11th Circuit Rejects Unlimited Power to Impose Federal Mandates

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The appeals court demonstrates why health insurance requirement is unconstitutional.

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Last week’s 11th Circuit Court of Appeals decision striking down the individual health insurance mandate in the Patient Protection and Affordable Care Act is an important milestone. As the first appellate court to invalidate the law, the 11th Circuit panel correctly recognized that there is no way to uphold the mandate without giving Congress unlimited power to mandate anything.

Judge Frank Hull, an appointee of President Clinton, coauthored the decision, thereby becoming the first Democratic-appointed judge to vote to strike down the mandate. Her opinion undercuts already dubious claims that the lawsuits challenging the mandate are frivolous and contrary to “consensus” expert opinion. Another federal appellate court, the Sixth Circuit, recently upheld the law. The “circuit split” created by the two rulings now makes it likely that the Supreme Court will decide to hear the case soon.

The federal government argues that the mandate is authorized by three provisions of the Constitution: the Commerce Clause, the Tax Clause, and the Necessary and Proper Clause. The Eleventh Circuit compellingly rebutted all three of these arguments.

Both the federal government and those courts upholding the mandate have relied on the Commerce Clause claim more than any other argument. That Clause does give Congress the power to regulate interstate commerce. But it does not authorize the individual mandate.

Failure to purchase health insurance does not involve either a commercial transaction or any kind of interaction that crosses state lines. Since the 1930s, Supreme Court decisions have interpreted the Commerce Clause very broadly. But, as the Eleventh Circuit noted, even the Supreme Court’s broadest decisions applying the Clause “all involved attempts by Congress to regulate preexisting, freely chosen classes of activities,” such as operating a business or farm. If Congress could use the Clause to regulate the mere inactivity of failing to purchase a product, there would be no meaningful limits to its power. Yet both the Founders’ careful enumeration of federal powers and repeated Supreme Court decisions over the years make clear that the Constitution does not give Congress unlimited power.

Defenders of the insurance mandate claim that health care is a special case because everyone eventually uses it. But this argument relies on shifting the focus from health insurance to health care. The same bait and switch tactic can justify any other mandate. For example, not everyone eats broccoli. But everyone does participate in the market for food. Therefore, the federal government’s position would justify a mandate requiring everyone to purchase and consume broccoli.

Fortunately the Eleventh Circuit recognized the flaws in the government’s logic: “The government’s position amounts to an argument that the mere fact of an individual’s existence substantially affects interstate commerce, and therefore Congress may regulate them at every point of their life.” No matter what they do, people are always implicitly making decisions not to use the same time and resources to purchase some product or other.

The government’s Tax Clause argument is similarly flawed. It asserts that the individual mandate is really a tax because it imposes a monetary fine on those who don’t comply. If this logic is correct, it would justify any mandate enforced by a monetary penalty.

As recently as 1996, the Supreme Court drew a clear distinction between taxes and penalties, noting that “[a] tax is a pecuniary burden laid upon individuals or property for the purpose of supporting the Government,” while a penalty is “an exaction imposed by statute as punishment for an unlawful act” or, in the case of the health insurance mandate, an unlawful omission.

Like every other court to have considered the issue, the Eleventh Circuit correctly recognized that the mandate is not a tax but a penalty. As President Obama acknowledged in 2009, “for us to say that you’ve got to take a responsibility to get health insurance is absolutely not a tax increase.”

Finally, the Eleventh Circuit rightly rejected the government’s argument that the Necessary and Proper Clause authorizes the mandate. That Clause gives Congress the power to “make all Laws which shall be necessary and proper for carrying into Execution” other powers granted to Congress in the Constitution. The federal government argues that requiring people to purchase health insurance is needed to ensure that people won’t wait to get insured until after they get sick, something they may be encouraged to do because the health care bill forbids insurance companies from turning away customers with preexisting conditions.

The Eleventh Circuit emphasized that the mandate is not needed to regulate the health insurance market, but merely to counteract a negative effect of a regulation adopted by Congress. It therefore is not actually necessary for “carrying into execution” any of Congress’ enumerated powers. This might be enough to undercut the mandate’s necessity even under the Court’s definition of “necessary,” which includes anything that is “useful or convenient.” The opinion noted that the mandate runs afoul of the several of the five factors that the Court identified as relevant to the assessment of Necessary and Proper cases in its 2010 decision in United States v. Comstock.

Unfortunately, the Eleventh Circuit opinion failed to explicitly consider the most important weakness of the government’s position. Even if the mandate is necessary, it is not “proper.” In cases such as Printz v. United States, the Court has held that these are two separate requirements that must both be met.

The Supreme Court has provided little guidance on the definition of “proper.” But evidence from the Founding era suggests that a proper statute must, at the very least, not depend on a constitutional rationale that gives Congress unlimited power to impose any mandates it wishes. As James Madison explained in Federalist No. 39, the Constitution does not give the federal government “an indefinite supremacy over all persons and things.” If the Supreme Court adopts a definition of “necessary” broad enough to encompass the individual mandate, pretty much any other mandate will also qualify. And any such mandate necessarily has economic effects.

The legal battle over the individual health insurance mandate is far from over. When the issue reaches the Supreme Court, the justices should follow the Eleventh Circuit in refusing to give Congress an unlimited power to impose mandates.

Ilya Somin

Ilya Somin is an Associate Professor at George Mason University School of Law, where he teaches constitutional law.