Monday, December 13, 2010

The "Activity-Inactivity" Distinction

Mark Tushnet

I don't think anyone was surprised that conservative Judge Henry Hudson held the individual mandate unconstitutional. What's surprising is the traction that the distinction he relied on has gotten. Congress, according to Judge Hudson, has the power to regulate economic activity but not economic inactivity, that is, a failure to participate in some market such as the insurance market. This distinction seems to me unsound in principle but, more important, inconsistent with the governing precedents. The primary one is Wickard v. Filburn, which is usually described as holding that Congress has the power to regulate economic activities that, taken in themselves, have no substantial effect on interstate commerce but when aggregated do have such an impact. The economic activity in Wickard was the consumption on a person's own farm of wheat grown on that farm.

What the farmer did, though, could just as easily -- indeed, probably more easily -- be described as a failure to purchase wheat in the general market. (Justice Jackson's opinion made the point in this way: "The effect of the statute before us is to restrict the amount which may be produced for market and the extent, as well, to which one may forestall resort to the market by producing to meet his own needs" (emphasis added). Those who do not purchase health-care insurance "forestall resort to the market" by paying the full out-of-pocket costs of their medical care when they incur those costs (or at least assert that they are willing to do so) or by relying on charity to cover the costs (although I would think that in principle the person should forgo that portion of the charity care attributable to the public decision to grant tax-exempt status to charitable health care -- or at least that Congress could require that the person do so).

The government's argument is that the "activity/inactivity" distinction requires too narrow a time-focus -- on the moment at which the decision to purchase or not purchase insurance is made, rather than on the lifetime consumption of health care -- or, alternatively and equivalently, that the relevant market is the healthcare market, not the insurance market. That seems to me right: Filburn, after all, did not participate in the market for wheat, but that didn't prevent Congress from regulating his failure to do so.

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