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Analysis: Virginia ruling on health-care reform revives debate on national power, states' rights

This article first appeared in the St. Louis Beacon, Dec. 13, 2010 - A leading constitutional law expert at Washington University called Monday's court decision striking down a key provision of the health-care law "embarrassing" and "anachronistic." But a libertarian lawyer said it was a refreshing reminder that congressional power has limits.

U.S. District Judge Henry E. Hudson ruled that Congress did not have the power to require people to buy health insurance, a requirement of the Affordable Care Act considered essential to its workability.

Bruce La Pierre, a constitutional law professor at Washington University Law School, said the decision was "right out of the 1930s," a throwback to pre-Depression era law when the courts voided child-labor laws.

The "decision is an anachronism," he wrote in an email. "Judicial limits on national legislative power have accomplished little good and are rarely if ever, and certainly not here, anything more than judicial disagreement with legislative policies.

"If (the health-care law) is bad, there is a simple solution -- amend it or repeal it. The power of judicial review should be husbanded -- exercised sparing and carefully -- to protect individual rights from majorities; it should not be squandered in policing disputes between the national majority (ACA is good policy) and a state majority (ACA is bad)."

Dave Roland, director of litigation at the Freedom Center of Missouri, disagreed. "Most importantly, Judge Hudson's decision reaffirms that there are still constitutional limits to congressional power, some areas of a person's private decision-making into which the federal government may not intrude," he wrote in an email.

Roland noted that the judge did not decide the issue of how Virginia's Health Care Freedom Act -- similar to Proposition C passed in Missouri in August -- would interact with the federal health-care law. "Presumably, courts will only need address this issue if the U.S. Supreme Court eventually reverses today's decision and upholds the constitutionality of the individual health-insurance mandate," he wrote.

Hudson is the third judge to rule on the health law. The other two upheld it. In all three, the judge's decision was in line with pre-bench political views. Hudson was active in Republican politics before being elevated to the bench by President George W. Bush.

National power vs states' rights

Many of the nation's most important legal and political disputes have centered around the issue of national power. Chief Justice John Marshall was a great architect of decisions upholding the exercise of federal power to create such institutions as a national bank. National power versus states' rights was at the heart of the dispute leading to the Civil War, just as it was to the legal fight over the Civil Rights Act of 1964. That law was upheld under an expansive reading of Congress' power to regulate interstate commerce.

Before and during the early years of the Depression, the Supreme Court threw out federal and state laws to protect workers. But the court reversed itself under heavy pressure from President Franklin Roosevelt and upheld a greatly expanded view of federal power.

Just how expansive is illustrated by two decisions that Judge Hudson considered but discarded in making his decision: Wickard vs. Filburn and Gonzales vs. Raich. The 239 bushels of wheat that Roscoe Filburn grew on his farm in Montgomery County, Ohio during the 1940s and the six marijuana plants cultivated by Diane Monson earlier this decade for her medicinal needs illustrate the breadth of Congress' commerce power.

Filburn bristled at the Depression-era regulations of the Agricultural Adjustment Act, which set a wheat production quota to avoid excess supplies and low prices. Before Uncle Sam intruded upon his life, Filburn raised a crop of winter wheat on his 23 acres of Montgomery County, Ohio. He sold about half his wheat and used the rest for home consumption and to maintain a herd of dairy cattle and a poultry and egg business.

In 1941, the feds told Filburn he could produce wheat on just under half of his 23 acres. He went ahead and planted all the land and went to court claiming that the home-consumption of a trivial amount of wheat couldn't be touched by Congress' power to regulate interstate commerce. But the Supreme Court disagreed.

The court said that even a small amount of wheat consumed at home could affect the stream of commerce. In describing Congress' broad commerce powers, the court harkened back to the decisions of Chief Justice Marshall who "made emphatic the embracing and penetrating nature of this (commerce) power by warning that effective restraints on its exercise must proceed from political, rather than from judicial, processes."

Marshall, the first important chief justice, had recognized broad power for Congress to enact laws "necessary and proper" to the exercise of its powers, especially its power to regulate interstate commerce.

Monson's pot case came to the court in 2005 in a different context. The Depression was a distant memory, and the Rehnquist court had been cutting back on Congress' commerce powers by ruling it could not regulate such subjects as guns in schools and how universities handled cases of violence against women. Many legal scholars thought the court was about to toss out Wickard. But it concluded in Gonzales vs. Raich that Monson's pot was a lot like Filburn's wheat and that both could be regulated by Congress because they had an impact on interstate commerce, even if miniscule.

