The case of US Department of Health and Human Services v. Florida, challenging the Affordable Care Act (ACA), is one of the most important cases to reach the Supreme Court in recent memory. Underscoring its importance, the parties and amici curiae filed about 150 briefs and the Court devoted more than six hours of oral argument at the end of March to the issues.
The Florida case raises four issues: (1) whether the individual mandate, which requires Americans to buy health insurance from private companies for the rest of their lives or pay annual penalties, is constitutional; (2) whether the individual mandate, if unconstitutional, is severable from the rest of the ACA and, if not, whether the entire law should be invalidated; (3) whether the Medicaid expansion is constitutional; and (4) whether the Anti-Injunction Act (AIA) bars the Court from reaching the first two issues.
As explained herein, the AIA does not prevent the Court from reaching the merits of the issues before it. Moreover, the Court should rule that the individual mandate is unconstitutional and not severable from the rest of the ACA. As such, the Court should invalidate the entire ACA.
The Anti-Injunction Act
The AIA, enacted in 1867, states in relevant part that "no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person, whether or not such person is the person against whom such tax was assessed." As the Supreme Court has explained in Bob Jones University v. Simon, the AIA is to be read literally and applies to "truly revenue-raising tax statutes." The individual mandate is not a truly revenue-raising tax statute for at least four reasons, and, thus, the AIA does not apply to the Florida case.
First, in Congress's findings supporting the individual mandate, Congress relied exclusively on its Commerce Clause authority. Congress found that the mandate to purchase health insurance "is commercial and economic in nature, and substantially affects interstate commerce." The findings also talk of "[e]ffects on the national economy and interstate commerce," which includes statements made to bolster Congress's assertion of Commerce Clause power and focuses solely on the goal of forcing people into the insurance market. Congress's findings do not mention its taxing power in support of the individual mandate and its penalty, which is unsurprising since the individual mandate's stated purpose is not to generate tax revenue but to create "effective health insurance markets" by forcing millions of Americans to purchase health insurance from private companies.
Second, Congress consciously chose not to refer to the penalty as a "tax" in the ACA. Underscoring that Congress knows the difference between a penalty and tax, Congress distinguished between "taxes" and "penalties" throughout the ACA. Although the individual mandate imposes a "penalty" while expressly relying upon the Commerce Clause, other sections of the ACA impose a "tax" on particular activities or entities, such as high cost employer-sponsored health coverage or indoor tanning services.
Third, Congress also indicated that the penalty is not a tax by prohibiting the use of traditional tax enforcement measures to collect the penalty. The Special Rules subsection of the individual mandate § 5000A(g)(2) declares that a person "shall not be subject to any criminal prosecution or penalty" for failing to timely pay the penalty. In addition, "[t]he Secretary shall not ... file notice of lien with respect to any property of a taxpayer by reason of any failure to pay the penalty imposed by this section," or "levy on any such property with respect to such failure." Had Congress intended the penalty to be a tax, it would not have eliminated key traditional tax enforcement measures.
Finally, Congress specifically listed [PDF] multiple revenue offset provisions within the ACA. Notably, the individual mandate penalty is not listed as a revenue producing provision, which underscores that Congress did not consider the penalty to be one of the many revenue generating provisions of the ACA.
In sum, the individual mandate is not a truly revenue-raising tax statute, and the AIA does not bar the Court from reaching the merits of the Florida case.
The Individual Mandate
The individual mandate, a key component of the ACA, requires millions of Americans to purchase health insurance from a private company for the rest of their lives or face annual penalties.
The individual mandate is unprecedented, as are the justifications offered by the federal government in support of it. The individual mandate marks the first time in American history that Congress has required American citizens to buy a product in the guise of regulating the economy. It goes much further than traditional provisions that merely encouraged Americans to buy products through incentives, for example, the "Cash for Clunkers" program that encouraged the purchase of new fuel-efficient cars.
