A four-part series on the relation and effects of the Commerce Clause to Health Care
The following is a four-part series intended to provide a historical perspective as to the exhaustive debate over the constitutionality of the health care mandate. Part One, “Clear Words—Muddy Intent” explains the Commerce Clause—its origins and purpose and what our fore-fathers intended with it; Part Two, “Simple Issues—Complicated Problems” delves into “New Deal” legislation and the impact of the Willard vs. Filburn Supreme Court case as well as the Agricultural Act of 1938 and how all those legalities intertwined with the Commerce Clause; Part Three, “Sliding Down the Slope,” explores the Trademark and Sherman Acts and its effect on the patent medicine manufacturer’s industry and further discussion of how these two acts, and court cases addressing them, have created more federal oversight and control. In the final segment, Part Four, is a discussion of how Obama-Care is yet another legislative act that allows Congress to enact legislation that states and individual’s rights regarding the intent of the Commerce Act.
Part One: Clear Words—Muddy Intent
The Commerce Clause has defined the balance of power between the federal government and the states.
There has been a constant battle in application of the Commerce Clause between the need to protect consumers from abuse and the obligation of individuals to exercise personal responsibility
It has a direct impact on the lives of ordinary Americans beginning with the enactment of the Interstate Commerce Act of 1887 and the Sherman Anti-trust Act of 1890. According to Article 1, section 8 of the United States Constitution, this is an “enumerated power” in the United States Constitution (article I, section 8), provides that Congress has the power “To regulate Commerce … among the several States …” In response to rapid industrial development, Congress used the Commerce Clause to justify a new era of federal regulation, beginning with enactment of the Interstate Commerce Act in 1887 and the Sherman Antitrust Act in 1890. The outer boundary of Congress’s use of this power over the states has been the subject of a seemingly never-ending – and sometimes heated – debate. The Commerce Clause has defined the balance of power between the federal government and the states. It has a direct impact on the lives of ordinary Americans.
Speaking strictly as a layman, I find it very difficult to justify the argument that the mandate in the Patient Protection and Affordable Care Act (PPACA), so called “Obama-Care,” to purchase some form of health insurance is consistent with the intention of the Commerce Clause. I am neither a constitutional law scholar nor even a lawyer. However, I am well read and I had the benefit of growing up around a family law practice. Like some, whose fathers ran a hardware store, or whose family was in the grocery business, my understanding of the law comes mostly from my grandfather who was a judge, and also as a result of long hours after school following the explicit instructions of my father, or numerous uncles; gathering research, or hanging out in the record room of the old county courthouse documenting title transfers or other such legal recordings.
Regardless, in my everyman’s view and due to significant reading, I still am stymied at how one can assume the intention of the Commerce Clause was to use it to regulate such a wide array of activities. In fact the argument itself is not only counterintuitive; it has been very difficult for the courts to maintain a consistent view of federal power under this clause almost from the time of its original writing.
The Commerce Clause is exceedingly simple in construction. To most readers, it comes across as straight up in its potential interpretation, yet like much of the practice of law these days, interpretation is more driven by the desired outcome than the original intent of the wording.
There has been a constant battle in application of the Commerce Clause between the need to protect consumers from abuse and the obligation of individuals to exercise personal responsibility. Spending considerable time reading various papers written by the framers of the constitution, it is clear to me at least that the founders were attempting to solve relatively simple issues.
