120 S. Ct. at 1762 (Over 1
million women in the United States seek medical assistance each year for injuries
sustained [from] their husbands or other partners. (quoting S. Rep. No. 101-545,
health care, criminal justice, and other social costs of domestic violence.
118
In Morrison, [t]he congressional findings that accompanied VAWA were so
voluminous that they were removed from the text of the statute and placed in a conference report
to avoid cluttering the United States Code. Melissa Irr, Note, United States v. Morrison; An
Analysis of the Diminished Effect of Congressional Findings in Commerce Clause Jurisprudence
and a Criticism of the Abandonment of the Rational Basis Test, 62 U. PITT . L. REV . 815, 824
(2001).
144
that gender-motivated violence substantially affected interstate commerce by
in interstate business, and from transacting with business, and in places involved
medical and other costs, and decreasing the supply of and the demand for
interstate products. Id. at 615, 120 S. Ct. at 1752 (majority opinion) (emphasis
added) (quoting H.R. Conf. Rep. No. 103-711, at 385 (1994)). The Morrison
Court did not dispute the above figures about medical costs, but instead
subject matter of the regulation had a sufficient nexus to interstate commerce. See
In both Lopez and Morrison, the Supreme Court determined that the
education where States historically have been sovereign. Lopez, 514 U.S. at 564,
145
effects on interstate commerce. See id. at 564, 115 S. Ct. at 1632. Yet, the mere
authority. Such a holding would require the Supreme Court to overturn Lopez and
Morrison.
We see no reason why the inferential leaps in this case are any less
attenuated than those in Lopez and Morrison. The cost-shifting accompanying the
shifting scenario associated with the medically uninsured. Meanwhile, in all three
cases, the regulated conduct giving rise to the cost-shifting is divorced from a
At best, we can say that the uninsured may, at some point in the
unforeseeable future, create that cost-shifting consequence. Yet this readily leads
legislation, a practice the Supreme Court admonishes us to avoid. See Lopez, 514
U.S. at 567, 115 S. Ct. at 1634. If anything, the temporal aspects present here, but
146
not in Lopez or Morrison, render the regulated activity even further remote.119
concerns.
health care, we fully recognize that Congress has the power under the Commerce
expansively and constitutionally in the fields of insurance and health care. See,
Pub. L. No. 104-191, 110 Stat. 1936 (1996); Consolidated Omnibus Budget
Reconciliation Act of 1985 (COBRA), Pub. L. No. 99-272, 100 Stat. 82 (1986);
Stat. 829 (1974); Social Security Amendments of 1965, Pub. L. No. 89-97, 79 Stat.
119
The dissent identifies an economic effectcost-shiftingand essentially defines that
as the activity being regulated. But the dissents conflation of activity and effect is sheer question
begging. It is no wonder, then, that the dissent makes the breathtaking assertion that there is not
even a single inferential step needed to link the regulated activity here to an impact on
commerce. As the dissent frames the issue, there is no lack of nexus between the regulated
activity and its effects on interstate commerce because they are one and the same!
To the extent the dissent describes the conduct being regulated as the uncompensated
consumption of health care services, the language of the mandate refers only to insurance and
contains no reference to health care services, much less how health care services are consumed or
paid for. The dissent can find no inferential leap because it has assumed away the very problem
in this case, effectively treating the mandate as operating at the point of consumption. Under the
dissents re-framing of the issue, the VAWAs civil-remedy provision in Morrison could be
regarded as regulating the consumption of health care services, because such consumption
inevitably and empirically flows from gender-motivated violence.
147
286 (1965) (establishing Medicare and Medicaid); Federal Food, Drug, and
Cosmetic Act, Pub. L. No. 75-717, 52 Stat. 1040 (1938). It is clear that Congress
has enacted comprehensive legislation regarding health insurance and health care.
The Act is another such example. Yet, the narrow constitutional question here is
whether one provision 5000Ain that massive regulation goes too far.
valid exercise of Article I power. It simply will not suffice to say that, because
Congress has regulated broadly in a field, it may regulate in any fashion it pleases.
The Constitution supplies Congress with various tools to effectuate its legislative
power, but it also denies others. In assessing Congresss exercise of power, courts
recognize that the structural limits embedded in the Constitution are of equal
limitation. See, e.g., Comstock, 560 U.S. at __, 130 S. Ct. at 1968 (Kennedy, J.,
120
The Supreme Court reminds us that the federal structure serves to grant and delimit
the prerogatives and responsibilities of the States and the National Government vis--vis one
another and action that exceeds the National Governments enumerated powers undermines the
sovereign interests of States. Bond, 564 U.S. at __, __, 131 S. Ct. at 2364, 2366; see also
Gregory, 501 U.S. at 458, 111 S. Ct. at 2399 (This federalist structure of joint sovereigns
preserves to the people numerous advantages. It assures a decentralized government that will be
more sensitive to the diverse needs of a heterogenous society; it increases opportunity for citizen
148
The Supreme Courts Commerce Clause jurisprudence emphasizes that, in
traditional state concern. See Morrison, 529 U.S. at 611, 613, 61516, 120 S. Ct.
at 175051, 1753; Lopez, 514 U.S. at 561 n.3, 56468, 115 S. Ct. at 1631 n.3,
163234. The Supreme Court has expressed concern that Congress might use the
national and local authority. Morrison, 529 U.S. at 615, 120 S. Ct. at 1752; see
also Raich, 545 U.S. at 3536, 125 S. Ct. at 221617 (Scalia, J., concurring);
Lopez, 514 U.S. at 557, 56768, 115 S. Ct. at 162829, 1634; id. at 577, 115 S. Ct.
control over areas of traditional state concern, the boundaries between the
spheres of federal and state authority would blur and political responsibility would
become illusory. The resultant inability to hold either branch of the government
answerable to the citizens is more dangerous even than devolving too much
authority to the remote central power (citation omitted)). Coupled with this
1633; see also Morrison, 529 U.S. at 61819, 120 S. Ct. at 1754; cf. Comstock,
560 U.S. at __, 130 S. Ct. at 1964; id. at __, 130 S. Ct. at 1967 (Kennedy, J.,
concurring) (stating that the police power belongs to the States and the States
alone).
state concern impacts three of the five Comstock factors pertinent to a Necessary
and Proper Clause analysis: (1) whether there is a long history of federal
involvement in this arena, (2) whether the statute accommodates or supplants state
interests, and (3) the statutes narrow scope. 560 U.S. at __, 130 S. Ct. at 1965.
care qualify as areas of traditional state concern. Prior to the Supreme Courts
exclusive domain over the insurance industry. St. Paul Fire & Marine Ins. Co. v.
Barry, 438 U.S. 531, 539, 98 S. Ct. 2923, 2928 (1978). Thus, South-Eastern
Underwriters was widely perceived as a threat to state power to tax and regulate
the insurance industry. United States Dept of Treasury v. Fabe, 508 U.S. 491,
499500, 113 S. Ct. 2202, 2207 (1993); see also Cantor v. Detroit Edison Co.,
428 U.S. 579, 608 n.4, 96 S. Ct. 3110, 3126 n.4 (1976) (Blackmun, J., concurring)
150
(Congress expressed concern [was that the result in South-Eastern
To allay those fears, Congress moved quickly to restore the supremacy of the
States in the realm of insurance regulation. Fabe, 508 U.S. at 500, 113 S. Ct. at
was largely considered by Congress to be a local matter. W. & S. Life Ins. Co. v.
State Bd. of Equalization, 451 U.S. 648, 653, 101 S. Ct. 2070, 2075 (1981)
(quoting H.R. Rep. No. 143, at 2 (1945)). The passage of the McCarran-Ferguson
408, 429, 66 S. Ct. 1142, 1155 (1946) (Obviously Congress purpose [in passing
121
The McCarran-Ferguson Act states: (1) [t]he business of insurance, and every person
engaged therein, shall be subject to the laws of the several States which relate to the regulation or
taxation of such business, 15 U.S.C. 1012(a), and (2) [n]o Act of Congress shall be construed
to invalidate, impair, or supersede any law enacted by any State for the purpose of regulating the
business of insurance, or which imposes a fee or tax upon such business, unless such Act
specifically relates to the business of insurance, id. 1012(b).
151
the McCarran-Ferguson Act] was broadly to give support to the existing and
future state systems for regulating and taxing the business of insurance.); see also
Ne. Bancorp, Inc. v. Bd. of Governors of Fed. Reserve Sys., 472 U.S. 159, 179,
105 S. Ct. 2545, 2556 (1985) (OConnor, J., concurring) (The business of
regulated by the States in recognition of the critical part [it] play[s] in securing the
Circuit has reached a similar conclusion. Blue Cross & Blue Shield v. Nielsen, 116
F.3d 1406, 1413 (11th Cir. 1997) (Adjustment of the rights and interests of
insurers, health care providers, and insureds is a subject matter that falls squarely
recognition counsels caution, and supplies reviewing courts with even greater
cause for doubt when faced with an unprecedented economic mandate of dubious
constitutional status. Cf. Lopez, 514 U.S. at 583, 115 S. Ct. at 1641 (Kennedy, J.,
concurring) (The statute now before us forecloses the States from experimenting
and exercising their own judgment in an area to which States lay claim by right of
history and expertise, and it does so by regulating an activity beyond the realm of
152
The health care industry also falls within the sphere of traditional state
declared that the structure and limitations of federalism . . . allow the States great
latitude under their police powers to legislate as to the protection of the lives,
limbs, health, comfort, and quiet of all persons. Gonzales v. Oregon, 546 U.S.
243, 270, 126 S. Ct. 904, 923 (2006) (quotation marks and citation omitted).
matters as a core facet of a states police powers. See, e.g., Hill v. Colorado, 530
U.S. 703, 715, 120 S. Ct. 2480, 2489 (2000) (It is a traditional exercise of the
States police powers to protect the health and safety of their citizens. (quotation
marks and citation omitted)); Barnes v. Glen Theatre, Inc., 501 U.S. 560, 569, 111
S. Ct. 2456, 2462 (1991) (The traditional police power of the States is defined as
the authority to provide for the public health, safety, and morals.); Head v. N.M.
Bd. of Examrs in Optometry, 374 U.S. 424, 428, 83 S. Ct. 1759, 1762 (1963)
public health, and the statute thus falls within the most traditional concept of what
U.S. 442, 449, 74 S. Ct. 650, 654 (1954) (It is elemental that a state has broad
153
power to establish and enforce standards of conduct within its borders relative to
the health of everyone there. It is a vital part of a states police power.); Jacobson
v. Massachusetts, 197 U.S. 11, 25, 25 S. Ct. 358, 360 (1905) (According to
settled principles, the police power of a state must be held to embrace, at least,
protect the public health and the public safety.); see also Raich, 545 U.S. at 42,
125 S. Ct. at 2221 (OConnor, J., dissenting) (This case exemplifies the role of
States as laboratories. The States core police powers have always included
authority to define criminal law and to protect the health, safety, and welfare of
their citizens.).122
Although the states and the federal government both play indispensable
confirmed the view that the health of a states citizens is predominantly a state-
based concern: the regulation of health and safety matters is primarily, and
Labs., Inc., 471 U.S. 707, 719, 105 S. Ct. 2371, 2378 (1985). The Supreme Court
122
Gibbons, which represents one of the Supreme Courts earliest articulations of the
states reserved police powers, also provides insight into the traditionally local nature of health
laws. In Gibbons, Chief Justice Marshall remarked that [i]nspection laws, quarantine laws,
health laws of every description, as well as laws for regulating the internal commerce of a State
together form a portion of that immense mass of legislation, which embraces every thing within
the territory of a State, not surrendered to the general government: all which can be most
advantageously exercised by the States themselves. 22 U.S. at 203 (emphasis added).
154
similarly has stated that the narrower category of health care is an area of
traditional state concern. See, e.g., Rush Prudential HMO, Inc. v. Moran, 536 U.S.
355, 387, 122 S. Ct. 2151, 2171 (2002) (referring to the field of health care as
211, 237, 120 S. Ct. 2143, 2158 (2000))); N.Y. State Conf. of Blue Cross & Blue
Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 661, 115 S. Ct. 1671, 1680
(1995) ([G]eneral health care regulation . . . historically has been a matter of local
concern.).
the states policy choices in these key areas of traditional state concern.
another factor that weighs in the plaintiffs favor, and strengthens the inference
company.
Congress should be able to do so as well. Yes, some states have exercised their
155
pertinently, for our purposes, health insurance itself.123 But if anything, this gives
that have elected not to employ their police power in this manner.124 After all, if
and when Congress actually operates within its enumerated commerce power,
Congress, by virtue of the Supremacy Clause, may ultimately supplant the states.
When this occurs, a state is no longer permitted to tailor its policymaking goals to
the specific needs of its citizenry. This is precisely why it is critical that courts
preserve constitutional boundaries and ensure that Congress only operates within
In sum, the fact that Congress has enacted this insurance mandate in an area
123
See, e.g., MASS. GEN . LAWS ch. 111M 2 (Massachusetts law requiring residents 18
years and older to obtain and maintain creditable coverage so long as it is deemed affordable);
N.J. STAT . ANN . 26:15-2 (New Jersey law requiring residents 18 years and younger to obtain
and maintain health care coverage that provides hospital and medical benefits).
124
Some states have even passed legislation providing that their citizens may not be
required to obtain or maintain health insurance. See, e.g., Utah Code Ann. 63M-1-2505.5; Va.
Code Ann. 38.2-3430.1:1; see also ARIZ. CONST . Art. XXVII, 2 (A law or rule shall not
compel, directly or indirectly, any person, employer or health care provider to participate in any
health care system.). The American Legislative Exchange Council, a nonprofit membership
association of state legislators, filed a helpful amicus brief documenting the diverse array of
policies implemented by states to provide their citizens with health coverage. See Br. of Amicus
Curiae American Legislative Exchange Council in Support of Plaintiffs at 2128.
156
constitutional violation. When this federalism factor is added to the numerous
invalidate a congressional enactment only upon a plain showing that Congress has
exceeded its constitutional bounds. Morrison, 529 U.S. at 607, 120 S. Ct. at
1748. But we believe a compelling showing has been made here, and the federal
balance is too essential a part of our constitutional structure and plays too vital a
role in securing freedom for us to admit inability to intervene when one or the
other level of Government has tipped the scales too far. Lopez, 514 U.S. at 578,
care markets.
157
recent vintage. In 1995, the Lopez Court commented that the Gun-Free School
Zones Act was not an essential part of a larger regulation of economic activity, in
which the regulatory scheme could be undercut unless the intrastate activity were
regulated. Id. at 561, 115 S. Ct. at 1631 (majority opinion). Ten years later in
adopted in Lopez and Morrison, the Supreme Court adverted to the essential part
mandate materially distinguish this case from Raich and demonstrate why the
First, the Supreme Court has implied that the larger regulatory scheme
challenge at issue here. For instance, the Supreme Court has employed the larger
statute is a permissible regulation within its commerce power, the statute cannot
be validly applied to his particular intrastate activity. Raich, 545 U.S. at 15, 2324,
125
In a concurring opinion, Justice Scalia stated that Congress may regulate even
noneconomic local activity if that regulation is a necessary part of a more general regulation of
interstate commerce. Raich, 545 U.S. at 37, 125 S. Ct. at 2217 (Scalia, J., concurring) (emphasis
added). As noted earlier, however, the majority opinion in Raich described the regulated activity
as the production, distribution, and consumption of commodities and thus quintessentially
economic. Id. at 26, 125 S. Ct. at 2211 (majority opinion).
158
125 S. Ct. at 2204, 220910. In such an instance, the Supreme Court may
undermine Congresss efforts to police the interstate market. Id. at 28, 125 S. Ct. at
2212. However, the Supreme Court has to date never sustained a statute on the
plaintiffs contend that the entire class of activity is outside the reach of
congressional power.126
On this facial versus as-applied point, the Raich Court declared that the
from the challenge respondents pursue in the case at hand. Here, respondents ask
contrast, in both Lopez and Morrison, the parties asserted that a particular statute
or provision fell outside Congress commerce power in its entirety. Id. at 23, 125
S. Ct. at 2209. The Court deemed this facial versus as-applied distinction
126
Although the Lopez Court was the first to recognize the larger regulatory scheme
doctrine, it is arguable whether they actually applied it, in any real sense, in that case. Rather, the
Supreme Court summarily stated that 922(q) did not implicate that doctrine at all and cannot,
therefore, be sustained under our cases upholding regulations of activities that arise out of or are
connected with a commercial transaction, which viewed in the aggregate, substantially affects
interstate commerce. Lopez, 514 U.S. at 561, 115 S. Ct. at 1631. Here, it would strain credulity
to suggest that the plaintiffs conduct arises out of or is connected with a commercial
transaction, since the very nature of their conduct is marked by the absence of a commercial
transaction.
159
regulated and that class is within the reach of federal power, the courts have no
power to excise, as trivial, individual instances of the class. Id. (quoting Perez,
402 U.S. at 154, 91 S. Ct. at 1361). The plaintiffs here, of course, are not asking
contend the mandate to purchase insurance from a private company falls outside of
But even accepting that this larger regulatory scheme doctrine fully applies
in facial challenges, the governments argument still fails here. To see why, we
discuss how the Supreme Court utilized the doctrine in the as-applied setting of
Raich, the only instance in which a statute has been sustained by the larger
except in a manner authorized by the CSA. Id. at 13, 125 S. Ct. at 2203 (emphasis
eliminate all interstate traffic in the commodity. The Supreme Court concluded
that the diversion of homegrown marijuana tends to frustrate the federal interest
160
Additionally, the fungible nature of the commodityi.e., the inability to
Congresss ability to enforce its concededly valid total CSA ban on commercial
transactions in the interstate market. The Raich Court stated that [g]iven the
locally and marijuana grown elsewhere, and concerns about diversion into illicit
channels, we have no difficulty concluding that Congress had a rational basis for
marijuana would leave a gaping hole in the CSA.127 Id. at 22, 125 S. Ct. at 2209
that Congresss regulation was justified by the possibility that the plaintiffs
127
The gaping hole identified by the Supreme Court was thrown into sharp relief by the
Raich plaintiffs lack of limiting principles. If Congress could not reach intrastate marijuana used
for medical purposes, the Raich Court reasoned that it must also be true that intrastate marijuana
used for recreational purposes could not be regulated either. 545 U.S. at 28, 125 S. Ct. at 2212.
And if Congress could not reach intrastate marijuana authorized by state law, neither could it
reach intrastate marijuana unauthorized by state law. Id. Moreover, if Congress could not reach
intrastate marijuana when it is authorized by state law, then Congresss ability to police the
interstate marijuana market would be wholly contingent on state decisions about whether or not
to authorize marijuana use. Congress would effectively be at the mercy of states, even though
state action cannot circumscribe Congress plenary commerce power. Id. at 29, 125 S. Ct. at
2213. It is easy to see how the Raich plaintiffs arguments threatened to completely undermine
the CSAs regulation of the interstate marijuana market, not to mention turn the Supremacy
Clause on its head. Id. at 29 n.38, 125 S. Ct. at 2213 n.38.
This stands in marked contrast with the case before us, where neither state law nor the
plaintiffs uninsured status undermine the ability of Congress to enforce its regulation of
interstate commerce. Even without the mandate, the integrity of all other statutory provisions is
maintained, and Congresss ability to enforce the Act is in no way jeopardized.
