NYT: Ad dollars show health law distaste

June 21st, 2012

FAKE NEWS for the Zionist agenda

CHIEF JUSTICE ROBERTS:
We will continue
argument
this morning in Case 11-398, the
Department of Health and Human Services
v.
Florida
.
General
Verrilli.
ORAL ARGUMENT
OF
DONALD B.
VERRILLI, JR., ON BEHALF OF THE PETITIONERS
GENERAL
VERRILLI: Mr. Chief Justice, and may it please the
Court
: The
Affordable Care Act
addresses a
fundamental
and enduring
problem
in our
health care system
and our economy.
Insurance
has become the predominant
means
of paying for
health care
in this
country
.
Insurance
has become the predominant
means
of paying for
health care
in this
country
. For most
Americans
, for more than 80 percent of
Americans
, the
insurance

system
does provide effective
access
. Excuse me. But for more than 40
million

Americans
who do not have
access
to
health insurance
either through their employer or through
government
programs such as
Medicare
or
Medicaid
, the
system
does not work. Those individuals must resort to the individual
market
, and that
market
does not provide
affordable

health insurance
. It does not do so because, because the multibillion
dollar
subsidies that are available for the, the employer
market
are not available in the individual
market
. It does not do so because
ERISA
and
HIPAA
regulations that preclude, that preclude discrimination against people based on their
medical history
do not apply in the individual
market
. That is an
economic problem
. And it begets another
economic problem
.
JUSTICE SCALIA
: Why aren’t those
problems
that the
Federal Government
can address directly?
GENERAL
VERRILLI: They can address it directly,
Justice Scalia
, and they are addressing it directly through this, through this
Act
by
regulating
the
means
by which
health care
, by which
health care
is purchased. That is the way this
Act

works
. Under the
Commerce Clause
, what, what
Congress
has done is to enact
reforms
of the
insurance

market
, directed at the individual
insurance

market
, that preclude, that preclude discrimination based on pre-existing conditions, that require
guaranteed
issue and
community
rating, and it uses — and the
minimum

coverage

provision
is
necessary
to carry into execution those
insurance

reforms
.
JUSTICE KENNEDY
: Can you create
commerce
in
order
to
regulate
it?
GENERAL
VERRILLI: That’s not what’s going on here,
Justice Kennedy
, and we are not seeking to defend the law on that
basis
. In this case, the — what is being
regulated
is the
method
of financing health, the
purchase
of
health care
. That
itself
is
economic activity
with
substantial

effects
on
interstate commerce
. And –
JUSTICE SCALIA
: Any self purchasing? Anything I — you know if I’m in any
market
at all, my failure to
purchase
something in that
market
subjects me to
regulation
.
GENERAL
VERRILLI: No. That’s not our
position
at all,
Justice Scalia
. In the
health care

market
, the
health care

market
is characterized by the fact that aside from the few groups that
Congress
chose to exempt from the
minimum

coverage

requirement
— those who for religious reasons don’t
participate
, those who are incarcerated,
Indian tribes
— virtually
everybody else
is either in that
market
or will be in that
market
, and the distinguishing feature of that is that they cannot, people cannot generally control when they enter that
market
or what they need when they enter that
market
. CHIEF
JUSTICE ROBERTS
: Well, the same, it seems to me, would be true say for the
market
in
emergency services
: police, fire, ambulance,
roadside assistance
, whatever. You don’t know when you’re going to need it; you’re not sure that you will. But the same is true for
health care
. You don’t know if you’re going to need a
heart transplant
or if you ever will. So there is a
market
there. To — in some extent, we all
participate
in it. So can the
government
require you to buy a
cell phone
because that would facilitate responding when you need
emergency services
? You can just dial 911 no
matter
where you are?
GENERAL
VERRILLI: No, Mr. Chief Justice. think that’s different. It’s — We — I don’t think we think of that as a
market
. This is a
market
. This is
market regulation
. And in addition, you have a
situation
in this
market
not only where people enter involuntarily as to when they enter and won’t be able to control what they need when they enter but when they -CHIEF JUSTICE
ROBERTS
: It seems to me that’s the same as in my hypothetical. You don’t know when you’re going to need police assistance. You can’t predict the extent to emergency response that you’ll need. But when you do, and the
government
provides it. I
thought
that was an important part of your
argument
, that when you need
health care
, the
government
will make sure you get it. Well, when you need police assistance or fire assistance or ambulance assistance, the
government
is going to make sure to the best extent it can that you get it — get it.
GENERAL
VERRILLI: I think the
fundamental

difference
, Mr. Chief Justice, is that that’s not an issue of
market regulation
. This is an issue of
market regulation
, and that’s how
Congress
, that’s how
Congress
looked at this
problem
. There is a
market
.
Insurance
is provided through the
market system
–
JUSTICE ALITO
: Do you think there is a, a
market
for
burial

services
?
GENERAL
VERRILLI: For
burial

services
?
JUSTICE ALITO
: Yes.
GENERAL
VERRILLI: Yes,
Justice Alito
, I think there is.
JUSTICE ALITO
: All right, suppose that you and I walked around
downtown Washington
at lunch hour and we found a couple of
healthy

