Saturday, August 13, 2011

A few remarkable sentences in the Eleventh Circuit’s health care decision

Andrew Koppelman

I haven’t much to add to Mark Hall’s fine map of the contradictions in the Eleventh Circuit’s opinion holding that the health care mandate is unconstitutional. The constitutional objections are silly, for reasons I’ve explained elsewhere. But it is worth noting a few remarkable moves buried in the verbose, 207-page opinion.

Opponents of the mandate must reckon with the Supreme Court’s very recent, repeated declaration that Congress may regulate even local, noneconomic behavior when such regulation is “an essential part of a larger regulation of economic activity, in which the regulatory scheme could be undercut unless the intrastate activity were regulated.” Gonzales v. Raich, 545 U.S. 1, 23-24 (2005) (quoting United States v. Lopez, 514 U.S. 549, 561 (1995)). The district judge in the case below had found that “the individual mandate is absolutely ‘necessary’ and ‘essential’ for the Act to operate as it was intended by Congress.” That seems to be the end of the inquiry: if Congress can require insurers to take even those with preexisting conditions, and adverse selection means that insurance markets will unravel without a mandate, then the mandate is necessary to the regulatory scheme.

The joint opinion of Judges Dubina and Hull responds by declaring that it is none of Congress’s business if people go without insurance and transfer their health care costs to others: “An individual’s uninsured status in no way interferes with Congress’s ability to regulate insurance companies.” (slip op. 164) This presumes that Congress is indifferent to the consequences of its regulatory scheme: it just likes to regulate insurance companies. Congress’s declared aim in the statute, however, is to reduce the number of the uninsured. Without the mandate, the law’s protection of people with preexisting conditions would mean that healthy people could wait until they get sick to buy insurance. Because insurance pools rely on cross-subsidization of sick people by healthy participants, that would bankrupt the entire health insurance system. The individual mandate charges those people for at least some of the costs they impose on their fellow citizens. The joint opinion presupposes that these catastrophic effects are irrelevant to the regulatory scheme.

The opinion goes on: “At best, the individual mandate is designed not to enable the execution of the Act’s regulations, but to counteract the significant regulatory costs on insurance companies and adverse consequences stemming from the fully executed reforms. That may be a relevant political consideration, but . . .” (165) So now the frustration of the statutory purpose is merely a “political consideration.”

Oddly, the opinion also complains about the statute’s “toothless enforcement mechanisms” (166): the penalty isn’t big enough (reaching a maximum of $695 per person in 2016, see p. 46) and isn’t imposed with criminal penalties or liens, so it can only offset any tax refund owed to the uninsured person. The court is right that the penalty is pretty mild, probably too mild to accomplish what it aims to accomplish. By what logic, though, can this be relevant to the question of Congressional power? Would the mandate be constitutional if the enforcement provisions were nastier?

Congress ordinarily has a choice of means for carrying out its enumerated powers. The opinion does not explain why the mandate is not part of that reasonable choice of means.

The one useful contribution made by the majority opinion is the severability portion. The opinion reverses the district judge’s holding that the mandate is not severable from the rest of the statute. Here, the weakness of the mandate is quite relevant. “There is tension, at least, in the proposition that a mandate engineered to be so porous and toothless is such a linchpin of the Act’s insurance product reforms that they were clearly not intended to exist in its absence.” (202) This also suggests that a decision invalidating the mandate, while it would certainly be wrong, might be less of a catastrophe for Obama than everyone has been suggesting. Knocking out this weak enforcement mechanism would not much disrupt the statutory scheme in light of the elaborate system of other incentives to reduce the number of uninsured, including subsidies, tax credits, and mandates for employers (all described at 200). (Which would not keep it from being an egregious abuse of judicial power.)