One State Over Another
As the U.S. was forming out of the chaos that was a byproduct of the Revolutionary War, the founders were wrestling with a number of problems that had been endemic in the colonies and in the end decided to only provide a set of very limited controls for federal exercise. The framers wanted to empower the federal government to act in a central fashion in negotiations and commerce relations with foreign nations in order to not have one state undercutting another state in the impost of duties, taxes or discounted prices. Second, there was an intention to restrict the ability of a state to impose interstate duties and taxes. It can be persuasively argued that part of the role of the Commerce Clause that the framers saw as necessary, but that does not seem explicit in the language, included a role for the federal government to play in adjudicating the differences arising between actions under disparate laws between the states in order to provide continuity for interstate issues as to fair and equitable protections of the individuals rights and freedoms. These intentions do not readily translate to the many arguments currently defined in expanding federal reach. For instance, in the phrase “To regulate commerce… among the several states…” they specifically use the term “among,” not between the states. Nor does it say between the citizens of the states, nor among the citizens of the states. In truth, it seems to become even clearer to me and others that if the framers had intended to empower the federal government to regulate commercial relationships between the citizens of one state to the citizens of another, or within a single state, these powers would have been specifically said so in pointed and specific language as one of the few federal enumerated powers.
Who has the Authority?
Therefore, the basic issues over the constitutionality of the PPACA mandate to purchase insurance, hinges on whether or not the original intention of the framers of the constitution was to give the federal branch, as opposed to the various state governments, the authority to regulate transactions between the citizens inside the borders of a state. Regardless, of whether or not you believe the framers intended to only have the federal branch control the business between the states or not, there have been a series of decisions and additional legislations that have significantly muddied the water of their intentions in regard to what is, or is not, a simple and clear statement. We will be discussing this in more detail in the next article.
Part Two: Simple Issues—Complicated Problem
In the prior segment, Clear Words – Muddy Intent, we discussed the evolving debate over for what most people on the surface seems a simple, clear and concise statement as to where the federal branch of government’s responsibility related to commerce begins and ends. The simple and direct interpretation that most laypeople draw from the Commerce Clause—which is an “enumerated power” in the United States Constitution (article I, section 8), that provides that Congress has the power ” To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes”—is that when commerce transpires among the states, as in between one or more states, then the federal branch is responsible to provide regulations that control such commercial transactions, and when commerce is between citizens inside of the boundaries of a state then it is the state’s responsibility to regulate those transactions. This seems clear to most people but…
Over the past several hundred years, smart men, (perhaps sometimes not-so-smart) often trying to secure honorable goals, (OK, sometimes selfish goals) for the common good, (yes, sometimes not for the common good at all) have parsed, prodded, twisted and convoluted these sixteen simple words into marvelous interpretations that confound the average persons intellect.
Wickard v. Filburn: A broad reach?
Filburn was growing more wheat than allowed—even though it for private consumption. He was fined and ordered to destroy his crops by the federal government.
The historical applications of the authority as interpreted under the sixteen words in this clause have ranged from the sublime to the ridiculous. In Wickard v. Filburn, 317 U.S. 111 (1942), the U.S. Supreme Court upheld a lower court’s decision that increased the power of the federal government to regulate what would seem to most a state-based, perhaps private activity. Roscoe Filburn was growing wheat for his own consumption. As part of the “New Deal” legislation, rushed through congress to ameliorate the effects of the Great Depression, The Agricultural Adjustment Act of 1938 limited the area in which farmers could devote to wheat production. Filburn was growing more wheat than was permissible—beyond the limits even though it was not for sale. Filburn intended it for private consumption. Ultimately, he was fined and ordered to destroy his crops. The courts found that because Filburn was growing more wheat than allowed, his actions somehow reduced the amount he would have purchased on the open market. Simply because wheat was traded nationally, the courts maintained Filburn’s acts affected interstate commerce which meant that he was under the federally regulated mandate of the court’s interpretation of the Commerce Clause.
The Government’s Unfettered Access
It seems that it is a difficult and dangerous stretch to view the Commerce Clause as a law that allows the federal government unfettered license to restrict individual freedoms in the same manner as the restrictions against Filburn. By nature of the argument as upheld in Filburn, any self-reliant activity could be determined to impede commerce in that if I, as an individual grow it, hunt it, or fish it, then I am not purchasing the item from others and therefore am affecting interstate commerce. I further find the argument specious, in that there is no basis to determine, other than abject supposition, that should Filburn have not grown his wheat himself that the wheat would have been purchased from an interstate supplier instead of an intrastate source. More likely in keeping with the times, he would have simply bartered for the un-grown grain in the first place. I believe this is a very dangerous expansion of federal powers that directly and potentially infringe permanently upon Filburn’s liberties which, in the end, caused him economic harm.
