Obamacare on trial: The Supreme Court and health care reform

[The Congress shall have power] “To regulate Commerce with foreign Nations, and among the several States, and with the Indian tribes.” Constitution Article I, Section 8, Clause 3.”

Obamacare goes on trial beginning Monday. The fate of this law now rests with the Supreme Court and its decision on its constitutionality will hinge on how it interprets the Commerce clause and a Supreme Court case decided in 1942.

In 2010 President Barack Obama signed into law the Patient Protection and Affordable Care Act of 2009. The law, known to its critics as “Obamacare,” was a significant effort to regulate health care insurance in the United States in order to provide coverage for more individuals. Among the major provisions of the law was a mandate that required individuals who otherwise did not have health care coverage (such as through their employers) to purchase the coverage or face a fine. The bill cleared Congress along partisan lines, with Democrats supporting it and Republicans opposing it. Tea party activists, especially disliked the law, contending that it also violated the Tenth Amendment and states’ rights.

Many contended that this personal individual mandate was unconstitutional. A range of claims were offered to support this assertion, but the main argument was that Congress lacked the authority under the Commerce clause to mandate individuals purchase health care insurance. Shortly after the passage and signing into law, several legal challenges to the Patient Protection and Affordable Care Act were brought in court. Four cases reached decisions on the merits regarding the constitutionality of the act under the Commerce clause. Two district court decisions, Liberty University, Inc. v. Geithner, and Thomas More Law Center v. Obama upheld the individual mandate under the Commerce clause while two other cases Commonwealth ex rel. Cuccinelli v. Sebelius, and Florida v. Health and Human Services, found it exceeded Congress’ power under the Commerce clause. Federal courts of appeal also split over the constitutionality of the individual mandate.

The heart of the constitutional issue is actually quite simple. First, is the decision not to purchase health care insurance an act that affects interstate commerce? If it does, then Congress does in fact have the authority to mandate its purchase.

The Commerce clause is perhaps the most potent clause in the Constitution depending federal power. Its insertion into the original Constitution of 1787 was made necessary because the then existing Articles of Federal government (the first constitution for the United States) proved ineffective in preventing individual states from discriminating against one another. States imposed tariffs and special taxes on imports, and the national government seemed ineffective in building a national market and regulating trade. For some the Commerce clause is the heart of the Constitution.

Some of the Supreme Court’s most important and major constitutional decisions defining the scope of congressional power have been rooted in interpretations of the commerce clause. Cases such as Gibbons v. Ogden (1824) defined congressional commerce power as almost limitless, but other decisions have drawn its power and scope more narrowly. In the post Civil War Nineteenth century Supreme Court decisions struck down numerous federal laws, ruling that efforts to regulate certain business practices either did not constitute commerce or that they exceeded the scope of the power Congress could regulate. For example, in Hammer v. Dagenhart (1918) the Supreme Court ruled that Congress lacked authority under the Commerce clause to regulate child labor.

The highwater mark of the Supreme Court invalidating congressional legislation as exceeding its Commerce clause authority occurred during the first New Deal in the 1930s. In decisions such as Schechter Poultry Corporation v. United States (1935), United States v. Butler (1936), and Carter v. Carter Coal Co. (1936) the Court ruled that many of the original pieces of New Deal legislation pushed by FDR and passed by Congress exceeded the constitutional limits imposed by the Commerce clause.

However, then it all changed. In 1937 FDR threatened the Court with a plan to add more justices. As a result of that threat, the retirement of some justices, and his replaced with new ones, the Supreme Court changed its mind in a new round of New Deal cases, upholding them as not inconsistent with the Commerce clause. Among the most notable decisions, Wickard v. Filburn (1942).

In Wickard, at issue was whether a small dairy farmer who planted wheat for personal use could be fined under the Agricultural Assessment Act (AAA) because his production wheat violated the quota he was allotted. Wickard had argued that his growing of wheat for personal use had no direct impact on interstate commerce and therefore Congress had exceeded its constitutional authority in the creation of the AAA and in the imposition of the quota and fine. The Supreme Court rejected Wickard’s arguments, ruling that statutory penalties may be applied to those who raise more than the assigned quotas of acres of wheat even though the wheat is to be consumed on the farm and not moved in interstate commerce. The Court held that this exerts a substantial economic effect on interstate commerce since “it supplies a need of the man who grew it which would otherwise be reflected by purchases in the open market.” For the Court, decisions not to purchase goods can impact interstate commerce–such as the decision not to purchase wheat and grow it instead for personal consumption.

The fate of Obamacare rests with what Wickard means as a precedent. Does the decision not to purchase health care insurance burden or affect interstate commerce? This is the question before the Supreme Court starting Monday. Do not look to the Court striking down the entire law–at issue is only a portion of it (the individual mandate) and not the entire act.

Since decided in 1942, Wickard’s expansive reading of the Commerce clause has been used to justify extensive regulation and legislation, including promoting civil rights laws, anti-trust, and protection of the food supply. The Court has agreed with clams that refusing to serve customers, for example, affects interstate commerce, thereby justifying civil rights or anti-discrimination laws.

There have been only two decisions since Wickard that have invalidated federal legislation under the Commerce clause. In 1992 the Court in United States v. Lopez struck down a provision of the Gun-Free School Zones Act of 1990 as exceeding federal commerce powers. And in 2000 the Court in United States v. Morrison strikes down a provision of the Violence Against Women Act of 1994 as exceeding federal commerce powers. Both of these decisions were decided under the Rehnquist Court when both Chief Justice William Rehnquist and Justice Sandra Day O’Connor pushed an agenda limiting federal power and championing states rights. Outside of these two cases, no other federal law has been invalidated on Commerce clause grounds since 1937–75years ago.

But the Rehnquist Court is not the Roberts court. The current court that replaced Rehnquist with Roberts and O’Connor with Alito is less interested in federalism issues (limits on the federal government) than its predecessor. One can easily see a scenario where this Court upholds Obamacare, especially if it follows Wickard. Not purchasing health insurance and thereby shifting costs of medical care to others (for the uninsured) is just as much an impact on interstate commerce as the decision of one farmer not to buy wheat but purchase it.

Whatever the Court does do, its impact politically will be significant. Were Obama and the federal government to win it might rally the conservatives come November, whereas an Obama loss might mobilize Democrats and liberals. Thus, losing in Court might be a political blessing for November.

Note: Today's blog draws upon a discussion of health care reform and the Commerce Clause found in my textbook Constitutional Law in Contemporary America, published by Oxford University Press.

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    David Schultz's picture
    David Schultz

    David Schultz is a professor in the School of Business at Hamline University.