11th Circuit strikes down Obamacare mandate

WILLIAM A. JACOBSON AUG 12, 2011 1:18 PM

This is the big case involving 26 states.  In January, Judge Roger Vinson struck the entire law finding that the mandate could not be severed from the rest of the law.

The 11th Circuit ruled that the mandate was unconstitutional, but unlike Judge Vinson, did not throw out the entire law, finging that the mandate could be severed.  The opinion is here. [link fixed]

Here is the conclusion summarizing the various aspects of the ruling:

We first conclude that the Act’s Medicaid expansion is constitutional. Existing Supreme Court precedent does not establish that Congress’s inducements are unconstitutionally coercive, especially when the federal government will bear nearly all the costs of the program’s amplified enrollments.

Next, the individual mandate was enacted as a regulatory penalty, not a revenue-raising tax, and cannot be sustained as an exercise of Congress’s power under the Taxing and Spending Clause. The mandate is denominated as a penalty in the Act itself, and the legislative history and relevant case law confirm this reading of its function.

Further, the individual mandate exceeds Congress’s enumerated commerce power and is unconstitutional. This economic mandate represents a wholly novel and potentially unbounded assertion of congressional authority: the ability to compel Americans to purchase an expensive health insurance product they have elected not to buy, and to make them re-purchase that insurance product every month for their entire lives. We have not found any generally applicable, judicially enforceable limiting principle that would permit us to uphold the mandate without obliterating the boundaries inherent in the system of enumerated congressional powers. “Uniqueness” is not a constitutional principle in any antecedent Supreme Court decision. The individual mandate also finds no refuge in the aggregation doctrine, for decisions to abstain from the purchase of a product or service, whatever their cumulative effect, lack a sufficient nexus to commerce. [fn omitted]The individual mandate, however, can be severed from the remainder of the Act’s myriad reforms. The presumption of severability is rooted in notions of judicial restraint and respect for the separation of powers in our constitutional system. The Act’s other provisions remain legally operaive after the mandate’s excision, and the high burden needed under Supreme Court precedent to rebut the presumption of severability has not been met.

Some thoughts in no particular order:

• Once again a court rejects the belated argument by the administration that the mandate is an exercise of taxing powers.  I believe that every court that has considered the issue has ruled against Obama.  Remember, during the political debate leading up to passage the Democrats insisted they were not raising taxes with Obamacare, and now those words have come back to haunt them.
• The main opinion is 204 pages, much of which is devoted to explaining how the law works.  When Nancy Pelosi said we had to pass it to find out what was in it, she was right.  And we need hundreds of pages of judicial decision to tell us.
• The mandate was rejected precisely because it requires people to enter a market rather than regulating a market.  I’ll have to spend some more time to see if the court adopted the activity/no activity distinction, but this language certain sounds familiar to people who have been reading Legal Insurrection:

It cannot be denied that the individual mandate is an unprecedented exercise of congressional power. As the CBO observed, Congress “has never required people to buy any good or service as a condition of lawful residence in the United States.” CBO MANDATE MEMO, supra p.115, at 1. Never before has Congress sought to regulate commerce by compelling non-market participants to enter into commerce so that Congress may regulate them. The statutory language of the mandate is not tied to health care consumption—past, present, or in the future.

Rather, the mandate is to buy insurance now and forever. The individual mandate does not wait for market entry. (p. 167)

• In another argument familiar to readers, the Court also pointed out that to accept the administration’s interpretation of the Commerce Clause would mean a limitless federal power:

The federal government’s assertion of power, under the Commerce Clause, to issue an economic mandate for Americans to purchase insurance from a private company for the entire duration of their lives is unprecedented, lacks cognizable limits, and imperils our federalist structure.  (p. 171)

Update:  On the activity/inactivity issue, the Court accepted that the distinction was legitimate, but found that it was not a complete answer to the health care mandate issue:

As our extensive discussion of the Supreme Court’s precedent reveals, Commerce Clause cases run the gamut of possible regulation. But the diverse fact patterns of Wickard, South-Eastern Underwriters, Heart of Atlanta Motel, Lopez, Morrison, and Raich share at least one commonality: they all involved attempts by Congress to regulate preexisting, freely chosen classes of activities.

Nevertheless, we are not persuaded that the formalistic dichotomy of activity and inactivity provides a workable or persuasive enough answer in this case. Although the Supreme Court’s Commerce Clause cases frequently speak in activity-laden terms, the Court has never expressly held that activity is a precondition for Congress’s ability to regulate commerce—perhaps, in part, because it has never been faced with the type of regulation at issue here.  (p.109)

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