Individual Mandate Now 2-1-1 in Circuit Court; Supreme Court Will Weigh-In…

Richard

On November 14 the Supreme Court agreed to review the constitutionality of the Affordable Care Act’s individual mandate, granting petitions for writs of certiorari on four aspects of the 11th Circuit Court’s decision in Florida et al v. Dept. of H&HS et al

Specifically, the Court agreed / asked to hear arguments from all parties regarding the following questions[1]:

(1)    Anti-Injunction Act Applicability (Supreme Court order)

“Whether the suit brought by respondents to challenge the minimum coverage provision of the Patient Protection and Affordable Care Act is barred by the Anti-Injunction Act, 26 U.S.C. §7421(a)

(2)    Constitutionality (Dept. of H&HS et al petition for writ cert)

Whether Congress had the power under Article I of the Constitution to enact the minimum coverage provision

(3)    Severability (National Federation of Small Business et al[2] petition for writ cert; Florida et al petition for writ cert)

“Whether the ACA must be invalidated in its entirety because it is nonseverable from the individual mandate that exceeds Congress’ limited and enumerated powers under the Constitution”

“[Whether] the Affordable Care Act‘s mandate that virtually every individual obtain health insurance exceed[ed] Congress‘s enumerated powers and, if so, to what extent (if any) can the mandate be severed from the remainder of the Act”

A week before the Court’s pivotal order, on Tuesday November 8, a split DC Circuit Court ruling in Seven-Sky v. Holder upheld the individual mandate provision of the Affordable Care Act (ACA). Judge Kavanaugh [GW Bush nominee] dissented on jurisdiction, invoking the Anti-Injuction Act. The result is somewhat surprising given that two of the three judges (Kavanaugh and Silberman [Reagan nominee]) are considered conservative, and had rather aggressively pressed for even a single example of an economic mandate that would be unconstitutional under the administration’s interpretation of the Commerce Clause – which the administration’s lawyers were unable to provide[3]

With this decision, two Circuits have upheld the mandate based on the Commerce Clause [the 6th (Thomas More Law Center v. Obama) and DC (Seven-Sky)]; one has ruled the mandate unconstitutional, exceeding the Commerce Clause [the 11th (State of Florida et al v. US DHHS et al)]; and one has punted on jurisdiction under the Anti-Injunction Act [the 4th (Liberty University et al v. Geithner et al)][4], [5]

Nearly every federal court opinion rendered to date has acknowledged the novelty of the individual mandate as an exercise of Congress’ Commerce Clause powers – however in Seven-Sky, Judge Silberman writing for the majority additionally notes that the plaintiffs argument against the mandate is likewise unique: “No Supreme Court case has ever held or implied that Congress’s Commerce Clause authority is limited to individuals who are presently engaging in an activity involving, or substantially affecting, interstate commerce”

Judge Silberman argues Wickard v. Filburn (in which the Court ruled that Congress could prevent a farmer from growing wheat for his own personal consumption, in effect forcing him to purchase on the open market) “comes very close to authorizing a mandate similar to ours [the individual minimum coverage mandate].” While the majority admits to discomfort with government’s inability to define any limits on Congress’ Commerce Clause power under their interpretation, the judges concede that they likewise struggle to define the limits themselves “either because the power to require the entry into commerce is symmetrical with the power to prohibit or condition commercial behavior, or because we have not yet perceived a qualitative limitation”

Aggregating the body of all majority and dissenting opinions of judges who have ruled on ACA cases at the Circuit level, a single ‘meta ruling’ would fairly convincingly uphold the mandate (6-3, with 3 precluded from ruling based on the AIA). (Exhibit 1)

We would concede that the party of the appointing president is a highly imperfect proxy for a judge’s political ideology, let alone judicial philosophy. However it is worth noting that in this small sample of Circuit Court judges, Republican appointees have been far more likely to rule the mandate constitutional than Democrat appointees have been to rule the mandate unconstitutional. Whether this is in fact judicial modesty, the strength of the administration’s Commerce Clause arguments or statistical noise we dare not speculate

However if for argument’s sake one were to assume the Circuit Court judges are representative of the Supreme Court justices, the accumulated votes weigh in favor of the mandate. A simple weighting of the Circuit Court opinions to (crudely) control for the “ideologies” of the 9 Supreme Court justices, would yield an expected margin of 5.7 – 3.3 upholding the mandate. As a comparison, the same calculation before incorporating the Seven-Sky ruling (i.e. at the time we published our original ACA / Supreme Court primer in late October) suggested a much narrower 4.7 – 4.3 vote to uphold. In that prior note, we declined to handicap the likelihood of the High Court upholding the mandate, but subjectively thought Justice Kennedy (who remains the key swing vote) was more likely than not to vote against the mandate, implying a 5-4 vote to strike down

At the risk of reading too much into Seven-Sky, this decision brings the judge-by-judge total to a 1 vote swing in favor of the mandate in the ideological projection – which, if layered onto our subjective analysis, effectively swings the court back to a 5-4 decision in favor of the mandate

Frankly, Justice Kennedy’s relationship with the Commerce Clause – particularly in the context of the individual mandate – remains an enigma to us. Kennedy was on the Court for 3 crucial Commerce Clause precedents, and his mixed record complicates any effort at predicting his vote in an ACA case. In both recent precedent cases limiting Commerce Clause power (U.S. v. Lopez, U.S. v. Morrison) he (somewhat reluctantly) voted with the more conservative majority in striking down the underlying statutes because the activities they sought to regulate were not economic in nature. However, he also voted with the (more liberal) majority in upholding broad congressional power under Commerce in Gonzalez v. Raich , even though the activity regulated by the statute in question in that case involved no actual commerce

Though Seven-Sky and a review of Kennedy’s prior Commerce Clause decisions makes us marginally less confident that the mandate is struck down by the Supreme Court (and keep in mind, we were not particularly confident previously), none of this changes our larger thesis that the economic relevance of the mandate is overestimated



[1] Additionally, the public appellants (i.e., not the NFIB) had asked, and the Court agreed to consider, whether the Medicaid expansion in the ACA was legal:

“[Whether] Congress exceeded its enumerated powers and violate basic principles of federalism when it coerce[d] States into accepting onerous conditions that it could not impose directly by threatening to withhold all federal funding under the single largest grant-in-aid program”

[2] NFIB was a party to the Florida case, but filed their own petition for writ cert with the Supreme Court

[3] http://www.forbes.com/sites/aroy/2011/09/29/d-c-appeals-court-points-the-way-to-individual-mandates-defeat/

[4] We exclude the dismissal of Virginia at the 4th Circuit, as the ruling was based on the standing of the appellant, not on the merits of the challenge, or jurisdiction of the federal courts.

[5] Please see “ACA at the Supreme Court – What You Should Know,” Sector & Sovereign Research LLC, October 24, 2011


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