161
intrastate activities could frustrate or impede a validly enacted congressional
essential to its broader regulation of the insurance market. For example, the
delay purchasing private insurance until an acute medical need arises. Therefore,
the government argues that unless the individual mandate forces individuals into
the private insurance pool before they get sick or injured, Congresss insurance
government emphasizes that the congressional findings state that the individual
improved health insurance products that are guaranteed issue and do not exclude
We first note the truism that the mere placement of a particular regulation in
a broader regulatory scheme does not, ipso facto, somehow render that regulation
larger regulatory scheme doctrine, the Supreme Court gave Congress carte
162
of a broader, comprehensive regulatory scheme. We do not construe the Supreme
power.
scheme doctrine embodies an observation put forth in the New Deal case of Jones
& Laughlin Steel Corp.: Although activities may be intrastate in character when
commerce from burdens and obstructions, Congress cannot be denied the power to
exercise that control. 301 U.S. at 37, 57 S. Ct. at 624 (emphasis added). Justice
stated that the larger regulatory scheme statement in Lopez referred to those
interfere with or obstruct the exercise of the granted power. Raich, 545 U.S. at
36, 125 S. Ct. at 2217 (Scalia, J., concurring) (emphasis added) (quoting United
States v. Wrightwood Dairy Co., 315 U.S. 110, 119, 62 S. Ct. 523, 526 (1942)). In
163
other words, the Necessary and Proper Clause enables Congress in some instances
Congresss ability to police the interstate market and because evidence indicated
that intrastate marijuana is often diverted into the interstate market. Yet it is
individual mandate.
and the individual mandate also do not prevent insurance companies regulatory
164
compliance with the Acts insurance reforms. At best, the individual mandate is
designed not to enable the execution of the Acts regulations, but to counteract the
stemming from the fully executed reforms. That may be a relevant political
insurance products.128
the Act itself. In Raich, Congress devised a closed regulatory system, id. at 13,
125 S. Ct. at 2203, designed to eliminate all interstate marijuana traffic. Here, by
contrast, Congress itself carved out eight broad exemptions and exceptions to the
individual mandate (and its penalty) that impair its scope and functionality. See 26
128
The government argues that Congress has broad authority to select the means by which
it enforces its comprehensive regulatory scheme. But this hardly entails that Congress may
choose any and all means whatsoever. Indeed, Congress might have employed other
unconstitutional means to render its community-rating and guaranteed-issue reforms more
effective. For example, it might order unreasonable searches and seizures of corporate
documents to ensure that insurance companies were not discriminating against applicants with
preexisting conditions. Surely this action would not cease being a Fourth Amendment violation
merely because it is deemed essential to a broader regulatory scheme.
165
U.S.C. 5000A(d)(e). Even if the individual mandate remained intact, the
adverse selection problem identified by Congress would persist not only with
respect to these eight broad exemptions, but also with respect to those healthy
persons who choose to pay the mandate penalty. Those who pay the penalty one
year instead of purchasing insurance may still get sick the next year and then
with the mandate by opting for toothless enforcement mechanisms. Eschewing the
IRSs traditional enforcement tools, the Act waives all criminal penalties for
noncompliance and prevents the IRS from using liens or levies to collect the
penalty. Id. 5000A(g)(2). Thus, to the extent the uninsureds ability to delay
the insurance market, Congress has seen fit to bore the hole itself.
J. Conclusion
For these reasons, we conclude that the individual mandate contained in the
in scope. The power that Congress has wielded via the Commerce Clause for the
actors. It may forbid certain commercial activity. It may enact hundreds of new
166
laws and federally-funded programs, as it has elected to do in this massive 975-
page Act. But what Congress cannot do under the Commerce Clause is mandate
that individuals enter into contracts with private insurance companies for the
purchase of an expensive product from the time they are born until the time they
die.
people to buy any good or service as a condition of lawful residence in the United
States. CBO MANDATE MEMO, supra p.115, at 1. Never before has Congress
commerce so that Congress may regulate them. The statutory language of the
Rather, the mandate is to buy insurance now and forever. The individual mandate
Courts decisions all emphasize the need for judicially enforceable limitations on
its exercise. The individual mandate embodies no such limitations, at least none
167
then that purchase decision will almost always substantially affect interstate
preserving the federal-state balance and (2) withholding from Congress a general
police power. Morrison, 529 U.S. at 61719, 120 S. Ct. at 1754; Lopez, 514 U.S.
at 56668, 115 S. Ct. at 163334; Jones & Laughlin Steel Corp., 301 U.S. at 30,
enumerated powers.
power to deal with the problems of the uninsured, and it wielded that power
168
provision, however, Congress exceeded its enumerated commerce power. The
arrogation of power by one branch or one sovereign. See Gregory, 501 U.S. at
458, 111 S. Ct. at 2400 (Just as the separation and independence of the coordinate
excessive power in any one branch, a healthy balance of power between the States
and the Federal Government will reduce the risk of tyranny and abuse from either
front.). We cannot ignore these structural limits on the Commerce Clause because
the Act.
The Supreme Court has often found itself forced to strike down
of New York, 524 U.S. 417, 118 S. Ct. 2091 (1998), the Supreme Court addressed
a problem of Congresss own creationdeficit spending. The Line Item Veto Act
was of first importance, for it seems undeniable the Act will tend to restrain
persistent excessive spending. Id. at 449, 118 S. Ct. at 2108 (Kennedy, J.,
concurring). The problem the act addressed was momentous: A nation cannot
plunder its own treasury without putting its Constitution and its survival in peril.
169
Id.
Nevertheless, the Supreme Court invalidated the Line Item Veto Act,
funding. The fact that constitutional tools sometimes prove insufficient[] cannot
structure requires a stability which transcends the convenience of the moment. Id.
at 453, 118 S. Ct. at 2110; see also New York v. United States, 505 U.S. at 178,
112 S. Ct. at 2429 (noting that [n]o matter how powerful the federal interest
involved, the Constitution simply does not give Congress the authority to
supersede its constitutionally imposed boundaries); INS v. Chadha, 462 U.S. 919,
95859, 103 S. Ct. 2764, 2788 (1983) (In purely practical terms, it is obviously
easier for action to be taken by one House without submission to the President; but
and debates, that the Framers ranked other values higher than efficiency.).
In the same way, the difficulties posed by the insurance market and health
care cannot justify extra-constitutional legislation. See Printz, 521 U.S. at 935, 117
170
commands are fundamentally incompatible with our constitutional system of dual
sovereignty.).
company for the entire duration of their lives is unprecedented, lacks cognizable
limits, and imperils our federalist structure. We recognize that [t]hese are not
precise formulations, and in the nature of things they cannot be. Lopez, 514 U.S.
at 567, 115 S. Ct. at 1634. That an economic mandate to purchase insurance from
505 U.S. at 187, 112 S. Ct. at 2434. Although courts must give due consideration
to the policy choices of the political branches, the judiciary owes its ultimate
129
We are at a loss as to why the dissent spends a considerable portion of its opinion on
the Fifth and Tenth Amendments. As mentioned earlier, the district court dismissed the
plaintiffs Fifth Amendment claim. Florida v. HHS, 716 F. Supp. 2d at 116162. That ruling is
not on appeal.
171
VI. CONSTITUTIONALITY OF INDIVIDUAL MANDATE UNDER THE
TAX POWER
The government claims in the alternative that the individual mandate is a tax
validly enacted pursuant to the Taxing and Spending Clause. The Clause provides
in relevant part that Congress shall have Power To lay and collect Taxes, Duties,
Imposts and Excises, to pay the Debts and provide for the common Defence and
general Welfare of the United States. U.S. CONST. art. 1, 8, cl. 1. The
government claims that the taxing power is comprehensive and plenary, and the
fact that the individual mandate also has a concededly regulatory purpose is
irrelevant, because a tax does not cease to be valid merely because it regulates,
Opening Br. at 50 (quoting United States v. Sanchez, 340 U.S. 42, 44, 71 S. Ct.
108, 110 (1950)). The government claims that as long as a statute is productive of
Sonzinsky v. United States, 300 U.S. 506, 514, 57 S. Ct. 554, 556 (1937)).
constitutional restraints on taxing are few and [t]he remedy for excessive
taxation is in the hands of Congress, not the courts. United States v. Kahriger,
345 U.S. 22, 28, 73 S. Ct. 510, 513 (1953), overruled on other grounds by
Marchetti v. United States, 390 U.S. 39, 88 S. Ct. 697 (1968); see also Kahriger,
345 U.S. at 31, 73 S. Ct. at 515 (Unless there are provisions, extraneous to any
tax need, courts are without authority to limit the exercise of the taxing power.).
Like every other court that has addressed this claim, we remain unpersuaded.
It is not surprising to us that all of the federal courts, which have otherwise
mandate, have spoken on this issue with clarion uniformity. Beginning with the
district court in this case, all have found, without exception, that the individual
mandate operates as a regulatory penalty, not a tax. Florida v. HHS, 716 F. Supp.
(as the Act itself says) a penalty.); U.S. Citizens Assn v. Sebelius, 754 F. Supp.
2d 903, 909 (N.D. Ohio 2010) (concluding that the individual mandate is a
penalty, agree[ing] with the thoughtful and careful analysis of Judge Vinson);
173
Liberty Univ., Inc. v. Geithner, 753 F. Supp. 2d 611, 629 (W.D. Va. 2010) (After
considering the prevailing case law, I conclude that the better characterization of
the exactions imposed under the Act for violations of the employer and individual
Sebelius, 728 F. Supp. 2d 768, 78288 (E.D. Va. 2010) (concluding that the
Goudy-Bachman v. HHS, 764 F. Supp. 2d 684, 695 (M.D. Pa. 2011) (The court
finds that the individual mandate itself is not a tax . . . .); Mead v. Holder, 766 F.
Supp. 2d 16, 41 (D.D.C. 2011) ([T]he Court concludes that Congress did not
cannot rely on the General Welfare Clause as authority for its enactment.).
For good reason. The breadth of the taxing power, well noted by the
government and its amici, fails to resolve the question we face: whether the
individual mandate is a tax in the first place. The plain language of the statute and
individual mandate is not a tax, but rather a penalty. The legislative history of the
Act further supports this conclusion. And as the Supreme Court has repeatedly
recognized, there is a firm distinction between a tax and a penalty. See, e.g.,
United States. v. La Franca, 282 U.S. 568, 572, 51 S. Ct. 278, 280 (1931) (The
174
two words are not interchangeable one for the other.).
The government would have us ignore all of this and instead hold that any
provision found in the Internal Revenue Code that will produce revenue may be
Invs., 553 F.3d 1351, 1362 (11th Cir. 2008) (citing Consumer Prod. Safety
Commn v. GTE Sylvania, Inc., 447 U.S. 102, 108, 100 S. Ct. 2051, 2056 (1980)).
The plain language of the individual mandate is clear that the individual mandate
is not a tax, but rather, as the statute itself repeatedly states, a penalty imposed
. . . fails to meet the requirement of subsection (a) for 1 or more months, then . . .
there is hereby imposed on the taxpayer a penalty with respect to such failures.
175
Nor could we construe Congresss choice of language as a careless one-time
invocation of the word penalty, because the remainder of the relevant provisions
in 5000A uses the same term over and over again, without exception and without
ever describing the penalty as a tax. See, e.g., id. 5000A(b)(3)(B) (individual
with respect to whom a penalty is imposed by this section who files joint tax
return shall [along with individuals spouse] be jointly liable for such penalty
imposed by this section on any taxpayer for any taxable year (emphasis added));
id. 5000A(c)(2) (describing the monthly penalty amount with respect to any
section shall be paid upon notice and demand by the Secretary . . . . (emphasis
added)); id. 5000A(g)(2)(A) (providing that taxpayer shall not be subject to any
criminal prosecution or penalty for failure to timely pay any penalty imposed by
this section (emphasis added)); id. 5000A(g)(2)(B) (providing that the Secretary
shall not file notice of lien or levy on any property of a taxpayer by reason of
any failure to pay the penalty imposed by this section (emphasis added)).
imposes a penalty. The penalty encourages compliance with the Acts requirement
176
conduct that violates that requirement. The text is not unclear and was carefully
U.S. 213, 116 S. Ct. 2106 (1996), [a] tax is an enforced contribution to provide
punishment for an unlawful act. Id. at 224, 116 S. Ct. at 2113 (quoting La
Franca, 282 U.S. at 572, 51 S. Ct. at 280). The Court further expounded upon La
penalty] to be sufficient for the decision of this case; if the concept of penalty
means anything, it means punishment for an unlawful act or omission. . . . Id.; see
also Dept of Revenue of Mont. v. Kurth Ranch, 511 U.S. 767, 77980, 114 S. Ct.
1937, 1946 (1994) (Whereas fines, penalties, and forfeitures are readily
characterized as sanctions, taxes are typically different because they are usually
terms tax and penalty are not interchangeable one for the other . . . . and if an
We add the truism that Congress knows full well how to enact a tax when it
177
chooses to do so. And the Act contains several provisions that are unmistakably
taxes. The point is amply made by simply looking at four different provisions: (1)
hereby imposed on the sale of any taxable medical device by the manufacturer,
producer, or importer a tax equal to 2.3 percent of the price for which so sold.
imposed a tax equal to 40 percent of the excess benefit (emphasis added)); (3) an
3101(b) (as part of Federal Insurance Contributions Act, providing that there is
hereby imposed on the income of every individual a tax equal to 1.45 percent of the
(4) an Excise Tax on Indoor Tanning Services, id. 5000B(a) (There is hereby
imposed on any indoor tanning service a tax equal to 10 percent of the amount paid
130
Indeed, this provision, which takes effect in 2013, is a 0.9% flat tax increase on an
individuals wages, applicable to those earning annual wages over $200,000 ($250,000 in the
case of a jointly-filed return, or $125,000 in the case of a married taxpayer filing a separate tax
return). Act 9015(a)(1), 10906(a), (c); HCERA, Pub. L. No. 111-152, 1402(b)(1)(A), (3),
124 Stat. 1029, 1063 (2010), to be codified in 26 U.S.C. 3101(b) (effective Jan. 1, 2013).
178
It is an unremarkable matter of statutory construction that we presume
Congress did not indiscriminately use the term tax in some provisions but not in
others. See Duncan v. Walker, 533 U.S. 167, 173, 121 S. Ct. 2120, 2125 (2001) (It
is well settled that where Congress includes particular language in one section of a
statute but omits it in another section of the same Act, it is generally presumed that
(quotation marks and alteration omitted)). We have little difficulty concluding that
further amplifies that Congress designed and intended to design a penalty for the
failure to comply and not a tax. The source of the power, asserted by Congress, to
create the mandate is directly pegged to the Commerce Clause. See, e.g., 42 U.S.C.
interstate commerce . . . .); id. 18091(a)(2)(B) (Health insurance and health care
services are a significant part of the national economy. . . . Private health insurance
spending . . . pays for medical supplies, drugs, and equipment that are shipped in
179
claims payments flow through interstate commerce.).
Indeed, the findings make clear that the goal of the individual mandate is not
to raise revenue for the public fisc, but rather to, among other things, reduce the
health insurance markets that make health insurance more widely available. Id.
creating effective health insurance markets that do not require underwriting and
The argument that Congress need not employ the label of tax or expressly
invoke the Taxing and Spending Clause in order to enact a valid tax is surely true,
insofar as it goes. See Woods v. Cloyd W. Miller Co., 333 U.S. 138, 144, 68 S. Ct.
421, 424 (1948) ([T]he constitutionality of action taken by Congress does not
with the claim, however, is not that Congress simply failed to use the term tax, or
declined to invoke the Taxing and Spending Clause when explaining the
repeatedly told us that the individual mandate is a penalty and expressly invoked
its Commerce Clause power as the foundation for the mandate. The two are not the
same thing. Ultimately, we are hard pressed to construe the statute in a manner that
180
would require us to ignore the plain text of the statute, the words repeatedly
settled law emphasizing the substantive distinction between a tax and a penalty.
an examination of the legislative history, we would still find more of the same
thing: Congress intended to impose a penalty for the failure to maintain health
insurance.
Prior to the passage of the Act, earlier bills in both houses of Congress
See Florida v. HHS, 716 F. Supp. 2d at 1134. Thus, for example, Section 401 of the
Americas Affordable Choices Act of 2009, H.R. 3200, 111th Cong. (2009),
which was introduced in the House of Representatives on July 14, 2009, provided
that there is hereby imposed a tax on any individual who does not meet the
during the taxable year. A later version of the House bill, the Affordable Health
Care for America Act, H.R. 3962, 111th Cong. 501 (2009), passed the House of
181
Healthy Future Act, a precursor to the Act, also used the term tax. See S. 1796,
Notably, however, the final version of the Act abandoned the term tax in
principles of statutory construction are more compelling than the proposition that
Congress does not intend sub silentio to enact statutory language that it has earlier
44243, 107 S. Ct. 1207, 1218 (1987) (emphasis added) (quotation marks omitted).
particularly the statements of individual legislators, speaking both for and against
the Act, who at various times referred to the individual mandate as a tax. See
Governments Opening Br. at 54 (citing 156 Cong. Rec. H1854, H1882 (daily ed.
Mar. 21, 2010) (statement of Rep. Miller); 156 Cong. Rec. H1824, H1826 (daily
ed. Mar. 21, 2010) (statement of Rep. Slaughter); 155 Cong. Rec. S13,751,
S13,753 (daily ed. Dec. 22, 2009) (statement of Sen. Leahy); 155 Cong. Rec.
S13,558, S13,58182 (daily ed. Dec. 20, 2009) (statement of Sen. Baucus); 155
Cong. Rec. S12,768 (daily ed. Dec. 9, 2009) (statement of Sen. Grassley)). These
182
they are in conflict with the plain text of the statute and with more reliable
indicators of congressional intent. See Huff v. DeKalb Cnty., Ga., 516 F.3d 1273,
1280 (11th Cir. 2008) (The best evidence of [legislative] purpose is the statutory
text adopted by both Houses of Congress and submitted to the President. Where
Hosps., Inc. v. Casey, 499 U.S. 83, 9899, 111 S. Ct. 1138, 1147 (1991))).
tax in both administration and effect. Governments Opening Br. at 54. It claims
only with its practical operation, not its definition or the precise form of descriptive
words which may be applied to it. Id. (quoting Nelson v. Sears, Roebuck & Co.,
312 U.S. 359, 363, 61 S. Ct. 586, 588 (1941)). That the individual mandate will
produce some revenue and will be enforced by the Internal Revenue Service is
enough, they say, to transmute the individual mandates penalty provision into a
tax.
183
individual mandate does not in practical operation act as a tax. See Nelson, 312
U.S. at 363, 61 S. Ct. at 588. The government specifically claims that the individual
mandate has the character of a tax because it will produce revenue. This
mandate will generate some four to five billion dollars in annual revenue by the
end of this decade131does little to address the distinction between a penalty and a
tax. This is because [c]riminal fines, civil penalties, civil forfeitures, and taxes all
share certain features: They generate government revenues, impose fiscal burdens
on individuals, and deter certain behavior. Kurth Ranch, 511 U.S. at 778, 114 S.
Ct. at 1945. The Supreme Court has thus recognized, as indeed we must, that in our
world of less than perfect compliance, penalties generate revenue just as surely as
taxes.
Nor does the amount of projected revenue that will be collected under the
converse of the situation we face here, where a provision imposing a $200 annual
131
CBO, Payments of Penalties for Being Uninsured Under the Patient Protection and
Affordable Care Act 3 (rev. Apr. 30, 2010) [hereinafter CBO, Payments], available at
http://www.cbo.gov/ftpdocs/113xx/doc11379/Individual_Mandate_ Penalties-04-30.pdf.
