Just the facts: Health economics and constitutional doctrine
Professor Gluck, Associate Professor of Law and the Milton Handler Fellow at Columbia Law School, teaches and writes about legislation, health law and federalism. Her next article, A Federalism Agenda for the Age of Statutes: Intrastatutory Federalism in Health Reform and Beyond, will appear in the Yale Law Journal this fall.
Professor Metzger, Vice Dean and Professor of Law at Columbia Law School, is one of the authors of the Constitutional Law Professors’ brief in the ACA litigation, which argues that the mandate is a constitutional exercise of the tax power. She teaches constitutional and administrative law and writes frequently on federalism, most recently Federalism and Federal Agency Reform in the Columbia Law Review. Â To view the symposium in its entirety, click here.
Cases turn on their facts and this one should be no different. In our view, three key facts â€“ two empirical, one doctrinal â€“ make clear that if the Supreme Court takes one of the challenges to the Affordable Care Act, as we believe it will, it will sustain the Actâ€™s â€œinsurance mandateâ€( the requirement that most Americans have health insurance).
These three facts are: First, the national health care and insurance market is unquestionably economic in character. Second, aspects of that market are unique to health â€“ a fact that we elaborate not to argue that Congress should get a free pass but rather to explain why expanding the insurance pool (which is all the individual mandate does) is an appropriate and well-tailored solution to the current failures and inefficiencies of that market.Â Third, since the New Deal, the Court has always deferred to the specifics of congressional regulatory choices when it has perceived that the overall context that Congress is regulating is an economic or commercial one.
Our focus in these pages on the particular link between these economic and doctrinal facts is not intended to slight other arguments that support the mandateâ€™s constitutionality, including arguments about the tax power.Â We have chosen to emphasize these facts, however, because we believe they will fundamentally frame how the Court decides the challenge.
Fact one:Â The incontrovertibly economic nature of the national health care and insurance market
The national health care and insurance market is unquestionably economic. National health-related spending accounts for almost one-fifth of gross domestic product, and the health care industry is one of the fastest growing in the world.Â The health insurance industry alone is already one of the largest industries in the nation, with most of it dominated by large companies that operate in interstate markets. Thus, whether the market at issue is seen as just the insurance market or as the overall health care market â€“ of which insurance is an integral part â€“ its economic character is indisputable, as the Court held half a century ago with respect to the insurance industry in United States v. South-Eastern Underwriters Association.
The ACA is a multipronged attack on the cost, inaccessibility, and weaknesses of this national market.Â Its strategies range from doctor training, to introducing new methods of pricing and bundling health care services, to strengthening the national medical fraud and abuse laws, to â€“ critical here â€“ stabilizing the supply and demand of insurance.
The mandate is one mechanism of achieving these goals, because by expanding the insurance pool it will cut insurance costs, make service delivery more efficient and give more individuals access to the health care system.Â A larger insurance pool enables a change in current insurance enrollment practices, providing enough (and healthier) customers so that insurers can afford to switch from a system that discriminates against high-risk individuals to one in which everyone can be insured. It is important to understand that, in the context of the ACA (and in general), insurance is not the end in itself: it is a financing mechanism that pays for health care and allows the health care market to work.
Fact two: The unique features of the health care and insurance markets
Our second key fact, and one that has long been the focus of the health economic, policy and legal literature, is that the health care and insurance market is unique.Â This is an argument that has been advanced in the litigation as well, but recognizing that the argument has a long, confirmable pedigree â€“ and was not just concocted for litigation purposes â€“ is important.
Space does not permit a full airing of the unique character of this market, but consider the following exemplary facts, well stated by a brief submitted by dozens of the nationâ€™s leading economists â€“ including three Nobel laureates:
- Virtually everyone, regardless of whether they have health insurance, uses medical services in their lifetimes (and, in fact, approximately two-thirds of individuals without insurance use medical services each year);
- Because health care is so expensive, the cost of care that people cannot pay for is necessarily shared with others; more than $43 billion dollars worth of uncompensated care annually is passed onto to the federal and state governments, hospitals and doctors, and insurance companies â€“ all of which then pass those costs on to citizens through taxes, higherÂ medical charges, and higher insurance premiums;
- The cost of health care services is much more unpredictable than the cost of other essential goods, like food, housing and transportation and, also unlike those goods, very few individuals can actually afford to pay for health services without insurance;
- The health insurance market depends on a â€œpoolâ€ of insureds. If all healthy individuals stayed out of insurance pools, the premiums that insurance companies would have to charge to insure only the less healthy would be unsustainable. And when the uninsured ultimately purchase insurance â€“ as most do â€“ they impose greater health care costs because they have had less health care in the past.
- Consumers of health care services are less informed and more vulnerable than consumers of ordinary goods, and doctors and hospitals have a longstanding moral mission to treat regardless of means, both of which make the market for health care function in fundamentally different ways than traditional markets.