The unprecedented nature of the individual mandate is strong evidence that the Commerce Clause does not authorize Congress to require an individual to buy something from a private company. In Printz v. US, the Court observed that "[t]he utter lack of statutes imposing [similar] obligations ... (notwithstanding the attractiveness of that course to Congress), suggests an assumed absence of such power." Also, "[I]f ... earlier Congresses avoided use of this highly attractive power, we would have reason to believe that the power was thought not to exist."
The federal government has argued that an individual's decision whether to buy health insurance (including a decision not to buy health insurance), when viewed together with the decisions of other individuals, substantially affects the national economy and is subject to congressional regulation. Under the federal government's reasoning, however, an individual's failure to buy any product or service could also be regulated by a federal mandate to buy the product or service because the failure to buy would substantially affect supply and demand as well as market prices.
If the federal government's view of Congress's Commerce Clause power were accepted, there would be no principled limit to the type of economic mandates that Congress could impose. This is not mere speculation. For example, during oral argument in Goudy-Bachman v. US Department of Health and Human Services, an ACA challenge filed in the US District Court for the Middle District of Pennsylvania, the federal government's attorney acknowledged to the judge that, under the government's theory of the Commerce Clause, if Congress determined that following the adage "an apple a day keeps the doctor away" would improve Americans' health, then Congress would be within its Commerce Clause power to order Americans to purchase apples. Further, the government's attorney did not, and could not, name any requirement to purchase a commodity from a private company that Congress would lack the power to enact.
The absence of any limit on a congressional power to force Americans to buy products from private companies is a critical defect in the ACA. As the Supreme Court has said repeatedly, in cases such as US v. Morrison and US v. Lopez, the Constitution itself illustrates that Congress's power under the Commerce Clause has limits. As the Court in Lopez asserts, without clear limiting principles, Congress's Commerce Clause power would improperly become "a general police power of the sort retained by the States." In his concurring opinion in Lopez, Justice Kennedy stated that "the federal balance is too essential a part of our constitutional structure and plays too vital a role in securing freedom for us to admit inability to intervene when one or the other level of Government has tipped the scales too far."
Another flawed argument offered by the federal government in support of the individual mandate is that Congress can regulate all Americans now, and indefinitely, through mandates to buy insurance because all Americans will eventually participate in broadly defined markets at some point during their lifetimes (health care, housing, transportation, food, etc). This view, however, would transform the power to regulate individuals who voluntarily take part in an interstate market during the duration of their participation in that market into an unwieldy power to micromanage every American's financial decisions long before or after they take any action (if they even take action at all).
A purported exercise of the Commerce Clause power, however, must be predicated upon the regulation of existing, voluntary commercial or economic activity to be valid, not the failure to purchase a product or the anticipated eventual participation in that market. Indeed, Supreme Court jurisprudence does not suggest that Congress may reach individuals who are not engaged in the relevant economic activity. In Gonzales v. Raich, the Court upheld the regulation of individuals who grew marijuana, and in Heart of Atlanta Motel, Inc. v. US, the Court upheld the regulation of individuals who operated motels. Because the individual mandate applies to individuals regardless of whether they are presently engaged in any specific commercial or economic activity, it exceeds the Commerce Clause power.
Moreover, although at times a person's failure to buy a particular product is the result of a deliberate decision-making process, far more often, the individual has not contemplated buying the particular product at all. There is a vast and diverse array of services and products available for sale, many of which an individual will never make an active decision not to purchase. The progression from a congressional power to regulate commerce among the several states to a power to regulate a person's failure to buy a good or service, even one that the person has never thought about, is staggering and bears no connection to the Commerce Clause's text or the Constitution's system of dual sovereignty.
Indeed, should the individual mandate be upheld by the Supreme Court, our nation and system of government will be forever changed. Gone would be the government carefully constructed by our Founders, who deliberately divided power among the various branches and levels of government so that no single individual or entity could wield unlimited power. In Bond v. US, the Court stressed the importance of federalism in US society.
In short, the individual mandate exceeds Congressional power and should be ruled unconstitutional.
The Severability of the Individual Mandate
Once the Court determines that the individual mandate is unconstitutional, it must consider the question of severability.