What’s the Logic?
If this remains the modern interpretation of the Commerce Clause, then it is would be clear that the mandate to purchase health care, as proscribed by the PPACA, strictly by the historic definition as decided in Wickard v. Filburn is therefore constitutional because any commerce between parties, even intra-state, can affect the purchase of goods and services inter-state. Further, using the same logic, any affect that the lack of purchase could have on the cost of care to others within a state to offset the cost to the individuals supported by the state’s health systems, including private insurance, Medicaid, community based etc., would also become subject to the federal regulation under the commerce clause.
There are at least two flies in the ointment to these arguments. One is the obvious one as discussed in the Wickard v. Filburn case, which is that it is a large conceptual leap for most normal people to see how the actions that Mr. Filburn engaged in should have been subject to federal intervention in the first place. But the second, and more interesting, argument is based on the circumstances of how insurance is actually provided to citizens of the states in the first place, and the resistance by some in the federal government to actually have a national insurance market at all.
Crossing State Lines?
Insurance within states today is subject to regulations that exist in, and are specific to, each state. Health care provided within one state is subject to the health regulations of that state. There is little, to no, transportability of an insurance policy for a worker in Pittsburg, Penn. to have the same policy in San Francisco, Calif. Recently, during a congressional hearing on tort reform, one democratic congressional representative (and noted constitutional lawyer) remarked—and I will paraphrase here—that since health care was not provided in a manner that it crossed state lines, that in every case he was aware of such care was provided within the jurisdiction of the state, and since he had never heard of care being provided in any hospital where the patient receiving care, or the hospital itself for that matter, existed simultaneously in two states at the same time, therefore, in his learned opinion, tort reform was a state’s rights issue and not subject to federal jurisdiction under the commerce clause. So how is it that the foregoing statement can be factual and true, while at the same time Wickard v. Filburn is also true? One of them simply must be a dangerous canard! But the key question is which one? This is THE question that today we, the people, must decide as the outcome of this decision will either fundamentally empower us or further restrict our life and liberties. This must be our collective choice alone.
In the next installment, we will look at other regulations and decisions by the courts that further confound this vital determination, and most importantly, further expand the gulf between the ordinary ability of a normal person to read and understand common language and the legal wrangling and interpretations that follow.
Part Three: Sliding Down the Slope
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)
PART FOUR: A Time for a Fresh Look
In the last article, Sliding Down the Slope, we discussed how continuing court decisions and additional legislations have continued to push us further and further down the slope of federal oversight and control of increasingly larger parts of our daily lives. We also looked at how our historical interpretation of the commerce clause has muddied the water as to where the responsibility of the states to regulate our actions ends and responsibility federal government begins. Now, let’s look at this, from an everyday person’s perspective, as to what this may mean related to the current debate over the constitutionality of the PPACA mandate for all to purchase insurance.
However, going back to the issues the framers were attempting to protect against, is it consistent with the framers view that the expansion of liability, as it is promulgated under this act, should so far abrogate personal responsibility as to the outcome of bad choice and bad behavior? Merely arguing that there is some benefit to a consumer does not make the clause relevant. The original expansion argument under Filbern that any commerce can be derived to be interstate commerce no longer seems to be a reasonable inference. Intrastate commerce itself is not innately subject to federal jurisdiction. The principle motivation to protect the consumer is not, in-and-of-itself, sufficient justification to regulate intrastate commerce, nor does it immediately give rise to the notion that all commerce is interstate.
