Health Care Mandate and the Commerce Clause (Part 3)

The patient protection and affordable care act purchase mandate –
A four-part series on the relation and effects of the Commerce
Clause to Health Care

By: Thomas W. Loker

The following is the third segment of a four-part series where author, Tom Loker, explores the impact of the Commerce Clause on Obama-Care.

Part Three: Sliding Down the Slope

The Dreaded Slipery Slope

At the end of the last article, Simple Issues – Complicated Problems, we were discussing some of the earlier expansions of the federal reach under the commerce clause and one landmark case, Wickard vs. Filburn, which strains many ordinary people’s cognitive grasp.   There are some other significant legislations and court decisions that take this strain to a new level – perhaps venturing into lands, heretofore, exclusively explored by the venerable Rod Sterling of Twilight Zone fame.

Two Sides of the Same Coin

The Pure Food and Drug Act of 1906, made law that the liability for addiction and potential harm of a nostrum was in the hands of the person who purchased it not the manufacturer

In the late 1880’s, the rise in power of monopolies and cartels was having a deleterious effect on the population.  State laws provided effective controls intrastate, but the lack of solid legislative protections for the patent medicine manufacturers interstate was leaving them open to both economic and physical damage. The so called patent medicines were not protected by patent at all. Patents mandated disclosure of materials and methods so instead these manufacturers relied on trade secrets and brand protection.  Brand protection on an interstate level was the root of the problem for the patent medicine men.  In this mix grew one of the most dangerous cartels, the Proprietary Manufacturers Association, the makers of patent medicines.  While most states had forms of trademark protection, it was effective interstate protections that the Proprietary Association effectively lobbied for, and congress passed, with the Trademark Act of 1870.  Enacted under the authority of article 1, section 8, clause 8 alongside the Commerce Clause (clause 3), the Trademark Act allowed the members of the Proprietary Association to receive additional protections fostering their rapid growth and providing an instrument that allowed them to secure their brands interstate without having to disclose their formula or ingredients.  The effect on the population was devastating, not so much as to the economic impact, but to the addictive and deadly nature of the hidden ingredients in these nostrums. The effect on congress was even more troubling as the association’s power grew exponentially and soon they controlled 80% of all newspapers in the U.S., and with that and other contract-related devices, they had substantially gained effective legislative control.

Trademark Law Found Unconstitutional

As part of the political battle taking hold to reign in this emerging problem, the initial Trademark Act was challenged and found unconstitutional because it failed to make any reference to commerce with foreign nations, among several states, or with Indian tribes.  Moreover, the court found that the act made no mention of “the character of the trade to which it was to be applied or the residency of the owner.”   The battle continued with the Trademark Act of 1881, and then later the Trademark Act of 1905.

In addition to the Trademark laws that were effectively lobbied on behalf of the patent medicine men, the Sherman Antitrust Act of 1890 was another step in  the government’s battle to protect the citizenry.  Created to control the anticompetitive and harmful actions of cartels like the Proprietary Manufacturers Association, the Sherman Act provided a framework to protect consumers from anticompetitive behaviors of cartels, monopolies and trusts.  Reflecting the political climate of the day, and the power of the Proprietary Manufacturers Association, the Sherman Act politicians were virtually unwilling to use the law until Theodore Roosevelt’s presidency fifteen years later.  Specifically justified under the Commerce Clause, the Sherman Act and the extensions that followed like the Clayton Act, Robinson-Patman Act and other pieces of law began to leverage the Commerce Clause as a means to argue for and extend the reach of federal regulation in areas of interstate commerce, particularly when it was for the good of the consumer.

The Control of the Patent Medicine Industry

Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U.S. 373 (1911) established that Retail Price Maintenance (RPM) was per se illegal and helped to interrupt the significant control the patent medicine industry was exerting over retailers of the period.  The tenant of the per se illegality of Retail Price Maintenance remained black letter until recent years.  Recent rulings like GTE Sylvania (1977) and Leegin Creative Products, Inc. v. PSKS, Inc., 128 S. Ct 2705 (2007) have begun to reverse these long standing decisions as reconsideration by the courts are again questioning the underlying basis of authority under the Commerce Clause.

Like Wickard v. Filburn, the creation and enforcement of the Sherman Act was motivated by the desire to protect the public.  Unlike Filburn, the Sherman Act stays well within the logical confines of interstate commerce to provide its authority for the protection of the consumer. It also serves to establish a limited framework for its use.  This act provided an indirect method by which to limit harm to consumers being wrought from the Proprietary Manufacturers Association.  This indirect method also became necessary and appropriate because the courts at that time did not recognize an ability to assess the manufacturer of an items liability mainly because the consumer made a reasonable choice.

As seen codified in the enactment of the Pure Food and Drug Act of 1906, much of the liability for the addiction and the potential harm of a nostrum was not in the hands of the manufacturer, but in the hands of the person responsible for its purchase. So, as long as the manufacturer made the consumer aware of any of a list of specific potentially “harmful” ingredients it was thought to be held harmless.

