Why the Supreme Court Will Strike Down All of Obamacare


ACRU Staff


April 6, 2012

This column by ACRU General Counsel and Senior Fellow for the Carleson Center for Public Policy (CCPP) Peter Ferrara was published April 5, 2012 on Forbes.com.

Barack Obama made a national laughingstock out of himself with his recent comments on the Obamacare law now before the Supreme Court. Obama said on Monday, “I’m confident that the Supreme Court will not take what would be an unprecedented, extraordinary step of overturning a law that was passed by a strong majority of a democratically elected Congress.” (emphasis added).

President Obama is not stupid. But he thinks you are. He knows the Obamacare health care takeover was not passed by a strong majority. But he figures you’re so dumb he can rewrite recent history in plain sight. The law passed a House with a huge Democrat majority at the time by only 219-212. It did not get a single Republican vote, but the opposition was bipartisan.

The law also barely squeaked past a Senate filibuster despite an overwhelming 60 Senate Democrats, and even then humiliating buyoffs were necessary. Public opposition was so strong that the ultraliberal Democrat controlled Massachusetts, the only state to go for George McGovern in 1972, elected a Republican in a special election for Sen. Ted Kennedy’s seat, to terminate the Democrats’ filibuster-proof majority. That required final passage of the law improperly in violation of Congressional rules as a reconciliation measure, which is only to be used to clean up the budget and so cannot be filibustered.

And given that Obama is so certain you can’t remember what happened just two years ago, he is more than certain that you have never heard of the ancient history of Marbury v. Madison, where the 14-year old Supreme Court in 1803 took the then unprecedented step of overturning a provision of law adopted by a strong majority of a democratically elected Congress, in the Judiciary Act of 1789. That case was where the Supreme Court first recognized its power of judicial review, under which it is empowered to strike down laws found unconstitutional. As the Wall Street Journal observed on Tuesday:

“In the 209 years since, the Supreme Court has invalidated part or all of countless laws on grounds that they violated the Constitution. All of these laws were passed by a ‘democratically elected’ legislature of some kind, either Congress or in one of the states. And no doubt many of them were passed by ‘strong’ majorities….probably stronger majorities than passed the Affordable Care Act.”

As a former constitutional law professor and President of the Harvard Law Review, Obama no doubt knows all about Marbury v. Madison and judicial review. But he figures he can safely assume a majority of you know nothing about it, and his party controlled media will not tell you anything concerning it at this inopportune moment. Hence, another classic example of what I have called Calculated Deception.

President Obama further assailed any Supreme Court decision ruling his Obamacare health care takeover unconstitutional as “judicial activism, or a lack of judicial restraint, that an unelected group of people would somehow overturn a duly constituted and passed law.” Alexander Hamilton disagreed over 200 years ago in Federalist 78, writing, “There is no position which depends on clearer principles, than that every act of a delegated authority, contrary to the tenor of the commission under which it is exercised, is void. No legislative act, therefore, contrary to the Constitution, can be valid. . . .”

Or, as the Wall Street Journal explained on Monday:

“Judicial activism is not something that happens every time the Supreme Court overturns a statute. The Justices owe deference to Congress and the executive, but only to the extent that the political branches stay within the boundaries of the Constitution. Improper activism is when the Court itself strays beyond the founding document to find new rights or enhance its own authority without proper constitutional grounding.”

The Journal added, “Far from seeking an activist ruling, the Obamacare plaintiffs aren’t asking the Court to overturn even a single commerce clause precedent.”

In my role as General Counsel of the American Civil Rights Union, I filed 3 amicus curiae briefs with the Supreme Court in the Obamacare litigation. I also filed amicus briefs in the lower federal courts in the cases in Virginia and Florida.

The reason that at least 5 Justices are going to find the law’s individual mandate unconstitutional is that it is contrary to the fundamental federalism architecture of the Constitution. Under the Constitution, the federal government is an authority of limited, enumerated, delegated powers. All other powers of government are reserved for the states, including the broad authority labeled the “police power.” That is the power to compel individuals to take specific actions for the public good, such as actions for the public health like vaccinations or quarantines, or obtaining car insurance, or attending school. Notice that all such laws are adopted at the state or local level. (Any federal laws compelling action are based on specific delegated powers other than the Commerce Clause, like those providing for national defense, or taxation).

The power to compel the purchase of health insurance for the public good, as in Obamacare’s individual mandate, is a function of the police power reserved to the states, and denied to the federal government by the Constitution and Supreme Court precedents. If the federal government is now to hold a national police power, then the constitutional framework of federalism, with limited, enumerated powers delegated to the federal government, and the remaining powers of government retained by the states, would be obliterated.

That is why the Supreme Court held in United States v. Morrison, 529 U.S. 598 (2000), “We always have rejected readings of the Commerce Clause and the scope of federal power that would permit Congress to exercise a police power.” The Court added, “the principle that the Constitution created a Federal Government of limited powers, while reserving a generalized police power to the States, is deeply ingrained in our constitutional history.” The Court explained in New York v. United States, 505 U.S. 144 (1992) that Congress may not exercise its enumerated powers in a way that “infring[es] upon th[at] core of state sovereignty.” The Court in Morrison rejected the argument that women who are sexually assaulted would need medical care and that provides a sufficient interstate commerce connection under the Commerce Clause for federal regulation of violence against women.

As Justice Kennedy explained in United States v. Comstock, 130 S. Ct. 1949 (2010), “the precepts of federalism embodied in the Constitution inform which powers are properly exercised by the National Government in the first place.” The Court added in Gregory v. Ashcroft, 501 U.S. 452, 457 (1991), “[t]he Constitution created a Federal Government of limited powers [and] withhold[s] from Congress a plenary police power that would authorize enactment of every type of legislation.”

