Affordable Care Act: Courts, Commerce and the Constitution

By Cameron Smith

Recently, the Supreme Court agreed to hear a challenge to the Patient Protection and Affordable Care Act (PPACA). The Supreme Court’s decision in the case, likely to be issued in the summer of 2012, has as much to do with the constitutional limits on the federal government as with the future of American healthcare.

While the Court will hear a number of arguments against the PPACA, the most important consideration is whether Congress exceeded the constitutional limits of its power by establishing an “individual mandate” requiring individuals to either carry acceptable health insurance or pay a penalty. The Constitution’s “Commerce Clause” gives Congress the power “to regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.”

Gradually, the interpretation and application of the Commerce Clause has been stretched past the point of common sense. For example, the Supreme Court’s 1942 Wrightwood Dairy holding found that the federal government could regulate the price of milk sold solely within the State of Illinois. The opinion effectively established that commerce need not cross state lines to be under federal jurisdiction provided that “control over intrastate transactions…is necessary and appropriate to make the regulation of the interstate commerce effective.”

Could the framers of the Constitution really have envisioned that wholly intrastate commerce could somehow be interpreted as “Commerce…among the several States?”

The most shocking example of expanded congressional power under the Commerce Clause happened only a few months after the Wrightwood Dairy case. In Wickard v. Filburn, the Supreme Court ruled that the Commerce Clause allowed the federal government to regulate an Ohio farmer growing wheat on his own land for his personal consumption. The Court found that “[h]ome-grown wheat…competes with wheat in commerce” and, as such, was subject to the reach of the federal government.

Wrightwood Dairy effectively negated the “interstate” aspect of the Commerce Clause and Wickard expanded “commerce” to apply to activities never intended for the marketplace. After these cases, almost all activity that could conceivably impact interstate commerce has been upheld by the Court. Even the Civil Rights Act of 1964 was passed under Congress’s Commerce Clause authority on the theory that discriminatory practices by individuals impacted interstate commerce.

Earlier this month, the United States Court of Appeals for the District of Columbia (DC Circuit Court) upheld the PPACA’s individual mandate, in spite of the federal government’s inability to conceive of “any mandate to purchase a product or service in interstate commerce that would be unconstitutional” under the Commerce Clause. The court conceded that Congress has virtually limitless power to “forge national solutions to national problems no matter how local–or seemingly passive–their individual origins.”

Every American, regardless of their political inclinations on the PPACA, should be concerned about potential extensions of the DC Circuit Court’s decision in American politics. If the sole standard for determining congressional authority under the Commerce Clause is whether it addresses a national problem, then political ambition and the ability to assemble even the smallest of majorities are the only hurdles to unbridled federal control.

Consider recent national problems such as the housing crisis, automotive industry collapse, and skyrocketing energy prices. If the Commerce Clause has no real boundaries, what will stop Congress from preventing new residential construction until the stock of available homes is absorbed by the marketplace? Rather than the infamous “Cash for Clunkers” program or tax incentives for “green” fuels, what can prevent Congress from simply requiring Americans to turn in their old F-150s and buy new, fuel efficient automobiles?

The PPACA’s individual mandate also provides legislators with a politically expedient tool to avoid legislative transparency on the politically sensitive subjects of taxation and spending. The tax penalty associated with the individual mandate is effectively a mechanism to encourage the diversion of income from individuals directly to health insurers without passing through the government. The passage of the PPACA would have been highly unlikely if the individual mandate had been a national tax increase where the proceeds were promptly sent to insurance companies to pay for coverage. If the mandate is deemed constitutional, legislators will likely create similar income transfer provisions for other policy priorities.

Upholding the PPACA’s individual mandate could be the final blow for any remaining constitutional limitations on Congress’s Commerce Clause power. An individual’s right to avoid engaging in commerce is one of the last bastions of refuge from congressional control. Allowing Congress to conscript citizens into the stream of commerce in order to regulate their activities represents the height of federal encroachment not only into the domain of the states but also into the lives of individuals.

Constitutional limits on federal power are much more than archaic hurdles to “get things done.” America’s Founding Fathers endured the abuses of a controlling government’s power and specifically developed the Constitution as a safeguard against the repetition of those evils. The Court must restore those limits if the dangers of tyranny appreciated by the Founders are to be avoided.

Cameron Smith is General Counsel for the Alabama Policy Institute, a non-partisan, non-profit research and education organization dedicated to the preservation of free markets, limited government and strong families, which are indispensable to a prosperous society.

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