That Pesky Constitution

On December 13, 2010, U.S. District Judge Henry E. Hudson signed a Memorandum Opinion declaring unconstitutional a key provision of  the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 – better known as ObamaCare. In his legal cross hairs was Section 1501 of the Act, known as the Minimum Essential Coverage Provision, which requires every U.S. citizen, other than those falling within specified exceptions, to purchase a minimum level of health insurance coverage beginning in 2014. Section 1501 is administered and enforced as part of the Internal Revenue Code and failure to comply will result in a penalty included with the taxpayer’s annual federal tax return.

This new ruling on cross-motions for summary judgment came in the case of Commonwealth of Virginia v. Kathleen Sebelius, filed last March by Ken Cuccinelli, Virginia’s attorney general, against Kathleen Sebelius, the secretary of the Department of Health and Human Services, wherein the state of Virginia challenged the constitutionality of the pivotal enforcement mechanism contained in ObamaCare. An appeal to the U.S. Supreme Court will likely be the next stop for this critical ruling.

This ruling is a teachable constitutional moment and echoes one of the main criticisms of ObamaCare – that the Commerce Clause of the U.S. Constitution does not give Washington the power to require people to buy health insurance or face a stiff penalty. Opponents of the intrusive bill argued — successfully it seems — that the passage of Section 1501 exceeds the power of Congress under the Commerce Clause and the General Welfare Clause of the U.S. Constitution. Instead of policy wonks arguing about the political merits and economic stimulus of smaller federal government, perhaps the key to keeping Washington, D.C., in check has been under our noses the whole time — the U.S. Constitution.

Congressional Republicans are promising to pass “a clean repeal of ObamaCare” once they take over the House in January. That effort may be bolstered by the alarming number of people who are not surprised at the new court ruling. The three main arguments in support of ObamaCare — low cost, constitutionality, and support of the American people — have now all been thoroughly discredited. Repeal will be foremost on the minds of legislators next year, and any veto of efforts to repeal will undoubtedly remain on the minds of voters in 2012.

The core issue examined by Judge Hudson was whether or not Congress has the power to regulate — and tax — a citizen’s decision not to participate in interstate commerce, to wit, the purchase of insurance. Judge Henry correctly points out in his decision that no reported case from any federal appellate court in history has extended the Commerce Clause to include the regulation of a person’s decision not to purchase a product — notwithstanding its effect on interstate commerce.

The Commerce Clause is one of the enumerated powers listed in the U.S. Constitution (Article I, Section 8, Clause 3), which sets forth the limits of Congressional authority. The clause states that Congress has the power “To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.” The 10th Amendment provides that any powers not specifically vested in the federal government nor prohibited of the states are reserved to the states and to the people. Therefore, the only powers given to Congress are those specifically listed.

The status of ObamaCare’s mandate and penalties has endured the roller-coaster ride of truth since Obama first blasted Hillary Clinton for the idea during the 2008 presidential campaign. When campaigning against Hillary Clinton for the Democratic presidential nomination, Obama condemned Hillary’s call for an individual mandate to purchase health insurance, alleging that Clinton would garnish workers’ wages and that Massachusetts was “worse off” as a result of its individual mandate. That all changed during the debate over ObamaCare, when President Obama mocked George Stephanopoulos for suggesting the individual mandate was a tax. He couldn’t have been clearer. “I absolutely reject that notion,” he stated unequivocally. Still later, when he realized that their best chance of passing constitutional muster was to admit it was a tax, Obama reversed himself yet again. Obama spokespersons said that the tax argument was a linchpin of the individual mandate after all.

The need for this political yo-yo became clear in the federal judge’s analysis when he ripped the administration’s Commerce Clause argument a new one. The judge noted that Congress has the power to regulate and protect (1) the channels of interstate commerce, (2) the instrumentalities of or persons or things in interstate commerce, and (3) activities that substantially affect interstate commerce. Only the third category was is at issue in this case. The secretary of Health and Human Services argued that an individual’s decision not to purchase health insurance constitutes “economic activity” and that nobody could simply avoid participation in the health care market because inevitably, every individual would require medical care. She stretched the bounds of credulity by arguing that the billions of dollars in uncompensated care every year constitutes “economic activity” sufficient to authorize Congressional authority over interstate commerce. Essentially, Washington argued that by not requiring full market participation, the interstate health care system would “implode.”