184
license tax on firearms dealers was challenged as not a true tax, but a penalty
firearms. 300 U.S. at 51112, 57 S. Ct. at 55455. The tax was productive of
some revenue, but not much. Id. at 514 & n.1, 57 S. Ct. at 556 & n.1 (observing
that 27 dealers paid the tax in 1934, and 22 paid in 1935). That did not stop the
Supreme Court from upholding the provision as a tax. The Supreme Court later
interpreted Sonzinsky as standing for the proposition that a tax does not cease to
activities taxed, and that proposition applies even though the revenue obtained is
obviously negligible. Sanchez, 340 U.S. at 44, 71 S. Ct. at 110 (emphasis added).
because they demonstrate the breadth of Congresss taxing power, the cases merely
hold that an Act of Congress which on its face purports to be an exercise of the
taxing power is not any the less so because the tax is burdensome or tends to
restrict or suppress the thing taxed. Sonzinsky, 300 U.S. at 513, 57 S. Ct. at 556
(emphasis added). Thus, once Congress has expressly and unmistakably indicated
that a provision is a tax, courts will not [i]nquir[e] into the hidden motives which
may move Congress to exercise a power constitutionally conferred upon it. Id. at
51314; 57 S. Ct. at 556. But that is not this case. Here we confront a statute that is
185
not on its face a tax, but rather a penalty. Whats more, the district court correctly
noted that the government lacks any case precedent squarely on point. Florida v.
respect to be punishment for an unlawful act or omission, which defines the very
concept of penalty. CF & I Fabricators, 518 U.S. at 224, 116 S. Ct. at 2113; see
also Virginia v. Sebelius, 728 F. Supp. 2d at 786 (The only revenue generated
under the [individual mandate] is incidental to a citizens failure to obey the law by
extraneous to any tax need. (quoting Kahriger, 345 U.S. at 31, 73 S. Ct. at 515)).
The government also suggests that the individual mandate operates as a tax
taxpayers annual returns. It is true that the individual mandate is located under the
section of the Code titled Miscellaneous Excise Taxes. Yet the Code itself makes
clear that Congresss choice of where to place a provision in the Internal Revenue
186
legislative construction shall be drawn or made by reason of the location or
U.S.C. 7806(b); see also Florida v. HHS, 716 F. Supp. 2d at 1137 (citing same).
tax. Indeed, Congress placed in Chapter 68 of the Internal Revenue Code a panoply
of civil penalties, running the gamut from broadly applicable (filing frivolous tax
mandates penalty is not treated like a tax because, as noted above, the IRS may not
132
See 26 U.S.C. 6702(a) (imposing penalty of $5,000" on person who files what
purports to be a return of a tax imposed by this title which either lacks information on which
the substantial correctness of the self-assessment may be judged or contains information that
on its face indicates that the self-assessment is substantially incorrect).
133
See 26 U.S.C. 6676(a) (If a claim for refund or credit with respect to income tax . . .
is made for an excessive amount, unless it is shown that the claim for such excessive amount has
a reasonable basis, the person making such claim shall be liable for a penalty in an amount equal
to 20 percent of the excessive amount.).
134
See 26 U.S.C. 6715A(a)(1) (If any person tampers with a mechanical dye injection
system used to indelibly dye fuel . . . such person shall pay a penalty in addition to the tax (if
any).). The penalty is the greater of $25,000 or $10 for each gallon of fuel involved. Id.
6715A(b)(1).
135
See 26 U.S.C. 6720A (imposing penalty of $10,000" for each violation, in addition
to the tax on such [fuel]).
187
place liens, or levy or initiate criminal prosecution or impose any interest or
criminal sanctions. All the IRS, practically speaking, may do is to offset the penalty
Revenue Code Congress decided to place the individual mandate, id. 7806(b), we
observe that other chapters of the Internal Revenue Code include penalty
provisions as well. See, e.g., id. 5761(a) (imposing a penalty of $1,000" on any
comply with a variety of statutory duties and taxes under Chapter 52 of the Internal
Revenue Code related to tobacco products and cigarettes). And Chapter 75 of the
Internal Revenue Code sets forth criminal penalties, which permit courts to impose
substantial fines. Id. 7206 (providing that those who commit tax fraud in a variety
of ways shall be guilty of a felony and, upon conviction thereof, shall be fined not
more than 3 years, or both, together with the costs of prosecution). While the
entire list of penalties in the Internal Revenue Code is far too long to exhaust here,
it is apparent that the placement of the individual mandate in the Internal Revenue
Code is far from sufficient to convert the individual mandate into a tax and has
limited value, if any at all, in determining whether the individual mandate is a tax
188
or a penalty.
After careful review of the statute, we conclude that the individual mandate
is a civil regulatory penalty and not a tax. As a regulatory penalty, the individual
Sunshine Anthracite Coal Co. v. Adkins, 310 U.S. 381, 393, 60 S. Ct. 907, 912
(1940) (Congress may impose penalties in aid of the exercise of any of its
VII. SEVERABILITY
A. Governing Principles
In analyzing this question, we start with the settled premise that severability
restraint. See Ayotte v. Planned Parenthood of N. New Eng., 546 U.S. 320, 32930,
126 S. Ct. 961, 96768 (2006). Courts must strive to salvage acts of Congress by
189
severability. Regan v. Time, Inc., 468 U.S. 641, 653, 104 S. Ct. 3262, 3269
(1984).
In the overwhelming majority of cases, the Supreme Court has opted to sever
the constitutionally defective provision from the remainder of the statute. See, e.g.,
Free Enter. Fund v. Pub. Co. Accounting Oversight Bd., 561 U.S. __, __, 130 S. Ct.
Act); New York v. United States, 505 U.S. at 186187, 112 S. Ct. at 2434 (holding
Amendments Act of 1985); Alaska Airlines, Inc. v. Brock, 480 U.S. 678, 68497,
107 S. Ct. 1476, 147986 (1987) (holding legislative veto provision severable from
Airline Deregulation Act of 1978); Chadha, 462 U.S. at 93135, 103 S. Ct. at
Nationality Act); Buckley v. Valeo, 424 U.S. 1, 10809, 96 S. Ct. 612, 677 (1976)
Indeed, in the Commerce Clause context, the Supreme Court struck down an
136
The paucity of case law supporting the plaintiffs severability position is underscored
by the lack of citation to any modern case where the Supreme Court found a legislative act
inseverable. Indeed, the most recent such case cited by the plaintiffs was decided over 75 years
ago, before modern severability law had even been established. See Private Plaintiffs Br. at
5962 (citing R.R. Ret. Bd. v. Alton R. Co., 295 U.S. 330, 55 S. Ct. 758 (1935); Williams v.
Standard Oil Co., 278 U.S. 235, 49 S. Ct. 115 (1929); Pollock v. Farmers Loan & Trust Co.,
158 U.S. 601, 15 S. Ct. 912 (1895), superseded by U.S. CONST . amend. XVI).
190
important provision of a statute and left the remainder of the statute intact. In
Morrison, the Court invalidated only one provisionthe civil remedies provision
for victims of gender-based violence. Morrison, 529 U.S. at 605, 627, 120 S. Ct. at
1747, 1759. The Supreme Court did not invalidate the entire VAWAor the
omnibus Violent Crime Control and Law Enforcement Act of 1994, of which it was
parteven though the text of the two bills did not contain a severability clause.
Ayotte, 546 U.S. at 328, 126 S. Ct. at 967. Because [a] ruling of
people, courts should act cautiously and refrain from invalidating more of the
statute than is necessary. Regan, 468 U.S. at 652, 104 S. Ct. at 3269.
evident that the Legislature would not have enacted those provisions which are
within its power, independently of that which is not, the invalid part may be
dropped if what is left is fully operative as a law. Alaska Airlines, 480 U.S. at 684,
107 S. Ct. at 1480 (quotation marks omitted) (emphasis added). As the Supreme
191
severability or non-severability clause can be an elusive enterprise. 462 U.S. at
B. Wholesale Invalidation
Applying these principles, we conclude that the district court erred in its
decision to invalidate the entire Act. Excising the individual mandate from the Act
does not prevent the remaining provisions from being fully operative as a law. As
the lions share of the Act has nothing to do with private insurance, much less the
mandate that individuals buy insurance. While such wholly unrelated provisions
abstinence education, id. 710; and an excise tax on indoor tanning salons, 26
U.S.C. 5000B.
In invalidating the entire Act, the district court placed undue emphasis on the
Acts lack of a severability clause. See Florida ex rel. Bondi v. HHS, No. 3:10-CV-
91-RV/EMT, __ F. Supp. 2d __, 2011 WL 285683, at *3536 (N.D. Fla. Jan. 31,
192
severability will rarely turn on the presence or absence of such a clause. United
States v. Jackson, 390 U.S. 570, 585 n.27, 88 S. Ct. 1209, 1218 n.27 (1968).
against severability. Alaska Airlines, 480 U.S. at 686, 107 S. Ct. at 1481.
Congresss health reform bill did contain a severability clause. Congresss failure
to include such a clause in the final bill, the district court reasoned, can be viewed
as strong evidence that Congress recognized the Act could not operate as intended
without the individual mandate. Florida v. HHS, 2011 WL 285683, at *36. The
First, both the Senate and House legislative drafting manuals state that, in
unnecessary unless they specifically state that all or some portions of a statute
should not be severed. See Office of Legislative Counsel, U.S. Senate, Legislative
a specific portion of an Act is declared invalid, the whole Act or some portion of
193
(Nov. 1995) (stating that a severability clause is unnecessary unless it provides in
detail which related provisions are to fall, and which are not to fall, if a specified
Second, the clause present in one early version of the Act was a general
severability clause, not a non-severability clause. See H.R. Rep. No 111-299, pt. 3,
at 17 155 (2009), reprinted in 2010 U.S.C.C.A.N. 474, 537 (If any provision of
manuals, the severability clause was unnecessary, and its removal should not be
read as any indicator of legislative intent against severability. Rather, the removal
their manifest lack of connection to the individual mandate, the plaintiffs have not
met the heavy burden needed to rebut the presumption of severability. We therefore
conclude that the district court erred in its wholesale invalidation of the Act.
194
respect to two of the private insurance industry reforms.137 The two reforms are:
guaranteed issue, 42 U.S.C. 300gg-1 (effective Jan. 1, 2014); and the prohibition
Our pause over the severability of these two reforms is due to the fact that
the congressional findings speak in broad, general terms except in one place that
that are guaranteed issue and do not exclude coverage of pre-existing conditions
can be sold. Id. 18091(a)(2)(I). The findings in that paragraph add that if there
were no mandate, many individuals would wait to purchase health insurance until
conditions voluntarily tried to buy insurance but were denied coverage or had those
137
For ease of discussion, we refer to those two provisions collectively as the two
reforms.
138
Section 18091(a)(2)(I) provides, in its entirety:
Under sections 2704 and 2705 of the Public Health Service Act (as added by section
1201 of this Act) [to be codified in 42 U.S.C. 300gg-3, 300gg-4], if there were no
requirement, many individuals would wait to purchase health insurance until they
needed care. By significantly increasing health insurance coverage, the requirement,
together with the other provisions of this Act, will minimize this adverse selection
and broaden the health insurance risk pool to include healthy individuals, which will
lower health insurance premiums. The requirement is essential to creating effective
health insurance markets in which improved health insurance products that are
guaranteed issue and do not exclude coverage of pre-existing conditions can be sold.
42 U.S.C. 18091(a)(2)(I).
195
conditions excluded, resulting in uncompensated health care consumption and cost-
shifting. Congress also found that insurers $90 billion in underwriting costs in
18091(a)(2)(J). The two reforms reduce the number of the uninsured and
products and required insurers to cover consumers who need their products the
most.
impose additional costs on the industry regulated. These two reforms obviously
have significant negative effects on the business costs of insurers because they
require insurers to accept unhealthy entrants, raising insurers costs. The individual
mandate, in part, seeks to mitigate the reforms costs on insurers by requiring the
healthy to buy insurance and pay premiums to insurers to subsidize the insurers
costs in covering the unhealthy. Further, if there were no mandate, the argument
goes, the healthy people can wait until they are sick to obtain insurance, knowing
139
When a medical need arises, individuals cannot literally purchase insurance on the way
to the hospital. Rather, the Act permits insurers to restrict enrollment to a specific open or special
enrollment period. 42 U.S.C. 300gg-1(b) (effective Jan. 1, 2014). Individuals therefore must
wait for an enrollment period. And once an individual applies for insurance, the Act allows up to
196
In this regard, our severability concern is not over whether the two reforms
can fully operate as a law. They can. Rather, our severability concern is only
whether it is evident that Congress would not have enacted the two insurance
reforms without the individual mandate. Alaska Airlines, 480 U.S. at 684, 107 S.
Ct. at 1480.
At the outset, we note that Congress could easily have included in the Act a
non-severability clause stating that the individual mandate should not be severed
from the two reforms. Under the legislative drafting manuals, the one instance in
related provisions are to fall, and which are not to fall, if a specified key provision
did not include any such non-severability clause in the Act, however.
mandates continued existence. See United States v. Booker, 543 U.S. 220, 260,
a 90-day waiting period for group coverage eligibility. Id. 300gg-7 (effective Jan. 1, 2014). We
can find no limit in the Act on the waiting period insurers can have in the individual market.
197
125 S. Ct. 738, 765 (2005) (stating that 18 U.S.C. 3742(e) contains critical
severed and excised for similar reasons); Alaska Airlines, 480 U.S. at 68889, 107
S. Ct. at 1482 (Congress did not link specifically the operation of the first-hire
under 19, despite the individual mandate not taking effect until 2014. This is a far
cry from cases where the Supreme Court has ruled provisions inseverable because
the provisions. See, e.g., Randall v. Sorrell, 548 U.S. 230, 262, 126 S. Ct. 2479,
because doing so would require [the Court] to write words into the statute); see
also Free Enter. Fund, 561 U.S. at __, 130 S. Ct. at 3162 (cautioning courts against
blue-pencil[ing]).
closely to Congress original objective in passing the Act: (1) the Act without the
individual mandate but otherwise intact; or (2) the Act without the individual
mandate and also without these two insurance reforms. See Booker, 543 U.S. at
198
As discussed earlier, a basic objective of the Act is to make health insurance
coverage accessible and thereby to reduce the number of uninsured persons. See,
e.g., 42 U.S.C. 18091(a)(2) (stating the Act will increase the number and share
of Americans who are insured and significantly reduc[e] the number of the
uninsured). Undoubtedly, the two reforms seek to achieve those objectives. All
other things being equal, then, a version of the Act that contains these two reforms
would hew more closely to Congresss likely intent than one that lacks them.
But without the individual mandate, not all things are equal. We must
therefore look to the consequences of the individual mandates absence on the two
reforms. See Booker, 543 U.S. at 260, 125 S. Ct. at 765 (considering whether
excision of one part of statute would pose a critical problem); Regan, 468 U.S. at
653, 104 S. Ct. at 3269 (asking whether the policies Congress sought to advance
First, the Act retains many other provisions that help to accomplish some of
the same objectives as the individual mandate. See Booker, 543 U.S. at 264, 125 S.
Ct. at 767 (The system remaining after excision, while lacking the mandatory
features that Congress enacted, retains other features that help to further these
objectives.); New York v. United States, 505 U.S. at 186, 112 S. Ct. at 2434
199
(Common sense suggests that where Congress has enacted a statutory scheme for
For example, Congress included other provisions in the Act, apart from and
independent of the individual mandate, that also serve to reduce the number of the
purchase insurance coverage. These include: (1) the extensive health insurance
reforms; (2) the new Exchanges; (3) federal premium tax credits, 26 U.S.C. 36B;
(4) federal cost-sharing subsidies, 42 U.S.C. 18071; (5) the requirement that
insurers plans, id. 18031(d)(4)(D); (6) the requirement that employers offer
insurance or pay a penalty, 26 U.S.C. 4980H; and (7) the requirement that certain
sponsored plan unless the employee opts out, 29 U.S.C. 218A, just to name a few.
operation vis--vis the number of the uninsured. In Alaska Airlines, the Supreme
Court found that the unconstitutional legislative veto provision of the Airline
200
regulations) was severable because, among other things, the statute left little of
substance to be subject to a veto. 480 U.S. at 687, 107 S. Ct. at 1481. The
Supreme Court noted the ancillary nature of the Labor Secretarys obligations
and the limited substantive discretion afforded the Secretary.140 Id. at 688, 107 S.
provision furnishes evidence that Congress likely would have enacted the statute
without it. Cf. Booker, 543 U.S. at 249, 125 S. Ct. at 759 (considering whether the
by its three exemptions, its five exceptions to the penalty, and its stripping the IRS
Even with the mandate, a healthy individual can pay a penalty and wait until
140
The Supreme Court stated:
With this subsidiary role allotted to the Secretary, the veto provision could affect only
the relatively insignificant actions he might take in connection with the duty-to-hire
program. There is thus little reason to believe that Congress contemplated the
possibility of vetoing any of these actions and one can infer that Congress would
have been satisfied with the duty-to-hire provisions even without preserving the
opportunity to veto the DOLs regulations.
Alaska Airlines, 480 U.S. at 688, 107 S. Ct. at 1482 (footnote omitted).
201
the fact that, although the individual mandate requires individuals to obtain
insurance coverage, the mandate itself does not require them to obtain the
essential health benefits package or, indeed, any particular level of benefits at all.
otherwise, when the lofty veneer of the term is stripped away, one finds that the
actual coverage the individual mandate deems essential is nothing more than
The multiple features of the individual mandate all serve to weaken the
mandates practical influence on the two insurance product reforms.141 They also
weaken our ability to say that Congress considered the individual mandates
existence to be a sine qua non for passage of these two reforms. There is tension, at
such a linchpin of the Acts insurance product reforms that they were clearly not
But in the end, they do not tip the scale away from the presumption of severability.
141
Studies by the CBO bear this out. Even with the individual mandate, the CBO
estimates that in 2016, there will still be more than 21 million non-elderly persons who remain
uninsured, the majority of whom will not be subject to the penalty. See CBO, Payments, supra
note 131, at 1.
202
Supreme Courts Commerce Clause decisions. But the severability inquiry is
separate, and very different, from the constitutional analysis. The congressional
language respecting Congresss constitutional authority does not govern, and is not
whether Congress would have enacted the Acts other insurance market reforms
Under the Employee Retirement Income Security Act of 1974 (29 U.S.C.
1001 et seq.), the Public Health Service Act (42 U.S.C. 201 et seq.), and
this Act, the Federal Government has a significant role in regulating
health insurance. The requirement is an essential part of this larger
regulation of economic activity, and the absence of the requirement
would undercut Federal regulation of the health insurance market.
regulating health insurance, which it does through ERISA and the Public Health
Service Act. If applied to severability, this would mean that Congress intended the
individual mandate to be essential to, and thus inseverable from, ERISA (enacted
in 1974) and the entire Public Health Service Act (or at least all parts of those
statutes that regulate health insurance). This is an absurd result for which no party
203
argues.142
These congressional findings do not address the one question that is relevant
to our severability analysis: whether Congress would not have enacted the two
reforms but for the individual mandate. Just because the invalidation of the
individual mandate may render these provisions less desirable, it does not
ineluctably follow that Congress would find the two reforms so undesirable
without the mandate as to prefer not enacting them at all. The fact that one
provision may have an impact on another provision is not enough to warrant the
inference that the provisions are inseverable. This is particularly true here because
the reforms of health insurance help consumers who need it the most.
In light of all these factors, we are not persuaded that it is evident (as
opposed to possible or reasonable) that Congress would not have enacted the two
142
A second illustration of the danger in relying too much on these statements in isolation
is that the same congressional findings also statenot once, but six timesthat the individual
mandate operates together with the other provisions of this Act to reduce the number of the
uninsured, lower health insurance premiums, improve financial security for families, minimize
adverse selection, and reduce administrative costs. See 42 U.S.C. 18091(a)(2)(C), (E), (F), (G),
(I), (J) (emphasis added). Congress itself states that all the provisions of the Act operate together
to achieve its goals. On this reasoning, the entire Act would be invalidated along with the
individual mandate. As discussed above, this conclusion is invalid.
143
While we discuss the two reforms specifically, our conclusionthat the individual
mandate is severableis the same as to the other insurance product reforms, such as community
rating and discrimination based on health status.
