Early this afternoon the 11th Circuit Court of Appeals
declared the individual mandate of the PPACA unconstitutional in a 2-1
decision.
The case, Florida v.
U.S. Department of Health and Human Services, is the matter filed on behalf
of 26 states, the NFIB, and a handful of individual plaintiffs. Most notably the lower court decision in this
case was one of only two declaring the individual mandate unconstitutional, and
the only case declaring the entirety of Obamacare unconstitutional as a result.
My previous analysis from January 2011 of the lower court
ruling can be found here.
What this means for
the Supreme Court
The Supreme Court now has two competing appellate decisions
from different parts of the country on the same issue: the earlier
decision from the 6th Circuit upholding the individual mandate, and now
this decision from the 11th Circuit declaring the individual mandate
unconstitutional. This "circuit
split" is one of the strong factors considered by the Supreme Court when
deciding to take a case.
What this means for
the challengers in the 11th Circuit
There was always a danger that the 11th Circuit challengers
might win this case, but that the government might seek and obtain en banc review (review by the entire
appellate court). This would have
delayed a petition to the Supreme Court for months and months. Instead the challengers lost on a couple of
issues, and may file a petition for Writ
of Certiorari as soon as they are ready.
Introduction to the opinion
The opinion is a monstrous 304 pages (including the brief
appendix). Below is an analysis
primarily of the majority decision, and what it means for challengers of the
individual mandate throughout the country.
Judges Dubina and Hull
wrote for the majority, while Judge Marcus wrote the dissent.
Findings and Medicaid
- the first 67 pages
Most of the first 67 pages are devoted to stating factual
findings, primarily reciting the legislative history of the PPACA,
Congressional findings regarding the bill, and actual terms of the bill.
Did you know the suit filed by the states challenged
Congressional authority to expand the mandates within Medicaid? This is the portion of the lawsuit in which Virginia did not also
file a similar action. The states actually
lost on this issue in the lower court and the decision was the same here before
the 11th Circuit. The short version of
how Medicaid works is that states may opt out of the program, and so any
constraint placed on the program by Congress are inherently not coercive, and coercion
equals unconstitutionality.
The history of the
Commerce Clause and explanation of the necessary and proper clause
The Commerce Clause is one of the enumerated powers under Article
1 § 8 of the U.S. Constitution allowing Congress to write laws "To
regulate Commerce with foreign Nations, and among the several States . .
." The majority goes to great
lengths to detail commerce clause jurisprudence in pages 67-92 of the
opinion. A Constitutional law course on
the Commerce Clause could be taught from this portion of the brief.
Pages 92-99 are devoted to explaining the Necessary and
Proper Clause also of Article 1 § 8 of the U.S. Constitution allowing Congress
"to make all Laws which shall be necessary and proper for carrying into
Execution the foregoing Powers, and all other Powers vested by this
Constitution in the Government of the United States . . ."
The individual
mandate exceeds the powers allowed under the Commerce Clause
Given the length of the opinion I will allow the judges to
speak for themselves:
In commenting on the court's need to intervene: "When
Congress oversteps those outer limits [of the Commerce Clause], the
Constitution requires judicial engagement, not judicial abdication." p.
104.
On the issue of activity v. inactivity: "[T]he Supreme
Court has always described the commerce power as operating on already existing
or ongoing activity." p. 108. Nonetheless, "we are not persuaded that
the formalistic dichotomy of activity and inactivity provides a workable or
persuasive enough answer in this case."
p. 109. The decision is not made
based on the concept that not buying health insurance constitutes activity or
inactivity.
What the Court views as the actual legal question: "We
perceive the question before us to be whether the federal government can issue
a mandate that Americans purchase and maintain health insurance from a private
company for the entirety of their lives." p. 112.
On the unprecedented nature of behavioral mandates (economic
or otherwise): "Given the attractiveness of the power to compel behavior
in order to solve important problems, we find it illuminating that Americans
have, historically, been subject only to a limited set of personal mandates:
serving on juries, registering for the draft, filing tax returns, and
responding to the census." p. 119.
