Friday, May 4, 2012

Did Congress Employ the Commerce Power to Impose Individual Mandates in the 1790s? Of Course Not.

Recently some, including Eliot Spitzer (see here) and Einer Elhauge before him (see here) have invoked early maritime legislation in support of their argument that the Affordable Care Act's coercive individual mandate is consistent with the original meaning of the Commerce Clause, in part because so many of the Founders were members of Congress during the 1790s.  Both point to two such statutes:  First, a 1798 "Act for the Relief of Sick and Disabled Seamen," which required ship owners to collect taxes to support health care for seamen and second, a 1790 Act purportedly requiring ship owners to purchase health insurance for seamen manning their vessels.  Spitzer refers to Professor Elhauge's essay  as a "brilliant article" involving "spectacular historical reporting."  Professor Elhauge's tone, it should be noted, is far more nuanced and modest.

Invocation of the 1798 Act is not new in this context.  As early as January, 2011, Ezra Klein of the Washington Post invoked this statute in his blog, claiming that the Act constituted precedent for the Affordable Care Act's coercive requirement that Americans who can afford to do so must purchase health insurance policies whose terms are dictated by the National Government.  In so doing, Klein claimed that the 1798 Act "was, in essence, a regulation against a form of inactivity: You were not allowed to not do something, in this case, pay for sailor's health insurance."

Others issued effective rebuttals to this claim at the time.  (See this excellent January 2011 essay in Forbes by Avik Roy.) 

Neither statute provides precedent for the Affordable Care Act's coercive individual mandate.

The 1798 statute, for instance, was a quintessential regulation of interstate commerce.  By its terms, the statute only applied to vessels whose owners affirmatively sought licenses to engage the so-called "coasting trade," that is, the carriage of goods within the waters of the United States from one port to another.  According to Joseph Story, Congress's power over the coasting trade derived from the Commerce Clause, and "extends to the regulation of navigation, and to the coasting trade and fisheries, within, as well as without any state, wherever it is connected with the commerce or intercourse with any other state, or with foreign nations."  See Joseph Story, II Commentaries on the Constitution of the United States, Ch. 15, Section 1071 (1833).  Indeed, as Story explained, this power "extend[ed] to the regulation and government of seamen on board of American ships."  Id.

Indeed, it may be that the 1798 Act involved an exercise of the taxing and spending power.  As Matthew Franck has explained, the statute imposed a "payroll tax collected by shipowners from seamen’s wages for purposes of a federal spending program on caring for sick sailors."  Characterized in this way, the statute was not a regulation of commerce at all, but instead an exercise of the power to "lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States."   Of course, under a Madisonian view of the Commerce Power, such spending could only further the general welfare if it carried into execution  one of Congress's enumerated powers, such as the Commerce Power.

The 1790 Act provides no more support for the Spitzer/Elhauge claim.

Here is the relevant text:

"[E]very ship or vessel belonging to a citizen or citizens of the United States, of the burthen of one hundred and fifty tons or upwards, navigated by ten or more persons in the whole, and bound on a voyage without the limits of the United States, shall be provided with a chest of medicines, put up by some apothecary of known reputation, and accompanied by directions for administering the same; and the said medicines shall be examined by the same or some other apothecary, once at least in every year, and supplied with fresh medicines in the place of such as shall have been used or spoiled; and in default of having such medicine chest so provided, and kept fit for use,Penalty on the master for default. the master or commander of such ship or vessel shall provide and pay for all such advice, medicine, or attendance of physicians, as any of the crew shall stand in need of in case of sickness, at every port or place where the ship or vessel may touch or trade at during the voyage, without any deduction from the wages of such sick seaman or marine."

As Matthew Franck (again) has explained, the Act did not require vessel owners to provide health care as such.  Instead, owners only had to provide such care if they "default[ed]" on the statute's requirement to provide "a chest of medicines, put up by some apothecary of known reputation, and accompanied by directions for administering the same . . ."   Moreover, the statute did not apply to any and all vessels but instead applied only to those vessels "navigated by ten or more persons in the whole, and bound on a voyage without the limits of the United States."   Thus, the statute did not even apply to the so-called "coasting trade" governed by the 1798 Act.

