Is the individual mandate constitutional? Part 5

In my most recent post of this series, I argued that the individual mandate may be unconstitutional because Congress may only regulate “economic activity” that has substantial economic effects, and because deciding whether to engage in economic activity is not economic activity in and of itself. However, the economic activity requirement may not always apply. Analyzing the Court’s decision in United States v. Lopez, Justice Scalia concluded that “Congress may regulate even noneconomic local activity if that regulation is a necessary part of a more general regulation of interstate commerce.” Gonzalez v. Raich, 545 U.S. 1, 37 (2005) (Scalia, J., concurring in the judgment) (citing United States v. Lopez, 514 U.S. 549, 561 (1995)).

Under this reading, regulation of intrastate noneconomic activity can only be upheld if it is an “‘essential part’” of Congress’s regulation of an interstate market whose elimination would “‘undercut’” the regulatory scheme. Id. at 36 (Scalia, J., concurring in the judgment) (quoting Lopez, 514 U.S. at 561). Justice Scalia maintains (correctly, I think) that this power is derived from the Necessary and Proper Clause, id. at 34, 37-38 (Scalia, J., concurring in the judgment), which gives Congress the power to “[t]o make all Laws which shall be necessary and proper for carrying into Execution the [enumerated] Powers.” U.S. Const. art. I, § 8, cl. 18. According to precedent, regulations that are “‘reasonably adapted’” “means” to a “legitimate end under the commerce power” should be upheld under the Necessary and Proper Clause. Raich, 545 U.S. at 37 (Scalia, J., concurring in the judgment) (quoting United States v. Darby, 312 U.S. 100, 121 (1941)); see also McCulloch v. Maryland, 4 Wheat. (17 U.S.) 316, 421 (1819).

The tests in Lopez and Darby may appear to set forth dueling standards—must a regulation of intrastate, noneconomic activity be “essential,” or may it simply be “reasonably adapted?” I think they can be harmonized by understanding that, because intrastate, noneconomic activity is being regulated, its regulation is “reasonably adapted” only when it is an “essential part” of an interstate regulatory scheme. In other words, in this context, the “essential part” test determines whether the regulation is necessary and proper.

Legislation that attempts to control prices is a legitimate end under, at the very least, Wickard v. Filburn. But it is hard to argue that the individual mandate is an “essential part” of a price regulation scheme. Less draconian measures have been used in all previous price regulation schemes, and in all other currently existing schemes to regulate prices. Was it essential for Congress in the Wickard era to require every individual to buy wheat in order to regulate prices in the wheat market? Obviously not—which is why it didn’t. And there is no reason for a court to conclude that requiring individuals to buy a product has suddenly become essential when regulating its price. So the federal government cannot get around Lopez’s economic activity requirement by invoking its noneconomic regulatory exception.

A few other arguments are worth addressing in brief: First, the federal government might argue that, if Congress can prohibit a person from buying marijuana, similar logic should enable it to require that a person buy health insurance. Contrary to what I argued in my last post, doesn’t prohibiting someone from buying marijuana determine whether, and not how, to engage in an economic transaction?

This superficial similarity hides a crucial distinction. When it prohibits the purchase of (for instance) marijuana, Congress uses its power to regulate the use of the channels of interstate commerce. This power enables Congress to prohibit movement across state lines, see, e.g., Lottery Case, 188 U.S. 321, 354 (1903), and is a completely separate power from Congress’s ability to regulate substantial interstate economic effects, on which the individual mandate is supposedly based. See Lopez, 514 U.S. at 558.

Of course, Congress’s power to forbid the intrastate purchase of a commodity whose interstate sale is forbidden cannot be explained solely by its ability to regulate interstate channels, but, given the fungibility of most commodities, forbidding intrastate sale may be said to be an essential part of the interstate regulatory scheme that falls within the power conferred by the Necessary and Proper Clause. See Raich, 545 U.S. at 40-41 (Scalia, J., concurring in the judgment).

A second argument worth addressing: the federal government could try to draw an analogy to the fact that state law may require individuals to possess car insurance. But the U.S. Constitution doesn’t limit the power of state legislatures. So even though state law can compel individuals to buy insurance in certain circumstances, that doesn't mean that federal law can.

Moreover, it’s far from clear that the circumstances surrounding car insurance and health insurance are analogous. You only need to buy car insurance if you drive a car on public roads—a privilege. The government can require you to do a number of things if you want to avail yourself of a privilege—for instance, you also need a driver's license in order to drive on public roads, and you need a license in order to practice medicine or sell alcohol. But under the individual mandate requirement, if you’re alive and you don’t already have health insurance, you must buy it. You can't choose whether or not to avail yourself of a privilege before the obligation to buy insurance attaches.

A third argument worth discussing: challengers could argue that health insurance is a purely intrastate market, because federal law gives states the right to regulate health insurance plans, which states have done, and which has generally led insurance subsidiaries to only offer plans within a given state. Also, the health insurance exchanges that the new legislation sets up are intrastate exchanges.

However, even if subsidiaries operate wholly intrastate, their parent companies are often national—which probably generates a sufficiently interstate component to the health insurance market. I doubt that the intrastate insurance exchanges would undermine that interstate nexus. The phrase “interstate commerce” has become somewhat synonymous with the phrase “national economy.” See, e.g., United States v. Morrison, 529 U.S. 598, 610-11 (2000) (quoting Lopez, 514 U.S. at 573-74 (Kennedy, J., concurring)); see also Lopez, 514 U.S. at 563-64 (majority opinion); id. at 626 (Breyer, J., dissenting). I don’t condone this definitional blurring (consider in particular that the text of the Commerce Clause doesn’t actually contain the phrase “interstate commerce” but simply gives Congress the power “[t]o regulate Commerce . . . among the several states,” making this drift in meaning even more dubious), but I suspect that it’s a fact of life. As such, I don’t think that the challengers are pressing this argument in their litigation, probably because they feel that the courts would be unreceptive.

In my next post, I’ll give some of my own thoughts on the proper interpretation of the Commerce Clause.