young people
and we stopped them and we said, “You know what you’re doing? You are financing your
burial

services
right now because eventually you’re going to die, and somebody is going to have to
pay for it
, and if you don’t have
burial

insurance
and you haven’t saved
money
for it, you’re going to shift the cost to somebody else.” Isn’t that a very artificial way of talking about what somebody is doing?
GENERAL
VERRILLI: No, that –
JUSTICE ALITO
: And if that’s true, why isn’t it equally artificial to say that somebody who is doing absolutely nothing about
health care
is financing
health care services
?
GENERAL
VERRILLI: It’s, I think it’s completely different. The — and the
reason
is that the, the
burial
example is not — the
difference
is here we are
regulating
the
method
by which you are paying for something else —
health care
— and the
insurance

requirement
— I think the key thing here is my
friends

on the other side
acknowledge that it is within the authority of
Congress
under
Article I
under the
commerce

power
to
impose

guaranteed
-issue and
community
rating forms, to end — to
impose
a
minimum

coverage

provision
. Their
argument
is just that it has to occur at the point of sale, and –
JUSTICE ALITO
: I don’t see the
difference
. You can get
burial

insurance
. You can get
health insurance
. Most people are going to need
health care
. Almost everybody. Everybody is going to be buried or cremated at some point. What’s the
difference
?
GENERAL
VERRILLI: Well, one big
difference
, one big
difference
,
Justice Alito
, is the — you don’t have the cost shifting to other
market
participants. Here –
JUSTICE ALITO
: Sure you do, because if you don’t have
money
then the
State
is going to
pay for it
. Or some –
GENERAL VERRILLI
: That’s different.
JUSTICE ALITO
: Or a family member is going to pay.
GENERAL
VERRILLI: That’s a
difference
and it’s a significant
difference
. In this
situation
one of the
economic

effects

Congress
is addressing is that the — there — the many billions of
dollars
of uncompensated
costs
are transferred directly to other
market
participants. It’s transferred directly to other
market
participants because
health care
providers charge higher
rates
in
order
to
cover
the cost of uncompensated care, and
insurance companies
reflect those higher
rates
in higher premiums, which
Congress
found translates to a thousand
dollars
per family in additional
health insurance

costs
.
JUSTICE ALITO
: But isn’t that a very small part of what the
mandate
is doing? You can correct me if these figures are wrong, but it appears to me that the
CBO
has estimated that the average premium for a single
insurance policy
in the non-
group

market
would be roughly $5,800 in — in
2016
.
Respondents
— the economists have supported — the
Respondents
estimate that a
young
,
healthy
individual targeted by the
mandate
on average consumes about $854 in
health services
each year. So the
mandate
is forcing these people to provide a huge
subsidy
to the
insurance companies
for other purposes that the act wishes to serve, but isn’t — if those figures are right, isn’t it the case that what this
mandate
is really doing is not requiring the people who are
subject
to it to pay for the
services
that they are going to consume? It is requiring them to
subsidize

services
that will be received by somebody else.
GENERAL
VERRILLI: No, I think that — I do think that’s what the
Respondents
argue. It’s just not right. I think it — it really gets to a
fundamental

problem
with their
argument
.
JUSTICE GINSBURG
: If you’re going to have
insurance
, that’s how
insurance

works
.
GENERAL
VERRILLI: A, it is how
insurance

works
, but, B, the
problem
that they — that they are identifying is not that
problem
. The — the
guaranteed
issue and
community
rating
reforms
do not have the
effect
of forcing
insurance companies
to take on lots of additional people who they then can’t afford to
cover
because they’re — they tend to be the sick, and that is — in fact, the exact opposite is what happens here. The — when — when you enact
Guaranteed Issue
and
Community Rating Reforms
and you do so in the absence of a
minimum

coverage

provision
, it’s not that
insurance companies
take on more and more people and then need a
subsidy
to
cover
it, it’s that fewer and fewer people end up with
insurance
because their
rates
are not
regulated
.
Insurance companies
, when — when they have to offer
Guaranteed Issue
and
Community Rating
, they are entitled to make a profit. They charge
rates
sufficient to
cover
only the sick population because health –
JUSTICE KENNEDY
: Could you help — help me with this. Assume for the moment — you may disagree. Assume for the moment that this is unprecedented, this is a step beyond what our
cases
have allowed, the affirmative duty to act to go into
commerce
. If that is so, do you not have a heavy burden of justification? I
understand
that we must presume laws are
constitutional
, but, even so, when you are changing the relation of the individual to the
government
in this, what we can stipulate is, I think, a unique way, do you not have a heavy burden of justification to show authorization under the
Constitution
?
GENERAL
VERRILLI: So two things about that,
Justice Kennedy
. First, we think this is
regulation
of people’s participation in the
health care

market
, and all — all this
minimum

coverage

provision
does is say that, instead of requiring
insurance
at the point of sale, that
Congress
has the authority under the
commerce

power
and the
necessary

proper

power
to ensure that people have
insurance
in advance of the point of sale because of the unique nature of this
market
, because this is a
market
in which — in which you — although most of the population is in the
market
most of the time — 83 percent visit a physician every year; 96 percent over a five-year period — so virtually everybody in society is in this
market
, and you’ve got to pay for the
health care
you get, the predominant way in which it’s — in which it’s paid for is
insurance
, and — and the
Respondents

