Larry Tribe says it in plain (well, plain-ish) English:
According to the Eleventh Circuit, decisions not to purchase health insurance are not economic activities subject to the aggregation principle of Wickard v. Filburn but are instead non-economic activities indistinguishable from the possession of a gun or a violent attack on a woman. This bizarre conclusion neglects the fact that a decision to forgo health insurance is equivalent to a decision that someone else will eventually pay for one’s inevitable consumption of health care. Gonzales v. Raich expressly holds that “consumption” is economic activity. It follows plainly from this characterization that decisions about how one’s consumption of health care will be funded are indeed economic decisions subject to regulation under the commerce power. The fundamental fallacy in the Eleventh Circuit’s approach is to view the decision not to purchase health insurance in what the dissent properly described as “a freeze-framed still, captured, like a photograph, in a single moment in time.” But nothing in the Commerce Clause – in its text, its structure, its history, or the precedents construing it – justifies any such insistence on stopping time in its tracks.
The Eleventh Circuit also worries that, if Congress were permitted to impose the individual mandate, there would be no limiting principle demarcating the boundary of its commerce power. This worry is overstated. The Supreme Court has already articulated significant limiting principles in United States v. Lopez and United States v. Morrison: under those decisions, Congress may not regulate noneconomic activity based solely on the aggregate effects of such activity on interstate commerce. Recognizing that decisions to forgo health insurance are economic when viewed not in a freeze-frame but over time, and that the individual mandate accordingly falls within the power of Congress to regulate those economic activities that, in the aggregate, have a significant impact on interstate commerce, in no way detracts from this already extant limiting principle.
Accordingly, the Eleventh Circuit was wrong to worry that Congress could impose all manner of mandates if the health insurance mandate were upheld. For example, it does not follow that Congress could also require everyone to keep a firearm in his home or apartment – a mandate of the form that the City of Kennesaw, Georgia, has adopted – on the theory that would-be burglars would be deterred from invading homes to steal what they might otherwise purchase commercially. This is so because, just as a decision to possess a gun in a school zone is “noneconomic” under Lopez, so too is a decisionnot to possess a firearm in one’s home “noneconomic”; accordingly, the aggregate effects of refusals to possess guns do not bring those refusals within Congress’s commerce power. Nor does it follow that Congress could compel everyone to purchase liability insurance. Decisions to forgo health insurance are decisions about who will pay for one’s inevitable consumption of health care. Decisions to forgo liability insurance, for example, are not of this character even though, as the Eleventh Circuit noted, all of us are subject to a risk of eventually causing harm through a reckless or negligent act at a time when we might not have the means to make the injured party whole.
One might certainly argue, as the Eleventh Circuit does, that factors such as “inevitability” are not “constitutional” in character. But this objection misses the point. The purpose of talking about such criteria as “inevitability” is not to establish new “constitutional principles” that delineate the boundaries of the commerce power. That task has already been accomplished by Lopez and Morrison, which together supplied the key limiting principle: Congress may not regulate purely noneconomic activity based solely on its aggregate effects on interstate commerce. The point of talking about such factors as “inevitability” is simply to explore whether this already articulated limiting principle enables one to distinguish the reach of the Affordable Care Act from that of other imagined federal legislation requiring all citizens to purchase particular goods or services. And the answer is that it does, for the tight link between an individual’s decision not to purchase health insurance and that individual’s eventual consumption of uninsured health care establishes that the individual’s decision to forgo health insurance is an “economic” one.
To be sure, some uninsured individuals will ultimately be able to pay for health care when they need it; they will not, at the point of consumption, shift costs onto others. Thus, the individual mandate might be said to be “overinclusive.” But in Raich, the Supreme Court held that Congress need not “legislate with scientific exactitude” when using the commerce power. To the contrary, when “the total incidence of a practice poses a threat to a national market,” Congress “may regulate the entire class.” Congress properly concluded that the “total incidence” of the practice of going without health insurance poses a threat to the health-care services market; it may therefore regulate the “entire class” of that activity, even if particular instances in that class do not contribute to that threat. As Judge Marcus’s dissent from the Eleventh Circuit’s ruling puts it, “The fact that an exceedingly small set of individuals … can afford to go it alone poses no obstacle to Congress’ ability under the Commerce Clause to regulate the uninsured as a class.”
