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A Weak Link in the Obamacare Lawsuits

Opponents of the Affordable Care Act had another day in court on Wednesday, this time before federal judges in Georgia, representing the 11th Circuit Court of Appeals. These opponents want the judges to uphold a ruling, made by a lower federal judge in Florida, that the law is unconstitutional. It's the third such appeal to go before a Circuit Court -- and perhaps a prelude to consideration before the Supreme Court.

As you probably know, the primary focus of the plaintiffs in these lawsuits is the "individual mandate" -- the requirement that all people with economic means contribute toward the cost of their health care by obtaining insurance or paying a tax penalty. The constitutional objections to this scheme are varied and complicated. But one argument by the plaintiffs deserves extra scrutiny, because it suggests the plaintiffs misunderstand health care policy, are misapplying a crucial court precedent, or some combination of the two.

The argument is about Article I, Section 8 of the Constitution, which empowers the federal government "to regulate commerce … among the several states." The Commerce Clause, as it is known, is one of three constitutional provisions that the government has cited as justification for imposing the individual mandate. And its origins should be familiar to anybody with even rudimentary knowledge of American history.

In the first years after independence, the country's governing charter was the Articles of Confederation, in which state autonomy hindered security and hobbled prosperity. Frustration with this situation led to the 1787 Constitutional Convention, where, as legal scholar Andrew Koppelman noted recently in the Yale Law Journal, delegates agreed that the new Congress should "legislate in all cases … to which the states are separately incompetent, or in which the harmony of the United States may be interrupted by the exercise of individual legislation." That resolution eventually evolved into the Commerce Clause.

The clause's final text is vague enough to allow honest debate over its meaning and limits. But, except for a relatively brief period from the 1890s until the 1930s, the courts have interpreted it very broadly. In the early 1940s, for example, the Supreme Court agreed that the federal government could place strict quotas on a farmer's wheat production, even limiting what the farmer could grow for his own family and livestock, because the aggregate effect of more farmers doing the same thing would depress the price of wheat nationally and imperil the then-fragile economy.

In the 1990s, the court retrenched just a bit, producing the key decision upon which the health care lawsuits now rely. In that decision, United States v. Lopez, the Supreme Court threw out a federal law establishing "gun-free zones" around schools. The federal government had cited the Commerce Clause as justification for its law, arguing that gun possession led to violence and fear, preventing students from gaining skills they need for the job market -- and that the aggregate effect depressed economic growth nationally. The Supreme Court said that "pil[ing] inference upon inference" in that way was not sufficient to warrant federal intervention. Years later, the court made a similar ruling about national efforts to prevent violence against women.

Opponents of the health care law say the Lopez principle ought to invalidate the Affordable Care Act, too, because the argument for an individual mandate relies on a similar pile of inferences -- namely, that people going without health insurance drive up prices for everybody else. But is that really the sort of argument the justices meant to reject in Lopez? Are the inferences in the two cases really similar? I don't think so. At its core, the Lopez case was about the distinction between state and federal responsibilities. The "inferences" that drew the justices' ire were the ones arguing that gun violence near schools demanded federal, rather than state, action -- even though many states already had laws dealing with the problem.

Health care is different. It is very clearly a national problem beyond states' ability to control. Hospitals routinely charge for services that insurers from other states must pay. Employers negotiate premiums for workers in multiple states. And so on. As Koppelman noted, "Statues that horn in on matters that are purely local, such as the federal ban on the possession of handguns near schools that the Supreme Court struck down in Lopez, exceed the commerce power. But the national health care insurance market is not a purely local matter."

To put this in more practical and specific terms, imagine that you are the governor of New Jersey. You've signed a law establishing universal coverage and, heeding the advice of health policy experts, you've established an individual mandate. But the governor in Pennsylvania has not done these things. Therefore, in the greater Philadelphia area, which spans your states' common border, younger and healthier residents are moving to Pennsylvania because they figure they don't need insurance and there they won't be forced to obtain it. The result is that your population is getting gradually sicker, prompting insurers to raise their premiums and diminish their offerings. But your only recourse is to hurl insults across the Delaware River. It's a textbook case of the states being "separately incompetent" to solve a problem.

You don't have to take my word for this, by the way. Officials in Massachusetts, the one state that already enacted health reform with an individual mandate, filed an amicus brief in defense of the health law. In that brief, they cite their limited ability to reduce the price of health care without a national regulatory system that includes an individual mandate. California, which came within one state legislature vote of enacting a similar system several years ago, filed a brief making the same argument.

Could the courts throw out the Affordable Care Act without using Lopez in the way the law's opponents do? Sure. The case, again, is more complicated than that. But it would be one more sign that the courts are establishing new limits on federal power, rather than recognizing existing ones. That is not something conservative judges, in particular, say they like to do.

This column is a collaboration between TNR and Kaiser Health News. KHN is an editorially independent news service and is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization, which is not affiliated with Kaiser Permanente.