agree
that
Congress
could require that you have
insurance
in
order
to get
health care
or forbid
health care
from being provided –
JUSTICE SCALIA
: Why do you — why do you define the
market
that broadly?
Health care
. It may well be that
everybody needs

health care
sooner or later, but not
everybody needs
a
heart transplant
, not
everybody needs
a liver transplant. Why –
GENERAL
VERRILLI: That’s correct,
Justice Scalia
, but you never know whether you’re going to be that
person
.
JUSTICE SCALIA
: Could you define the
market
— everybody has to buy food sooner or later, so you define the
market
as food, therefore, everybody is in the
market
; therefore, you can make people buy
broccoli
.
GENERAL
VERRILLI: No, that’s quite different. That’s quite different. The food
market
, while it shares that trait that everybody’s in it, it is not a
market
in which your participation is often unpredictable and often involuntary. It is not a
market
in which you often don’t know before you go in what you need, and it is not a
market
in which, if you go in and — and seek to obtain a
product
or service, you will get it even if you can’t
pay for it
. It doesn’t –
JUSTICE SCALIA
: Is that a principal
basis
for distinguishing this from other
situations
? I mean, you know, you can also say, well, the
person

subject
to this has blue eyes. That would indeed distinguish it from other
situations
. Is it a
principle

basis
? I mean, it’s — it’s a
basis
that explains why the
government
is doing this, but is it — is it a
basis
which shows that this is not going beyond what — what the — the
system
of
enumerated powers
allows the
government
to do.
GENERAL
VERRILLI: Yes, for two reasons. First, this — the test, as this
Court
has articulated it, is: Is
Congress

regulating

economic activity
with a
substantial

effect
on
interstate commerce
? The way in which this
statute
satisfies the test is on the
basis
of the factors that I have identified. If –
JUSTICE GINSBURG
: Mr.
Verrilli
, I
thought
that your main point is that, unlike food or any other
market
, when you made the
choice
not to buy
insurance
, even though you have every intent in the world to self-insure, to save for it, when disaster strikes, you may not have the
money
. And the tangible
result
of it is — we were told there was one brief that
Maryland Hospital Care
bills 7 percent more because of these uncompensated
costs
, that families pay a thousand
dollars
more than they would if there were no uncompensated
costs
. I
thought
what was unique about this is it’s not my
choice
whether I want to buy a
product
to keep me
healthy
, but the cost that I am forcing on other people if I don’t buy the
product
sooner rather than later.
GENERAL
VERRILLI: That is — and that is definitely a
difference
that distinguishes this
market
and justifies this as a
regulation
.
JUSTICE BREYER
: All right. So if that is your
difference
— if that is your
difference
, I’m somewhat uncertain about your answers to — for example,
Justice Kennedy
asked, can you, under the
Commerce Clause
,
Congress
create
commerce
where previously none existed. Well, yeah, I
thought
the answer to that was, since
McCulloch versus Maryland
, when the
Court
said
Congress
could create the
Bank of the United States
which did not previously exist, which job was to create
commerce
that did not previously exist, since that time the answer has been, yes. I would have
thought
that your answer — can the
government
, in fact, require you to buy
cell phones
or buy burials that, if we propose comparable
situations
, if we have, for example, a uniform
United States

system
of paying for every
burial
such as
Medicare Burial
,
Medicaid Burial
,
CHIP Burial
,
ERISA Burial
and
Emergency Burial
beside the
side of the road
, and
Congress
wanted to rationalize that
system
, wouldn’t the answer be, yes, of
course
, they could.
GENERAL
VERRILLI: So –
JUSTICE BREYER
: And the same with the computers or the same with the — the
cell phones
, if you’re driving by the side of the highway and there is a
federal

emergency service
just as you say you have to buy certain mufflers for your car that don’t hurt the environment, you could — I mean, see, doesn’t it depend on the
situation
?
GENERAL
VERRILLI: It does,
Justice Breyer
, and if
Congress
were to enact laws like that, we –
JUSTICE BREYER
: We would be — or –
GENERAL
VERRILLI: My responsibility —
and I
would defend them on a rationale like that, but I do think that we are advancing a narrower rationale.
JUSTICE KENNEDY
: Well, then your question is whether or not there are any limits on the
Commerce Clause
. Can you identify for us some limits on the
Commerce Clause
?
GENERAL
VERRILLI: Yes. The — the rationale purely under the
Commerce Clause
that we’re advocating here would not justify
forced
purchases of commodities for the purpose of stimulating demand. We — the — it would not justify purchases of
insurance
for the purposes — in
situations
in which
insurance
doesn’t serve as the
method
of
payment
for service –
JUSTICE KENNEDY
: But why not? If
Congress
— if
Congress
says that the
interstate commerce
is affected, isn’t, according to your view, that the end of the analysis.
GENERAL
VERRILLI: No. The, the — we think that in a — when — the
difference
between those
situations
and this
situation
is that in those
situations
,
Your Honor
,
Congress
would be moving to create
commerce
. Here
Congress
is
regulating
existing
commerce
,
economic activity
that is already going on, people’s participation in the
health care