204
mindful of our duty to refrain from invalidating more of the statute than is
necessary.144 Regan, 468 U.S. at 652, 104 S. Ct. at 3269; see also Booker, 543
U.S. at 25859, 125 S. Ct. at 764 ([W]e must retain those portions of the Act that
are (1) constitutionally valid, (2) capable of functioning independently, and (3)
marks and citations omitted)). And where it is not evident Congress would not have
See Free Enter. Fund, 561 U.S. at __, 130 S. Ct. at 3162 ([S]uch editorial
not the Judiciary. Congress of course remains free to pursue any of these options
going forward.). We therefore sever the individual mandate from the remaining
VIII. CONCLUSION
144
We acknowledge that the government, in arguing for the individual mandates
constitutionality, stated summarily that the individual mandate cannot be severed from the Acts
guaranteed issue and community rating provisions because the individual mandate is integral to
those sections that . . . provide that insurers must extend coverage and set premiums without
regard to pre-existing medical conditions. Governments Reply Br. at 58. But as explained
above, whether a statutory provision is integral or essential to other provisions for
Commerce Clause analytical purposes is a question distinct from severability. And in any event,
the touchstone of severability analysis is legislative intent, not arguments made during litigation.
205
We first conclude that the Acts Medicaid expansion is constitutional.
Existing Supreme Court precedent does not establish that Congresss inducements
are unconstitutionally coercive, especially when the federal government will bear
under the Taxing and Spending Clause. The mandate is denominated as a penalty in
the Act itself, and the legislative history and relevant case law confirm this reading
of its function.
elected not to buy, and to make them re-purchase that insurance product every
month for their entire lives. We have not found any generally applicable, judicially
enforceable limiting principle that would permit us to uphold the mandate without
Court decision. The individual mandate also finds no refuge in the aggregation
206
doctrine, for decisions to abstain from the purchase of a product or service,
The individual mandate, however, can be severed from the remainder of the
judicial restraint and respect for the separation of powers in our constitutional
system. The Acts other provisions remain legally operative after the mandates
excision, and the high burden needed under Supreme Court precedent to rebut the
Accordingly, we affirm in part and reverse in part the judgment of the district
court.
145
Our respected dissenting colleague says that the majority: (1) has ignored the broad
power of Congress; (2) has ignored the Supreme Courts expansive reading of the Commerce
Clause; (3) presume[s] to sit as a superlegislature; (4) misapprehends the role of a reviewing
court; and (5) ignores that as nonelected judicial officers, we are not afforded the opportunity
to rewrite statutes we dont like. See Dissenting Op. at 208209, 243. We do not respond to
these contentions, especially given (1) our extensive and exceedingly careful review of the Act,
Supreme Court precedent, and the parties arguments, and (2) our holding that the Act, despite
significant challenges to this massive and sweeping federal regulation and spending, falls within
the ambit and prerogative of Congresss broad commerce power, except for one section,
5000A. We do, however, refuse to abdicate our constitutional duty when Congress has acted
beyond its enumerated Commerce Clause power in mandating that Americans, from cradle to
grave, purchase an insurance product from a private company.
207
MARCUS, Circuit Judge, concurring in part and dissenting in part1:
concludes that Congress does not have the commerce power to require uninsured
majority does so even though the individual mandate was designed and intended to
national problems: first, the substantial cost shifting that occurs when uninsured
individuals consume health care services -- as virtually all of them will, and many
do each year -- for which they cannot pay; and, second, the unavailability of health
insurance for those who need it most -- those with pre-existing conditions and
In the process of striking down the mandate, the majority has ignored many
ignored the broad power of Congress, in the words of Chief Justice Marshall, to
U.S. (9 Wheat.) 1, 196 (1824). It has ignored the undeniable fact that Congress
commerce power has grown exponentially over the past two centuries, and is now
1
I concur only in Parts I (standing), III (Medicaid expansion), and VI (taxing
power) of the majority opinion.
208
generally accepted as having afforded Congress the authority to create rules
regulating large areas of our national economy. It has ignored the Supreme Courts
expansive reading of the Commerce Clause that has provided the very foundation
on which Congress already extensively regulates both health insurance and health
care services. And it has ignored the long-accepted instruction that we review the
Holmes put it over one hundred years ago, that commerce among the states is not
a technical legal conception, but a practical one, drawn from the course of
business. Swift & Co. v. United States, 196 U.S. 375, 398 (1905).
The approach taken by the majority has also disregarded the powerful
constitutionality, that the task at hand must be approached with caution, restraint,
and great humility, and that we may not lightly conclude that an act of Congress
underscored by recognizing, in the words of Justice Kennedy, the long and difficult
history of the judicial struggle to interpret the Commerce Clause during the
transition from the economic system the Founders knew to the single, national
market still emergent in our own era. United States v. Lopez, 514 U.S. 549, 568
209
(1995) (Kennedy, J., concurring).
The plaintiffs and, indeed, the majority have conceded, as they must, that
Congress has the commerce power to impose precisely the same mandate
compelling the same class of uninsured individuals to obtain the same kind of
care services, at the time the uninsured seek these services. Nevertheless, the
plaintiffs argue that Congress cannot do now what it plainly can do later. In other
words, Congress must wait until each component transaction underlying the cost-
shifting problem occurs, causing huge increases in costs both for those who have
health care insurance and for health care providers, before it may constitutionally
act. I can find nothing in logic or law that so circumscribes Congress commerce
point dictating the result that the individual mandate is within the commerce power
over more than 75 years makes clear that this legislation falls within Congress
interstate commerce power. These decisions instruct us to ask whether the target of
the regulation is economic in nature and whether Congress had a rational basis to
conclude that the regulated conduct has a substantial effect on interstate commerce.
210
It cannot be denied that Congress has promulgated a rule by which to
comprehensively regulate the timing and means of payment for the virtually
inevitable consumption of health care services. Nor can it be denied that the
consumption of health care services by the uninsured has a very substantial impact
on interstate commerce -- the shifting of substantial costs from those who do not
pay to those who do and to the providers who offer care. I therefore respectfully
dissent from the majoritys opinion insofar as it strikes down the individual
mandate.
I.
A.
-- lacks any form of health care insurance.2 The individual mandate was designed
2
In 2009, the total number of uninsured was estimated at 50.7 million, or about
16.7% of the total population. U.S. Census Bureau, U.S. Dept of Commerce, Income,
Poverty, and Health Insurance Coverage in the United States: 2009, at 23 tbl.8 (2010),
available at http://www.census.gov/prod/2010pubs/p60-238.pdf. Whats more, the
population of uninsured is not confined to those with low incomes. The Census Bureau
found that the estimated income brackets for the uninsured are as follows:
(1) less than $25,000: 15.5 million uninsured, about 26.6% of the total
population in this income bracket;
(2) $25,000 to $49,999: 15.3 million, about 21.4%;
(3) $50,000 to $74,999: 9.4 million, about 16.0%;
(4) $75,000 or more: 10.6 million, about 9.1%.
Id.
211
to ameliorate twin problems related to the uninsured as a class: (1) huge cost
shifting from the uninsured, who often dont pay for their health care services, to
those with health insurance and to health care providers; and (2) the inability of
tax returns for any month, beginning in 2014, in which they fail to maintain
uninsured is not an option under the Act (at least to avoid paying a penalty),
plans will satisfy the individual mandate. These plans fall into five general
categories, some of which are further divided into subcategories: (1) government-
the individual market; (4) grandfathered health plans; or (5) any other coverage
212
despite lacking health insurance, the uninsured are still substantial participants in
the market for health care services. And when the uninsured do seek medical care,
they often fail to pay all or even most of their costs. On average -- and these
figures are not disputed -- the uninsured pay only 37% of their health care costs out
of pocket, while third parties pay another 26% on their behalf.3 The remaining
costs are uncompensated -- they are borne by health care providers and are passed
insurance market.
foundation for the individual mandate, Congress quantified the costs associated
with the free-riding and cost-shifting problems that result from the provision of
3
These figures come from a study cited by both the plaintiffs and the government:
Families USA, Hidden Health Tax: Americans Pay a Premium 2 (2009) [hereinafter
Hidden Health Tax], available at http://familiesusa2.org/assets/pdfs/hidden-health-
tax.pdf. And again, the problem of uncompensated care is not confined to those of
limited means. Even in households at or above the median income, people without health
insurance pay, on average, less than half the cost of the medical care they consume. See
Bradley Herring, The Effect of the Availability of Charity Care to the Uninsured on the
Demand for Private Health Insurance, 24 J. Health Econ. 225, 229-31 (2005).
213
The cost of providing uncompensated care to the uninsured was
$43,000,000,000 [$43 billion] in 2008. To pay for this cost, health
care providers pass on the cost to private insurers, which pass on the
cost to families. This cost-shifting increases family premiums by on
average over $1,000 a year. By significantly reducing the number of
the uninsured, the [individual mandate], together with the other
provisions of this Act, will lower health insurance premiums.
The Act thus seeks to regulate the payment for health care consumption
and financial decisions about how and when health care is paid for, and when
words, the individual mandate is the means Congress adopted to regulate the timing
and method of individuals payment for the consumption of health care services.
insurance market by regulating the insurers themselves. The Act bars insurers from
using many of the tools they had previously employed to protect themselves against
the large costs imposed by high-risk individuals. Thus, insurers may no longer
provision, insurers may only vary premiums based on (i) whether the plan covers
an individual or a family, (ii) rating area, (iii) age, and (iv) tobacco use. 42 U.S.C.
300gg(a)(1). And under the guaranteed issue provisions, insurers must accept
every employer or individual who applies for coverage through the individual or
insurers may no longer offer plans that limit or exclude benefits for individuals
individuals on the basis of (i) health status, (ii) medical condition (including both
physical and mental illnesses), (iii) claims experience, (iv) receipt of health care,
(ix) any other health status factor recognized by the Secretary of HHS, id. 300gg-
4(a).
that are guaranteed issue and do not exclude coverage of pre-existing conditions
can be sold. Id. 18091(a)(2)(I). Congress further found that waiting until the
215
uninsured actually consume health care services before regulating them would
effectively be a day late and a dollar short. See id. ([I]f there were no [individual
mandate], many individuals would wait to purchase health insurance until they
needed care.); Liberty Univ., Inc. v. Geithner, 753 F. Supp. 2d 611, 634-35 (W.D.
Va. 2010) (As Congress stated in its findings, the individual coverage provision is
essential to th[e] larger regulatory scheme because without it, individuals would
postpone [acquiring] health insurance until they need substantial care, at which
point the Act would obligate insurers to cover them at the same cost as everyone
else. This would increase the cost of health insurance and decrease the number of
insured individuals -- precisely the harms that Congress sought to address . . . .);
Govt Br. at 19 (citing testimony before Congress that a health insurance market
could never survive or even form if people could buy their insurance on the way to
Congress also made findings supporting the proposition that the markets for
health insurance and health care services are deeply and inextricably bound
together and indicated clearly that it sought to regulate across them both. Congress
understood that health insurance and health care consumption are linked as a
factual matter. Health insurance is the means by which most of our national health
care costs are paid for; in 2009, private and government insurance financed
216
approximately 75% of health care spending. Govt Br. at 9 (citing non-disputed
data from the Centers for Medicare and Medicaid Services (CMS)). Moreover,
market that it expected to result from the individual mandate with increasing the
supply of, and demand for, health care services. 42 U.S.C. 18091(a)(2)(C). On
a more basic level, Congress also understood that [h]ealth insurance is not bought
for its own sake; it is bought to pay for medical expenses. Govt Br. at 39 (citing
M. Moshe Porat et al., Market Insurance Versus Self Insurance: The Tax-
Differential Treatment and Its Social Cost, 58 J. Risk & Ins. 657, 668 (1991);
Martin S. Feldstein, The Welfare Loss of Excess Health Insurance, 81 J. Pol. Econ.
251, 253 (1973) [hereinafter Welfare Loss] (Health insurance is purchased not as
a final consumption good but as a means of paying for the future stochastic
purchases of health services.)); see also Brief for Econ. Scholars as Amici Curiae
Supporting the Government (Govt Econ. Br.) at 12 (Medical care is the set of
insurance is a mechanism for spreading the costs of that medical care across people
or over time, from a period when the cost would be overwhelming to periods when
B.
217
1.
us almost two hundred years ago, the power to prescribe the rule by which
limitations, other than are prescribed in the constitution. Gibbons, 22 U.S. at 196.
insurance and health care markets, areas of commerce that Congress has long
regulated and regulated heavily. First, the parties all agree (as they must) that
general, as the Supreme Court concluded more than 60 years ago in United States
4
In response to South-Eastern Underwriters, Congress enacted the McCarran-
Ferguson Act, which provides that state laws regulating insurance will not be
invalidate[d], impair[ed], or supersede[d] by federal law, unless the federal law
specifically relates to the business of insurance. 15 U.S.C. 1012(b). But this
218
Second, in light of Congress undeniable power under the Commerce Clause
dispute -- that Congress may also regulate health insurance in particular, which is,
after all, a subset of the insurance market. See Charles Fried, Written Testimony
http://judiciary.senate.gov/pdf/11-02-02%20Fried%20Testimony.pdf. In fact,
Congress has extensively exercised its commerce power to regulate the health
insurance market for many years, long before the Act was passed. For example,
(ERISA), Pub. L. No. 93-406, 88 Stat. 829 (1974), which is a massive piece of
power. 29 U.S.C. 1001(b) (It is hereby declared to be the policy of this chapter
to protect interstate commerce . . . .); see also id. 1003(a). Among other things,
the regulatory provisions in Title I of ERISA, 29 U.S.C. 1001 et seq., set forth
uniform minimum standards to ensure that employee benefit plans are established
and maintained in a fair and financially sound manner. U.S. Dept of Labor,
10, 2011). Title I of ERISA governs most private sector employee benefit plans,
government entities or churches. Id.; see also Williams v. Wright, 927 F.2d 1540,
1545 (11th Cir. 1991) (concluding that ERISA regulates even plans covering only
a single employee).
Congressional efforts to regulate health insurance did not end with ERISA.
(COBRA), Pub. L. No. 99-272, 100 Stat. 82 (1986), which contains a wide
variety of provisions relating to health care and health insurance. As for health
insurance, the most significant reforms were amendments to ERISA, which added
220
employer-sponsored health insurance for a period following the end of their
1161, 1162. And in the Health Insurance Portability and Accountability Act of
1996 (HIPAA), Pub. L. No. 104-191, 110 Stat. 1936 (1996), Congress amended
the Public Health Service Act to add insurance portability provisions that prohibit
insurers to offer coverage to small businesses, and that limit pre-existing condition
Under its commerce power, Congress has also repeatedly regulated the
content of private health insurers policies. See, e.g., Mental Health Parity Act of
1996, Pub. L. No. 104-204, 702, 110 Stat. 2874, 2944 (1996) (regulating limits
on mental health benefits); Newborns and Mothers Health Protection Act of 1996,
Pub. L. No. 104-204, 603, 110 Stat. 2874, 2935 (1996) (requiring maternity
coverage to provide at least a 48-hour hospital stay); Womens Health and Cancer
Rights Act of 1998, Pub. L. No. 105-277, 902, 112 Stat. 2681, 2681-436 (1998)
and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008, Pub. L.
No. 110-343, 512, 122 Stat. 3765, 3881 (2008) (providing for parity between
221
mental health/substance abuse disorder benefits and medical/surgical benefits).
Third, it is equally clear that Congress power under the Commerce Clause
likewise extends to the regulation of the provision and consumption of health care
services. Indeed, for many years, Congress has substantially regulated both health
care providers and the commodities that those providers may use. As far back as
1946, Congress enacted the Hospital Survey and Construction Act (also known as
the Hill-Burton Act), Pub. L. No. 79-725, 60 Stat. 1040 (1946), which
appropriated funds for the construction of new hospitals in the post-World War II
renovation funds to provide care to all persons residing in the territorial area and
291c(e).
The requirement that hospitals provide free care was strengthened and
Treatment and Active Labor Act (EMTALA). COBRA, Pub. L. No. 99-272,
9121, 100 Stat. 82, 164 (1986). EMTALA requires all hospitals that receive
Medicare funds to screen and stabilize, if possible, any patient who comes in with
Galen of Va., Inc., 525 U.S. 249, 250-51 (1999) (per curiam). EMTALA also
222
restricts the ability of hospitals to transfer a patient until he is stable or a medical
EMTALAs provisions are backed by both civil fines and a private cause of action
Congress has also regulated health care providers (and, as mentioned, health
care insurers) through HIPAA. The definition of health care provider under
furnishes, bills, or is paid for health care in the normal course of business. 45
further to include business associates of health care providers and health insurers.
See Health Information Technology for Economic and Clinical Health Act, Pub. L.
No. 111-5, 13401, 13404, 123 Stat. 115, 260, 264 (2009); 45 C.F.R. 160.103.
privacy provisions that govern[] the use and disclosure of protected health
information by health care providers and health insurers, Sneed v. Pan Am. Hosp.,
370 F. Appx 47, 50 (11th Cir. 2010) (per curiam) (unpublished), as well as protect
HIPAA even regulates what information health care providers may communicate to
223
HIPAA also requires health care providers to follow several administrative
Fourth, Congress has extensively regulated under its commerce power the
commodities used in the health care services market, most notably drugs and
medical devices. For example, in the Food, Drug, and Cosmetics Act, Congress
delegated to the Food and Drug Administration the authority to screen and approve
drugs and medical devices for use in commerce, and to regulate their continued use
once approved. See, e.g., 21 U.S.C. 351, 352, 355(a), 360c, 360e, 360j(e).
Fifth, the majority and all the parties also agree that Congress commerce
power extends to the regulation of the price to be paid for the consumption of
health care services. Medicare is the most pervasive example. Since 1983, the
Medicare program has set the fees it pays to hospitals through a prospective
payment system that assigns a fixed amount to each service provided rather than
reimbursing hospitals for their actual costs. See United States v. Whiteside, 285
F.3d 1345, 1346 (11th Cir. 2002). In 1989, Congress also set a federally
Reconciliation Act of 1989, Pub. L. No. 101-239, 6102, 103 Stat. 2106, 2169
(1989). In this way, Congress directly sets the prices for health care services paid
224
for under Medicare.5
may lawfully regulate prices for all manner of health care consumption, however
wise or unwise that regulation may be. In fact, the Supreme Court has said that
Congress may regulate or even fix prices in interstate markets, either directly or by
Filburn, 317 U.S. 111, 128 (1942) (It is well established . . . that the power to
regulate commerce includes the power to regulate the prices at which commodities
in that commerce are dealt in and practices affecting such prices.); accord
Gonzales v. Raich, 545 U.S. 1, 18-19 (2005); see also Sunshine Anthracite Coal
Co. v. Adkins, 310 U.S. 381, 394 (1940) (holding that Congress could not only
regulate price, but could also attach other conditions to the flow of a commodity
5
While Medicaid prices are not as directly regulated at the federal level, Congress
has legislated in a number of ways that affect the prices to be paid to health care providers
and others under the Medicaid program. Most notable is the Medicaid Drug Rebate
Program, created by the Omnibus Budget Reconciliation Act of 1990. The program
provides that, if drug companies want their products to be covered by Medicaid, they
must provide detailed price information to, and enter into a national rebate agreement
with, the Secretary of HHS. 42 U.S.C. 1396r-8. Congress has thus regulated
prescription drug prices under Medicaid by requiring drug companies to provide
discounts to states -- in the form of rebates -- for their Medicaid drug purchases. See
generally Iowa Dept of Human Servs. v. Ctrs. for Medicare & Medicaid Servs., 576 F.3d
885, 886-87 (8th Cir. 2009).