Turning to the argument that the individual mandate is in any event supported by the Necessary & Proper Clause, the Eleventh Circuit suggested that the individual mandate cannot be “Necessary and Proper” to the broader regulatory scheme because the enforcement mechanism Congress established is “toothless.” (In effect, all the government can do under the Act as drafted is reduce any tax refund owed to an uninsured individual; it may not use criminal or civil sanctions, or even impose levies or liens.) This argument is wide of the mark. Whenever Congress wishes to encourage particular behavior, it has available to it a wide variety of mechanisms, ranging from tax credits or subsidies for engaging in the desired conduct to criminal sanctions for failing to engage in it. Of course a penalty that is enforceable only through the reduction of tax refunds will not provide as powerful an incentive as a criminal law. But it provides an incentive to get insured nonetheless. And it is therefore a means rationally related to a constitutionally permissible end, which is all that the Necessary & Proper Clause has been understood to require ever since John Marshall’s landmark interpretation of the clause inMcCulloch v. Maryland in 1819.
Finally, the Eleventh Circuit’s conclusion that the individual mandate cannot be upheld as an exercise of Congress’s power to tax rests entirely on the proposition that the penalty through which the mandate is enforced cannot be appropriately characterized as a “tax” in light of Congress’s intent in enacting it and Congress’s way of describing it in the Affordable Care Act. This is at bottom an argument not about congressional power but about statutory interpretation. But fundamental questions of congressional authority vis-à-vis the reserved powers of the states turn not on what Congress had in mind but on what Congress did and on whether its exercise of power fell within the boundaries of Article I. Here, what Congress did was to adjust the income tax liability of certain taxpayers in accord with whether they have or have not purchased the health insurance mandated by the Act. This means of measuring the tax liability of individuals cannot serve to turn the law from a valid exercise of the taxing power into something else. As the Supreme Court held in United States v. Sanchez, “a tax does not cease to be valid merely because it regulates, discourages, or even definitely deters the activities taxed.” This continues to be true “even though the revenue obtained is obviously negligible.” The revenue that the CBO projects will be obtained from the individual mandate (about five billion dollars a year by the decade’s end) is far from negligible, so the proposition that a tax may also be a regulation has even more force in this context.
More importantly still, the scheme established by the ACA is functionally identical to another scheme that would be plainly constitutional. The constitutionality of the Social Security System (see Steward Machine Co. v. Davis) would of course be a decisive precedent for the constitutionality of a system under which Congress creates a single-payer health-care system funded by a tax on everyone with incomes above a given threshold. And if Congress could constitutionally institute such a single-payer health-care system operated by the federal government itself, then why may it not also authorize private insurers, regulated by federal statute, to administer the same system with the money raised by the tax? And if it may do that, then why may it not eliminate the federal middleman and simply increase the income tax liability of anyone who fails to purchase a qualified insurance plan from a regulated private insurer?
The Eleventh Circuit, reflecting what appears to be a widely held public sentiment, opined that Congress cannot “mandate that individuals enter into contracts with private insurance companies for the purchase of an expensive product from the time they are born until the time they die.” Shorn of the rhetorical flourish – and viewed in terms of the power of Congress to “lay and collect Taxes” under Article I, including “taxes on incomes,” as specified by the Sixteenth Amendment – this is simply an objection to the form in which Congress has chosen to use the federal tax structure to encourage insurance coverage that it could have directly compelled just as it compels participation in Social Security and Medicare through payroll taxes that the Supreme Court upheld decades ago in Steward Machine. It’s not as though Congress has sent a swarm of federal bureaucrats into individual homes to drag citizens kicking and screaming into the offices of federally specified insurance executives and forced those citizens at gunpoint to sign lifelong agreements with the companies that those executives operate! Those who would prefer to meet their health-care financial obligations through paying the tax penalty levied by Congress are left entirely free to do so – the very feature of the Affordable Care Act that the Eleventh Circuit found objectionable when analyzing the ability of the measure to survive challenge under the Necessary & Proper Clause.
Put otherwise, Congress may undoubtedly use its taxing power to mandate that individuals pay for coverage supplied by private insurers, so long as it acts in two steps: step 1, impose a tax, and step 2, use the proceeds of the tax to fund privately provided health insurance for each individual. If Congress may accomplish this objective in two steps, why not in one? No federalism or liberty-related concern, whether the dignity of the states or that of individuals, is served by denying Congress that authority.