The issue of the application of the Commerce Clause related to PPACA is even more muddled in that one of the principled arguments against this legislation is that it does not open the state-centered administration of health insurance nor does it provide an open and competitive interstate market. Most, if not all states, specifically regulate insurance provided within their borders. The inability of consumers to purchase insurance plans across state lines itself should stave off the argument that this is in some way per se interstate commerce and subject to the clause. The historical Filbern argument is even more difficult to rationalize in the absence of a transportable open state policy mandate.
Intrastate Regulation and Fairness
A reach to enforce the mandate for purchase of insurance under the auspices of the Commerce Clause is a hard one, indeed, in that the benefits to consumers that could be argued in the justification to impinge individual freedoms and economic liberties for the greater good are lost when the purchase itself is confined within intrastate regulation. Effective argument can only be made based on interstate availability of insurance whereby the policies available across the state line are comparable in standard of fees and services provided and transportable from state to state after purchase. An item, good, or service that is purchased in, and only is consumable, within one state and is subject only to the regulations of the state where the service was purchased and consumed in no way logically rises to become interstate. Further, any argument that attempts to provide nexus for an interstate affect, as in the case of Filburn, should be deemed to interpretation in the same manner as was done in Lopez.
A Voice Speaks Out
Specifically in relation to the Commerce Clause; let us agree with Justice Kennedy and walk a slow and careful path. In every case possible, let us demur to the authority of the state and the preservation of individual rights and liberties.
Finally, most recently in hearings of the Judiciary Committee relating to the debate for the need of tort reform legislation pursuant to the PPACA debate, one congressman, who shall remain nameless, while arguing why Tort reform was not necessary for the federal government to consider, made the following argument: He stated that in his long history as a strong states’ rights advocate, he had never seen an instance where health care was provided in a clinical setting and where the clinic existed simultaneously in two states, or between the borders of two states. As such, the provision of care was always done within the border of one state and therefore could not be interstate. The congressman further stated that if the person received care in one state, while a resident of another state, and that the care was provided under the licensure, regulations and authority of the state where the service was provided, that this was still no more interstate commerce than any other commercial action as prosecuted within a state on a daily basis.
Clearly, the evolution of the argument of the Commerce Clause, as providing a basis for regulations governing protection to consumers, can from time to time provide a broad and expedient method to justify such federal powers; these powers are innately the proverbial slippery slope. The framers carefully crafted the Constitution to preserve individual liberties and freedoms above all others. To allow expansion of federal powers under the aegis of the Commerce Clause, which has happened over the past few hundred years, is one of the more dangerous areas of law we have today. As such, full and unfettered caution must ensue.
The Judge Steps Up
Justice Kennedy wrote,
“[T]he Court as an institution, and the legal system as a whole, have an immense stake in the stability of our Commerce Clause jurisprudence as it has evolved to this point. Stare decisis operates with great force in counseling us not to call into question the essential principles now in place respecting the congressional power to regulate transactions of a commercial nature. That fundamental restraint on our power forecloses us from reverting to an understanding of commerce that would serve only an 18th century economy, dependent then upon production and trading practices that had changed but little over the preceding centuries; it also mandates against returning to the time when congressional authority to regulate undoubted commercial activities was limited by a judicial determination that those matters had an insufficient connection to an interstate system.”
Let us agree with Justice Kennedy and walk a slow and careful path. In every case possible, let us demur to the authority of the state and the preservation of individual rights and liberties. I also suggest we only allow federal regulation when such regulation is meant to provide a mechanism by which it can normalize controls on behalf of consumers among states; where interstate commerce requires only federal control for solution or provision of benefit; or where it is necessary to regulate the actions among the states, not among or between the citizens of the states. Let us be mindful that the actions of the states themselves will not harm the public good or unfairly impost taxes, duties or levies between the states or with other nations or Indian tribes.
This treatise, outlied in these four articles, is just one lay person’s read of this issue. If we cannot explain it to every man and woman. Perhaps the reach is simply too far!
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