The Supreme Court Questions the Individual Responsibility Provision

Given the strength of the precedent supporting the constitutionality of the individual responsibility provision, most legal observers going into the argument yesterday expected the Supreme Court to uphold it. A poll of prior Supreme Court clerks and attorneys who frequently argue before the Court, for example, showed this group of insiders thought it very unlikely that the law would be struck down.  After all, some of the most high-profile conservative Court of Appeals judges in the country have found it to be constitutional. The argument yesterday therefore surprised many. While the Justices’ questions at argument aren’t necessarily a reliable indicator of their ultimate votes, questions by several of the conservative Justices showed both little concern for precedent and little understanding of the impact of the health care law on individuals’ lives.

There’s no question the Commerce Clause of the Constitution gives Congress the power to pass laws regulating commercial markets, including the insurance industry. The Constitution and Supreme Court precedent are also clear that Congress has the authority to craft national solutions to national economic problems. The individual responsibility provision, which requires non-exempt people to maintain insurance (and provides subsidies to low- and moderate-income individuals) or pay a fine, is an integral piece of just such a national solution. Congress designed the individual responsibility provision to work in tandem with the ban on preexisting condition exclusions and the requirement that all insurers must sell health insurance to anyone who wants to purchase it, recognizing that near-universal participation—which the individual responsibility provision and the associated subsidies for purchasing health insurance are meant to achieve—is required for these insurance reforms to succeed. Otherwise, some people would likely forego insurance coverage until they get sick, sharply driving up the costs of insurance for all when they eventually seek care. Because (in constitutional terms) the provision is a “necessary and proper” means for carrying out these reforms of the insurance industry, it should be constitutional under long-established Supreme Court precedent.

But on Tuesday, various Justices appeared surprisingly hostile to the idea that given the realities of this market and the impact of these realities on individuals, it was appropriate to create this incentive to obtain coverage. Solicitor General Verrilli, in defense of the mandate, pointed out that the health care market is unique, because an inability to pay for care doesn’t mean you will be denied care, but means the cost of care will be shifted to others. He pointed to the “social norms . . . to which we’ve obligated ourselves so that people get health care” regardless of their ability to pay. Justice Scalia in essence shrugged, answering, “Well, don’t obligate yourself to that.” Later, when the Solicitor General explained that the requirement that insurance companies make insurance available to all would lead to skyrocketing premiums in the absence of an individual responsibility provision, Justice Scalia again was unconcerned, stating that to the extent this was a problem Congress faced, it was a “self-created problem”: “You could solve that problem by simply not requiring the insurance company to sell it to somebody who has a condition that is going to require medical treatment, or at least not -- not require them to sell it to him at a rate that he sells it to healthy people,” Justice Scalia suggested. In other words, making insurance broadly available and covering preexisting conditions is the problem and Congress should have just avoided doing that.

Justice Roberts and Justice Alito asked questions that seemed to quibble with the very concept of insurance as protection against unforeseeable risks through cost-sharing, focusing again and again on the “young and healthy” whose premiums would be subsidizing others’ care. Justice Roberts suggested, for example, that perhaps it was illegitimate to require all policies to cover maternity care, stating, “[T]he policies that you're requiring people to purchase . . . must contain provision for maternity and newborn care, pediatric services, and substance use treatment. . . .you're requiring people who are . . . never going to need pediatric or maternity services to participate in that market.” Justice Alito asserted, “[A] young, healthy individual targeted by the mandate on average consumes about $854 in health services each year. So the mandate is forcing these people to provide a huge subsidy to the insurance companies for other purposes that the Act wishes to serve, but . . . isn't it the case that what this mandate is really doing is not requiring the people who are subject to it to pay for the services that they are going to consume? It is requiring them to subsidize services that will be received by somebody else.” Of course, as the S.G. pointed out, “This is not a market in which you can say that there is a immutable class of healthy people who are being forced to subsidize the unhealthy. This is a market in which you may be healthy one day and you may be a very unhealthy participant in that market the next day.” Or, as Justice Ginsburg stated, “If you’re going to have insurance, that’s how insurance works.”

Justice Kennedy’s questions did not betray a concern that young healthy men might be forced to subsidize sick or childbearing women, but he did wonder whether the provision represented an unprecedented change in the relationship of the individual to the government by requiring an individual to undertake an affirmative act—obtaining insurance. As the most likely fifth vote for upholding the constitutionality of the provision, his concerns are perhaps the most important to the fate of the ACA. Those challenging the individual responsibility provision have energetically argued that Congress cannot require individuals to participate in the insurance market if they choose not to.

But over forty years ago, the Court found that Congress had the authority to require hotel and restaurant owners to serve African-American customers—even if they did not want to. Just as the refusal to rent a hotel room to a person of color is a decision about how and when to participate in the market for lodging, rather than a decision about whether to participate in that market, the choice not to purchase health insurance is not a decision to forego participation in the health care market altogether. Instead, it is an economic choice about how and when to pay for the costs of health care—given that all of us have health care needs at some point in our lives. In fact, health care costs of the uninsured are shouldered by society as a whole, at a cost of billions of dollars per year.

At the argument’s close, Justice Kennedy suggested he understood this connection. “I think it is true . . .,” he stated, that “the young person who is uninsured is uniquely proximately very close to affecting the rates of insurance and the costs of providing medical care in a way that is not true in other industries.” The ultimate decision in this case may turn on whether Justice Kennedy finds this close relationship between the risks the uninsured face and the costs the rest of society bears for their care to justify the individual responsibility provision as a necessary and proper regulation of commerce, as a long line of Supreme Court precedent suggests.