225
in interstate [commerce]); id. (To regulate the price for . . . transactions is to
regulate commerce itself, and not alone its antecedent conditions or its ultimate
consequences. (quoting Carter v. Carter Coal Co., 298 U.S. 238, 326 (1936)
the power to prescribe rules cutting across the two linked markets of health
insurance and health care services. Both the congressional intent to link the two
and the empirical relation between the purchase of health insurance and the
whether Congress has lawfully exercised its commerce power, courts must examine
the entire transaction, of which [the] contract [for insurance] is but a part, in order
see how the relevant chain of events here does not include the substantial
2.
other words, it could only look at the health insurance market standing alone. In
226
the plaintiffs view, Congress could not mandate the purchase of insurance as a
means of ameliorating a national problem arising in the related but distinct market
for health care services. The majority appears to have adopted this view,
only the decision to forego health insurance. Maj. Op. at 126, 136. This approach
is wooden, formalistic, and myopic. The plaintiffs and the majority would view the
in time. They contend that Congress cannot constitutionally regulate the uninsured
as a class at that single moment, because at that moment any particular uninsured
individual may be healthy, may be sitting in his living room, or may be doing
nothing at all. The only way the plaintiffs and the majority can round even the first
purview, for no principled reason that I can discern, the cost-shifting problems that
principle that, in reviewing whether Congress has acted within its enumerated
powers, courts must look at the nature of the problem Congress sought to address,
based on economic and practical realities. See Swift & Co., 196 U.S. at 398
227
([C]ommerce among the states is not a technical legal conception, but a practical
one, drawn from the course of business.); Wickard, 317 U.S. at 123-24
longer feasible.); NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1, 41-42
Am. Co. v. SEC, 327 U.S. 686, 705 (1946) (Congress is not bound by technical
realities. (citation omitted)); Lopez, 514 U.S. at 571, 574 (Kennedy, J.,
mandate is viewed through a more pragmatic and less stilted lens, it is clear that
Congress has addressed a substantial economic problem: the uninsured get sick or
injured, seek health care services they cannot afford, and shift these unpaid costs
onto others.
single industry, the plaintiffs nevertheless concede that Congress may use its rule-
228
making power to regulate the market for health insurance as a vehicle or means to
address the cost-shifting problems arising in the market for health care services.
They have conceded, both in their briefs and at oral argument, that Congress may
at the time they actually seek medical care. The plaintiffs acknowledge -- as does
the majority -- that Congress may constitutionally require the uninsured to obtain
health care insurance on the hospital doorstep, or that Congress may otherwise
impose a penalty on those who attempt to consume health care services without
regulate [the practice of consuming health care services without insurance] -- for
consume health care services without insurance.); Maj. Op. at 129-30 ([W]hen
the uninsured actually enter the stream of commerce and consume health care,
Congress may regulate their activity at the point of consumption.); see also
Florida ex rel. Bondi v. U.S. Dept of Health & Human Servs., No. 3:10-cv-91-
RV/EMT, 2011 WL 285683, at *26 (N.D. Fla. Jan. 31, 2011) (Congress plainly
has the power to regulate [the uninsured] . . . at the time that they initially seek
229
medical care[], a fact with which the plaintiffs agree.).6 Thus, all of the parties
agree that, at the time of health care consumption, Congress may lawfully cut
across a distinct market and impose a financial penalty designed to compel the
uninsured to obtain health insurance. And Congress may do so even where the
anyone to buy health insurance at any time as a means of paying for health care,
they at least would have evinced the virtue of consistency. But instead, the
plaintiffs concession undermines their claim that Congress has exceeded its rule-
at least where the two industries are so closely bound together. After all, even at
the point of consuming health care services, individuals may wish to remain
inactive in the health insurance market. But the plaintiffs and the majority
6
At oral argument, counsel for the state plaintiffs was explicitly asked whether, at
the point of health care consumption, Congress could compel an individual who doesnt
have health insurance to either pay a penalty or obtain insurance at that time, to which
counsel responded that [i]n the health care market, at the time of consumption, yes.
And at the district court hearing on the governments motion to dismiss, counsel for the
plaintiffs made a similar concession. In response to the district courts question, Well,
the government could impose this penalty at the point of service at the doctors office or
the hospital and say, if you do not have insurance, you are subject to a penalty?, counsel
for the plaintiffs responded, I believe the government would be able to do it, Your
Honor. RE 334-35.
230
concede that Congress may nevertheless compel individuals at that point to
the text of the Commerce Clause, nor in the jurisprudence surrounding it. The
language of the Commerce Clause itself draws no distinction between activity and
inactivity. The seven operative words speak broadly about Congress power [t]o
regulate Commerce . . . among the several States. U.S. Const. art. I, 8, cl. 3.
The power to regulate is the power to prescribe the rule by which commerce is to
an artificial doctrinal distinction between activity and inactivity is thus novel and
-- who are presently inactive in the health insurance market -- to unwillingly enter
the stream of commerce to purchase health insurance they would not otherwise
231
choose to buy. The plaintiffs and the majority would have Congress wait at the
waters edge until the uninsured literally enter the emergency room. In other
words, they say, Congress may not legislate prophylactically, but instead must wait
until the cost-shifting problem has boiled over, causing huge increases in costs for
those who have health care insurance (through increased premiums), and for those
question: can Congress, under the Commerce Clause, regulate how and when
health care services are paid for by requiring individuals -- virtually all of whom
will consume health care services and most of whom have done so already -- to pay
now for those services through the mechanism of health insurance? As I see it, the
answer to whether Congress can make this temporal jump under its Commerce
There is no doctrinal basis for requiring Congress to wait until the cost-
shifting problem materializes for each uninsured person before it may regulate the
that congressional regulation only apply to individuals who first engage in specific
market transactions in the health care services market is at war with the idea that
232
of interstate commerce. Consol. Edison Co. v. NLRB, 305 U.S. 197, 222 (1938)
([I]t cannot be maintained that the exertion of federal power must await the
379 U.S. 294, 301 (1964) (quoting same, and noting that Congress was not
required to await the total dislocation of commerce); Stevens v. United States, 440
F.2d 144, 152 (6th Cir. 1971) (It is not necessary for Congress to await the total
other grounds by United States v. Bass, 404 U.S. 336 (1971); NLRB v. Sunshine
Mining Co., 110 F.2d 780, 784 (9th Cir. 1940). In Consolidated Edison, the
Supreme Court explained that, through the National Labor Relations Act -- which
regulates labor practices -- Congress did not attempt to deal with particular
did not need to wait until labor practices actually disrupted interstate commerce
before it could regulate.7 305 U.S. at 222. In other words, Congress may lawfully
7
The majority opinion misapprehends this point. See Maj. Op. at 129 n.100.
Consolidated Edison is cited along with Katzenbach to make this simple point: Congress
need not wait until an economic problem has erupted and the national economy is
disrupted before it may act prophylactically, under its commerce power, to address an
obvious and apparent economic problem. That Consolidated Edison specifically involved
the regulation of labor practices or that Katzenbach (along with Heart of Atlanta)
specifically involved the regulation of innkeepers and restaurateurs is beside the point.
This principle of Commerce Clause jurisprudence is general, and it remains binding law.
233
regulate present conduct to prevent future disruptions of interstate commerce from
occurring.
Whats more, and even more basic, here the disruption of interstate
individual mandate regulates the mere possibility of future activity, Maj. Op. at
129, but as we speak, the uninsured are consuming health care services in large
numbers and shifting costs onto others. By ignoring the close relationship between
the health insurance and health care services markets, the plaintiffs and the
majority seek to avoid the hard fact that the uninsured as a class are actively
consuming substantial quantities of health care services now -- not just next week,
next month, or next year. The uninsured make more than 20 million visits to
emergency rooms each year; 68% of the uninsured had routine checkups in the past
five years; and 50% had one in the past two years.8 See U.S. Dept of HHS, New
Data Say Uninsured Account for Nearly One-Fifth of Emergency Room Visits
8
The plaintiffs do not contest the validity of these data. Indeed, at oral argument,
counsel for the state plaintiffs conceded that these visits to the emergency room constitute
economic activity that Congress may lawfully regulate.
234
Dave M. ONeill, Empt Policies Inst., Who Are the Uninsured? An Analysis of
Americas Uninsured Population, Their Characteristics and Their Health 20-21 &
Hidden Health Tax, supra, at 2 (observing that the uninsured consumed $116
billion worth of health care services in 2008); Govt Econ. Br. at 10 (57 percent of
the 40 million people uninsured in all of 2007 used medical services that year.
(emphasis added)); NFIB Br. at 5 (citing same 57% statistic). In addition, there
were more than two million hospitalizations -- not just emergency room visits, but
HHS, ASPE Research Brief, The Value of Health Insurance: Few of the Uninsured
http://aspe.hhs.gov/health/reports/2011/valueofinsurance/rb.pdf.
health care services market, and that many of these uninsured currently consume
health care services for which they cannot or do not pay. This is, in every real and
meaningful sense, classic economic activity, which, as Congress findings tell us,
has a profound effect on commerce. See Thomas More Law Ctr. v. Obama, -- F.3d
--, 2011 WL 2556039, at *24 (6th Cir. June 29, 2011) (Sutton, J., concurring) (No
235
matter how you slice the relevant market -- as obtaining health care, as paying for
health care, as insuring for health care -- all of these activities affect interstate
commerce, in a substantial way.).9 Once the artificial barrier drawn between the
health insurance and health care services markets breaks down, the plaintiffs
inactivity argument collapses. And there can be no doubt that Congress rationally
linked the two markets. Its very findings accompanying the mandate detail at
length the impact that going uninsured has on the broader availability of health
insurance and on the costs associated with the consumption of health care services.
not as a final consumption good but as a means of paying for the future stochastic
purchase of health care services. Welfare Loss, supra, at 253. And virtually all of
us will have the misfortune of having to consume health care services at some
unknown point for some unknown malady and at some uncertain price. Each of us
remains susceptible to sudden and unpredictable injury. No one can opt out of
illness, disability, and death. These, we all must accept, are facts of life. Thus,
9
Contrary to the majoritys assertion, see Maj. Op. at 147 n.119, the conduct
being regulated by Congress is the consumption of health care services by the uninsured.
And it is the very act of consuming health care services by those who do not pay for them
that has the natural and probable effect of shifting costs to those who do -- what occurs
when I consume a good, and leave you with the bill. In every real sense, the conduct
being regulated is analytically and conceptually distinct from its effects on interstate
commerce.
236
even if I were to accept the plaintiffs distinction between activity and inactivity,
the facts undermine the distinction here. The inevitable consumption of health care
regulation.
3.
The plaintiffs and the majority also object to the mandate on different
grounds -- that it is overinclusive insofar as it applies to: those who do not enter
the health care market at all (non-consumers), and those who consume health
care services but pay for their services in full and thus do not shift costs (non-cost-
overinclusiveness may not be fatal for constitutional purposes. Id. Indeed, the
Supreme Court has made it abundantly clear that Congress is not required to
legislate with scientific exactitude. Raich, 545 U.S. at 17. Rather, [w]hen
Congress decides that the total incidence of a practice poses a threat to a national
market, it may regulate the entire class. Id. (emphases added) (internal quotation
marks omitted). As Justice Holmes put it in Westfall v. United States, 274 U.S.
256 (1927), when it is necessary in order to prevent an evil to make the law
embrace more than the precise thing to be prevented [Congress] may do so. Id. at
237
259. There is simply no requirement under the Commerce Clause that Congress
choose the least restrictive means at its disposal to accomplish its legitimate
objectives. Nor is there a requirement that Congress target only those uninsured
individuals who will consume health care services at a particular point in time or
just those who will be unable to pay for the health care services they consume.
Congress concluded that the total incidence of health care consumption by the
uninsured threatened the national health insurance and health care services
commerce, was obliged to somehow draw the class more narrowly, the subclass of
10
The Court in Raich specifically approved of Congress legislating across a
broad class when enforcement difficulties would attend drawing the class more
narrowly. Raich, 545 U.S. at 22. The Court said, [g]iven the enforcement difficulties
that attend distinguishing between marijuana cultivated locally and marijuana grown
elsewhere, and concerns about diversion into illicit channels, we have no difficulty
concluding that Congress had a rational basis for believing that failure to regulate the
intrastate manufacture and possession of marijuana would leave a gaping hole in the
CSA. Id. (citation and footnote omitted). When it may be difficult to distinguish
between categories of conduct, especially when the categories are fluid, Congress may
enlarge the regulated class. Here, too, Congress may broadly regulate uninsured
individuals because it may be difficult to distinguish between cost-shifters and non-cost-
shifters. And the categories are fluid -- a non-consumer or non-cost-shifter today may
become a cost-shifter tomorrow, especially if a catastrophic injury befalls him.
Moreover, the majority concedes that Congress may regulate all of the uninsured -- cost-
shifters and non-cost-shifters alike -- at the point of consumption. See Maj. Op. at 129-
30. Thus, by the majoritys own lights, Congress inclusion of non-cost-shifters within
the mandates reach does not create a constitutional infirmity.
238
non-consumers -- those individuals who will never enter the health care services
market at all -- is surely minuscule. The plaintiffs emphasize that it is not strictly
true that everyone will participate in the health care services market. States Br. at
30. But the only elaboration the plaintiffs offer on this point is that some
individual circumstances. Id. As for the first, it does not get the plaintiffs very
far, because religious groups that opt out of the health care services or health
insurance markets may also seek exemption from the individual mandate. 26
the plaintiffs mean is that a few individuals either will fortuitously avoid ill health
altogether, or -- more likely -- will fail to consume health care services due to an
distinction between the virtual inevitability of health care consumption and the
that an individual will go through his entire life without ever consuming health care
services than there is that he will win the Irish Sweepstakes at the very moment he
is struck by lightning. Nor are there more than a minuscule number of Americans
who could afford to take on the financial risk of a personal medical catastrophe out
of their own pockets. Yet, on the basis of these slight mathematical possibilities
239
would the majority bring down the individual mandate and all that may fall with it.
Congress has wide regulatory latitude to address the extent of financial risk-
taking in the health care services market, Govt Reply Br. at 15, which in its view
is a threat to a national market, Raich, 545 U.S. at 17. The fact that an
exceedingly small set of individuals may go their whole lives without consuming
cost-shifting impact the mandate seeks to address. First, they claim that the
individual mandate targets the young and healthy and that the annual costs of
uncompensated care for those individuals is much less than $43 billion. See Brief
for Economists as Amici Curiae Supporting the Plaintiffs (Plaintiffs Econ. Br.) at
3, 10, 13. The point is unpersuasive, because it conflates the scope of the
individual mandate with its relative benefits for different population groups. The
and while the young and healthy may benefit less than other groups from having
health insurance, [i]t is of the essence of regulation that it lays a restraining hand
on the selfinterest of the regulated and that advantages from the regulation
240
commonly fall to others, Wickard, 317 U.S. at 129. Balancing different groups
calibrate, but rather is wisely left under our system to resolution by the Congress
under its more flexible and responsible legislative process. Id. Moreover, the
argument that the mandate targets the young and healthy and that, therefore, this
Court should only look at the economic impact on interstate commerce of those
individuals is not even consistent with the plaintiffs own suggestion that the
individual mandate regulates everyone at every moment of their lives, from cradle
The economists also suggest that even if we look at the $43 billion figure as
a whole, that amount is less than 1.8% of overall annual health care spending
(which Congress found was $2.5 trillion, or 17.6% of the national economy, in
problem is relatively modest and fails to justify the individual mandate. Plaintiffs
comparing the economic impact of the problem to the total size of the regulated
market. The argument would also lead to the perverse conclusion that Congress
has less regulatory power the larger the national market at issue. But in any event,
241
there can be no doubt that $43 billion is a substantial amount by any accounting.
Even the economists (as well as the district court) recognize that the amount is not
insignificant. Plaintiffs Econ. Br. at 10; accord Florida, 2011 WL 285683, at *26
(noting that $43 billion is clearly a large amount of money). In this connection, I
am reminded of the comment often attributed to the late Illinois Senator Everett
McKinley Dirksen: A billion here, a billion there, and pretty soon youre talking
Relying heavily on the economists brief, the majority goes even further and
subjects Congress findings to an analysis that looks startlingly like strict scrutiny
review. The majority engages in a breakdown of who among the uninsured are
responsible for the $43 billion, presumably in order to show that the mandate will
not be the most efficacious means of ameliorating the cost-shifting problem. See
Maj. Op. at 139-41. For instance, the majority claims that low-income individuals
and illegal aliens (or other nonresidents) together are responsible for around half of
the total cost shifting, yet are exempted from either the mandate or its penalty. Id.
at 139-40. But even on the majoritys own terms, a substantial number of cost-
shifters are not exempted from the mandate or its penalty, and there was nothing
irrational about Congress decision to subject to the mandate those individuals who
242
More fundamentally, however, as I see it, the majoritys searching inquiry
throughout its opinion into whether the individual mandate fully solves the
problems Congress aimed to solve, or whether there may have been more
efficacious ways to do so, probes far beyond the proper scope of a courts
Commerce Clause review. The majority suggests any number of changes to the
legislation that would, it claims, improve it. Thus, for example, the majority offers
that Congress should have legislated with a finer scalpel by inserting some element
conduct. Id. at 128 (internal quotation marks omitted). And the majority would
have the IRS enforce the mandate more aggressively. See id. at 166; id. at 202
offering ways in which Congress could have legislated more efficaciously or more
narrowly. This approach ignores the wide regulatory latitude afforded to Congress,
under its Commerce Clause power, to address what in its view are substantial
judicial officers, we are not afforded the opportunity to rewrite statutes we dont
like, or to craft a legislative response more sharply than the legislative branch of
243
congressional enactment falls within the boundaries of Art. 1, 8, cl. 3. In
power, [w]e need not determine whether [the regulated] activities, taken in the
is determine whether a rational basis exists for so concluding. Id. The courts
are not called upon to judge the wisdom or efficacy of the challenged statutory
scheme. See, e.g., id. at 9 (The question before us, however, is not whether it is
wise to enforce the statute in these circumstances.); Wickard, 317 U.S. at 129
(And with the wisdom, workability, or fairness[] of the plan of regulation we have
resides in the scheme of [the statute at issue], it is not for us to say. The answer to
such inquiries must come from Congress, not the courts. Helvering v. Davis, 301
U.S. 619, 644 (1937); see also Thomas More Law Ctr., 2011 WL 2556039, at *33
(Sutton, J., concurring) (Time assuredly will bring to light the policy strengths and
allowing the peoples political representatives, rather than their judges, to have the
244
individual mandate with caution and with greater cause for doubt, Maj. Op. at
152, because insurance and health care are areas of traditional state concern, id.
at 150. While it is true that insurance and health care are, generally speaking, areas
commerce power to regulate concurrently in these areas. The sheer size of the
the health insurance and health care industries. In 2010, 47.5 million people were
out, Medicare and Medicaid accounted for roughly $750 billion of federal spending
in 2009 alone. Govt Br. at 10. It would surely come as a great shock to Congress,
or, for that matter, to the 47.5 million people covered by Medicare, the 44.8 million
insurers, and health care providers regulated by ERISA, COBRA, and HIPAA, to
245
learn that, because the health care industry also falls within the sphere of
traditional state regulation, Maj. Op. at 153, Congress was somehow skating on
4.