market
, and is
regulating
to deal with existing
effects
of existing
commerce
. CHIEF
JUSTICE ROBERTS
: That — that it seems to me, it’s a — it’s a passage in your
reply brief
that I didn’t quite grasp. It’s the same point. You say
health insurance
is not purchased for its own sake, like a car or
broccoli
; it is a
means
of financing
health care
consumption and covering universal risks. Well, a car or
broccoli
aren’t purchased for their own sake, either. They are purchased for the sake of transportation or in
broccoli
, covering the need for food. I — I don’t
understand
that
distinction
.
GENERAL
VERRILLI: The
difference
, Mr. Chief Justice, is that
health insurance
is the
means
of
payment
for
health care
and
broccoli
is -CHIEF JUSTICE
ROBERTS
: Well, now that’s a significant — I’m sorry.
GENERAL
VERRILLI: And — and
broccoli
is not the
means
of
payment
for anything else. And an automobile is not -CHIEF JUSTICE
ROBERTS
: It’s the
means
of satisfying a
basic
human need, just as your
insurance
is a
means
of satisfying –
GENERAL VERRILLI
: But I do think that’s the
difference
between existing
commerce

activity
in the
market
already occurring — the people in the
health care

market
purchasing, obtaining
health care services
— and the creation of
commerce
. And the
principle
that we are advocating here under the
Commerce Clause
does not take the step of justifying the creation of
commerce
. It’s a
regulation
of the existing
commerce
.
JUSTICE GINSBURG
:
General Verrilli
, can we -can we go back to,
Justice Breyer
asked a question, and it kind of interrupted your answer to my question. And tell me if I’m wrong about this, but I
thought
a major, major point of your
argument
was that the people who don’t
participate
in this
market
are making it much more expensive for the people who do; that is, they -they will get, a good number of them will get
services
that they can’t afford at the point where they need them, and the
result
is that
everybody else
‘s premiums get raised. So you’re not — it’s not your — your
free choice
just to do something for yourself. What you do is going to
affect
others,
affect
them in —
in a major way
.
GENERAL
VERRILLI: That — that absolutely is a justification for
Congress
‘s action here. That is existing
economic activity
that
Congress
is
regulating
by
means
of this rule.
JUSTICE SCALIA
:
General Verrilli
, you -you could say that about buying a car. If — if people don’t buy cars, the
price
that those who do buy cars pay will have to be higher. So you could say in
order
to bring the
price
down, you are hurting these other people by not buying a car.
GENERAL
VERRILLI: That is not what we are saying,
Justice Scalia
.
JUSTICE SCALIA
: That’s not — that’s not what you’re saying.
GENERAL
VERRILLI: That’s not — not –
JUSTICE SCALIA
: I
thought
it was. I
thought
you were saying other people are going to have to pay more for
insurance
because you’re not buying it.
GENERAL
VERRILLI: No. It’s because you’re going — in the
health care

market
, you’re going into the
market
without the ability to
pay for what you get
, getting the
health care
service anyway as a
result
of the
social norms
that allow — that — to which we’ve obligated ourselves so that people get
health care
.
JUSTICE SCALIA
: Well, don’t obligate yourself to that. Why — you know?
GENERAL
VERRILLI: Well, I can’t imagine that that — that the
Commerce Clause
would — would forbid
Congress
from taking into account this deeply embedded
social norm
.
JUSTICE SCALIA
: You — you could do it. But — but does that expand your ability to, to issue mandates to — to the people?
GENERAL
VERRILLI: I — I — this is not a
purchase

mandate
. This is a — this is a law that regulates the
method
of paying for a service that the class of people to whom it applies are either consuming -JUSTICE
SOTOMAYOR
:
General
–
GENERAL
VERRILLI: — or — or inevitably will consume. JUSTICE
SOTOMAYOR
:
General
, I see or have seen three strands of arguments in your briefs, and one of them is echoed today. The first strand that I have seen is that
Congress
can pass any
necessary
laws to
effect
those
powers
within its rights, i.e., because it made a
decision
that to
effect
, to
effect
mandatory issuance of
insurance
, that it could also obligate the mandatory
purchase
of it. The second strand I see is self-
insurance

affects
the
market
, and so the
government
can
regulate
those who self-insure. And the third
argument
—
and I
see all of them as different — is that what the
government
is doing, and I think it’s the
argument
you’re making today — that what the — what the
government
is saying is if you pay for — if you use
health services
, you have to pay with
insurance
. Because only
insurance
will guarantee that whatever need for
health care
that you have will be covered. Because virtually no one, perhaps with the exception of 1 percent of the population, can afford the massive cost if the unexpected happens. This third
argument
seems to be saying what we are
regulating
is
health care
, and when you go for
health services
, you have to pay for
insurance
, and since
insurance
won’t issue at the moment that you consume the
product
, we can reasonably, necessarily tell you to buy it ahead of time, because you can’t buy it at the moment that you need it. Is that — which of these three is your
argument
? Are all of them your
argument
? I’m just not sure what the –
GENERAL VERRILLI
: So,
let me try
to
state
it this way.
The Congress
enacted
reforms
of the
insurance

