Day two of the oral arguments before the United States Supreme  Court, regarding the constitutionality of the federal health reform law’s “individual mandate,” did not disappoint.

If Monday’s oral arguments (largely dealing with jurisdictional  issues) were tantamount to a skirmish, Tuesday’s arguments—taking head-on the legitimacy of the individual mandate—seemed more akin to a genteel sort of  firefight. By late Tuesday morning the ideological battle lines noticeably absent Monday were starkly drawn between the conservative and liberal wings of the Court.

We have long believed those lines would become clear at this  point in the oral arguments, with Justices Breyer, Ginsburg, Sotomayor and Kagan on the left, and Justices Scalia, Thomas, Alito and (probably) Chief Justice  Roberts on the right. It appeared the the wildcard might be Justice Anthony Kennedy.  Kennedy is a Reagan appointee who has been the deciding swing vote in a number of cases.

Although later in the morning Justice Kennedy seemed more open to the argument that the mandate is constitutional, his questions much earlier in the proceedings seemed to signal a healthy dose of skepticism. Just minutes into the argument by Solicitor General Donald Verrilli (arguing on behalf of the Obama Administration in defense of the mandate), Justice Kennedy interrupted him:

Justice Kennedy:  [W]hen you are changing the relation of the individual to the government in this, what we can stipulate is, I think, a unique way, do you not have a heavy burden of justification to show authorization under the Constitution?

His conservative colleagues, Justices Alito and Scalia, and Chief Justice Roberts, were more pointed in the early moments. They challenged  Verrilli’s argument that the mandate is necessary to stem the cost shifting that occurs when those without insurance receive medical care. The cost of that care is shifted to those with insurance.

The conservative justices peppered Verrilli with requests to explain why, if Congress can compel Americans to buy health insurance, it cannot  also compel them to buy burial insurance (to prevent shifting the cost of burial to the state), a cell phone (to dial authorities in the case of an emergency), broccoli, automobiles (to help hold down the cost of cars to others) or health club memberships (to reduce the need for medical care and thus reduce cost shifting).

Verrilli distinguished a mandate to purchase health insurance as a product that is used to finance something else (e.g., medical care) and without it, someone else must pay.

But Justice Kennedy seemed troubled by the precedent the individual mandate sets. He repeatedly pushed Verrilli to articulate—assuming Congress has the right to impose the individual mandate—what limits, if any, Congress then has under the Constitution’s Commerce Clause.

“[T]he federal government is not supposed to be a government that has all powers,” Kennedy noted. “It’s supposed to be a government of limited
powers…what is left? If the government can do this, what else can it not do?”

Verrilli struggled to articulate a limit.

Chief Justice Roberts seemed sympathetic to the problem Congress was trying to correct, in imposing the individual mandate. But he too expressed concern that if the mandate were ruled constitutional, there would effectively be no limit to Congress’s reach under the Commerce Clause:

Chief Justice Roberts: But once we say that there is a market and Congress can require people to participate in it…it seems to me that we can’t say there are limitations on what Congress can do under its commerce power…all bets are off….

The Mandate Makes a  Second-Half Rally

By the time Verrilli sat down the individual mandate seemed destined for a 5-4 decision striking it down as unconstitutional. Yet when former Solicitor General Paul Clement rose to make his argument against the mandate, the proceedings took additional interesting turns.

Clement represents the 26 states challenging the individual mandate. Under questioning from the Court, Clement conceded that his clients’ view of the mandate’s unconstitutionality is poised on a very narrow ledge indeed. He admitted that Congress could legitimately have passed a law requiring that all payment for health care services be made with insurance. That is, he conceded that Congress could have required the purchase of insurance at the point of sale, at the point the individual receives health care.

“Well, Mr. Clement,” quipped Justice Kagan, the Court’s newest member, “now it seems as though you’re just talking about a matter of timing…and Congress surely has within its authority to decide, rather than at the point of sale, given an insurance-based mechanism, it makes sense to regulate it earlier. It’s just a matter of timing.”