Civil Rights Act—Interstate Normalization

The Commerce Clause has repeatedly been used to help legislate behaviors at the federal level.  After the passage of the Civil Rights Act of 1964, the Supreme Court issued several rulings supporting the use of the Commerce Clause in regulating enforcement of discriminatory behavior in businesses.  In the case of Heart of Atlanta  v. United States, 379 U.S. 241, the court ruled that Congress could regulate a business that served mostly interstate travelers.  More interestingly, in Daniel v. Paul, 395 U.S. 298 (1969), the court ruled that the regulation of recreational facilities was permitted because three out of four items sold at its snack bar were purchased outside of the state thereby subjecting the facility to the jurisdiction of the federal regulation under the Commerce Clause.

Again, it is clear that the intention of the act itself was to protect consumers against discrimination based on race, religion, or national origin.  The intention of this particular legislation is clear and understandable.  For the everyday person, the argument endorsed in Daniel v. Paul becomes problematic in that it smacks of interpretation driven by outcome.  For most readers, it is very hard to swallow that the Commerce Clause comes into play because some or even most of the items sold in a related activity may have been subject to interstate purchase.  This stretch makes it hard to find any tacit alignment that bolsters the rest of the arguments many of which appear weak and overly broad.

Gun Free School Zones

Gun-Free School Zones v. Lopez, the Supreme Court was faced with a challenging decision.  A 12th grade student had been convicted of carrying a concealed handgun into a school in violation of the Gun–Free School Zones Act of 1990.  The lower court found that in Wickard v. Filburn the Court had ruled that Congress was exercising its Commerce Clause power to police local economic activity because the individual states were powerless to regulate it themselves. More specifically, this was determined to be the case because in the opinion of the court only the federal government was able to manage the national wheat supply and control prices.  The lower court reasoned that if you extrapolated the same arguments to acts of gun violence because crime negatively affected education, congress could conclude that crime in schools clearly affected commerce; therefore it ought to be federally regulated.

Nationalizing Police Power

One can rapidly come to the conclusion that if this in fact were true, the entirety of all police power in all states could be nationalized because all crime therefore has some impact on interstate commerce. In this case, the Supreme Court overturned the lower courts verdict.  Justice Thomas, in his concurring opinion, argued that allowing Congress to regulate intrastate, noncommercial activity under the Commerce Clause would confer on Congress a general “police power” over the entire nation.

Clearly, once again, the intention was to find some way to allow the federal government to help protect the citizenry from harmful acts.  While the intention was and is noble, the argument that this is an applicable extension of federal power under the Commerce Clause simply does not hold.  In allowing these stretches to carry our normal imagination to such levels that old Rod would be proud.  Mr. Sterling started each show with the quote, “You’re traveling through another dimension — a dimension not only of sight and sound but of mind. A journey into a wondrous – land whose boundaries are that of imagination. That’s a signpost up ahead: your next stop: the Twilight Zone!”  The difference between Mr. Sterling’s excursions and the commerce clause debate, are that the ramifications of this mind trip have very significant  consequences on each of us, and ultimately the health care we will be able to
access.  In the last and final article we will discuss the Patient Protection and Affordable Care Act. (PPACA)

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This entry was posted in General Comments, News, Other Related Comments, Patient Protection and Affordable Care Act "ObamaCare" and tagged , , , , , , , , , , by Thomas W. Loker. Bookmark the permalink.

About Thomas W. Loker

Meet the Author - Thomas Loker is a Startup Consultant and Advisor at SYDK.ORG, Angel Investor, Mentor and Advisor at Keiretsu Forum & Venture-Med and an established operations guy with serial successes with startups, transitional companies and turnaround situations. He has had a long career serving in the fields of science, technology and healthcare related industries. He is an active board member in both for-profit and not-for-profit companies. Tom has written numerous articles in the areas of healthcare, technology, politics and the economy. He is currently the principal author of Health Reform 2.0: Beyond partisan divide lies pragmatic solutions – a whitepaper focused on moving beyond the partisan rhetoric of the ACA (Obamacare) to a simple, efficient, effective, accessible and affordable healthcare system. He maintains a passion for serving the underserved and has founded, supported and worked in various companies to serve the most fragile among us. Because of his expertise on the business of healthcare, he was invited to conduct multiple congressional briefings on healthcare reform in Congress, meeting with more than 100 congressional representatives. He has been a guest on HuffPost Live to talk about health care issues, and is a frequent keynote speaker on the topic for many groups and events. Prior to his latest book, The History and Evolution of Healthcare in America: The untold backstory of where we've been, where we are, and why healthcare needs more reform, Tom published “Delusional Ravings of a Lunatic Mind”—a collection of essays on healthcare, politics and their interaction with the economy, available at Amazon, Barnes and Nobles, and other bookstores. Tom's passion for Music is currently expressed by his role as VP Operations and General Manager of David Victor Presents. See www,davidvictorpresents.com to find out more. You can find Tom online at: Website: http://www.loker.com Blog: https://tloker.wordpress.com LinkedIn: http://www.linkedin.com/in/thomaswloker Photography: http://www.loker.net

One thought on “Health Care Mandate and the Commerce Clause (Part 3)

  1. I agree with your Health Care Mandate and the Commerce Clause (Part 3) | The History and Evolution of Health Care in America, superb post.

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