market
, the
guaranteed
-issue and
community
-rating
reforms
. It did so to deal with a very serious
problem
that results in 40
million
people not being able to get
insurance
and therefore not
access
to the
health care
environment. Everybody agrees in this case that those are within
Congress
‘s
Article I

powers
. The
minimum

coverage

provision
is
necessary
to carry those provisions into — into execution; because without them, without those provisions, without
minimum

coverage
,
guaranteed
issue and
community
rating will, as the experience in the
States
showed, make matters worse, not better. There will be fewer people covered; it will cost more. Now the — so -JUSTICE
SOTOMAYOR
: So on that ground, you’re answering affirmatively to my colleagues that have asked you the question, can the
government

force
you into
commerce
.
GENERAL
VERRILLI: So — no. JUSTICE
SOTOMAYOR
: And there is no limit to that
power
.
GENERAL
VERRILLI: No. No. Because that’s — that’s the first part of our
argument
. The second part of our
argument
is that the
means
here that the
Congress
has chosen, the
minimum

coverage

provision
, is a
means
that regulates the -that regulates
economic activity
, namely your transaction in the
health care

market
, with
substantial

effects
on
interstate commerce
; and it is the conjunction of those two that we think provides the particularly secure foundation for this
statute
under the
commerce

power
. JUSTICE
KAGAN
:
General
, you’ve talked on -a couple of times about other alternatives that
Congress
might have had, other alternatives that the
Respondents

suggest
to deal with this
problem
, in particular, the alternative of mandating
insurance
at the point at which somebody goes to a hospital or an
emergency room
and asks for care. Did
Congress
consider those alternatives? Why did it reject them? How should we think about the question of alternative ways of dealing with these
problems
?
GENERAL
VERRILLI: I do think, Justice
Kagan
, that the point of
difference
between my
friends

on the other side
and the
United States
is about one of timing. They have agreed that
Congress
has
Article I
authority to
impose
an
insurance

requirement
or other -or other
penalty
at the point of sale, and they have agreed that
Congress
has the authority to do that to achieve the same objectives that the
minimum

coverage

provision
of the
Affordable Care Act
is designed to achieve. This is a
situation
if which we are talking about
means
.
Congress
gets a
substantial
deference in the
choice
of
means
, and if one thinks about the
difference
between the
means
they say
Congress
should have chosen and the
means

Congress
did choose, I think you can see why it was eminently more sensible for
Congress
to choose the
means
that it chose.
JUSTICE KENNEDY
: I’m not sure which way it cuts. If the
Congress
has alternate
means
, let’s assume it can use the tax
power
to
raise
revenue and to just have a
national health service
,
single payer
. How does that factor into our analysis? In the one sense, it can be argued that this is what the
government
is doing; it ought to be honest about the
power
that it’s using and use the correct
power
.
On the other hand
, it
means
that since the
Court
can do it anyway —
Congress
can do it anyway, we give a certain amount of latitude. I’m not sure which the way the
argument
goes.
GENERAL
VERRILLI:
Let me try
to answer that question,
Justice Kennedy
, and get back to the question you asked me earlier. The, the — I do think one striking feature of the
argument
here that this is a novel
exercise
of
power
is that what
Congress
chose to do was to rely on
market
mechanisms and efficiency and a
method
that has more
choice
than would the traditional
Medicare
/
Medicaid
type model; and so it seems a little ironic to
suggest
that that counts against it. But beyond that, in the sense that it’s novel, this
provision
is novel in the same way, or unprecedented in the same way, that the
Sherman Act
was unprecedented when the
Court
upheld it in the
Northern Securities case
; or the
Packers and Stockyards Act
was unprecedented when the
Court
upheld it, or the
National Labor Relations Act
was unprecedented when the
Court
upheld it in
Jones
and
Laughlin
; or the — the dairy
price supports
in
Wrightwood Dairy
and
Rock Royal
–
JUSTICE SCALIA
: Oh, no, it’s not. They all involved
commerce
. There was no
doubt
that was what
regulated
was
commerce
. And here you’re
regulating
somebody who isn’t covered. By the way, I don’t
agree
with you that the
relevant market
here is
health care
. You’re not
regulating

health care
. You’re
regulating

insurance
. It’s the
insurance

market
that you’re addressing and you’re saying that some people who are not in it must be in it and that’s — that’s
difference
from
regulating
in any manner
commerce
that already exists out there.
GENERAL
VERRILLI: Well, to the extent that we are looking at the comprehensive
scheme
,
Justice Scalia
, it is
regulating

commerce
that already exists out there. And the
means
in which that
regulation
is made effective here, the
minimum

coverage

provision
, is a
regulation
of the way in which people
participate
, the
method
of their
payment
in the
health care

