Battle Over Obama Health Care Law: A Legal Primer

Jan. 24, 2011 -- Call it the war of the constitutional scholars.

At issue is the constitutionality of the Obama administration's health care law, specifically a provision called the "individual mandate" that requires individuals to buy health insurance by 2014 or pay a penalty.

On one side you have the constitutional-scholar-in-chief, President Obama, who says that Congress, through its power to tax and regulate interstate commerce, was well within its authority to pass the law in 2010. Last week more than 100 law professors released a statement saying, "Congress's power to regulate the national healthcare market is unambiguous."

But across the battlefield, opponents of the law are focused on the scope of federal power. They contend that Congress had no right to require individuals to enter a marketplace and buy a particular good or service. "If this mandate is not struck down," says Georgetown law professor Randy Barnett, "we will no longer be citizens, we will be subjects. The federal government will be able to command citizens to do anything short of violating a fundamental right."

Barnett admits the majority of his colleagues disagree with his position, but says that the consensus will shift as the legal challenges mature and the political debate continues.

Status of Current Lawsuits:

Currently federal judges across the country are hearing challenges to the law from 28 states and private parties. Two federal judges have upheld the law, while another in Virginia struck down the individual mandate. In the coming days a major decision is expected from US District Court Judge Roger Vinson in Florida that could balance out the score card. In court proceedings Vinson seemed skeptical of some of the administration's positions.

Both sides have vowed to take their appeals all the way to the Supreme Court and, court watchers are already trying to read the tea leaves of past decisions hoping to divine how the justices will rule.

"Ultimately, the Supreme Court will have to decide the case " says Bradley Joondeph of Santa Clara University who has not taken a position on the constitutionality of the law.

"The lower court decisions matter" he says "because they can affect the political discourse surrounding the law and can also affect the perceived legitimacy of the constitutional arguments. The more judges that strike down the individual mandate, the more likely that argument is to gain traction ultimately at the Supreme Court. "

The Individual Mandate and the Commerce Clause:

The administration 's central authority points to the Commerce Clause of the Constitution, which gives Congress the power to regulate interstate commerce. Lawyers for the Obama administration outline the astronomical costs of the uninsured, which, they argue in court papers, "shift $43 billion in the cost of their care annually to other market participants, including providers, insurers, and the insured population."

"We are talking about the regulation of a $2 trillion industry," says University of North Carolina law professor Bill Marshall, who supports the law. "The argument that the federal government cannot regulate what is one of the most important aspects of interstate commerce in this country is considerable and could be devastating, to not just health care, but other kinds of government regulation as well."

But critics say that while Congress might be able to regulate economic activity, it cannot regulate whether someone chooses not to buy insurance. They say that is legally labeled as "inactivity."

Experts say the issue of activity vs. inactivity is a novel question, and so far two federal judges have come to opposite conclusions. U.S. District Judge Henry Hudson, who recently struck down the individual mandate, agreed with the law's critic s that Congress has no right to regulate inactivity.

But U.S. District Court Judge George Caram Steeh of the Eastern District of Michigan, who upheld the law, scoffed at the notion that someone who doesn't participate is legall inactive. " Far from 'inactivity,'" the Judge wrote in his October 2010 decision, "by choosing to forgo insurance plaintiffs are making an economic decision to try to pay for health care services later, out of pocket, rather than now through the purchase of insurance."

Necessary and Proper Clause:

The Justice Department also argues that the law is constitutional under the "necessary and proper" clause, which gives Congress the power to "make all laws which shall be necessary and proper for carrying into execution the foregoing powers."

In court papers, Justice Department lawyers say that the mandate "is a reasonable means to accomplish Congress' goal of ensuring access to affordable coverage for all Americans. It is therefore necessary and proper to the valid exercise of the Commerce Clause power."

According to Santa Clara's Joondeph, "The government is invoking the necessary and proper clause, arguing in essence that even if the individual mandate -- seen in isolation -- does not regulate interstate commerce, it is a necessary component of a broader regulatory scheme that does clearly regulate interstate commerce. "

But again Judge Hudson disagreed. In his ruling striking down the individual mandate, he said that an individual's personal decision whether to purchase -- or to decline to purchase -- health insurance from a private provider is "beyond the historical reach of the Commerce Clause." He concluded that the necessary and proper clause "does not provide a safe sanctuary."

Hudson saw the dispute as not being about regulating the business of insurance but about an individual's right to choose to participate. He echoed the argument of Virginia Attorney Gen. Kenneth Cuccinelli, who said, "This case is not about health insurance or health care, it's about liberty."

A Tax or Not a Tax?

The health care law stipulates that in 2014 if an individual chooses not to buy health insurance he will be subject to a penalty to be paid as a part his annual tax return.

Supporters of the law say the mandate is also constitutionally valid under Congress' authority to use its taxing and spending power under the General Welfare Clause in Article I of the Constitution ("the Congress shall have Power To lay and collect Taxes").

But critics say that the penalty is not a tax and thus does not fall under Congress' taxing authority. They say its intended purpose is not to raise revenue but to serve as a punishment and compel individuals to enter into private commercial transactions.

Medicaid:

The state of Florida, joined by 26 other states, also argues that the law will unfairly burden the state in having to provide costly Medicaid to more citizens. Florida Attorney General Pam Bond argues, "The implementation of this law could add more than 1.9 million Floridians to the Medicaid program, a tremendous financial burden on our state at a time when our budget has no room for extra expenses."

But the Obama administration argues that Medicaid is voluntary and states can withdraw from the program if they don't like it. During oral arguments in the Florida case, Deputy Attorney General Ian Gershengorn argued, "State sovereignty is respected when states are given the choice to opt out." As a policy matter the Obama administration says that the federal government will cover the majority of the costs of new enrollees over the next several years. It says that in the long run, states will save money because their citizens will have more medical coverage.

The case is not expected to reach the Supreme Court for about two years. The legal and political scene at that time could change the backdrop of the debate.