Saturday, August 13, 2011

Why the 11th Circuit’s Opinion Self-Destructs

Guest Blogger

Mark Hall

Like a tragic literary figure, the 11th Circuit’s opinion declaring the individual mandate unconstitutional is doomed to failure by its own internal contradictions. What follows is a series of quotes directly from the opinion, paired to show how desperately the majority twisted logic in order to find its path to a unsupportable conclusion:

1. On the key necessary and proper argument, the court obfuscated as follows:
The government’s argument derives from a Commerce Clause doctrine of recent [1995] vintage: . . . the “essential part of a larger regulation of economic activity” language in Lopez. . . . Raich [is the] the only instance in which a statute has been sustained by the larger regulatory scheme doctrine.

HOWEVER, the court was well aware that
The Supreme Court’s most definitive statement of the Necessary and Proper Clause’s function remains Chief Justice Marshall’s articulation in McCulloch v.Maryland: 17 U.S. (4 Wheat.) 316, 421 (1819).

2. Wearing this historical and precedential blinder, the court framed the relevant test as whether the mandate is “essential” to the ACA’s overall regulatory scheme:
[W]e conclude that the Supreme Court’s “larger regulatory 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 separately considered, if they have such a close and substantial relation to interstate commerce that their control is essential or appropriate to protect that commerce from burdens and obstructions, Congress cannot be denied the power to exercise that control.” . . . [The failure to purchase insurance] in no way “burdens” or “obstructs” Congress’s ability to enforce its regulation of the insurance industry. . . . The government’s assertion that the individual mandate is “essential” to Congress’s broader economic regulation is further undermined by components of the Act itself.

BUT, of course, “essential,” “burden,” and “obstruct” are not the operative tests. Instead, the court itself explained earlier in its decision that a much more lenient rational basis test applies:
“the Necessary and Proper Clause makes clear that the Constitution’s grants of specific federal legislative authority are accompanied by broad power to enact laws that are ‘convenient, or useful’ or ‘conducive’ to the authority’s ‘beneficial exercise.’” . . . On the breadth of the Necessary and Proper Clause, the Comstock Court noted that The Supreme Court must determine whether a federal statute “constitutes a means that is rationally related to the implementation of a constitutionally enumerated power.” “[T]he relevant 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.”
The court never invokes or applies this test, even though (and perhaps because) it is one that the government easily meets.

3. On whether the mandate relates to commerce:
[W]e are not persuaded that the formalistic dichotomy of activity and inactivity provides a workable or persuasive enough answer in this case. Although the Supreme Court’s Commerce Clause cases frequently speak in activity-laden terms, the Court has never expressly held that activity is a precondition for Congress’s ability to regulate commerce—perhaps, in part, because it has never been faced with the type of regulation at issue here. . . . As an inferior court, we may not craft new dichotomies ... not recognized by Supreme Court doctrine. . . .
BUT, of course the decision was all about a new categorical limit:
[T]he Act is forcing market entry by those outside the market . . . 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 “activity”—financial decisions whose effects are felt some time in the future—but it wishes to do so through a heretofore untested power: an economic mandate. . . . [T]his distinction . . . in truth [] strikes at the heart of whether 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. . . . Never before has Congress sought to regulate commerce by compelling non-market participants to enter into commerce so that Congress may regulate them. . . . The individual mandate does not wait for market entry.
4. On the slippery slope concern:
To connect this conduct to interstate commerce would . . . allow Congress to regulate anything. . . . 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 . . .
BUT, why is this any real concern, considering:
The fact that Congress has never before exercised this supposed authority is telling . . . 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, inflation, and unemployment, Congress never sought to require the purchase of wheat or war bonds, force a higher savings rate or greater consumption of American goods, or require every American to purchase a more fuel efficient vehicle . . . .
5. On the mandate’s fit with legislative purposes, the court complained that:
the individual mandate’s attempt to reduce the number of the uninsured and correct the cost-shifting problem is woefully overinclusive.
BUT, the court also criticized the mandate for being underinclusive:
Even if the individual mandate remained intact, the “adverse selection” problem identified by Congress would persist not only with respect to [the] eight broad exemptions, but also with respect to those healthy persons who choose to pay the mandate penalty. . . . Additionally, Congress has hamstrung its own efforts to ensure compliance with the mandate by opting for toothless enforcement mechanisms.
6. The court thought the mandate is not necessary to regulate insurers because:
[T]he conduct regulated by the individual mandate—an individual’s decision not to purchase health insurance and the concomitant absence of a commercial transaction—in no way “burdens” or “obstructs” Congress’s ability to enforce its regulation of the insurance industry.
BUT, the court conceded there is universal agreement that the mandate is needed to combat adverse selection:
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.
AND, in an analogous regulatory arena (flood insurance), the court went to some length to explain that:
Without an “individual mandate,” the flood insurance program has largely been a failure. . . . One key reason for this low participation is not surprising. . . . People living in a flood plain know that even if they do not have insurance, they can count on the virtually guaranteed availability of federal funds.
7. Finally, on the government’s burden of persuasion, the court reflexively said:
We, as all federal courts, must begin with a presumption of constitutionality . . . We are loath to invalidate an act of Congress, and do so only after extensive circumspection.
BUT of course how it really thought and reasoned was:
[T[he government has been unable, either in its briefs or at oral argument, to point this Court to Supreme Court precedent that addresses the[] constitutionality [or economic mandates]. . . . The government’s position . . . affords no limiting principles in which to confine Congress’s enumerated power. . . . [T]he government’s insistence that we defer to Congress’s fact findings underscores the lack of any judicially enforceable stopping point . . . . At best, we can say that the uninsured may, at some point in the unforeseeable future, create [a] cost-shifting consequence. Yet this readily leads to a scenario where we must “pile inference upon inference” to sustain Congress’s legislation . . . . The government’s factbased criteria would lead to expansive involvement by the courts in congressional legislation, requiring us to sit in judgment over when the situation is serious enough to justify an economic mandate.

Mark Hall is Fred D. & Elizabeth L. Turnage Professor of Law at Wake Forest University School of Law. You can reach him by e-mail at mhall at