market
. That is what it is.
And I
do think,
Justice Kennedy
, getting back to the question you asked before, what — what matters here is whether
Congress
is choosing a tool that’s reasonably adapted to the
problem
that
Congress
is confronting. And that may mean that the tool is different from a tool that
Congress
has chosen to use in the past. That’s not something that counts against the
provision
in a
Commerce Clause
analysis.
JUSTICE SCALIA
: Wait. That’s — that’s -it’s both ”
Necessary and Proper
.” What you just said addresses what’s
necessary
. Yes, has to be reasonably adapted.
Necessary
does not mean essential, just reasonably adapted. But in addition to being
necessary
, it has to be
proper
. And we’ve held in two
cases
that something that was reasonably adapted was not
proper
because it violated the sovereignty of the
States
, which was implicit in the
constitutional
structure. The
argument
here is that this also is — may be
necessary
, but it’s not
proper
because it violates an equally evident
principle
in the
Constitution
, which is that the
Federal Government
is not supposed to be a
government
that has all
powers
; that it’s supposed to be a
government
of
limited

powers
. And that’s what all this questioning has been about. What — what is left? If the
government
can do this, what, what else can it not do?
GENERAL
VERRILLI: This does not violate the norm of
proper
as this
Court
articulated it in
Printz
or in
New York
because it does not interfere with the
States
as sovereigns. This is a
regulation
that — this is a
regulation
–
JUSTICE SCALIA
: No, that wasn’t my point. That is not the only
constitutional

principle
that exists.
GENERAL
VERRILLI: But it –
JUSTICE SCALIA
: An equally evident
constitutional

principle
is the
principle
that the
Federal Government
is a
government
of
enumerated powers
and that the vast majority of
powers
remain in the
States
and do not belong to the
Federal Government
. Do you acknowledge that that’s a
principle
?
GENERAL
VERRILLI: Of
course
we do,
Your Honor
.
JUSTICE SCALIA
: Okay.
That’s what
we are talking about here.
GENERAL
VERRILLI: And the way in which this
Court
in its
cases
has policed the boundary that — of what’s in the
national
sphere and what’s in the local sphere is to ask whether
Congress
is
regulating

economic activity
with a
substantial

effect
on
interstate commerce
. And here I think it’s really impossible, in view of our history, to say that
Congress
is invading the
State
sphere. This is a — this is a
market
in which 50 percent of the people in this
country
get their
health care
through their employer. There is a massive
Federal
tax
subsidy
of $250 billion a year that makes that much more
affordable
.
ERISA
and
HIPAA

regulate
that to ensure that the
kinds
of bans on pre-existing condition discrimination and pricing practices that occur in the individual
market
don’t occur.
JUSTICE SCALIA
: I don’t
understand
your –
GENERAL VERRILLI
: This is in –
JUSTICE SCALIA
: Whatever the
States
have chosen not to do, the
Federal Government
can do?
GENERAL
VERRILLI: No, not at all.
JUSTICE SCALIA
: I mean, the
Tenth Amendment
says the
powers
not given to the
Federal Government
are reserved, not just to the
States
, but to the
States
and the people. And the
argument
here is that the people were left to decide whether they want to buy
insurance
or not.
GENERAL
VERRILLI: But this — but,
Your Honor
, this is — what the
Court
has said, and I think it would be a very
substantial
departure from what the
Court
has said, is that when
Congress
is
regulating

economic activity
with a
substantial

effect
on
interstate commerce
that will be upheld. And that is what is going on here, and to embark on — I would submit with all due
respect
, to embark on the kind of analysis that my
friends

on the other side

suggest
the
Court
ought to embark on is to import
Lochner
-style substantive
due process
-CHIEF JUSTICE
ROBERTS
: The key in
Lochner
is that we were talking about
regulation
of the
States
, right, and the
States
are not
limited
to
enumerated powers
. The
Federal Government
is. And it seems to me it’s an entirely different question when you ask yourself whether or not there are going to be limits in the
Federal power
, as opposed to limits on the
States
, which was the issue in
Lochner
.
GENERAL VERRILLI
: I
agree
, except, Mr. Chief Justice, that what the
Court
has said as I read the
Court
‘s
cases
is that the way in which you ensure that the
Federal Government
stays in its sphere and the sphere reserved for the
States
is protected is by policing the boundary: Is the
national government

regulating

economic activity
with a
substantial

effect
on
interstate commerce
?
JUSTICE KENNEDY
: But the
reason
, the
reason
this is concerning, is because it requires the individual to do an affirmative act. In the
law of torts
our tradition, our law, has been that you don’t have the
duty to rescue
someone if that
person
is in danger. The blind man is walking in front of a car and you do not have a duty to stop him absent some relation between you. And there is some severe moral criticisms of that rule, but that’s generally the rule. And here the
government
is saying that the
Federal Government
has a duty to tell the individual citizen that it must act, and that is different from what we have in previous
cases
and that changes the relationship of the
Federal Government
to the individual in the very
fundamental
way.
GENERAL
VERRILLI: I don’t think so,
Justice Kennedy
, because it is predicated on the participation of these individuals in the
market
for
health care services
. Now, it happens to be that this is a
market
in which, aside from the groups that the
statute
excludes, virtually everybody participates. But it is a
regulation
of their participation in that
market
. CHIEF
JUSTICE ROBERTS
: Well, but it’s critical how you define the
market
. If I
understand
the law, the policies that you’re requiring people to
purchase
involve — must contain
provision
for maternity and newborn care, pediatric
services
, and substance use treatment. It seems to me that you cannot say that everybody is going to need substance use treatment, substance use treatment or pediatric
services
, and yet that is part of what you require them to
purchase
.
GENERAL
VERRILLI: Well, it’s part of what the
statute
requires the insurers to offer.
And I
think the
reason
is because it’s trying to define
minimum
essential
coverage
because the
problem
-CHIEF JUSTICE
ROBERTS
: But your theory is that there is a
market
in which everyone participates because everybody might need a certain range of
health care services
, and yet you’re requiring people who are not — never going to need pediatric or maternity
services
to
participate
in that
market
.
GENERAL
VERRILLI: The — with
respect
to what
insurance
has to
cover
,
Your Honor
, I think
Congress
is entitled the latitude of making the judgments of what the appropriate scope of
coverage
is. And the
problem
here in this
market
is that for — you may think you’re perfectly
healthy
and you may think that you’re not — that you’re being
forced
to
subsidize
somebody else, but this is not a
market
in which you can say that there is a
immutable class
of
healthy
people who are being
forced
to
subsidize
the unhealthy. This is a
market
in which you may be
healthy
one day and you may be a very unhealthy participant in that
market
the next day and that is a
fundamental