The original intent of the crafters of the Constitution’s Commerce Clause undoubtedly drew its original meaning from colonial mercantilist tradition, primarily restrictions on international trade, giving subsidy or protection to favored domestic merchants, or punishing imports or foreign producers. From that humble beginning the Commerce Clause has been inflated, expanded, and twisted like a pretzel to meet the desires of an ever-expanding federal government thirsty for control and power. It is far and away the most important tool used by judicial activists, and its interpretation was at the epicenter of Franklin Roosevelt’s socialist New Deal agenda.

For many years this clause was conservatively and strictly interpreted. It served as the sentinel and guardian against the onslaught of Progressivism in the 1920s, allowing the Supreme Court to strike down one big government, socialist measure after another. In the 1930s the clause also held back government expansion and huge programs like the National Recovery Act which would have given the federal government massive control over the economy. Using the limiting nature of the commerce clause, the Supreme Court struck down big-government initiatives with machine-gun like efficiency. Supreme Court Justice Louis Brandeis is said to have told a Roosevelt aide, “This is the end of this business of centralization, and I want you to go back and tell the president that we’re not going to let this government centralize everything.”

Roosevelt later declared war on the U.S. Supreme Court, complaining about the court’s “horse and buggy” definition of the Commerce Clause and, ironically, accusing it of reading into the clause words which were not there. Browbeaten, the Court ultimately relented and in the 1937 case of National labor Relations Board v. Jones & Laughlin Steel Corporation held that Congress could regulate intrastate labor relations if the “effects” were felt across state lines. In the 1942 decision in Wickard v. Filburn it ruled that even if the actions of an individual were not sufficient to trigger the Commerce Clause, the mere notion that if everybody acted like that individual it would affect interstate commerce was held sufficient to trigger its authority.

From that point forward the Commerce Clause dominoes began to fall. Civil rights legislation was deemed too important to let a little thing like the federal authority or the commerce clause get in the way. If a small, family-owned restaurant bought goods from out of state, its actions could be governed and regulated by Congress. The extent and power of the commerce clause has grown uncontrollably to the point where today, the federal government can control almost every aspect of our lives — much to the chagrin of the Founding Fathers. In less than 80 years, its authority was expanded to allow the federal government control over any business with out-of-state customers, any business using supplies which originate out-of-state, and any business whose actions could have the slightest effect on interstate commerce.

In a strange twist of political and historical irony, history may credit the overreaching thirst for power of the Obama administration with the ultimate re-collapse of Commerce Clause authority and a much-needed return to the original intent of the Founding Fathers with regard to the power and authority of the federal government.

Judge Hudson ruled last week that the ultimate power grab — Congress simply claiming that the Commerce Clause should apply because without commerce clause authority the “kinetic link that animates Congress’s overall regulatory reform of interstate health care and insurance markets” would fail — simply isn’t good enough. He said that the power granted to Congress is not without limitations. “Despite the laudable intentions of Congress in enacting a comprehensive and transformative health care regime, the legislative process must still operate within constitutional bounds,” Hudson wrote.

The judge noted that every application of Commerce Clause power ever found to be constitutional involved some sort of action, transaction, or deed placed in motion by an individual or legal entity. He rejected the federal government’s argument that because every individual will require health insurance at some point in their lives, the decision not to purchase health care insurance is such an activity. The fallacy of this argument is that if a decision not to do anything can qualify as activity in interstate commerce, there truly are no limits to federal power — which clearly was not the intent of the Founding Fathers. The court concluded that Congress lacked power under the Commerce Clause to pass ObamaCare.

Obama had a Plan B. As a back up argument, the secretary also maintained that congressional taxing power can be upheld even when its regulatory intent or purpose extends beyond its Commerce Clause authority — hence the flip-flip on whether ObamaCare’s penalty is actually a penalty or a tax. By now arguing it is a tax, the federal government could maintain a weak but colorable argument that it had constitutional authority to implement the health care mandate and penalty.

The law does provide that Congress can tax under its taxing power that which it can’t regulate. But Judge Hudson was having none of that either. He noted that if it was allowed to stand as a tax, Section 1501 would be the only tax in U.S. history to be levied directly on individuals for their failure to affirmatively engage in activity mandated by the government but not specifically delineated in the Constitution. The judge held that the lack of a constitutionally viable exercise of an enumerated power under the Commerce Clause was also fatal to the penalty contained within Obamacare, and that the Minimum Essential Coverage Provision exceeded the constitutional boundaries of congressional power.

President Obama’s massive power grab in the form of The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 may be the catalyst needed to return sanity and reasonable limits to a bloated federal government mad with power and intrusive in ways never imagined by our Founding Fathers.  Although the U.S. Supreme Court will have the last say on the issue, Obama’s plot appears to have been foiled — for the moment. It seems that pesky Constitution has gotten in the way.