In sum neither Act provides precedent for the Affordable Care Act's coercive individual mandate.  Instead, both regulate --- that is, prescribe a rule governing --- Commerce Among the Several States and with Foreign Nations.  Indeed, in  Gibbons v. Ogden, 22 U.S. 1, 197 (1824), a case often invoked by advocates of broad national power, Chief Justice John Marshall defined the power to regulate interstate commerce as the power "to prescribe the rule by which commerce is to be governed."   The two early statutes invoked by Spitizer and Elhuage do exactly that --- they impose a rule on individuals volutarily conducting interstate commerce.  Thus, the requirements of these statutes are indistinguishable from, say, a requirement that interstate railroads install particular safety equipment, allow their employees to unionize, or travel at certain speeds.  Examples could be multiplied.  Like so many other laws, all such requirements "mandate" that firms voluntarily operating in interstate commerce perform certain acts they would not otherwise perform. 

By contrast, of course, the Affordable Care Act's individual mandate applies to individuals as such, regardless whether such individuals are engaged in interstate commerce.  That is to say, instead of prescribing a rule by which parties conduct interstate commerce that already exists, such legislation conscripts individuals into engaging in interstate commerce in the first place.  The maritime Acts invoked by Spitzer, Elhauge and others no more support such an unprecedented expansion of Federal power than they would support, for instance, a ban on the possession of guns near a school.  See United States v. Lopez, 514 U.S. 549 (1995) (invalidating such a ban)  or the regulation of purely intrastate commerce.  See A.L.A. Schechter Poultry Corp. v. United States, 295 U.S. 495 (1935) (invalidating such regulation). 

Update:  After publishing this post I located a response by Professor Elhauge to a similar but briefer argument made by Randy Barnett.  The core of Elhauge's response is worth quoting in full, though I have highlighted key portions.

Although Barnett acknowledges that the early medical insurance mandates were exercises of Congress’ commerce clause power, he distinguishes them on the ground that they were imposed on actors who were in commerce, namely on shipowners and (in a third example he omits) seamen. His distinction thus means that he admits that these precedents show that if one is engaged in commerce in market A – here the shipping market or the seamen labor market – then Congress has the power to impose a mandate to purchase in market B – here the medical insurance market – even though markets A and B are totally unrelated. This concession conflicts with the argument of the challengers, which claimed that widespread activity in the health care market did not permit a purchase mandate even in the highly related health insurance market. Indeed, this concession seems to make the whole action/inaction distinction collapse because the fact that no relation between the markets is required means that commercial activity in any market – say, the market for employment or food or housing – would permit the Obamacare mandate. Because the Obamacare mandate applies only to those who have income that subjects them to income tax, it is necessarily limited to people who are active in some commercial market and thus his test would be satisfied.

Basically, then, Elhauge argues that the coercive individual mandate is constitutional because it only applies to individuals who earn enough income to subject themselves to the requirement.  As such they are "in commerce" with the result that Congress may require them to purchase products in an unrelated market, just as Congress required the owners of vessels to, for instance, purchase medicine.

Elhauge's argument ellides two distinct questions: (1) whether individuals subject to the mandate are engaged in commerce and (2) whether the mandate constitutes a regulation of that commerce.  Elhauge is certainly correct that individuals who work for employers and earn income are "in commerce" (at least according to the Supreme Court's modern case law.)   In this sense they are analogous to the vessels travelling in interstate commerce regulated by the statutes discussed above.  However, while the individuals are analogous to the vessels, the mandate is emphatically NOT analogous to the regulations of those vessels that Congress promulgated in the 1790s.   Simply put, given the definition of "regulate" announced in Gibbons and discussed above, the coercive individual mandate is not a "regulation" of employment or other income generating activity.  That is to say, the mandate does NOT "prescribe the rule by which commerce [earning income] is to be governed."  Instead, the mandate has nothing to do with that income-generating activity.

Indeed, if Professor Elhauge is correct, then choosing to enter the workforce would thereby subject an individual to any regulation of Congress's choosing.  Congress could, for instance, require all individuals to do a certain number of push ups each day, or ban exercise altogether.  It could ban poker or require it.  It could require all individuals to eat rice pudding or broccoli.  Nothing in the American Constitution grants Congress this sort of power.