The Constitutionality of the Patient Protection and Affordable Care Act David Orentlicher, MD, JD Visiting Professor of Law University of Iowa College of Law Samuel Rosen Professor and Co-Director, Hall Center for Law and Health Indiana University School of Law-Indianapolis

The constitutional question The national government is a government of limited powers—Congress must be able to invoke an enumerated power to enact any legislation The national government is a government of limited powers—Congress must be able to invoke an enumerated power to enact any legislation What is the source of power for the “individual mandate” to purchase health care? What is the source of power for the “individual mandate” to purchase health care? Potential sources of power for the individual mandate Potential sources of power for the individual mandate Commerce Clause (Art. I, § 8, cl. 3) Commerce Clause (Art. I, § 8, cl. 3) Taxing and Spending Clause (Art. I, § 8, cl. 1) Taxing and Spending Clause (Art. I, § 8, cl. 1)

Commerce Clause challenge According to critics, the individual mandate cannot be justified under the Commerce Clause According to critics, the individual mandate cannot be justified under the Commerce Clause The Commerce Clause allows Congress to regulate interstate economic activity or intrastate economic activity that has an interstate impact The Commerce Clause allows Congress to regulate interstate economic activity or intrastate economic activity that has an interstate impact The individual mandate constitutes the regulation of “inactivity” The individual mandate constitutes the regulation of “inactivity”

Commerce Clause response The Commerce Clause allows Congress to regulate health insurance companies The Commerce Clause allows Congress to regulate health insurance companies In the Affordable Care Act, Congress has prohibited health insurance companies from taking into account individual health status (i.e., no preexisting conditions clauses) In the Affordable Care Act, Congress has prohibited health insurance companies from taking into account individual health status (i.e., no preexisting conditions clauses) Just as the Civil Rights Acts of 1964 prohibit discrimination on the basis of race or sex, the Affordable Care Act of 2010 prohibits discrimination on the basis of health status Just as the Civil Rights Acts of 1964 prohibit discrimination on the basis of race or sex, the Affordable Care Act of 2010 prohibits discrimination on the basis of health status

Commerce Clause response It’s not fair to prohibit preexisting conditions clauses if individuals can pick and choose when to buy insurance—healthy people will just wait until they’re sick to purchase insurance It’s not fair to prohibit preexisting conditions clauses if individuals can pick and choose when to buy insurance—healthy people will just wait until they’re sick to purchase insurance The anti-discrimination provision will work only if people are required to carry health care insurance The anti-discrimination provision will work only if people are required to carry health care insurance The individual mandate thus is an implied part of the Commerce Clause power (Steeh, E.D. Mich., Oct. 2010; Moon, W.D. Va., Nov. 2010) The individual mandate thus is an implied part of the Commerce Clause power (Steeh, E.D. Mich., Oct. 2010; Moon, W.D. Va., Nov. 2010) The individual mandate is justified under the Necessary and Proper Clause (Art. I, § 8, cl. 16) The individual mandate is justified under the Necessary and Proper Clause (Art. I, § 8, cl. 16)

Commerce Clause response The individual mandate should not be seen as a regulation of inactivity The individual mandate should not be seen as a regulation of inactivity Rather, it entails a regulation of the economic decision whether to purchase health care insurance or to self-insure Rather, it entails a regulation of the economic decision whether to purchase health care insurance or to self-insure Everyone uses the health care system at some point, so must either carry insurance or pay out of pocket Everyone uses the health care system at some point, so must either carry insurance or pay out of pocket Steeh, E.D. Mich., Oct. 2010; Moon, W.D. Va., Nov Steeh, E.D. Mich., Oct. 2010; Moon, W.D. Va., Nov. 2010

Commerce Clause response What about Lopez and Morrison? Hasn’t the Supreme Court narrowed the reach of the Commerce Clause? What about Lopez and Morrison? Hasn’t the Supreme Court narrowed the reach of the Commerce Clause? In those cases, the Court was worried about Congress intruding into areas of local concern that should be regulated by states (K-12 education, local crime). Access to health care insurance is a matter of national concern. In those cases, the Court was worried about Congress intruding into areas of local concern that should be regulated by states (K-12 education, local crime). Access to health care insurance is a matter of national concern. In Raich, Perez and other cases, the Court upheld provisions that, standing alone, would probably not be constitutional but were permissible as part of broad regulatory programs that were valid overall. In Raich, Perez and other cases, the Court upheld provisions that, standing alone, would probably not be constitutional but were permissible as part of broad regulatory programs that were valid overall.

Taxing Power argument Individuals who lack health care insurance must pay 2.5 percent of their income (subject to minimum and maximum payments) Individuals who lack health care insurance must pay 2.5 percent of their income (subject to minimum and maximum payments) Critics of the mandate claim that Congress termed the payment a “penalty” rather than a tax, and Congress is bound by that decision (Vinson, N.D. Fla., Oct. 2010) Critics of the mandate claim that Congress termed the payment a “penalty” rather than a tax, and Congress is bound by that decision (Vinson, N.D. Fla., Oct. 2010) Congress is not bound by its stated source of authority. If another source of authority exists, that is sufficient Congress is not bound by its stated source of authority. If another source of authority exists, that is sufficient To be valid, a tax need only serve the general welfare and have a non-exclusive, revenue-raising purpose To be valid, a tax need only serve the general welfare and have a non-exclusive, revenue-raising purpose Sonzinsky, 300 U.S. 506 (1937); Sanchez, 340 U.S. 42 (1950) Sonzinsky, 300 U.S. 506 (1937); Sanchez, 340 U.S. 42 (1950)

Taxing Power argument Critics of the individual mandate claim as well that Critics of the individual mandate claim as well that The “tax” for failure to carry health care insurance is either an excise tax or a direct tax The “tax” for failure to carry health care insurance is either an excise tax or a direct tax If an excise tax, it needs to be imposed uniformly across the United States If an excise tax, it needs to be imposed uniformly across the United States If a direct tax, it needs to be apportioned across the states according to their populations If a direct tax, it needs to be apportioned across the states according to their populations Not clear that the tax is an excise tax, and in any event, it is imposed uniformly (2.5% of income or standard minimum or maximum payments) Not clear that the tax is an excise tax, and in any event, it is imposed uniformly (2.5% of income or standard minimum or maximum payments) The tax is not a direct tax—neither a tax on property nor a tax imposed on everyone, regardless of age, income, profession, or other circumstance The tax is not a direct tax—neither a tax on property nor a tax imposed on everyone, regardless of age, income, profession, or other circumstance

Medicare precedent If Medicare is constitutionally valid, so must be the individual mandate Medicare Part A entails a mandate to purchase hospital coverage for one’s senior years; the Affordable Care Act entails a mandate to purchase health care coverage for one’s current years Critics of the individual mandate recognize that Congress could have passed “Medicare-for-All” But Medicare-for-All constitutes a greater exercise of the national government’s power than does the Affordable Care Act—If the concern is to constrain governmental power, then the Affordable Care Act should be preferable to Medicare-for-All