The Obama Administration tried to shoe horn the individual mandate into the federal enumerated power of the Commerce Clause, which grants Congress the power to regulate interstate commerce. Their argument boiled down to the claim that millions of people choosing to not buy health insurance substantially affects interstate commerce. But every economic decision, when aggregated across the whole market, substantially affects interstate commerce in this way, including decisions not to do something. So that would leave the Commerce Cla
use eating up the whole Constitution and its most fundamental doctrine that the federal government is an authority of limited, enumerated, delegated powers. Federal power would then be without limit, contrary to the whole concept of the federal government in the Constitution.

That is why the Court kept asking the government for a principle that would limit its interpretation of the Commerce Clause, and its failure to come up with one is fatal to the government’s case. All prior cases under the Commerce Clause were based on the principle that some action had been taken that the federal government could then regulate as interstate commerce. To hold that inaction could be regulated as well as itself substantially affecting interstate commerce would break through any limitation on the power, and so was not what was intended. That would also again tear down the Constitution’s fundamental federalism architecture and any distinction between limited federal and plenary state power.

That is why the Supreme Court in United States v. Lopez, 514 U.S. 549 (1995) rejected the notion of unlimited Commerce Clause power, holding that it will strike down regulation under the Commerce Clause which leaves no principled limit to federal power under the Clause. The Court said, “the Constitution’s enumeration of powers does not presuppose something not enumerated and that there will never be a distinction between what is truly national and what is truly local.” Justice Kennedy added, “[T]he 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 another level of Government has tipped the scales too far.”

Once the Court finds the individual mandate unconstitutional on these grounds, as it will, the question becomes whether the whole Obamacare Act must be struck down as unconstitutional as a result. The law does not include a traditional severability clause providing that if one provision of the Act is found unconstitutional, the rest of the law should stand.

Consequently, the question becomes whether the remaining parts of the Obamacare law can still remain fully operative and function as Congress intended, and whether Congress would have passed the Act without the individual mandate. The answer in both cases is indisputably no.

Obama’s lawyers themselves have repeatedly argued in courts all over the country that the Obamacare law cannot function without the individual mandate. That is because of the Act’s regulatory requirements for guaranteed issue and community rating. The Act requires all insurers to cover all pre-existing conditions and issue health insurance to everyone that applies, no matter how sick they are when they first apply or how costly they may be to cover. Moreover, the insurers can only charge them the same, standard, market rates as everyone else.

Under these regulatory requirements, younger and healthier people delay buying insurance, knowing they are guaranteed coverage at standard rates after they become sick. Sick people show up applying for an insurer’s health coverage for the first time with very costly illnesses such as cancer and heart disease, which the insurer must then cover and pay for, out of the same standard premiums as everyone else pays. This means the insurer’s covered risk pool includes more costly sick people and fewer less costly healthy people, so the costs per person covered soar. The insurer then has to raise rates sharply for everyone just to be sure to have enough money to pay all of the policy’s benefits.

Those higher rates encourage even more healthy people to drop their insurance, leaving the remaining pool even sicker and more costly on average, which requires even higher premiums, resulting in a financial death spiral for the insurers and the insurance market.

If regulation required fire insurers to issue policies to people whose houses were already on fire at standard rates, the fire insurance pool would include only all burned down houses, which would obviously be dysfunctional.

The Obamacare law tries to counter this problem by adopting the individual and employer mandates, seeking to require everyone to be covered and contributing to the pool at all times. Without these mandates, the government itself has repeatedly argued, those who would remain uninsured would substantially affect the interstate market for health insurance, by allowing the remaining regulatory requirements to cause soaring health insurance premiums through the above process and ultimately a financial death spiral.

That financial death spiral would cause the costs of other provisions of Obamacare to soar, such as the subsidies for purchase of health insurance on the Exchanges, which would be even more costly than expected, and the costs for the Medicaid expansion, where more people would qualify given the decline of private insurance.

Indeed, Obamacare itself in its very statutory language recognized the essential role of the individual mandate in the statute’s overall framework, saying in Section 1501(a)(2)(I):

“[I]f there were no [individual mandate], many individuals would wait to purchase health insurance until they needed care….The [individual mandate] is essential to creating effective health insurance markets in which improved health insurance products that are guaranteed issue and do not exclude coverage of pre-existing conditions can be sold.”

As the court said in Alaska Airlines v. Brock, 480 U.S. 678 (1987), “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….” Moreover, the Court also recognized that in the absence of a statutory severance clause the entire statute must be struck down if Congress would not have enacted the statute without the unconstitutional provision.

Consequently, the loss of the individual mandate so centrally affects the entire structure of the Act that without it the entire structure must fall. Trying to determine what could be salvaged would embroil the Court in rewriting the statutory policy and framework to govern one-sixth of the entire U.S. economy, which is obviously not a judicial function.

The only other foreseeable outcome is for the liberals on the Court to agree to go along with a ruling declaring the mandate unconstitutional if the Court will just decide to hold back on deciding severability to give Congress the chance to figure out how it wants to fix it. But Congress could just pass a whole new law in any event if the Court just strikes down the whole thing, which based on its precedents is exactly what it should do.

But liberals should not despair. There is broad bipartisan agreement on alternative means of covering the uninsured with a health care safety net, which would not be expensive if done right, and addressing health costs through market competition and incentives, which altogether could well actually reduce federal spending sharply. The end result would be a much better bill that satisfies all desirable social goals. But that would still require a different President, because Obama’s anti-market, left wing, ideology would not allow him to accept that desirable result.



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