Clement deftly parried Kagan’s argument:

Clement: Well, Justice Kagan, we don’t think it’s a matter of timing alone, and we think it [the mandate] has very substantive effects. Because if Congress tried to regulate at the point of sale, the one group it wouldn’t capture at all are the people who don’t want to purchase health insurance and also have no plans of using health care services in the near term. And Congress very much wanted to capture those people. I mean, those people are essentially the golden geese that pay for the entire lowering of the premium.

But as the morning wore on, the Justices closer to the political center, Chief Justice Roberts and Justice Kennedy, seemed to grow more sympathetic  to the cost-shifting problem the mandate is intended to solve.

Earlier, two of the Court’s more liberal Justices had come to Verrilli’s defense, suggesting that what Congress may do, in terms of compelling individuals to engage in commercial transactions, depends on the situation. Questions from Breyer and Ginsburg implied that they see the tremendous cost shifting that occurs in the health care marketplace as justification for Congressional intervention via the mandate.

Justice Alito swatted impatiently at the argument:

Justice Alito: The reason there is cost shifting is because the government has mandated that. It has required hospitals to provide emergency treatment, and instead of paying for that through a tax which would be borne by everybody, it has…set up a system in which the cost is surreptitiously shifted to people who have health insurance and who pay their bills when they go to the hospital.

Michael Carvin, arguing against the mandate on behalf of the National Federation of Independent Businesses, seized the opening:

Carvin: [The government] seems to be saying, “Look, we couldn’t just force people to buy insurance to lower health insurance premiums. That would be no good. But we can do it because we’ve created the problem. We, Congress, have driven up the health insurance premiums, and since we’ve created that problem, this somehow gives us authority that we wouldn’t otherwise have.” That can’t possibly be right.

As he neared the end of his allotted time, Clement worked to move the Court’s focus from the cost-shifting problem to the question of whether Congress’s answer to the problem was a necessary and proper answer, as it must be to pass muster under the Commerce Clause.

The Justices and the attorneys seemed to agree on one thing:  Congress has the right to regulate individuals once they enter the stream of commerce. The question that divided them was whether an individual without insurance is, at that point, actually in the stream of commerce.

Clement argued that the individual without insurance is not in the market, and that the mandate forces him or her to enter that market. Yet Justice Kennedy was quick to point out, “But they [the uninsured] are [already] in the market in the sense they are creating a risk the market must account for.”

Justice Breyer wondered whether Congress could require certain high-polluting cars to install specific emission-control devices, to  control pollution that crosses state lines and collaterally affects commerce. Carvin conceded it could. Then why, Breyer asked, can’t Congress impose the individual mandate to arrest the cost-shifting that occurs nationwide in the context of uninsured health care?

Carvin had the answer. “[The distinction] is this,” he said. “They can’t require you to buy a car with an anti-pollution device.”

Congress and the Power to Tax

Solicitor General Verrilli also argued that, even if Congress does not have the power to impose the mandate under the Commerce Clause of the Constitution, the mandate is authorized by Congress’s general power to impose taxes. The mandate, Verrilli argued, is sufficiently tax-related because failure to comply can trigger an assessment that is collected like a tax.

But it was hard to find a Justice, on either side of the political spectrum, who seemed inclined to agree with him. Justice Sotomayor noted that Congress took pains to not call the individual mandate penalty a “tax,” and likely did so for a reason. Justice Ginsburg noted that taxes are, fundamentally, designed to raise revenue but the individual mandate penalty was designed to compel behavior and, if successful, would raise no revenue.

Justice Alito wondered how the mandate could be viewed as a tax when it is imposed on individuals some of whom, due to income levels, won’t be subject to the penalty no matter how the penalty is described (i.e., as a tax or something else).

Conclusion 

Today (Wednesday) the Court turns its attention to another question: If the mandate is struck down, must the Court jettison all or at least a portion of the balance of the health reform law?

— Ed Fensholt