In the course of its opinion, the majority also attaches great significance to
the unprecedented nature of the legislation before us. It is surely true that, as the
Commerce Clause power. Florida, 2011 WL 285683, at *20-21. But the mere fact
of its novelty does not yield its unconstitutionality. See Garcia v. Vanguard Car
Rental USA, Inc., 540 F.3d 1242, 1252 (11th Cir. 2008) (upholding, under the
Commerce and Necessary and Proper Clauses, the constitutionality of the Graves
the relatively novel theory that the rental car market should be protected by
tried. And to draw the line against any new congressional enactment simply
because of its novelty ignores the lessons found in the Supreme Courts Commerce
Clause cases. For example, in Wickard the Court squarely recognized that the case
embracing that expansion. 317 U.S. at 120 (Even today, when this power has
246
been held to have great latitude, there is no decision of this Court that such
intermingled with the subjects thereof.). The truth is that any ruling this Court
existing case law because the legislation and the issues presented are new. That the
Supreme Court has never before upheld a regulation of this kind can hardly be
Indeed, when measured against the kinds of sweeping changes we have seen
Congress commerce power over the past 75 years makes the point. Facing the
Court abandoned the categorical and formalistic distinctions that it had erected
business. The Court had previously held that broad categories of economic life,
antecedent to commerce itself, which was once viewed as being limited to the
movement of the fruits of those antecedent activities in and among the states. But a
247
more pragmatic view began to take hold by the mid-1930s. The Courts earlier
restrictive view of commerce did not survive the New Deal-era cases, where the
Supreme Court swiftly brought all of these categories within the lawful ambit of
Congress commerce power. See, e.g., Jones & Laughlin Steel, 301 U.S. at 40 (It
is thus apparent that the fact that the employees here concerned were engaged in
interstate commerce of the labor practice involved.); United States v. Darby, 312
U.S. 100, 115-17 (1941) ([W]e conclude that the prohibition of the shipment
deciding the question of federal power before us. . . . [E]ven if appellees activity
be local and though it may not be regarded as commerce, it may still, whatever its
commercial enterprise of any kind which conducts its activities across state lines
has been held to be wholly beyond the regulatory power of Congress under the
248
The Court did not stop there. It expanded the scope of Congress commerce
power from the regulation of the intercourse of goods moving across borders to
commerce. See Darby, 312 U.S. at 119-20 & n.3. Indeed, Wickard involved a
jump arguably far greater than the one we face today. In order to regulate price,
Congress could penalize conduct -- Filburns growing wheat above a fixed quota
for his own personal consumption -- absent any indicia that Filburn would ever
enter into the interstate wheat market. Justice Jackson, writing for the Court,
recognized this as a novel exercise of the commerce power. Wickard, 317 U.S. at
120. The Court held that Congress could nonetheless regulate the price of wheat
by restricting its production, even on a small farm where it was grown purely for
personal consumption. And, according to the Court, if the regulation had the
natural and probable effect of forcing some farmers into the market to buy what
they could provide for themselves absent the regulation, so be it. Id. at 129
(emphasis added).
concluding that the impact or effect on interstate commerce is not measured case by
case, or person by person, but rather in an aggregated way. Id. at 127-28. That
Filburns own contribution to the demand for wheat may be trivial by itself is not
249
enough to remove him from the scope of federal regulation where, as here, his
contribution, taken together with that of many others similarly situated, is far from
trivial. Id. (emphasis added); see also Darby, 312 U.S. at 123 ([Congress]
recognized that in present day industry, competition by a small part may affect the
whole and that the total effect of the competition of many small producers may be
great.); NLRB v. Fainblatt, 306 U.S. 601, 606 (1939) (The power of Congress to
in Darby and Fainblatt, the Court firmly established that Congress may regulate
classes of local activities that, only in the aggregate, have a substantial effect on
interstate commerce.11
In a pair of notable civil rights cases, Heart of Atlanta Motel, Inc. v. United
States, 379 U.S. 241 (1964), and Katzenbach, 379 U.S. 294, the Supreme Court
continued to read the Commerce Clause in an expansive way. The Court upheld
11
The majority attempts to skirt the breadth of the aggregation principle by
claiming that an individuals mere decision not to purchase insurance is not subject to
aggregation. Maj. Op. at 125. But again, the majority has shot at the wrong target.
Congress is regulating the uninsureds uncompensated consumption of health care
services. And under Wickard and Raich, we are instructed to measure the effect on
interstate commerce not case-by-case or person-by-person, but rather in the aggregate and
taken as a whole.
250
hoteliers and restaurateurs to enter into economic transactions with racial
minorities (indeed, with individuals of any race, color, religion, or national origin)
on the same terms as any other patrons (or exit their respective businesses
interstate commerce also includes the power to regulate the local incidents thereof,
including local activities in both the States of origin and destination, which might
have a substantial and harmful effect upon that commerce. Heart of Atlanta, 379
U.S. at 258. The Court concluded that, having entered the stream of commerce,
The plaintiffs are quick to point out, however, that the Commerce Clause has
mandate, the plaintiffs and the majority rely heavily upon Lopez, 514 U.S. 549, and
United States v. Morrison, 529 U.S. 598 (2000), the only two Supreme Court cases
in the past 75 years to hold that an act of Congress exceeded its commerce power.
Neither Lopez, where the Court struck down a statute criminalizing the possession
of a firearm within 1000 feet of a school, nor Morrison, where the Court struck
251
Indeed, in Raich, 545 U.S. 1, decided five years after Morrison, the Supreme
Court reaffirmed the vitality of Wickard, and specifically applied its holding in a
Court emphatically distinguished Lopez and Morrison, observing that the statutes
criminal behavior. The CSA, on the other hand, was characterized as a lengthy
Raich, 545 U.S. at 24. The Court found that, [u]nlike those at issue in Lopez and
Morrison, the activities regulated by the CSA are quintessentially economic. Id.
at 25.
Thus, much as in Raich, while Lopez and Morrison remind us that there are
discernible limits on Congress commerce power, the limits drawn in those two
cases are of limited help in this one. As a panel of this Circuit recently stated,
Raich makes clear that when a statute regulates economic or commercial activity,
Lopez and Morrison are inapposite. Garcia, 540 F.3d at 1252. Indeed, when we
are not . . . dealing with a single-subject statute whose single subject is itself
violence), Morrison and Lopez have little applicability and instead Raich guides
252
our analysis. United States v. Maxwell (Maxwell II), 446 F.3d 1210, 1216 n.6
(11th Cir. 2006); see also United States v. Paige, 604 F.3d 1268, 1273 (11th Cir.
2010) (per curiam). Lopez and Morrison each involved an effort to regulate
broadly regulate an entire industry; and, unlike in this case, the criminal conduct
problems there may be with the constitutionality of the individual mandate, they
that, contrary to the arguments advanced by the plaintiffs, upholding the individual
mandate would be far from a cosmic expansion of the boundaries of the Commerce
Clause. These past expansions have not been random, accidental, or in any way
today that would have been unimaginable to the Framers. United States v.
Comstock, -- U.S. --, 130 S. Ct. 1949, 1965 (2010) (quoting New York v. United
States, 505 U.S. 144, 157 (1992)). Indeed, the Framers purposely drafted a
Constitution capable of such resilience through time. Id.; see also McCulloch v.
253
Maryland, 17 U.S. (4 Wheat.) 316, 415 (1819) (describing the Constitution as a
The long and short of it is that Congress has promulgated a rule (the
payment for the virtually inevitable consumption of health care services, and to
thereby regulate commerce. The individual mandate was enacted as part of a broad
scheme to regulate health insurance and health care services, industries already
detailing the economic problems it saw, and how the mandate would ameliorate
C.
The individual mandate is also a valid means under the Necessary and Proper
Clause to further the regulatory end of the Acts insurance reforms. It has been long
recognized that Congress has the power to pass laws or regulations necessary and
proper to carrying out [its] commerce clause power. United States v. Ambert, 561
F.3d 1202, 1211 (11th Cir. 2009). Under the Necessary and Proper Clause, Congress
is empowered [t]o make all Laws which shall be necessary and proper for carrying
254
into Execution the foregoing [Art. 1, 8] Powers. U.S. Const. art. 1, 8, cl. 18.
Both the Supreme Court and this Circuit have said that in determining whether the
Necessary and Proper Clause grants Congress the legislative authority to enact a
particular federal statute, we look to see whether the statute constitutes a means that
Comstock, 130 S. Ct. at 1956 (emphasis added); United States v. Belfast, 611 F.3d
The constitutionality of the end -- that is, the Acts insurer regulations -- is
both clear and unchallenged, as even the district court recognized. Florida, 2011 WL
285683, at *32 ([T]he end of regulating the health care insurance industry (including
preventing insurers from excluding or charging higher rates to people with pre-
existing conditions) is clearly legitimate and within the scope of the constitution.
Marshall enduringly articulated [i]n language that has come to define the scope of the
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.
255
McCulloch, 17 U.S. at 421. In addition, Chief Justice Marshall broadly defined the
term necessary. It does not mean absolutely necessary, but rather only
was recently reaffirmed by the Supreme Court in Comstock, that requiring the
implementing the Acts insurer regulations. As the states that tried to effectuate
guaranteed issue and community rating reforms without some form of individual
mandate attest, trying to do the former without the latter simply does not work. See,
e.g., Brief for Am. Assn of People with Disabilities et al. as Amici Curiae Supporting
the Government at 5-6 (Kentucky, Maine, New Hampshire, New Jersey, New York,
Vermont, and Washington enacted legislation that required insurers to guarantee issue
to all consumers in the individual market, but did not have a minimum coverage
provision. . . . All seven states suffered from sky-rocketing insurance premium costs,
256
universal coverage because of the problems it experienced when it eliminated barriers
Supporting the Government at 17 ([A]fter Kentucky enacted reform, all but two
insurers (one State-run) abandoned the State.).12 In this light, the individual mandate
running insurers out of business entirely -- a point the district court recognized.
Florida, 2011 WL 285683, at *33 (The defendants have asserted again and again that
the individual mandate is absolutely necessary and essential for the Act to operate
The plaintiffs also claim that the individual mandate exceeds Congress power
because it is not proper -- that is, because it is inconsistent with the letter and the
spirit of the constitution. McCulloch, 17 U.S. at 421. I have little doubt that the
12
During a hearing before the House Ways and Means Committee, an economist
stated that imposition of community-rated premiums and guaranteed issue on a market of
competing private health insurers will inexorably drive that market into extinction, unless
these two features are coupled with . . . a mandate on individual[s] to be insured. Health
Reform in the 21st Century: Insurance Market Reforms: Hearing Before the H. Comm. on
Ways and Means, 111th Cong. 13 (2009) (statement of Dr. Uwe Reinhardt, Professor,
Princeton University). In other words, without a mandate, these two insurer reforms
would result in adverse selection, increased premiums, decreased enrollment, and fleeing
insurers -- in short, the insurance market would implode. See id. at 13 n.4.
257
Constitution.13 Cf. Comstock, 130 S. Ct. at 1957 ([T]he present statutes validity
under provisions of the Constitution other than the Necessary and Proper Clause is an
issue that is not before us. . . . [Therefore], the relevant inquiry is simply whether the
means chosen are reasonably adapted to the attainment of a legitimate end under the
undoubtedly rationally related to the end of effectuating the Acts guaranteed issue
and community rating reforms. Id. at 1956; Belfast, 611 F.3d at 804. The mandate
Congress found that without the mandate, many individuals would wait to purchase
health insurance until they needed care, 42 U.S.C. 18091(a)(2)(I) -- that is, until
they were sick, which would impose enormous costs on insurers and drive them out
of the market. And having observed the failed experience of those states that tried to
that one way to prevent this problem was to require that non-exempted individuals
enter the insurance risk pool. The Necessary and Proper Clause requires nothing
more.
II.
13
I address the plaintiffs suggestions that the individual mandate violates the
Fifth or Tenth Amendments in Part II.B, infra.
258
More fundamentally, the plaintiffs have offered two arguments that, they say,
undermine the governments position that Congress commerce power can justify
prescribing a rule that compels an individual to buy health insurance. First, they argue
that if Congress has the constitutional authority to enact the individual mandate, then
there is virtually no limit on its authority, and Art. 1, 8, cl. 3 of the Constitution
(whether standing alone or in concert with the Necessary and Proper Clause) would
be transformed into a grant of general police power. Second, they offer, although
largely implicitly, that the individual mandate really infringes upon notions of
individual liberty and popular sovereignty found either in the Fifth or Tenth
A.
1.
Perhaps at the heart of the plaintiffs objection to the mandate -- adopted by the
majority opinion in conclusion, if not in reasoning14 -- is the notion that allowing the
14
The majority comes perilously close to abandoning the central foundation -- the
dichotomy between activity and inactivity -- on which the plaintiffs and the district court
rely for their position that upholding the individual mandate would convert the Commerce
Clause into an unlimited general police power. See Maj. Op. at 109 ([W]e are not
persuaded that the formalistic dichotomy of activity and inactivity provides a workable or
persuasive enough answer in this case.). As I understand the position taken by the
plaintiffs and the district court, it is this: if the Commerce Clause affords Congress the
power to conscript the unwilling uninsured to enter the stream of commerce and buy
insurance, then Congress could also conscript any American to buy any private product at
a time and under circumstances not of his own choosing. In other words, the plaintiffs
259
individual mandate to stand will convert Congress commerce power into a plenary
federal police power, admitting of no limits and knowing of no bounds. The parade
of horribles said to follow ineluctably from upholding the individual mandate includes
the federal governments ability to compel us to purchase and consume broccoli, buy
General Motors vehicles, and exercise three times a week. However, acknowledging
legislation actually before us solely on the basis of conjecture about what the future
may hold. The plaintiffs heavy reliance on floodgate fears and a parade of
dreadfuls calls to mind wise counsel: Judges and lawyers live on the slippery slope
of analogies; they are not supposed to ski it to the bottom. Buckley v. Am.
Constitutional Law Found., Inc., 525 U.S. 182, 194 n.16 (1999) (quoting Robert Bork,
The Tempting of America: The Political Seduction of the Law 169 (1990)). Federal
courts may only be called on to resolve ripe controversies, and it is difficult and
say, the individual mandate extends the Commerce Clause beyond its outer limits
precisely because it allows the government to conscript the inactive and unwilling.
Without drawing the distinction between activity and inactivity, I am at a loss to
understand the argument that sustaining the individual mandate would transmute the
limited power contained in Art. 1, 8, cl. 3 of the Constitution into an unlimited general
police power. For reasons that remain inexplicable to me, the majority opinion seems to
suggest that the individual mandate is a bridge too far -- in the words of the district
court -- not because it conscripts the inactive, but rather for some inchoate reason stated at
the highest order of abstraction.
260
hazardous for courts to prejudge the next case or the one after that in a vacuum, devoid
See Baker v. Carr, 369 U.S. 186, 204 (1962) ([C]oncrete adverseness . . . sharpens
the presentation of issues upon which the court so largely depends for illumination of
lose sight of the legislation before us, viewed in the context of the discrete issues and
facts presented. I have little doubt that the federal courts will be fully capable of
But a more basic answer is this: upholding the individual mandate leaves fully
intact all of the existing limitations drawn around Congress Commerce Clause power.
To begin with, Congress is limited by the constitutional text and Supreme Court
in this case, because Congress has undeniably prescribed a rule (the individual
uninsured) that has a powerful impact on how, when, and by whom payment is made
for health care services. Indeed, the conduct regulated by the Act is even more
use of controlled substances, see Raich, 545 U.S. at 25, or the cultivation of wheat for
261
personal consumption, see Wickard, 317 U.S. at 119.
In Lopez and Morrison, the Supreme Court began to flesh out some of the outer
limits surrounding Art. I, 8, cl. 3. Chief Justice Rehnquist, writing for the Court in
both instances, posited a series of significant considerations, none of which pose any
problem in this case. See Morrison, 529 U.S. at 609-12. First, he observed that the
regulated conduct at issue in Lopez and Morrison was plainly of a noneconomic nature
-- again, the possession of a handgun within 1000 feet of a school in Lopez, and
gender-motivated felonious acts of violence in Morrison. See id. at 610 ([A] fair
reading of Lopez shows that the noneconomic, criminal nature of the conduct at issue
was central to our decision in that case.). Here, in sharp contrast, Congress has
prescribed a rule governing purely economic behavior. As Ive noted already, the Act
shifting from the uninsured to insured individuals and health care providers, 42 U.S.C.
of payment for health care services. In short, the first problem identified in Lopez and
Morrison -- that the statutes reached purely intrastate, noneconomic behavior -- is not
found in this case, and thus the mandate does not, at least for this reason, penetrate
262
Morrison was that the nexus between the criminal conduct regulated by the legislation
and its impact -- even if taken in the aggregate -- on interstate commerce was remote
and wholly attenuated, and on its own terms provided no limiting principle
surrounding the exercise of Congress commerce power. In both Lopez and Morrison,
show that the criminal conduct regulated had a substantial effect on interstate
commerce. In Lopez -- where Congress had made no factual findings regarding the
effects upon interstate commerce of gun possession in a school zone -- the government
had to argue, among other things, that the possession of firearms near schools had the
natural effect of disrupting the educational process, and that this disruption, over time,
would in turn lower the economic productivity of our citizens, causing an adverse
effect on the national economy. See Lopez, 514 U.S. at 563-64. Its no surprise, then,
that the Court found the critical link to interstate commerce wanting, and concluded
that if this chain of reasoning were an acceptable means of bridging the gap between
the regulated conduct and commerce, precious little would fall outside the ambit of
Congress commerce power. Id. at 564. By the same token, in Morrison, the Court
found wanting Congress chain of reasoning -- that felonious acts of violence against
women would, inter alia, cause lost hours in the workplace and drive up hospital costs
and insurance premiums, which in turn would have an adverse effect on the national
263
economy. See Morrison, 529 U.S. at 615. The problem remained the same as in
Lopez, even though in Morrison, Congress had sought to draw the causal inferences
itself through express factual findings. Again, the causal reasoning that was required
to link the regulated criminal conduct to interstate commerce was lengthy and
attenuated. And again, the very method of reasoning offered by Congress afforded no
In this case, no such complex and attenuated causal story is necessary to locate
the regulated conducts nexus with interstate commerce. Here, the substantial effect
on commerce occurs directly and immediately when the uninsured consume health
care services in large numbers, do not pay for them in full or maybe even at all, and
thereby shift powerful economic costs onto insured individuals and health care
providers (as Congress found they do). The nexus between the regulated conduct and
interstate commerce could not be more direct. I am at a loss to find even a single
inferential leap[], Maj. Op. at 146, required to link them. Moreover, Congress
unambiguously and in considerable detail drew the connection between the regulated
conduct and its substantial effect on interstate commerce through extensive findings
of fact. See 42 U.S.C. 18091. Contrary to the majoritys claim, here there is no need
to pile inference upon inference, Lopez, 514 U.S. at 567, to draw the critical nexus,
and, therefore, we face no unlimited exercise of congressional power for that reason.
264
Moreover, in sharp contrast to Lopez and Morrison, we are confronted today
Raich, 545 U.S. at 23-24 (drawing a sharp distinction between brief, single-subject
statute[s] divorced from a larger regulatory scheme and lengthy and detailed
without which the regulatory scheme would be undercut, Lopez, 514 U.S. at 561,
and the Supreme Court has endorsed the constitutionality of such comprehensive,
economic regulatory schemes, Raich, 545 U.S. at 24-25; see also Hodel v. Indiana,
452 U.S. 314, 329 n.17 (1981) (A complex regulatory program such as established
by the [Surface Mining] Act can survive a Commerce Clause challenge without a
showing that every single facet of the program is independently and directly related
integral part of the regulatory program and that the regulatory scheme when
considered as a whole satisfies this test.); Raich, 545 U.S. at 36 (Scalia, J., concurring
in the judgment) (Though the conduct in Lopez was not economic, the Court
unless the intrastate activity were regulated. (quoting Lopez, 514 U.S. at 561)). And,
265
according to Eleventh Circuit precedent, where Congress comprehensively regulates
to implement effectively the overlying economic regulatory scheme. Maxwell II, 446
The majority, in an effort to distance itself from this precedent, suggests that,
because Raich involved an as-applied challenge, the inquiry into whether challenged
In other words, the majority seems to be saying that, because the Supreme Court has
to date never sustained a statute on the basis of the larger regulatory scheme doctrine
regulatory scheme. There is no doctrinal basis for this view. In Lopez itself, the Court
applied this principle in the context of a facial challenge. In Raich, the Court plainly
recognized that, unlike the challenge it faced, the challenges to the constitutionality
of the Gun-Free School Zones Act in Lopez, and, for that matter, to Title III of the
Violence Against Women Act in Morrison, were facial challenges. Justice Stevens,
writing for the majority in Raich, said: Here, respondents ask us to excise individual
266
applications of a concededly valid statutory scheme. In contrast, in both Lopez and
Morrison, the parties asserted that a particular statute or provision fell outside
Congress commerce power in its entirety, the very definition of a facial challenge.
