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Michael Ramsey


In the Health Care Case, Could Federalism Lose the Battle and Win the War?
Michael Ramsey

In the challenges to the health care act being argued to the Supreme Court next week, most commentators assume that the Court will either advance federalism by striking down the law’s “individual mandate” (the requirement that everyone purchase health insurance) or deal a blow to federalism by upholding the mandate.  I want to explore an alternate scenario: that the Court might enhance federalism by upholding the mandate. 

My suggestion builds on the observation that the individual mandate seems a better case for national regulation than many other things the national government does.  Health insurance is a national market and arguably the individual mandate is an essential (or at least crucial) component of Congress’ regulatory scheme.  As Andrew Koppelman puts it at Balkinization,

Congress has the power, under the Commerce Clause, to regulate insurance, and so to mandate that insurers cover people with preexisting medical conditions. … Under the Necessary and Proper Clause, it may choose any convenient means to carry out this end. The  mandate [to purchase insurance] is clearly helpful, and may even be absolutely necessary, to Congress’s purpose. Therefore it is constitutional. Full stop.

True, the mandate is (essentially) unprecedented in compelling unwilling individuals to enter the market to buy something they don’t want.  But it’s not obvious as an original constitutional matter why that line in particular is one Congress cannot cross.

The bigger problem for federalism, from an originalist perspective, is that Congress regulates all sorts of local activity that doesn’t have a close connection with a broader regulation of the national market.  Consider the recent case Sackett v. EPA, where the Court considered how property owners could challenge an EPA order relating to how they used their land.  (The Sacketts wanted to build a house on their property; the EPA objected because it – somewhat dubiously – considered the property a “wetland” subject to federal law).  The Court’s decision for the Sacketts turned only on a procedural point; an underlying question, though, is why the federal government should be entitled to regulate local land use unrelated to a broader concern of the national market. 

The culprit here is not so much Wickard v. Filburn, the growing-wheat-in-your-backyard case that has drawn much attention in the challenge to the individual mandate.  Instead it’s a slightly earlier case, United States v. Darby, from 1941.  The outcome in Darby may well be right: it allowed federal regulation of working conditions at a factory that produced goods principally for the interstate market.  But in reaching that conclusion the Court said that Congress could regulate intrastate activity with a “substantial effect” on interstate commerce.

“Substantial” is a slippery word that can mean anything from “quite a lot” to “barely more than nothing.”  In later cases, especially in the lower courts, the latter meaning came to predominate.  And coupled with Wickard’s “aggregation” principle (which looks at the aggregate effect of all actors who might engage in the activity, not just the effect of those before the Court), the result seems to allow Congress to reach essentially all economic activity, interstate or not.

This is, for example, how the Sacketts’ private land use might come under Congress’ authority.  To improve the land, the Sacketts need to buy materials; some of those materials will have moved in interstate commerce; and if everyone were to improve their land as the Sacketts did, by buying materials in interstate commerce, then likely a “substantial effect” could be found.  And that's a challenge for defenders of the health care law: a persuasive argument for the individual mandate must find a limiting principle, or else Congress ends up with power to regulate almost everything -- an outcome wholly opposed to the basic constitutional structure.

From an textual perspective the misstep is the focus on “substantial effect,” a phrase that doesn’t appear in the Constitution.  Congress has two relevant textual powers: “to regulate Commerce … among the several States” and “to make all Laws which shall be necessary and proper for carrying into Execution” that regulatory power.  (In Sackett there may be a separate argument based on Congress’ power over interstate waterways, but I regard that as an even less plausible basis for that case).  The Constitution's text thus suggests a different test, something along the following lines: to regulate matters that are not themselves commerce among the several states, Congress needs to show (1) that it is elsewhere regulating actual interstate commerce; and (2) in order to carry into effect that regulation, it needs also to reach a matter that’s not interstate commerce because otherwise the effectiveness of the interstate regulation will be undermined. 

EPA’s regulation of the Sacketts would likely fail this test, because there’s no interstate-commerce-regulating federal law that’s threatened by the Sacketts’ activity.  Regulating the Sacketts’ land use is the end in itself.  That should put it outside the federal government’s commerce power, because the subject of the law isn't itself interstate commerce, and the law isn't “necessary” (even in the soft sense of “reasonably necessary”) to effectuate a regulation of commerce "among the several States."

Most of the Court’s key post-Darby cases are consistent with this approach – including Wickard, which arose out of Congress’ comprehensive regulation of the national wheat market, and Katzenbach v. McClung (the “Ollie’s Barbeque” case), which arose out of Congress’ desire to open interstate travel to all races without discrimination. 

The Court’s 2005 decision in Gonzales v. Raich (the medical marijuana case) points this way too (though I think the Court misapplied the principle).  There, Congress had enacted a comprehensive prohibition of interstate marijuana distribution (a regulation of commerce among the several states).  Non-economic local activity that undermined that regulatory project should also be reachable by Congress, under the necessary and proper clause, as the Court held.  Justice Scalia’s concurrence made the point explicit; he rejected an untethered “substantial effects” test and instead asked whether the regulation of local activity is “a necessary part of a more general regulation of interstate commerce.”  The Court (and Scalia) erred, I would say, in assessing the degree to which local use of marijuana for medical purposes – even if aggregated under Wickard – actually would interfere with the federal interstate regulation.  But that’s a quibble.  The broader point is that the Court in Gonzales asked the right question.  

What does this mean for the individual mandate?  The short answer is that Professor Koppelman may be right: the mandate is a key implementing provision of Congress’ comprehensive regulation of interstate commerce in health insurance.  Thus it’s “necessary” to carrying into execution a textually enumerated power, in the sense of “necessary” that Chief Justice Marshall outlined in the McCulloch v. Maryland, and it could be upheld on this basis.  In sum, it's constitutional because it's incidental to (and important for) a regulation of the national market.

But by putting the matter this way, the Court could aggressively call into question other much more egregious (from an originalist perspective) congressional intrusions into local matters that cannot be defended on this basis.  The goal should be to create an intelligible limit on Congress’ power that allows Congress to deal with national economic problems but leaves a significant body of issues beyond Congress’ reach.  By insisting that Congress’ regulations of intrastate or non-economic activities are constitutional under the commerce clause only if they are an important part of a broader regulation of the national market, the Court could uphold the individual mandate yet point the way to stronger federalism limits elsewhere.