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Doing Nothing is Not in Excess of Congress's Enumerated Powers.

January 15, 2019

If the federal government passes a law that exercises no power, is that law in excess of its powers?

A federal judge recently answered "Yes."

See: https://drive.google.com/file/d/1CAbrWy7zvfUec-_8YWDh7H3bQr2-X4uH/view

 

Some Background. 

In Texas v. United States, a bunch of States sued the U.S. Government, arguing that the Affordable Care Act ("the ACA" / "Obamacare") is now unconstitutional in 2018, despite the U.S. Supreme Court's prior ruling in 2012 that it was constitutional. 

 

What changed? 

 

In 2012, the U.S. Supreme Court held that the law's individual mandate -- requiring people to buy health insurance or pay a financial penalty -- was constitutional only if it was an exercise of one of Congress's enumerated powers in the Constitution. 

 

The Court held that the Interstate Commerce Clause could not justify the individual mandate, because it permitted Congress to regulate only Commerce that was already happening and could not compel people to enter into Commerce.  But the Court held that the Taxing Clause did justify the individual mandate. The financial penalty could be construed as a tax, since it collected revenue and was paid to the IRS.  So construed, it was a proper exercise of one of Congress's enumerated powers in the Constitution and so constitutional.

 

In 2017, a new Congress removed the teeth of the individual mandate by zeroing out the penalty in the 2017 Tax Cuts & Jobs Act. Before, a family's choice was: (1) buy health insurance, or (2) pay potentially thousands of dollars to the IRS.  Now, the choice was: (1) buy health insurance, or (2) don't, and pay $0. 

 

Shortly after Congress zeroed out the penalty, a bunch of States sued the U.S. Government, arguing that the individual mandate, and by extension the entire ACA, was now unconstitutional.  Why?  The U.S. Supreme Court had relied on the individual mandate's collection of revenue and payment to the IRS in categorizing it as a "tax."  Now it did neither, so it was no longer a tax.  And the U.S. Supreme Court had already said that, if the individual mandate was not an exercise of the Taxing Clause, then it exceeded Congress's power under the Commerce Clause, and was unconstitutional.  So, the argument went, since the individual mandate was no longer a tax -- it now collected no revenue -- it was now unconstitutional.

 

Why bother, since the individual mandate was now toothless?  The States' more far-reaching argument was that the entire ACA fell with the individual mandate.  They argued that the individual mandate was so entwined with the rest of the ACA that it was not severable.  If a requirement that individuals either buy health insurance or pay $0 was unconstitutional, then the entire law (guaranteed issue, community rating, etc.) must fall with it.

 

The U.S. District Court for the Northeastern District of Texas, Fort Worth Division,  agreed with the States on both points: (1) the individual mandate was now unconstitutional, and (2) it could not be severed, so the entire ACA must fall.  That ruling will be appealed.

 

Doing Nothing is Not in Excess of Congress's Enumerated Powers.

 

A lot of folks have weighed in on (2), the severability issue. This post is about (1), the constitutionality of the now toothless individual mandate.

 

It's definitely a debatable point.  But I think that, after the Tax Cuts and Jobs Act, the question of whether what's left of the individual mandate is unconstitutional distills down to the question of whether it's constitutional for the federal government to do nothing.

 

In short, the previous administration took the position that one could comply fully with the law by *either* buying health insurance *or* sending the shared responsibility payment to the IRS with one's other tax payments.  Both were equally legal options.

 

If that's an accurate understanding of the ACA -- there's room to disagree on that point -- then the same remains true now.  The language about the shared responsibility payment (the penalty) is all still in the law, the TCJA didn't remove any of it.  The only change made was replacing the prior amount charged with $0.  So you still have the same two options.  One of them just got really easy to comply with. 

 

The only way the ACA would become unconstitutional, it seems, is if the TCJA *added* a legal obligation to choose option 1 over option 2 that did not exist in the ACA before Trump took office.  Because that seems to me a less likely reading of what Congress intended when it passed the TCJA (empowering the ACA's individual mandate was the *opposite* of what Republicans wanted), it seems that the post-TCJA ACA is a mandate to either do a thing (purchase health insurance) or not do a thing (not purchase health insurance and pay $0), with the two being equally legal options. 

 

Since that is the functional equivalent of passing a law that says "just do what you want," it seems like the constitutional analysis is whether the government's exercise of *no* power is in excess of its enumerated powers.  The answer to that, I think, has to be "No."

Counterarguments.

 

The District Court and some commentators reach the opposite conclusion, for five main reasons. 

 

First, they reason that, because the ACA still says that people "shall" buy health insurance, some people will still do so as a result, even though there is an alternative means of compliance (not doing so and paying $0) that is much easier.  Therefore the individual mandate still has legal force. See, e.g., Section 2 here: http://reason.com/volokh/2018/12/17/understanding-the-new-obamacare-decision#fold

 

In my view, the law's remaining effect is more accurately described not as "legal force" but as "psychological force."  The ACA is now no different from a giant propaganda poster saying "BUY WAR BONDS."  That some people will buy bonds after seeing the poster does not mean that the poster has "legal force."  So too for the ACA. 

 

A second argument is that the toothless individual mandate is analogous to a law with "little or no enforcement," which is still on the books even if violations are not prosecuted.  But that is not so with the individual mandate.  This is not a question of the law prescribing a penalty and prosecutors declining to seek it.  That situation would arise only if, before the TCJA zeroed out the penalty, the IRS had stopped making people pay it.  By contrast, the people today who do not buy health insurance have not violated the individual mandate; they have complied fully with one of its two alternative options (pay $0) and so there is no violation and nothing to prosecute. This novel scenario, where — try as you might, and no matter what you do — you can never violate a law, is distinct from the usual scenario where you do violate the law (e.g., you drive 5 mph over the speed limit) but nothing is done about it. The latter still mandates something, at the end of the day, and so exercises power. The former does not. The distinction is crucial.

 

Third, the District Court noted that some people, based on their understanding of the law, still feel bound to buy insurance.  But it is no defense that some people will mistakenly believe they must choose option 1 (buy health insurance) over option 2 (not do so and pay $0).  Imagining something does not make it so.

 

Fourth, the District Court noted that, under the surplusage canon, it should not construe a statutory provision (the toothless individual mandate) to do nothing.  But that canon arises from a presumption that Congress usually wants to do something when it passes a law.  Here, Congress did something in 2012 -- it created a toothed individual mandate.  And Congress did something in 2017 -- it removed the teeth.  Interpreting the individual mandate now as not doing anything is thus consistent with the surplusage canon; it attributes meaning and substance to both the 2012 law and the 2017 law.  It just so happens that they cancel each other out, intentionally.

 

Fifth and finally, the District Court reasoned that it was logically inconsistent for the U.S. Government to both (1) say that the individual mandate did nothing now, and (2) try to justify it under the Commerce Clause on the ground that it regulated commerce, i.e., did something.  Though superficially appealing, the Court's analysis gets it exactly backward.  The U.S. Government needs to cite a source for the power it exercises only when it exercises power.  If you're doing nothing, then you don't need to prove that you have the authority to do it.

 

In sum, you don't need a train ticket to not ride the train.  And the U.S. Government does not exceed its enumerated powers when it does nothing. 

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