Raich, 545 U.S. at 23 (emphasis added). Indeed, Justice Thomas, dissenting, likewise
expressly recognized that [i]n Lopez and Morrison, the parties asserted facial
challenges. Id. at 71 (Thomas, J., dissenting). And of course in Lopez, the Court, for
the first time, applied this very doctrine, explaining that even though the Gun-Free
School Zones Act targeted purely local, noneconomic behavior, the Court could have
economic activity, in which the regulatory scheme could be undercut unless the
intrastate activity were regulated. Lopez, 514 U.S. at 561. Moreover, a panel of this
Court has recently explained in binding precedent that what distinguished Raich from
the regulation, Maxwell II, 446 F.3d at 1214 -- not whether the challenge was facial
or as-applied.
Furthermore, the majoritys view that the individual mandate is not an essential
part of the Acts concededly economic regulatory scheme, see Maj. Op. at 162-66,
cannot be squared with the economic realities of the health insurance business or the
legislative realities of the Act. Nor can this view be squared with the contrary
267
judgment reached by Congress on this very point. Thus, for example, the majority
appears to simply cast aside Congress finding that the individual mandate is essential
products that are guaranteed issue and do not exclude coverage of pre-existing
F.3d at 1215 (internal quotation marks omitted). Faced with evidence that the
insurance industry would collapse if the Acts guaranteed issue and community rating
provisions were implemented without the individual mandate, Congress had more than
a rational basis for concluding, Raich, 545 U.S. at 19, that the individual mandate
was essential to the success of the Acts concededly valid and quintessentially
economic insurer reforms.15 In short, the real and substantial limits on the commerce
15
Although the majority seems to take comfort in only striking down the
individual mandate, see Maj. Op. at 207 n.145, all of the parties have agreed that the
individual mandate is so essential to the principal insurer reforms that, at least for
severability purposes, the guaranteed issue and community rating provisions necessarily
rise and fall with the individual mandate, Govt Reply Br. at 58 (As plaintiffs note, the
federal government acknowledged below [and continues to acknowledge] that the
guaranteed-issue and community-rating provisions due to take effect in 2014 . . . cannot
be severed from the minimum coverage requirement. The requirement is integral to those
sections that go into effect along with it in 2014 and provide that insurers must extend
coverage and set premiums without regard to pre-existing medical conditions . . . .);
268
power set forth by the Supreme Court in Lopez and Morrison would be left wholly
Because the impact on interstate commerce of the conduct that Congress sought
to regulate through the individual mandate is so clear and immediate, this case is
which suffer from the inference-piling reasoning condemned in Lopez and Morrison.
Thus, for example, in arguing that Congress could force us to purchase broccoli, the
if people buy more broccoli, they will eat more broccoli; eating more broccoli will, in
the long run, improve peoples health; this, in turn, will improve overall worker
productivity, thus affecting our national economy. Such reasoning violates the
Congress could regulate any activity that it found was related to the economic
arguments, we are hard pressed to posit any activity by an individual that Congress is
without power to regulate. Lopez, 514 U.S. at 564. By contrast, the economic
States Br. at 63 (stating that the individual mandate cannot be severed from the core,
interrelated health insurance reforms); NFIB Br. at 60-61 (stating that the mandate and
the principal insurer provisions truly are the heart of the Act, and highlighting the
governments concession that the mandate and the insurer reforms must stand or fall
together (internal quotation marks omitted)).
269
problem that Congress sought to address through the individual mandate does not
individuals health care choices; indeed, the mandate does not compel individuals to
seek health care at all, much less any particular form of it. Instead, Congress rationally
2.
Moreover, this case does not open the floodgates to an unbounded Commerce
Clause power because the particular factual circumstances are truly unique, and not
holding in this case limited. I add the unremarkable observation that the holding of
every case is bounded by the peculiar fact pattern arising therein. See Licciardello v.
Lovelady, 544 F.3d 1280, 1288 n.8 (11th Cir. 2008) (Our holding, as always, is
limited to the facts before us.); see also United States v. Hunter, 172 F.3d 1307, 1310
(11th Cir. 1999) (Carnes, J., concurring) (The holdings of a prior decision can reach
only as far as the facts and circumstances presented to the Court in the case which
The health care services market is characterized by five relevant factors, which,
270
when taken in concert, uniquely converge to create a truly sui generis problem: (1) the
unavoidable need that virtually all of us have to consume medical care; (2) the
unpredictability of that need; (3) the high costs associated with the consumption of
health care services; (4) the inability of providers to refuse to provide care in
emergency situations; and, largely as a result of the previous four factors, (5) the very
significant cost shifting that underlies the way medical care is paid for in this country.
These are not just five fortuitous descriptors of the health care market, elevated
to artificial constitutional significance. Over the last 75 years the Supreme Court has
the course of business. Swift & Co., 196 U.S. at 398; accord Raich, 545 U.S. at 25
n.35; Lopez, 514 U.S. at 571, 574 (Kennedy, J., concurring); Wickard, 317 U.S. at
123-24; Jones & Laughlin Steel, 301 U.S. at 41-42. Legislation enacted pursuant to
Congress Commerce Clause power cannot be evaluated in a vacuum, but only in light
of the peculiar problems Congress sought to address, what Congress chose to regulate,
how Congress chose to regulate, and the connection between the regulated conduct
and the problem Congress sought to resolve. Courts must always engage in the hard
271
Clause cases. Raich, 545 U.S. at 47 (OConnor, J., dissenting). Far from being ad
hoc and illusory, Maj. Op. at 168, these factual criteria are relevant descriptors,
drawn from the course of business, of the economic realities Congress confronted.
They are, therefore, precisely what the Court has instructed us to consider in the
Commerce Clause analysis. And given these unique characteristics of the health care
market and the peculiar way these characteristics converge, the individual mandate
address.
The first and most basic of these factors is that no individual can opt out of the
health care services market, and thus virtually everyone will consume health care
therefore, a question of when and how individuals will consume and pay for such
services, not whether they will consume them. The plaintiffs are correct that there are
other markets that, if defined broadly enough, no one may opt out of, such as the
markets for food, transportation, and shelter. But the hypothetical mandates -- that
Congress can force individuals to buy broccoli, GM cars, or homes -- do not follow.
Neither those markets nor their hypothetical mandates resemble the market and
mandate here.
In the first place, unlike the needs for food, transportation, and shelter -- which
272
are always present and have largely predictable costs -- illness and injury are wholly
unpredictable. Individuals who never intend to consume health care, unlike those who
because of accidents, illnesses, and all the vagaries to which ones health is subject.
Indeed, the economists concluded that even the most sophisticated methods of
predicting medical spending can explain only 25-35% of the variation in the costs
incurred by different individuals; the vast bulk of [medical] spending needs cannot
In addition, while the costs associated with obtaining food, transportation, and
shelter are susceptible to budgeting, this is not the case for health care, which can be
so expensive that most everyone must have some access to funds beyond their own
resources in order to afford them. Id. at 11-12 (explaining that unpredicted medical
costs can eclipse the financial assets of all but the very well-to-do); see also Govt
demand for health care are unknowable. (quoting Jennifer Prah Ruger, The Moral
Foundations of Health Insurance, 100 Q.J. Med. 53, 54-55 (2007))). Moreover, there
realistic alternatives or less expensive substitutes for treating cancer, a heart attack,
273
or a stroke, or for performing a needed organ transplant or hip replacement. Even
and childbirth, cost more than many Americans can afford. Govt Econ. Br. at 11.
This is not to say that individuals may not budget and plan as best they can for their
health care costs, as many surely do, but the combination of uncertain timing,
individuals wholly unable to pay for the health care services they consume. Indeed,
Congress found that 62 percent of all personal bankruptcies are caused in part by
Largely because of these first three factors -- that health care costs are
inevitable, unpredictable, and often staggeringly high -- the health care services
market, unlike other markets, is paid for predominantly through the mechanism of
insurance.16 Govt Br. at 9 (citing CMS data that payments by private and government
insurers comprise 75% of national health care spending). Insurance is thus already
intimately linked to the health care services market. People do not similarly insure
16
The unpredictability and wide variation in health care costs demonstrate why
the majoritys comparison of average health care costs to the average insurance premium
misses the point. Maj. Op. at 140. Individuals pay $4500 in insurance premiums not to
avoid the $2000 average annual medical bill, but to avoid the extreme medical bill.
Indeed, the whole point of insurance is to make spending more regular and predictable.
Comparing the average medical bill with the average insurance premium is hollow --
insurance is purchased for the very reason that one cannot count on receiving the
average medical bill every year.
274
against the risk that they will need food or shelter, because these needs are apparent
and predictable, and people can reliably budget for them. Although the purchase of
a car or a home may often be too expensive for many individuals to afford out of
pocket, it would be fanciful indeed to suggest that individuals would insure against the
sudden and unpredictable purchase of a home or automobile. The plaintiffs admit that
[r]egulations are plainly adapted if they invoke the ordinary means of execution.
NFIB Br. at 42 (quoting McCulloch, 17 U.S. at 409, 421). Insurance is the ordinary
means of paying for health care services. Thus, a mandate to purchase insurance is
more appropriately suited to address the problems of non-payment and cost shifting
in the health care services market than it would be to address problems in other
markets that do not similarly rely on insurance as the primary method of payment.
The fourth important factor distinguishing the health care market from all other
markets -- and peculiarly contributing to the cost shifting that Congress sought to
address through the mandate -- is the fact that individuals may consume health care
services without regard to their ability to pay and often without ever paying for them.
Unlike any other sellers in any other marketplace, nearly all hospitals are required by
doorstep with a broken neck from an automobile accident or bleeding from a gunshot
275
wound, or if an individual suffers a heart attack or a stroke, hospitals will not turn him
away. Even aside from the federal obligation imposed by EMTALA, by my count, at
least ten of the plaintiff states have statutes on the books requiring hospitals with
ability to pay.17 Still other plaintiff states have state court judicial rulings imposing
similar requirements.18 And even absent any legal duty, many hospitals provide free
or deeply discounted care as part of their charitable mission, even when the patients
need does not rise to the level of an emergency. See Thornton v. Sw. Detroit Hosp.,
895 F.2d 1131, 1132 (6th Cir. 1990) (observing in the application of EMTALA that
American hospitals have a long tradition of giving emergency medical aid to anyone
17
See Fla. Stat. Ann. 395.1041(1); Idaho Code Ann. 39-1391b; La. Rev. Stat.
Ann. 40:2113.4(A); Nev. Rev. Stat. Ann. 439B.410(1); 35 Pa. Stat. Ann. 449.8(a);
S.C. Code Ann. 44-7-260(E); Tex. Health & Safety Code Ann. 311.022(a); Utah Code
Ann. 26-8a-501(1); Wash. Rev. Code 70.170.060(2); Wis. Stat. Ann. 256.30(2); see
also Govt Br. at 35 (citing testimony before Congress in 1986 that at least 22 states had
enacted statutes or issued regulations requiring provision of emergency medical services
regardless of ability to pay, and observing that state court rulings impose a common law
duty on doctors and hospitals to provide emergency care).
18
See, e.g., Thompson v. Sun City Cmty. Hosp., Inc., 688 P.2d 605, 610 (Ariz.
1984) ([A]s a matter of public policy, licensed hospitals in this state are required to
accept and render emergency care to all patients who present themselves in need of such
care. . . . This standard of care has, in effect, been set by statute and regulation embodying
a public policy which requires private hospitals to provide emergency care that is
medically indicated without consideration of the economic circumstances of the patient
in need of such care.); Walling v. Allstate Ins. Co., 455 N.W.2d 736, 738 (Mich. Ct.
App. 1990) ([L]iability on the part of a private hospital may be based upon the refusal of
service to a patient in a case of unmistakable medical emergency.).
276
in need who appeared on the emergency room doorstep). One expert from the
Heritage Foundation persuasively illustrated this distinction between health care and
other markets when recommending in 1989 that the government impose a mandate to
If a young man wrecks his Porsche and has not had the foresight to
obtain insurance, we may commiserate but society feels no obligation to
repair his car. But health care is different. If a man is struck down by a
heart attack in the street, Americans will care for him whether or not he
has insurance. If we find that he has spent his money on other things
rather than insurance, we may be angry but we will not deny him services
-- even if that means more prudent citizens end up paying the tab.
Stuart M. Butler, Heritage Found., The Heritage Lectures 218: Assuring Affordable
Health Care for All Americans 6 (1989);19 see also Govt Br. at 37.
This obligation of health care providers to provide free medical care creates
where one persons actions or inactions affect[] others), a free-rider problem (where
people buy [or consume] a good and leave the costs to others), or a Samaritans
19
The Heritage Foundation has filed an amicus brief in support of the plaintiffs
making clear that this excerpt does not reflect the policy of the Heritage Foundation or
even the current beliefs of the speaker; both strongly dispute the efficacy and the
constitutionality of the individual mandate. Brief for Heritage Found. as Amicus Curiae
Supporting the Plaintiffs at 5-6. I do not doubt the sincerity of this position, and use this
statement not to imply that the Heritage Foundation has blessed the individual mandate
but rather only for the statements own value as a persuasively articulated description of
an important distinction between health insurance, health care, and other markets.
277
dilemma (where people choose not to be prepared for emergencies, knowing that
others will care for them if needed). Govt Econ. Br. at 14-15. Individuals who
decline to purchase health insurance are not held to the full economic consequence of
that choice, as society does not refuse medical care to a patient in need, even when its
cost far exceeds the individuals ability to pay. The ability of health care market
participants to demand services without paying for them bolsters Congress rational
conclusion that the individual mandate -- which helps to assure payment for services
Finally, the four factors described above converge to cause a fifth unique factor
of the health care market: the substantial cost shifting from the uninsured to current
20
Contrary to the plaintiffs suggestion, it is not problematic that Congress own
legislation -- EMTALA -- may have contributed to the very market conditions that it
sought to address in the Act. Significantly, EMTALA predated the individual mandate by
over two decades, and was enacted for reasons wholly unrelated to the mandate.
Moreover, EMTALA did not create a new federal obligation out of whole cloth and then
impose it on health care providers; rather, it supplemented numerous state laws and
overarching social judgments that the sick and injured should be cared for regardless of
ability to pay. Nor should we be concerned that Congress might similarly enact
legislation requiring companies to give away cars, food, or housing, and then accompany
that legislation with a mandate prescribing the pre-purchase of a mechanism for financing
those items. Not only is it wholly unrealistic that Congress would require companies to
give away free cars or housing (even if it could do so) simply so that it could then impose
an insurance requirement on those items, but cars and houses are also products not
already predominantly financed through insurance. An insurance mandate thus would not
be a well-suited means to regulate payment in those markets.
278
participants in the health insurance market and to health care providers. This cost
shifting does not occur in other markets, even those in which we all participate, such
purchaser pays all of the cost (whether upfront or over time through a loan or
mortgage). My neighbor will not help cover my costs of purchasing a home by paying
a higher price for his own house. And I will not pay more for my car, simply because
my neighbor cannot afford to buy one for himself. The costs in those markets are
borne by the individual purchaser alone. Again, in sharp contrast, the uninsured shift
substantial costs to the insured and to health care providers, because the uninsured in
the aggregate consume health care services in large numbers and yet bear only a small
fraction of the costs for the services they consume. The parties agree that the
uninsured fail to pay for 63% of the health care services they receive, and some 37%
(amounting to $43 billion) of all health care costs incurred by the uninsured are
uncompensated entirely. States Br. at 30-31; Govt Reply Br. at 8-9, 11. Congress
found that this uncompensated care increases the average insured familys annual
phenomenon simply does not occur in other industries.21 Even under the majoritys
21
Perhaps the closest analog to the individual mandate is a requirement that
individuals buy other types of insurance. The district court rejected the governments
contention that the failure to buy health insurance is a financing decision by reasoning
that this is essentially true of any and all forms of insurance. Florida, 2011 WL
279
characterization of the regulated conduct as a decision not to purchase health
insurance, Maj. Op. at 164, deciding to self-insure in the health care market, unlike
all other financial decisions of Americans, id. at 115, is a decision to pay for your
care if you can afford it or to shift costs onto society if you cant.
In sum, the particular problems riddling the health care industry that Congress
sought to address, together with the unique factors that characterize the health care
market and its peculiar interconnectedness with the health insurance market, all led
large national problems. Although these economic factors are not precise
formulations, and in the nature of things they cannot be[,] . . . [I] think they point the
way to a correct decision of this case. Lopez, 514 U.S. at 567; see also id. at 579
(Kennedy, J., concurring) ([A]s the branch whose distinctive duty it is to declare
what the law is, we are often called upon to resolve questions of constitutional law
not susceptible to the mechanical application of bright and clear lines. (citation
Upholding the mandate under the particular circumstances of this case would do little
285683, at *28; see also Maj. Op. at 133. But of the examples suggested by the district
court -- supplemental income, credit, mortgage guaranty, business interruption, or
disability insurance -- none insures against risks or costs that are inevitable, or that will
otherwise be subsidized by those with insurance, unlike the relationship between health
insurance and health care services.
280
to pave the way for future congressional mandates that address wholly distinct
problems that may arise in powerfully different contexts. While the individual
mandate is indeed novel, I cannot accept the charge that it is a bridge too far. The
individual mandate, viewed in light of the larger economic regulatory scheme of the
Act as a whole and the truly unique and interrelated nature of both markets, is a
legitimate exercise of Congress power under Art. I, 8, cl. 3 of the Constitution and
B.
the subtext to much of the majoritys opinion, is the deeply rooted fear that the federal
government is infringing upon the individuals right to be left alone -- a fear that is
do not want to do (in this case, buy a product we do not wish to purchase). The
plaintiffs say that Congress cannot compel unwilling individuals to engage in a private
finding firm constitutional footing for the objection. The plaintiffs suggest that the
claim derives, if anywhere, from either of two constitutional provisions: the Fifth
Amendments Due Process Clause or the Tenth Amendment. If derived from the Fifth
281
Amendment, the objection, fairly stated, is that the mandate violates individual liberty,
alternative, if derived from the Tenth Amendment, the objection is that the individual
At the trial court, the plaintiffs squarely raised a Fifth Amendment substantive
due process challenge to the individual mandate, which the district court flatly
rejected. Florida ex rel. McCollum v. U.S. Dept of Health & Human Servs., 716 F.
Supp. 2d 1120, 1161-62 (N.D. Fla. 2010). And while the plaintiffs also challenged the
individual mandate on Tenth Amendment grounds, the district court addressed this
challenge only implicitly in ruling that the mandate exceeded Congress commerce
On appeal, the plaintiffs have expressly disclaimed any substantive due process
challenge to the individual mandate, although they appear still to advance a Tenth
just beneath the surface, inflecting the plaintiffs argument throughout, although
largely dressed up in Commerce Clause and Necessary and Proper Clause terms. For
example, the state plaintiffs go so far as to say that the individual mandate is one of
the Acts principal threats to individual liberty, States Br. at 16, and that upholding
it would sound the death knell for our constitutional structure and individual
282
liberties, id. at 19. Similarly, the private plaintiffs claim that the individual mandate
exemplifies the threat to individual liberty when Congress exceeds its enumerated
powers and attempts to wield a plenary police power. NFIB Br. at 7. Sounding
almost entirely in economic substantive due process, the private plaintiffs also assert
that [a]mong the most longstanding and fundamental rights of Americans is their
freedom from being forced to give their property to, or contract with, other private
parties. Id. at 47. Thus, to the extent the plaintiffs individual liberty-based
challenge to the individual mandate derives from the Fifth and Tenth Amendments,
The Fifth Amendment provides that [n]o person shall . . . be deprived of life,
liberty, or property, without due process of law. U.S. Const. amend. V. Although the
Due Process Clause has both a procedural and a substantive component, only its
substantive aspect is implicated here. The substantive component [of the Due
Process Clause] protects fundamental rights that are so implicit in the concept of
ordered liberty that neither liberty nor justice would exist if they were sacrificed.