"[T]he individual mandate is a sharp departure from all prior
exercises of federal power." p. 120.
Why looking at the decision to not purchase health insurance
by everyone (i.e. in the aggregate) is not a justification for the individual
mandate: "Applying aggregation
principles to an individual’s decision not to purchase a product would expand
the substantial effects doctrine to one of unlimited scope." p. 124. "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." p. 125.
On what is actually being regulated: "But the individual
mandate does not regulate behavior at the point of consumption . . . Instead,
the language of the individual mandate in fact regulates a related, but
different, subject matter: when health insurance is purchased." p. 130 (internal quotations omitted).
Why the federal
government's analysis of Commerce Clause Jurisdiction is incorrect
On the nefarious reason why the federal government chooses
to argue that the individual mandate is Constitutional under the Commerce
Clause because it regulates the consumption of healthcare (as opposed to health
insurance): "Because an
individual’s decision to forego purchasing a product is so incongruent with the
“activities” previously reached by Congress’s commerce power, the government
attempts to limit the individual mandate’s far-reaching implications. Accordingly, the government adroitly and
narrowly redefines the regulated activity as the uninsured’s health care
consumption and attendant cost-shifting, or the timing and method of payment
for such consumption." pp. 135-136.
On the issue of the uniqueness of the healthcare system as
the government's argument for allowing this one infringement of the bounds of
the Commerce Clause: "The
government’s five factual elements of “uniqueness,” proposed as constitutional
limiting principles, are nowhere to be found in Supreme Court precedent.
Rather, they are ad hoc, devoid of constitutional substance, incapable of
judicial administration—and, consequently, illusory." p. 168.
Translated this means the
government's argument that healthcare is a special area of the economy and has
different Constitutional limitations has absolutely no basis in law.
The other concerns of
the Court and the thrilling conclusion
The Court acknowledged that insurance is traditionally an
area of state concern and this increases the Constitutional concerns. The Court also indicates that striking the
individual mandate will not hinder the ability of Congress to regulate
insurance companies.
And most importantly the sweeping conclusion! "The federal government’s assertion of
power, under the Commerce Clause, to issue an economic mandate for Americans to
purchase insurance from a private company for the entire duration of their
lives is unprecedented, lacks cognizable limits, and imperils our federalist
structure." p. 171.
The individual
mandate is not a tax
If the penalty from the individual mandate is a tax it is
much easier for the government to show that it is Constitutional. The Court noted that no Court has upheld the
individual mandate penalty because it is considered a tax. "It is not surprising to us that all of
the federal courts, which have otherwise reached sharply divergent conclusions
on the constitutionality of the individual mandate, have spoken on this issue
with clarion uniformity." p. 173.
And later the Court concludes, "The plain language of the statute
and well-settled principles of statutory construction overwhelmingly establish
that the individual mandate is not a tax, but rather a penalty." p. 174.
And the challengers
suffer a major loss
The individual mandate was found to be severable from the
remainder of Obamacare. Essentially
courts are required to leave a statute intact, and simply remove the
unconstitutional portions if at all possible.
The lower court found that the individual mandate was not severable from
the remainder of the Act and therefore struck down the whole of Obamacare. The 11th Circuit has reversed that decision,
and merely determined the individual mandate itself was unconstitutional.
Judge Marcus's
dissent
Judge Marcus wrote an over 80 page dissent determining that
the individual mandate is Constitutional under the Commerce Clause. I may go back later and pull quotes from this
section to show differences in thought form other judges that upheld the
individual mandate.
Conclusion
This was a great day for challengers of the individual
mandate. A victory was obtained in a
federal appellate court accompanied by sound reasoning. This nearly assures that the
Constitutionality of the individual mandate will be decided by the Supreme
Court.
I may, over the next week, explain the standing ruling in
the 11th Circuit and why it does not bode well for the Commonwealth of Virginia.
My previous analysis of litigation regarding the individual
mandate can be found here.
