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NFIB v. Sebelius (on the Commerce Clause)

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Brief Fact Summary.

Congress passed a law requiring individuals to maintain health care.

Synopsis of Rule of Law.

The individual mandate provision of the Patient Protection and Affordable Care Act (ACA) was an invalid exercise of the Commerce Clause and the Necessary and Proper Clause. By requiring individuals to purchase health insurance, the government was not regulating commerce, but creating it.

Points of Law - Legal Principles in this Case for Law Students.

First, Congress may regulate the use of the channels of interstate commerce, second, Congress is empowered to regulate and protect the instrumentalities of interstate commerce, or persons or things in interstate commerce, even though the threat may come only from intrastate activities, and third, Congress' commerce authority includes the power to regulate those activities having a substantial relation to interstate commerce, i.e., those activities that substantially affect interstate commerce.

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Facts.

In 2010, Congress passed the ACA. One provision of the ACA was the individual mandate, which required individuals to maintain health insurance. The government claimed this provision was a response to a cost-shifting problem. It reasoned that everyone eventually needs health care, and some people do not have insurance and are unable to pay for their care. Hospitals are required to provide a certain degree of care regardless of individuals’ ability to pay, so they shift that cost to insurers, by charging them higher rates. Insurers shift that cost to their subscribers by charging them higher premiums, and the govenrment established the individual mandate as a way to address this cost-shifting promlem.

Issue.

Was the individual mandate of the Patient Protection and Affordable Care Act a proper exercise of the Commerce Clause or the Necessary and Proper Clause?

Held.

No, the individual mandate exceeded the government’s Commerce Clause and Necessary and Proper Clause authority.

Dissent.

Justice Ginsburg

Justice Ginsburg argued that the individual mandate did not compel individuals to purchase an unwanted product, because eveyone eventually consumes health-care products and services. She also argued that Congress had the authority to establish the boundaries of the market it sought to regulate. She argued that the Supreme Court in Wickard and Raich acknowledged Congress’ authority to direct the conduct of an individual today under the Commerce Clause. She asserted that the view that the Commerce Clause could only be used to regulate individuals actively engaged in a commercial market was underlied by a fear that the commerce power would become too broad without such a limit. This fear, she argued, was unfounded, because of existing checks on Congress’ power, such as the Due Process Clause.

Justice Ginsburg also disagreed that the individual mandate exceeded the Necessary and Proper Clause. She argued that the individual mandate did not intrude upon state sovereignty, evidenced in part by a history of the federal government playing a role in the health-care sector, and because it addressed the type of interstate problem that the commerce power was directed at.

Justice Thomas

Justice Thomas argued that the notion that the government may regulate inactivity that substnatially affects interstate commerce was inconsistent with the orignial understanding of Congress’ powers.

Concurrence.

Justice Scalia, Kennedy, Thomas, and Alito (joint opinion)

The concurring Justices argued that the individual mandate regulated the failure to maintain insurance coverage, which was not commerce, and that allowing the individual mandate under the Commerce Clause would mean that the federal govenrment could regulate all private conduct, including the failure to act.

Discussion.

The Supreme Court held that the government did not have the authority to enact the individual mandate under the Commerce Clause, because the individual mandate did not regulate commerce, but attempted to create commerce by requiring people to purchase health insurance. According to the Supreme Court, allowing Congress to create commerce under the Commerce Clause would be inconsistent with the text of the Commerce Clause and the Framers’ vision of the Commerce Clause.

The Government argued that everyone requires healthcare eventually, so uninsured people are in fact active in the healthcare market. The Supreme Court held that individuals’ future participation in a particular market does not authorize Congress to require them to participate today. The Supreme Court also distinguished its prior Commerce Clause cases like Wickard v. Filburn and Gonzales v. Raich, in which, according to the Supreme Court, the regulated individuals were engaging in preexisting economic activity.

The Government argued that the individual mandate was also a proper exercise of governmental power under the Necessary and Proper Clause, because it was an integral part of a comprehensive scheme of economic regulation. The Supreme Court rejected this argument, because the individual mandate was not in service of a governmental power granted to Congress. The Supreme Court also found that even if the individual mandate was necessary to the ACA’s reforms, expanding federal power was not a “proper” way of achieving the reforms.


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