Doe v. Moore, 410 F.3d 1337, 1342 (11th Cir. 2005) (internal quotation marks
governmental action, regardless of the procedures employed. Id. at 1343. And any
law, whether federal or state, that infringes upon these rights will undergo strict
283
scrutiny review, which means that the law must be narrowly tailored to serve a
compelling state interest. Id. (quoting Reno v. Flores, 507 U.S. 292, 302 (1993)).
Today, substantive due process protects only a small class of fundamental rights,
including the rights to marry, to have children, to direct the education and upbringing
abortion, Washington v. Glucksberg, 521 U.S. 702, 720 (1997) (citations omitted) --
a list the Supreme Court has been very reluctant to expand, Moore, 410 F.3d at
1343.
process was more broadly interpreted as also encompassing and protecting the right,
liberty, or freedom of contract. See, e.g., Adkins v. Childrens Hosp. of D.C., 261 U.S.
525, 545 (1923); Adair v. United States, 208 U.S. 161, 174-75 (1908). Through this
interpretation of the Due Process Clause, the Supreme Court struck down many federal
and state laws that sought to regulate business and industrial conditions. See, e.g.,
Adkins, 261 U.S. 525 (striking down a federal law fixing minimum wages for women
and children in the District of Columbia); Jay Burns Baking Co. v. Bryan, 264 U.S.
504 (1924) (striking down a Nebraska law regulating the weight of loaves of bread for
22
The name refers, of course, to Lochner v. New York, 198 U.S. 45 (1905), where
the Supreme Court struck down a New York law setting maximum hours for bakery
employees on the ground that it violated the right of contract, as protected by the
Fourteenth Amendments Due Process Clause.
284
sale).
However, the Supreme Court has long since abandoned the sweeping protection
of economic rights through substantive due process. See, e.g., Ferguson v. Skrupa,
372 U.S. 726, 730 (1963) (The doctrine that prevailed in Lochner . . . and like cases --
that due process authorizes courts to hold laws unconstitutional when they believe the
legislature has acted unwisely -- has long since been discarded.); Williamson v. Lee
Optical of Okla., Inc., 348 U.S. 483, 488 (1955) (The day is gone when this Court
uses the Due Process Clause of the Fourteenth Amendment to strike down state laws,
Hotel Co. v. Parrish, 300 U.S. 379, 391 (1937). Today, economic regulations are
presumed constitutional, Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 15 (1976),
and are subject only to rational basis review, Vesta Fire Ins. Corp. v. Florida, 141 F.3d
formulat[e] the alleged fundamental right, Glucksberg, 521 U.S. at 722, which must
be defined in reference to the scope of the [statute at issue], Williams v. Atty Gen.
of Ala., 378 F.3d 1232, 1241 (11th Cir. 2004). In light of the individual mandates
scope, the carefully formulated right would be the right of non-exempted individuals
285
to refuse to maintain a minimum level of health insurance. And this right -- whether
cast as the freedom to contract, the right to remain uninsured, or, in the words of one
commentator, the right to force a society to pay for your medical care by taking a free
heightened protection under the Due Process Clause. The present state of our
jurisprudence does not recognize any such right as a fundamental one, deeply
rooted in this Nations history and tradition, and implicit in the concept of ordered
liberty, such that neither liberty nor justice would exist if [it] were sacrificed.
fundamental right, we are obliged to apply rational basis review, which only asks
Inc. v. United States, 52 F.3d 941, 945 (11th Cir. 1995). Under rational basis review,
legislation must be sustained if there is any conceivable basis for the legislature to
believe that the means they have selected will tend to accomplish the desired end.
Id. at 945-46 (internal quotation marks omitted); see also Williams v. Morgan, 478
F.3d 1316, 1320 (11th Cir. 2007) (A statute is constitutional under rational basis
23
See Is the Obama Health Care Reform Constitutional? Fried, Tribe and Barnett
Debate the Affordable Care Act, Harvard Law School (Mar. 28, 2011),
http://www.law.harvard.edu/news/spotlight/constitutional-law/is-obama-health-care-refor
m-constitutional.html.
286
scrutiny so long as there is any reasonably conceivable state of facts that could
provide a rational basis for the [statute]. (alteration in original) (quoting FCC v.
Here, Congress rationally found that the individual mandate would address the
powerful economic problems associated with cost shifting from the uninsured to the
insured and to health care providers, and with the inability of millions of uninsured
individuals to obtain health insurance. Thus, to the extent the plaintiffs individual
liberty concerns are rooted in the Fifth Amendments Due Process Clause, they must
fail.
which provides that [t]he powers not delegated to the United States by the
Constitution, nor prohibited by it to the States, are reserved to the States respectively,
or to the people. U.S. Const. amend. X. The plaintiffs do not explicitly flesh out how
the mandate violates the Tenth Amendment. The state plaintiffs cite the Tenth
Amendment generally, claiming that [i]f this Court were to uphold [the individual
mandate and the Acts Medicaid expansion], there would remain little if any power
287
(quoting U.S. Const. amend. X).24 And the private plaintiffs suggest that the portion
of the amendment reserving undelegated power to the people provides the basis for
their individual liberty claim. See NFIB Br. at 46 (reciting the Tenth Amendments
admonition that the non-enumerated powers are reserved to the States respectively,
or to the people. (quoting U.S. Const. amend. X) (emphasis in original)); see also
Brief for Cato Institute as Amicus Curiae Supporting the Plaintiffs at 24 ([T]he text
of the Tenth Amendment protects not just state sovereignty, but also popular
sovereignty.).
The Supreme Court, however, has said precious little about the tail end of the
Tenth Amendment that reserves power to the people. Indeed, no case, either from the
Supreme Court or from any lower federal court, has ever invoked this portion of the
amendment to strike down an act of Congress. Instead, the Supreme Courts Tenth
Amendment cases have grappled almost exclusively with the balance of power
24
Indeed, when asked at oral argument if the Tenth Amendment had been
abandoned on appeal, counsel for the states reiterated that the Tenth Amendment is still
very much in this case, and that this is both an individual rights case and a Commerce
Clause enumerated rights case.
25
In Bond v. United States, -- U.S. --, 131 S. Ct. 2355 (2011), the Supreme Court
recently held that an individual has prudential standing to assert injury from
governmental action taken in excess of the authority that federalism defines. Id. at 2363-
64. In other words, Carol Anne Bond had standing to raise federalism-based arguments
in challenging the constitutionality of the criminal statute under which she was indicted,
288
In these cases, the Supreme Court has interpreted the Tenth Amendments
reservation of power to the states to mean that the federal government may not
enact and enforce a federal regulatory program. New York, 505 U.S. at 176 (quoting
Hodel v. Va. Surface Mining & Reclamation Assn, 452 U.S. 264, 288 (1981)); see
also Printz v. United States, 521 U.S. 898, 935 (1997) (The Federal Government may
neither issue directives requiring the States to address particular problems, nor
enforce a federal regulatory program.). The Court has thus held that federal laws
radioactive waste, New York, 505 U.S. at 149, and compelling state agents to conduct
violate the Tenth Amendment. In so holding, the Supreme Court has explained that
the limits the Tenth Amendment imposes on Congress power come not from the
amendments text, but rather from the principle of federalism, or dual sovereignty, that
the Tenth Amendment embodies. See New York, 505 U.S. at 156-57.
But because of the utter lack of Supreme Court (or any other court) precedent,
in time the law will come to breathe practical life into the Tenth Amendments
reservation of power to the people, but that day has not yet arrived.
Setting aside the lack of any precedent on point, a Tenth Amendment challenge
to the individual mandate fails for an additional, and critical, reason: when a federal
law is properly within Congress delegated power to enact, the Tenth Amendment
poses no limit on the exercise of that power. See, e.g., New York, 505 U.S. at 156 (If
disclaims any reservation of that power to the States . . . .); Midrash Sephardi, Inc.
v. Town of Surfside, 366 F.3d 1214, 1242 (11th Cir. 2004) (Because [the Religious
Land Use and Institutionalized Persons Act] is a proper exercise of Congresss power
Amendment.); United States v. Williams, 121 F.3d 615, 620 (11th Cir. 1997) ([T]he
[Child Support Recovery Act] is a valid exercise of Congresss power under the
the Constitution does not violate the Tenth Amendment. (quoting Cheffer v. Reno,
55 F.3d 1517, 1519 (11th Cir. 1995))); N. Ala. Express, Inc. v. ICC, 971 F.2d 661, 666
(11th Cir. 1992) (Because the Tenth Amendment reserves only those powers not
already delegated to the federal government, the Tenth Amendment has been violated
290
only if [the federal law at issue] goes beyond the limits of Congress power under the
Commerce Clause.). Since the individual mandate falls within Congress commerce
power, its enactment is a proper exercise of a power delegated to the United States
by the Constitution. U.S. Const. amend. X. The Tenth Amendment, therefore, has
no independent role to play. In short, the plaintiffs individual liberty claims find little
support in the Constitution -- whether pegged to the Fifth Amendments Due Process
health care services, in the aggregate, shifts enormous costs onto others and thus
means of payment for the consumption of these services. Congress also fairly
determined that the mandate is an essential part of the Acts comprehensive regulation
291
APPENDIX A: OVERALL STRUCTURE OF ACTS NINE TITLES
We outline here the structure and many of the key provisions in these nine
Titles.
and overhauls their health insurance products. Title I requires that private insurers
change their practices and products and offer new and better health insurance policies
for consumers. Title Is hefty insurance reforms include: (1) elimination of preexisting
1
There is also a tenth Title dedicated to amendments to these nine Titles. Although the
amendments are actually located in Title X, we list the substance of the amendments under the
Title being amended.
i
conditions exclusions for children immediately, Act 1201, 1255 (as re-numbered
2014, 1201, 1255 (as re-numbered by 10103(f)); (3) elimination of annual and
lifetime limits on benefits, 1001, 10101(a); (4) required coverage for preventive
services, 1001; (5) immediate extension of dependent coverage up to age 26, 1001;
payments (the medical loss ratio), 1001, 10101(f); (7) prohibition on excessive
process, 1001, 10101(g); and (15) insurance offerings for persons who retire before
2
In this Appendix, we provide citations to the sections of the Act. Our opinions in-depth
discussion of the contents of specific provisions, however, cites to the sections of the U.S. Code
where each provision is now, or will be, codified.
ii
In addition to requiring insurers to offer new, improved health insurance
products, Title I creates new state-run marketplaces for consumers to buy those new
products, accompanied by federal tax credits and subsidies. Title I establishes state-
administered Health Benefit Exchanges where both individuals and small groups can,
and are encouraged to, purchase health insurance plans through non-profits and private
and small businesses to pool resources together and obtain premium prices
competitive with those of large employer group plans. 1311. The Exchange
provisions include: (1) state flexibility to establish basic health programs for low-
income individuals not eligible for Medicaid, 1331; (2) transitional reinsurance
program for sellers of insurance in the individual and small group markets in each
state, 1341; (3) establishment of a temporary risk corridor program for plans in
individual and small group markets, 1342; (4) refundable premium-assistance tax
credit and reduced cost-sharing for individuals enrolled in qualified health plans,
140102; (5) tax credits for small businesses employee health insurance expenses,
if they do not offer any, or an adequate, health insurance plan to their employees.
iii
1513. Title I contains provisions regarding automatic enrollment for employees
services or goods used to facilitate assisted suicide. 1552, 1553, 1556, 1561.
either to purchase health insurance or pay a monetary penalty with their federal tax
return. 1501. Title I includes three exemptions from the mandate and five exceptions
to the penalty, which together exclude many uninsured persons from the individual
mandate. 1501.
CHIP, and initiatives under the Indian Health Care Improvement Act. As to Medicaid,
Title IIs provisions: (1) expand Medicaid eligibility to 133% of the federal poverty
level, 2001; (2) provide Medicaid coverage for former foster children, 2004; (3)
rescind the Medicaid Improvement Fund, 2007; (4) permit hospitals to make
(5) extend Medicaid coverage to freestanding birth center services and concurrent care
iv
to children, 230102; (6) require premium assistance to Medicaid recipients for
Medicaid family planning services, 2303; (8) create a Community First Choice
Option for Medicaid, 2401; (9) remove barriers to providing home- and community-
based services through Medicaid, 2402; (10) reauthorize Medicaid programs aimed
at moving beneficiaries out of institutions and into their own homes or other
community settings, 2403; and (11) protect Medicaid recipients of home- and
The Act: (1) reauthorizes CHIP through September 2015, 10203; and (2) from
October 2015 through September 2019, increases state matching rates for CHIP by 23
percentage points, up to a 100% cap, 2101. Title II requires states to maintain CHIP
Title II also amends and extends the Indian Health Care Improvement Act
(IHCIA). 10221. The Acts IHCIA amendments, inter alia: (1) make the IHCIAs
provisions permanent; (2) expand programs to address diseases, such as diabetes, that
are prevalent among the Indian population; (3) provide funding and technical
assistance for tribal epidemiology centers; (4) establish behavioral health initiatives,
especially as to Indian youth suicide prevention; and (5) authorize long-term care and
v
home- and community-based care for the Indian health system. 10221; see S.1790,
Title IIs provisions also create, or expand, other new publicly-funded programs
that: (1) establish a pregnancy assistance fund for pregnant and parenting teens and
women, 10212; (2) fund expansion of State Aging and Disability Resource Centers,
2405; (3) fund maternal, infant, and early childhood home visiting programs in order
to reduce infant and maternal mortality, 2951; (4) provide for support, education,
and research for postpartum depression, 2952; (5) support personal responsibility
education, 2953; (6) restore funding for abstinence education, 2954; and (7)
designating a health care power of attorney for them as part of their transition planning
Title III primarily addresses Medicare. Title III establishes new Medicare
programs, including: (1) a value-based purchasing program for hospitals that links
(2) a Center for Medicare & Medicaid Innovation to research and develop innovative
Board to present to Congress proposals to reduce Medicare costs and improve quality,
3403, 10320(b); and (4) a new program to develop community health teams
vi
supporting medical homes to increase access to community-based, coordinated care,
3502, 10321. Title III revises the Medicare Part D prescription drug program and
reduces the so-called donut hole coverage gap in that program.3 3301. Title III
Other sundry Medicare provisions in Title III include: (1) quality reporting for
3109; (4) payment for bone density tests, 3111; (5) extensions of outpatient hold-
harmless provisions, the Rural Community Hospital demonstration project, and the
for home health care, 3131; (7) hospice reform, 3132; (8) revision of payment for
Medicare Part C benefit protection and simplification amendments, 3202; and (12)
3
The Medicare Part D donut hole is the gap in prescription drug coverage, where
beneficiaries prescription drug expenses exceed the initial coverage limit but do not yet reach
the catastrophic coverage threshold, meaning beneficiaries must pay 100% of those prescription
drug costs. See 42 U.S.C. 1395w-102(b)(3)(A), (b)(4) (2009). In 2006, the donut hole extended
to yearly prescription drug expenses between $2,250 and $3,600, with values for later years
adjusted by an annual percentage increase. See id.
vii
an increase in premium amount for high-income Medicare Part D beneficiaries,
3308. Title III also includes new federal grants for (1) improving womens health,
3509; (2) health care delivery system research, 3501; and (3) medication
Health Promotion, and Public Health Council, and authorizes $15 billion for a new
Prevention and Public Health Fund to support initiatives from smoking cessation to
fighting obesity. 4001, 4002. Title IV authorizes new publicly-funded programs for
(1) an oral healthcare prevention education campaign, 4102; (2) Medicare coverage
for annual wellness visits, 4103; and (3) the operation and development of school-
based health clinics, 4101. Title IV also: (1) waives Medicare coinsurance
requirements and deductibles for most preventive services, 4104; and (2) provides
states with an enhanced funds-match if the state Medicaid program covers certain
clinical preventive services and adult immunizations, 4106. Title IV further provides
for: (1) Medicaid coverage of comprehensive tobacco cessation services for pregnant
women, 4107; (2) community transformation grants, 4201; (3) nutrition labeling
of standard menu items at chain restaurants, 4205; (4) reasonable break time for
nursing mothers and a place, other than a bathroom, which may be used, 4207; (5)
research on optimization of public health services delivery, 4301; (6) CDC and
viii
employer-based wellness programs, 4303; (7) advancing research and treatment for
Title V seeks to increase the supply of health care workers through education
loans, training grants, and other spending. Title V: (1) modifies the federal student
loan program, 5201; (2) increases the nursing student loan program, 5202; and (3)
health providers, and public health workers who practice in underserved areas, 5203.
Title V also provides for: (1) state health care workforce development grants, 5102;
(2) a national health care workforce commission, 5101; (3) nurse-managed health
clinics, 5208; (4) workforce diversity grants, 5404; (5) training in general,
pediatric, and public health dentistry, 5303; (6) mental and behavioral health
education and training grants, 5306; (7) advanced nursing education grants, 5309;
(8) grants to promote the community health workforce, 5313; (9) spending for
Federally Qualified Health Centers, 5601; and (10) reauthorization of the Wakefield
Emergency Medical Services for Children program, 5603. Title V addresses: (1) the
distribution of additional residency positions, 5503; and (2) rules for counting
resident time for didactic and scholarly activities and in non-provider settings,
550405.
ix
Title VI creates new transparency and anti-fraud requirements for physician-
owned hospitals participating in Medicare and for nursing facilities under Medicare
or Medicaid. Title VI authorizes the HHS Secretary to (1) reduce civil monetary
penalties for facilities that self-report and correct deficiencies, 6111; and (2)
support and service facilities, 6201. Title VI also provides: (1) screening of
providers and suppliers participating in Medicare, Medicaid, and CHIP, 6401; and
Title VI also includes the Elder Justice Act, designed to prevent and eliminate
elder abuse, neglect, and exploitation. 6703. Other Title VI provisions include: (1)
elimination of duplication between the Healthcare Integrity and Protection Data Bank
and the National Practitioner Data Bank, 6403; (6) reduction of maximum period for
submission of Medicare claims to not more than 12 months, 6404; (7) requirement
x
and abuse, 6406; (8) requirement of face-to-face encounter before physicians may
certify eligibility for home health services or durable medical equipment under
outside the United States, 6505; (10) enablement of the Department of Labor to issue
plans in financially hazardous condition, 6605; and (11) mandatory state use of the
Title VII extends and expands the drug discounts through the 340B program.4
7101. Title VII establishes a process for FDA licensing of biological products shown
Title VIII establishes a national voluntary long-term care insurance program for
plans, 9001; (2) an increase in taxes on distributions from individuals health savings
accounts, 9004; (3) increases in the employee portion of the FICA hospital insurance
4
Section 340B of the Public Health Service Act, 42 U.S.C. 256b, establishes a program
whereby HHS enters into contracts with manufacturers of certain outpatient drugs under which
the manufacturers provide those drugs at discounted prices to covered entities generally,
certain enumerated types of federally funded health care facilities serving low-income patients.
Id.; see generally Univ. Med. Ctr. of S. Nev. v. Shalala, 173 F.3d 438, 439 (D.C. Cir. 1999).
xi
tax for employees with wages over certain threshold amounts, 9015; (4) an
health flexible spending accounts under cafeteria plans, 9005; (6) imposition of an
annual fee on manufacturers and importers of branded prescription drugs, 9008; (7)
elimination of the tax deduction for expenses allocable to the Medicare Part D subsidy,
9012; (8) a decrease in the itemized tax deduction for medical expenses, 9013; and
(9) an excise tax on indoor tanning services, 10907. Title IX also provides for: (1)
requirements for hospitals to receive charitable designation and tax status, 9007;
(4) a study and report on the effect of the Acts new fees on drug manufacturers and
insurers on veterans health care, 9011; (5) prohibition on health insurers deducting
employee compensation over $500,000, 9014; (6) tax credit for companies with
fewer than 250 employees that are engaged in research on qualifying therapeutic
discoveries, 9023; and (7) establishment of simple cafeteria plans for small
which is apportioned among insurers based on a ratio designed to reflect each insurers
share of the net premiums written in the United States health care market. 9010,
xii
10905; HCERA 1406.
xiii