difference
, and you’re not going to know in which -CHIEF JUSTICE
ROBERTS
: I think you’re posing the question I was posing, which is that doesn’t apply to a lot of what you’re requiring people to
purchase
: Pediatric
services
, maternity
services
. You cannot say that everybody is going to
participate
in the substance use
market
and yet you require people to
purchase

insurance

coverage
for that.
GENERAL
VERRILLI:
Congress
has got —
Congress
is enacting
economic regulation
here. It has latitude to define essential, the attributes of essential
coverage
. That doesn’t — that doesn’t seem to me to implicate the question of whether
Congress
is engaging in
economic regulation
and solving an
economic problem
here, and that is what
Congress
is doing.
JUSTICE ALITO
: Are you denying this? If you took the
group
of people who are
subject
to the
mandate
and you calculated the amount of
health care services
this whole
group
would consume and figured out the cost of an
insurance policy
to
cover
the
services
that
group
would consume, the cost of that policy would be much,
much less than
the kind of policy that these people are now going to be required to
purchase
under the
Affordable Care Act
?
GENERAL
VERRILLI: Well, while they are
young
and
healthy
that would be true. But they are not going to be
young
and
healthy
forever. They are going to be
on the other side
of that
actuarial
equation at some point. And of
course
you don’t know which among that
group
is the
person
who’s going to be hit by the bus or get the definitive diagnosis. And that –
JUSTICE ALITO
: The point is — no, you take into account that some people in that
group
are going to be hit by a bus, some people in that
group
are going to unexpectedly contract or be diagnosed with a
disease
that — that is very expensive to treat. But if you take their
costs
and you calculate that, that’s a lot less than the amount that they are going to be required to pay. So that you can’t just justify this on the
basis
of their trying to shift their
costs
off to other people, can you?
GENERAL
VERRILLI: Well, the — the people in that class get benefits, too,
Justice Alito
. They get the
guaranteed
-issue benefit that they would not otherwise have, which is an enormously valuable benefit. And in terms of the — the
subsidy
rationale, I — I don’t think — I think it’s — it would be unusual to say that it’s an illegitimate
exercise
of the
commerce

power
for some people to
subsidize
others. Telephone
rates
in this
country
for a century were set via the
exercise
of the
commerce

power
in a way in which some people paid
rates
that were much higher than their
costs
in
order
to
subsidize
–
JUSTICE SCALIA
: Only if you make
phone calls
.
GENERAL
VERRILLI: Well, right. But — but everybody — to live in the
modern world
,
everybody needs
a telephone. And the — the same thing with
respect
to the — you know, the dairy
price supports
that — that the
Court
upheld in
Wrightwood Dairy
and
Rock Royal
. You can look at those as disadvantageous contracts, as
forced
transfers, that — you know, I suppose it’s theoretically true that you could
raise
your kids without milk, but the reality is you’ve got to go to the store and buy milk. And the
commerce

power
-as a
result
of the
exercise
of the
commerce

power
, you’re subsidizing somebody else -JUSTICE
KAGAN
: And this is especially true, isn’t it,
General
–
GENERAL VERRILLI
: — because that’s the judgment
Congress
has made. JUSTICE
KAGAN
: —
Verrilli
, because in this context, the subsidizers eventually become the subsidized?
GENERAL
VERRILLI: Well, that was the point I was trying to make, Justice
Kagan
, that you’re
young
and
healthy
one day, but you don’t stay that way. And the — the
system

works

over time
. And so I just don’t think it’s a fair characterization of it. And it does get back to, I think — a
problem
I think is important to
understand
–
JUSTICE SCALIA
: We’re not stupid. They’re going to buy
insurance
later. They’re
young
and — and need the
money
now.
GENERAL
VERRILLI: But that’s –
JUSTICE SCALIA
: When — when they think they have a
substantial
risk of incurring high medical bills, they’ll buy
insurance
, like
the rest of us
. But –
GENERAL
VERRILLI: That’s — that’s –
JUSTICE SCALIA
: — I don’t know why you think that they’re never going to buy it.
GENERAL
VERRILLI: That’s the
problem
,
Justice Scalia
. That’s — and that’s exactly the experience that the
States
had that made the imposition of
guaranteed
-issue and
community
rating not only be ineffectual but be highly counterproductive.
Rates
, for example, in
New Jersey
doubled or tripled, went from 180,000 people covered in this
market
down to 80,000 people covered in this
market
. In
Kentucky
, virtually every insurer left the
market
. And the
reason
for that is because when people have that guarantee of — that they can get
insurance
, they’re going to make that calculation that they won’t get it until they’re sick and they need it, and so the pool of people in the
insurance

