Challengers of the constitutionality President Obama’s healthcare insurance reform law, the Affordable Care Act, could not have asked for a more favorable judge to hear their case than Judge Jeffrey Sutton, who cast the deciding vote on June 29 in the first federal court of appeals decision to rule on the law’s constitutionality. Sutton is not just a former law clerk to Justice Antonin Scalia, an appointee of President George W. Bush and an active member of the Federalist Society. Until his nomination to the Sixth Circuit, he was the leading advocate before the Supreme Court on states’ rights. He argued, successfully, that Congress could not impose the Age Discrimination Act or the Americans with Disabilities Act on state employers and could not enact the Violence Against Women Act. Liberal groups vigorously opposed his nomination to the US Court of Appeals for the Sixth Circuit precisely because of his vehement states’ rights views.
The constitutional challenge to Obamacare turns on a states’ rights claim. Challengers argue that the law’s requirement that individuals who can afford to must purchase healthcare insurance or pay a fine is beyond Congress’s power under the Commerce Clause and therefore remains the exclusive prerogative of the states. They contend that while Congress has broad power to regulate economic activity, a requirement that individuals purchase healthcare insurance goes too far, because it seeks to regulate not activity, but inactivity. Could Congress require us to eat tofu or join a health club, they ask? Surely there must be some limit on the Commerce Clause or the federal government will no longer be a government of limited “enumerated” powers.
If such arguments would appeal to anyone, they would appeal to Judge Sutton. Yet when he cast his decisive vote, he sided with the Obama administration and upheld the law. As sympathetic to states’ rights as Sutton is, he could not find a way to support the challenge. That fact could well be a harbinger of how the case will be decided when it inevitably reaches the Supreme Court.
Sutton reasoned first that Congress’s action went no further than regulations the Supreme Court has upheld in the past. Recognizing that the national economy is highly integrated, and that therefore local economic activity inevitably affects “interstate commerce,” the Court in 1942 permitted Congress to limit the amount of wheat farmers grow for their own consumption, even if they never intended to offer it for sale. On similar grounds, the Court in 2005 upheld Congress’s authority to forbid the growing of marijuana for personal, medicinal consumption. If Congress could regulate those activities on the ground that they might affect interstate commerce, Sutton maintained, surely it can require individuals to purchase healthcare insurance in order to maintain the viability of the insurance scheme. Virtually everyone ultimately needs healthcare, and those without insurance generally impose the costs of their care on others, as hospitals and/or the government generally pick up the cost—to the tune of $43 billion in 2008 alone. Without the individual mandate, moreover, the healthcare law’s prohibition on denying insurance or charging more for pre-existing medical conditions would make this situation even worse, because individuals would have an incentive to wait until the last possible moment—while they are on the way to the hospital—to buy insurance. And insurance simply cannot work if people are free to game the system in that way.
Sutton went on to offer six separate reasons for why the challengers’ purported distinction between “inaction” and “action” does not work as a coherent limiting principle for Congress’s power to regulate. For starters, he noted, the text of the Commerce Clause itself nowhere suggests such a distinction. Moreover, the power to regulate generally includes the power to prescribe, which means Congress can regulate “inaction” by requiring individuals to take “action.” More importantly, he argued, when it comes to financial risk, inaction is action, citing Warren Buffett’s comments to Berkshire Hathaway shareholders that “we continue to make more money when snoring than when active” or that “inactivity strikes us as intelligent behavior.” And however one chooses to pay for one’s inevitable future healthcare needs, whether by purchasing insurance on the market or “self-insuring” by personal saving, “each requires affirmative choices; one is no less active than the other; and both affect commerce.”
If those challenging the healthcare reform law could not convince Judge Sutton, a self-avowed states’ rights conservative, they are likely to have a tough road in the Supreme Court. And that’s good news for those who believe that it’s about time the United States joined the rest of the developed world in providing for basic healthcare for all of its citizens, regardless of financial ability.