In Minnesota v. Mille Lacs Band of Chippewa Indians, the Court asserted that "The inquiry into whether a statute is severable is essentially an inquiry into legislative intent." In Alaska Airlines, Inc. v. Brock, the Court wrote that "Congress could not have intended a constitutionally flawed provision to be severed from the remainder of the statute if the balance of the legislation is incapable of functioning independently." With regard to the individual mandate, the Court must determine "whether [after removing the invalid provision] the [remaining] statute will function in a manner consistent with the intent of Congress."
Two factors demonstrate that Congress did not intend the individual mandate to be severable from the rest of the ACA. Consequently, the entire ACA should be invalidated along with the unconstitutional individual mandate.
First, the Affordable Health Care for America Act (H.R. 3962) [PDF], which the House of Representatives approved on November 7, 2009, contained an individual mandate section as well as a severability provision. HR 3962's severability provision, however, was not included in the final version of the ACA. Congress's conscious rejection of a severability clause in the ACA indicates that Congress did not intend for the statute's individual provisions to be severable.
Second, as the Court asserted in Brock, Congress would not intend for a provision to be severable if severing it would allow an inoperable or counterproductive regulatory scheme to stand. Without the individual mandate, the ACA's remaining portions cannot function "in a manner consistent with the intent of Congress." The federal government has conceded as much. In Mead v. Holder, the federal government asserted in the US District Court for the District of Columbia that the individual mandate is essential to the workings of the ACA's reforms to the health insurance and health care markets. The federal government stated [PDF] that:
Indeed, as the federal government has candidly acknowledged, the individual mandate is essential to the overall operation of the ACA. It follows that Congress could not have intended the individual mandate to be severable from the rest of the law. Without the individual mandate, the ACA's reforms to the health care and health insurance markets could not function effectively, and the statute may very well not have been enacted. These observations, along with the fact that Congress deleted a severability provision from an earlier version of the health care reform legislation, lead to one conclusion: the individual mandate is not severable from the ACA's remaining provisions. Consequently, the Court should rule the entire law invalid, which would also resolve the issue of the constitutionality of the ACA's Medicaid expansion.
- the ACA's "reforms of the interstate insurance market ... could not function effectively without the [individual mandate] provision."
- the individual mandate is "an 'essential' part of the Act's larger regulatory scheme for the interstate health care market."
- Congress found the individual mandate "not only is adapted to, but is 'essential' to, achieving key reforms of the interstate health care and health insurance markets."
- "Congress determined, also with substantial reason, that [the individual mandate] provision was essential to its comprehensive scheme of reform. Congress acted well within its authority to integrate the provision into the interrelated revenue and spending provisions of the Act."
The Supreme Court should rule the individual mandate unconstitutional and invalidate the entire ACA. If the Court reaches that conclusion, our country would continue on its path as founded one where the people have granted Congress limited powers and have reserved the remaining powers for themselves and the states in order to preserve individual liberty through the division of government power. Problems with the health care and health insurance systems could be addressed thereafter through a variety of constitutional means at the federal and state levels.
Jay Sekulow is Chief Counsel of the American Center for Law and Justice. He specializes in the law of religious freedom and hosts a syndicated daily radio program. He has argued 12 cases before the US Supreme Court, including several landmark cases in Establishment Clause and Free Exercise Clause jurisprudence.
Edward White is Senior Counsel with the American Center for Law and Justice. He specializes in civil rights litigation, representing clients across the country primarily in the areas of free speech and religious freedom. He previously served as an Assistant US Attorney, handling federal civil and criminal cases at the trial and appellate court levels.
Suggested citation: Jay Sekulow & Edward White, Values of Federalism at Stake in Health Care Litigation, JURIST - Hotline, Apr. 9, 2012, http://jurist.org/hotline/2012/04/sekulow-white-health-care.php.
This article was prepared for publication by Stephen Krug, an assistant editor for JURIST's professional commentary service. Please direct any questions or comments to him at email@example.com