Solicitor General: If you don't like mandate, earn less money

Discussion in 'Economics' started by Tom B, Jun 3, 2011.

  1. Tom B

    Tom B

    Solicitor General: If you don't like mandate, earn less money

    By Philip Klein
    Created Jun 2 2011

    President Obama's solicitor general, defending the national health care law on Wednesday, told a federal appeals court that Americans who didn't like the individual mandate could always avoid it by choosing to earn less money.

    Neal Kumar Katyal, the acting solicitor general, made the argument under questioning before the U.S. Court of Appeals for the Sixth Circuit in Cincinnati, which was considering an appeal by the Thomas More Law Center. (Listen to oral arguments here.) The three-judge panel, which was comprised of two Republican-appointed judges and a Democratic-appointed judge, expressed more skepticism about the government's defense of the health care law than the Fourth Circuit panel that heard the Virginia-based Obamacare challenge last month in Richmond. The Fourth Circuit panel was made up entirely of Democrats, and two of the judges were appointed by Obama himself.

    During the Sixth Circuit arguments, Judge Jeffrey Sutton, who was nominated by President George W. Bush, asked Kaytal if he could name one Supreme Court case which considered the same question as the one posed by the mandate, in which Congress used the Commerce Clause of the U.S. Constitution as a tool to compel action.

    Kaytal conceded that the Supreme Court had “never been confronted directly” with the question, but cited the Heart of Atlanta Motel case as a relevant example. In that landmark 1964 civil rights case, the Court ruled that Congress could use its Commerce Clause power to bar discrimination by private businesses such as hotels and restaurants.

    “They’re in the business,” Sutton pushed back. “They’re told if you’re going to be in the business, this is what you have to do. In response to that law, they could have said, ‘We now exit the business.’ Individuals don’t have that option.”

    Kaytal responded by noting that the there's a provision in the health care law that allows people to avoid the mandate.

    “If we’re going to play that game, I think that game can be played here as well, because after all, the minimum coverage provision only kicks in after people have earned a minimum amount of income,” Kaytal said. “So it’s a penalty on earning a certain amount of income and self insuring. It’s not just on self insuring on its own. So I guess one could say, just as the restaurant owner could depart the market in Heart of Atlanta Motel, someone doesn’t need to earn that much income. I think both are kind of fanciful and I think get at…”

    Sutton interjected, “That wasn’t in a single speech given in Congress about this...the idea that the solution if you don’t like it is make a little less money.”

    The so-called “hardship exemption” in the health care law is limited, and only applies to people who cannot obtain insurance for less than 8 percent of their income. So earning less isn't necessarily a solution, because it could then qualify the person for government-subsidized insurance which could make their contribution to premiums fall below the 8 percent threshold.

    Throughout the oral arguments, Kaytal struggled to respond to the panel's concerns about what the limits of Congressional power would be if the courts ruled that they have the ability under the Commerce Clause to force individuals to purchase something.

    Sutton said it would it be “hard to see this limit” in Congressional power if the mandate is upheld, and he honed in on the word “regulate” in the Commerce clause, explaining that the word implies you're in a market. “You don’t put them in the market to regulate them,” he said.

    In arguments before the Fourth Circuit last month, Kaytal also struggled with a judge's question about what to do with the word “regulate,” to the point where the judge asked him to sit down to come up with an answer. (More on that exchange here). Kaytal has fallen back on the Necessary and Proper clause, insisting that it gives broader leeway to Congress.

    Judge James Graham, a Reagan district court appointee who is temporarily hearing cases on the appeals court, said, “I hear your arguments about the power of Congress under the Commerce Clause, and I’m having difficulty seeing how there is any limit to the power as you’re defining it.”

    Kaytal responded by referencing United States v. Morrison, in which the Supreme Court struck down parts of the Violence Against Women Act, and United States v. Lopez, which struck down gun free school zones. In those cases, Kaytal responded, the Supreme Court set the limit that the Commerce Clause had to regulate economic activities.

    The health care market is unique, Kaytal insisted, because everybody will eventually participate. With the mandate, Kaytal said, “What Congress is regulating is not the failure to buy something. But failure to secure financing for something everyone is going to buy.”

    Graham acknowledged Kaytal's arguments, yet reiterated that he was “having trouble seeing the limits.”

    The problem with the “health care is unique” argument – and this is me talking – is that it just creates an opening for future Congresses to regulate all sorts of things by either a) arguing that a particular market is also special or b) finding a way to tie a given regulation to health care.

    For instance, the example that's come up often is the idea of a law in which government forces individuals to eat broccoli.

    During the Sixth Circuit argument, Kaytal said that such an example doesn't apply, because if you show up at a grocery store, nobody has to give you broccoli, whereas that is the case with health care and hospital emergency rooms.

    Yet that argument assumes that Congress passes such a law as a regulation of the food market. What if the law was made as part of a regulation of the health care market? It isn't difficult to see where that argument can go.

    The broccoli example is really a proxy for a broader argument about whether the government can compel individuals to engage in healthy behavior – it could just as well be eating salad, or exercising. There's no doubt that a huge driver of our nation's health care costs are illnesses linked to bad behavior. People who are overweight and out of shape cost more because they have increased risk of heart disease, diabetes, and so on. Those increased costs get passed on to all of us, because government pays for nearly half of the nation's health care expenses, a number that's set to grow under the new health care law. Is it really unrealistic to believe that future Congresses, looking for ways to control health care costs, could compel healthy behavior in some way? More pertinently, is there any reason why that would be unconstiutional under the precedent that would be set if the individual mandate is upheld?

    With most experts expecting the case to go before the Supreme Court, it seems the biggest obstacle for the Obama administration is figuring out where power would be limited if the mandate were upheld. Those challenging the law have made a clear and understandable limit by drawing a distinction between regulating activity and regulating inactivity (i.e. the decision not to purchase insurance). But simply saying the health care market is unique doesn't actually create a very clear or understandable limit to Congressional power.

    The 11th Circuit hears the case next week brought by 26 states led by Florida.,0