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Administration Articulates Only Fine Distinctions in Defending Health Care Reform

| Mar 28, 2012 | Analysis

In an attempt to prevent the Supreme Court from striking down the Obama Administration’s signature legislative achievement, U.S. Solicitor General Donald Verrilli argued yesterday that Congress had the authority to enact the Patient Protection and Affordable Care Act (ACA) not because of any broad constitutional principle but because of the unique characteristics of the health insurance market.

The Supreme_Court.jpg Supreme Court justices seemed surprised by the narrowness of the Solicitor General’s arguments. Verrilli repeatedly evaded the justices’ attempts to elicit a principled answer to the general question that had been billed as the central one in the case: namely, whether Congress has the power to require individuals to enter an economic market and then to regulate their activity in that market.

Instead, Verrilli said his arguments were “limited to insurance.” This description left Chief Justice John Roberts unsatisfied. “[I]t would be going back to Lochner if we were put in the position of saying…you can use your commerce power to regulate insurance, but you can’t use your commerce power to regulate th[e] market in other ways,” he observed. “So, I don’t see how we can accept your [argument that] oh, it’s just insurance.”

Verrilli argued that the health insurance market is unique because essentially all people participate in it. Everyone uses health care services or inevitably will use them, and the means of paying for those services is through health insurance. The only question, he indicated, is whether users of health care (or their employers) pay for the health insurance, or if health care costs are instead passed on to others.

When Justice Antonin Scalia asked how this market differed from the market for broccoli, Verrilli explained that though all people will also inevitably need to purchase food, the amount of food they will buy is predictable. In contrast, people cannot predict when they will need a significant amount of health care – and when their insurer or taxpayers will be hit with the cost of that care.

Verrilli did attempt to provide two principles for when Congress has the power to compel individuals to engage in economic activity, but they strongly resembled the specific facts of the case before the Court.

First, when Congress has implemented a comprehensive regulatory scheme, it may regulate individuals to guard against risks that could undercut that scheme. In the case of the ACA, Congress has required insurers to provide specified minimum coverage to all people, including those with preexisting conditions or who otherwise would significantly burden insurers’ coffers. To guard against the risk that insurers would not be able to afford these increased costs, the “individual mandate” requires all people – including healthy people who do not currently need health care – to purchase health insurance or face a penalty.

Second, Congress has authority to regulate the method of payment in a market in which all people inevitably participate to an unpredictable extent. In the case of the ACA, Congress requires all people to pay for the health care they will inevitably need by buying insurance before that need arises.

Justice Anthony Kennedy suggested that the government was being disingenuous when it pretended its arguments could be limited to health insurance, noting, “[T]he government tells us that[]…the insurance market is unique. And in the next case, it’ll say the next market is unique.”



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