These facts show that the inactivity/activity distinction advanced in the current challenge makes no economic sense.Â Those who are uninsured have significant effects on the market.Â Studies also have shown that decisions not to insure are economically driven decisions. Efforts to portray the uninsured as inactive are in any event implausible, given the large number of uninsured who seek health care each year and the massive cost of uncompensated care that gets shifted as a result. Even those who fully pay for their care are obviously active in the healthcare market.
These facts, too, are what make the health care and insurance market very different from other markets.Â Deciding not to buy a car, a house, or milk does not prohibitively raise the cost of cars, homes and milk for everyone else.Â It does not result in billions of dollars a year in passed-on costs. And one can live an entire lifetime without owning a car, a house or milk â€“ or can plan financially for those needs because they are easy to predict.Â Because of these differences, arguments for the uniqueness of the health care and insurance market are not arguments to give Congress a free pass, but rather to explain why the solution chosen by Congress is reasonable and well-tailored to the goals of the statute.
Fact three: The Court defers to the specifics of Congressional regulatory choices when the context regulated is clearly economic.
Add to these economic facts a key doctrinal one: since the early New Deal, the Supreme Court has not second-guessed the particulars of congressional regulation of intuitively economic or commercial activity. There is no modern decision in which the Court has rejected the specific mechanism that Congress has chosen to regulate a context that, like this one, is indisputably economic when that mechanism does not violate an independent constitutional prohibition (like the First Amendment) or directly target the states, as states.
The â€œtangible link to commerce â€¦ based on empirical demonstrationâ€ that Justice Kennedy identified as necessary under the Commerce Clause two Terms ago in United States v. Comstock is plainly present here. This point serves to distinguish the two recent cases in which the Court has held that Congress exceeded its commerce power â€“ cases that involved possessing guns near schools and domestic violence. As Judge Suttonâ€™s Sixth Circuit opinion sustaining the ACAâ€™s mandate recognized, those activities simply were not â€œquintessentially economicâ€ in the same way as is the health care and insurance market, nor did Congress target its regulation in those cases at areas that are as obviously economic as is the question of how individuals participate (and all do) in that market.
If further proof were needed, Gonzales v. Raich provides it.Â There, the Court emphasized the overwhelming economic nature of the activities addressed by the Controlled Substances Act in concluding that Congress could also regulate local cultivation and possession of marijuana for personal use. Further, the Court insisted that congressional determinations about the level at which to regulate economic activity get substantial deference.Â Thus, not only do efforts to pull out non-purchase insurance as inactivity fail empirically, but they fail doctrinally.
Finally it also is clear that the federalism concerns that have given the Court pause in the past are not implicated by the ACA.Â This is not an area of traditionally exclusive state terrain, nor does the mandate raise any commandeering concerns. Congress has been a major player in the health care and insurance industry at least since 1965, with the enactment of Medicare and Medicaid, and also has regulated private health insurance plans directly, through the ERISA and HIPAA statutes. Whatâ€™s more, the ACA expressly does not preempt state efforts to regulate insurance beyond ACAâ€™s limits, and it gives the states many choices about the role they can play in implementing the statute. (We also note that the challenge to the mandate is entirely unrelated to some statesâ€™ claim that the Actâ€™s separate provisions expanding Medicaid are unconstitutional â€“ an argument that is foreclosed regardless by settled Supreme Court doctrine.)
Fact four: If we are wrongâ€¦..
In light of these facts, we believe that the constitutionality of the statute is clear. If we are wrong, however, and the Court does not otherwise sustain the mandate, we cannot resist making one additional point about the remedy â€“ a point also based on facts that seem to have been ignored. The mandate, as we have stated, is but one piece of an enormously complex and multifaceted federal statute, many portions of which have absolutely nothing to do with it â€“ including the Medicaid expansion, the provisions about long-term care, public health services, doctor training, and many other aspects of the Actâ€™s nine titles.
One lower federal court, in holding that the mandate was unconstitutional, further ruled that the entire rest of the statute had to fall with it.Â That decision was plainly wrong, and not only because it ignored the diversity of the ACAâ€™s provisions. It also was at odds with the long-standing doctrine of severability â€“ the judicial presumption that courts should â€œseverâ€ only the unconstitutional provisions of federal statutes rather than striking down statutes entirely, a presumption deriving from separation-of-powers concerns and judicial respect for the policymaking role assigned to Congress by the Constitution.
To be sure, certain aspects of the statute, such as the new regulations on insurers, are more closely linked to the mandate â€“ but we think even those provisions deserve a closer look than they have been given with respect to severability. Â In the context of the Commerce Clause inquiry, the mandate is a well-tailored â€œnecessary and properâ€ means by which Congress can achieve the ACAâ€™s goals. But that does not necessarily mean that, as a remedial matter, if the mandate falls, the Court need or should do more than simply sever it and leave the rest to Congress.