Hudson said that the national health-care mandate was different from Filburn's wheat or Monson's pot. Filburn and Monson had taken affirmative steps to grow the wheat and pot. By contrast, a person who doesn't buy health insurance is not taking an affirmative step. That is crucial, Hudson wrote, because the Commerce Clause only allows Congress to regulate "activity," and the refusal to buy health insurance is not an activity.

Hudson said that the Rehnquist era decisions limiting Congress' power to regulate guns at schools and sexual violence on college campuses were more relevant to the health-care law.

Commerce Clause and Interstate Commerce

La Pierre disagreed with Hudson's analysis. "The court has long upheld Congress' power (under the necessary and proper clause) to regulate local activities that have a substantial effect on interstate commerce," he wrote. "There is no warrant for Judge Hudson's distinction between local acts (buying health care insurance) and local omissions (failing to buy health-care insurance) -- both affect the price of health care in the interstate market -- and the power to regulate, under long-settled precedent, includes the power to penalize.

"As Judge Hudson correctly notes, '[t]he court's task . . . is limited to determining whether a rational basis exists for Congress' conclusions' that a local activity affects interstate commerce. Unfortunately, Judge Hudson ignores his own counsel and proceeds to substitute his judgment for Congress' judgment. ...He substitutes his judgment that the local activity (failing to buy health insurance) does not affect interstate commerce for Congress' determination that this local activity does affect interstate commerce.

"The question is not, as Judge Hudson would have it, 'the authority of Congress to compel anyone to purchase health insurance.' The question is whether Congress has a rational basis for its determination that failure of citizens to purchase health-care insurance raises costs of health care in the interstate market. The short answer is that Congress has a rational basis for believing that individual decisions not to purchase health-care insurance, viewed as an aggregate, will raise the cost of health care and prevent low-cost delivery of health care for persons with pre-existing symptoms. That is, without an adequate revenue base, the interstate health-care system will fail."

But Roland agreed with the judge's interpretation of the Commerce Clause. "The court seized upon the vital distinction between an individual deciding to take action (such as growing wheat or marijuana) deemed to be counter to the public interest and an individual's decision not to act (i.e., choosing not to purchase something one does not want). Judge Hudson determined that even the Supreme Court's precedents of Wickard and Gonzales did not allow the federal government to use the Commerce Clause to require that citizens engage in an involuntary economic transaction."

Congressional power to tax and impose penalties

The other issue before the court was whether the health law was constitutional under Congress' broad power to tax. Hudson reasoned that the health-care mandate was enforced by a "penalty" rather than a "tax" because Congress was not trying to raise revenue. Because it was a penalty rather than a tax, Congress could not rely on its broad taxing powers, Hudson concluded.

La Pierre called Hudson's interpretation of Congress' taxing power a "crabbed understanding of tax power, right out of the 1930s." He added that is "hard to believe that Hudson can spin his analysis on the basis of conclusory labels 'tax' and 'penalty' -- hard to believe that Bailey (the child-labor tax case) still rings true for Judge Hudson."

The courts do not look at the intent or motive of a tax, La Pierre wrote. For example, the court has upheld taxes on bookies and marijuana sales, two taxes probably aimed at discouraging activities rather than raising revenue.

He added that it was "embarrassing" that Hudson relied on U.S. vs. Butler, to rule that the health-care law violated states' rights protected by the 10th amendment. The Butler decision was from the era before the Roosevelt court recognized broader congressional power.

Roland, on the other hand, wrote that, "the court reinvigorated the distinction between taxes levied for the purpose of generating revenue and regulatory penalties under the guise of taxation. Congress is permitted to impose tax-based regulatory penalties for laws passed pursuant to the Commerce Clause. But if Congress lacks authority under the Commerce Clause to regulate certain activity (or inactivity, as the case may be), it cannot avoid constitutional limitations by creating 'taxes' intended to force the desired behaviors. This is vitally important because it affirms that courts have a responsibility to discern when Congress is using sleight-of-hand to accomplish an otherwise impermissible end."

La Pierre wrote that the truly conservative approach to judicial interpretation of the health-care law would be to uphold it.

"The Republicans -- who couldn't defeat health-care reform in the political process last year -- are now trying to obtain judicially what they couldn't obtain in the democratic (small d) political process," he wrote. "It is always amusing to watch the opponents of judicial activism turn to the courts to redress their political losses. Sadly, Judge Hudson has given them the first round. One can hope, nonetheless, that the Roberts' Court will prove to be judicially conservative as opposed to politically conservative, that it will defer to the political branches of government, and that it will tell the new conservative Congress to repeal health-care reform on its own."

William H. Freivogel is director of the School of Journalism at Southern Illinois University Carbondale and a professor at the Paul Simon Public Policy Institute. 

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