market
gets smaller and smaller. The
rates
you have to charge to
cover
them get
higher and higher
. It helps fewer and fewer —
insurance
covers fewer and fewer people until the
system
ends. This is not a
situation
in which you’re conscripting — you’re forcing
insurance companies
to
cover
very
large numbers
of unhealthy people –
JUSTICE SCALIA
: You could
solve
that
problem
by simply not requiring the
insurance company
to sell it to somebody who has a — a condition that is going to require
medical treatment
, or at least not -not require them to sell it to him at — at a rate that he sells it to
healthy
people. But you don’t want to do that.
GENERAL
VERRILLI: But that seems to me to say,
Justice Scalia
, that
Congress
— that’s the
problem
here. And that seems to be –
JUSTICE SCALIA
: That seems to me a self-created
problem
.
GENERAL
VERRILLI:
Congress
cannot
solve
the
problem
through standard
economic regulation
, and that — and —
and I
do not think that can be the premise of our understanding of the
Commerce Clause
–
JUSTICE SCALIA
: Whatever –
GENERAL
VERRILLI: — this is an
economic problem
–
JUSTICE SCALIA
: — whatever
problems

Congress
‘s
economic regulation
produces, whatever they are, I think
Congress
can do something to counteract them. Here, requiring somebody to enter — to enter the
insurance

market
.
GENERAL
VERRILLI: This is not a — it’s not a
problem
of
Congress
‘s creation. The
problem
is that you have 40
million
people who cannot get
affordable

insurance
through the
means
that
the rest of us
get
affordable

insurance
.
Congress
, after a long study and careful deliberation, and viewing the experiences of the
States
and the way they tried to handle this
problem
, adopted a package of
reforms
.
Guaranteed
-issue and
community
rating, and — and subsidies and the
minimum

coverage

provision
are a package of
reforms
that
solve
that
problem
. I don’t — I think it’s highly artificial to view this as a
problem
of
Congress’s own
creation. CHIEF
JUSTICE ROBERTS
: Is your
argument

limited
to
insurance
or
means
of paying for
health care
?
GENERAL
VERRILLI: Yes. It’s
limited
to
insurance
. CHIEF
JUSTICE ROBERTS
: Well, now why is that?
Congress
could — once you — once you establish that you have a
market
for
health care
, I would suppose
Congress
‘s
power
under the
Commerce Clause
meant they had a broad scope in terms of how they
regulate
that
market
. And it would be — it would be going back to
Lochner
if we were put in the
position
of saying no, you can use your
commerce

power
to
regulate

insurance
, but you can’t use your
commerce

power
to
regulate
this
market
in other ways. I think that would be a very significant intrusion by the
Court
into
Congress
‘s
power
. So I don’t see how we can
accept
your -it’s good for you in this case to say oh, it’s just
insurance
. But once we say that there is a
market
and
Congress
can require people to
participate
in it, as some would say — or as you would say, that people are already participating in it — it seems to me that we can’t say there are limitations on what
Congress
can do under its
commerce

power
, just like in any other area, all — given significant deference that we accord to
Congress
in this area, all bets are off, and you could
regulate
that
market
in any rational way.
GENERAL
VERRILLI: But this is
insurance
as a
method
of
payment
for
health care services
-CHIEF JUSTICE
ROBERTS
: Exactly.
GENERAL
VERRILLI: And that — and that is -CHIEF JUSTICE
ROBERTS
: And you’re worried — that’s the area that
Congress
has chosen to
regulate
. There’s this
health care

market
. Everybody’s in it. So we can
regulate
it, and we’re going to look at a particular serious
problem
, which is how people
pay for it
. But next year, they can decide everybody’s in this
market
, we’re going to look at a different
problem
now, and this is how we’re going to
regulate
it. And we can
compel
people to do things —
purchase

insurance
, in this case. Something else in the next case, because you’ve — we’ve accepted the
argument
that this is a
market
in which everybody participates.
GENERAL
VERRILLI: Mr. Chief Justice, let me answer that, and then if I may, I’d like to move to the tax
power

argument
.
JUSTICE SCALIA
: Can — can I tell you what the something else is so — while you’re answering it? The something else is everybody has to
exercise
, because there’s no
doubt
that lack of
exercise
cause — causes illness, and that causes
health care

costs
to go up. So the
Federal government
says everybody has to — to join a — an
exercise
club. That’s — that’s the something else.
GENERAL
VERRILLI: No. The — the
position
we’re taking here would not justify that rule,
Justice Scalia
, because
health club
membership is not a
means
of
payment
for — for consumption of anything in — in a
market
. CHIEF
JUSTICE ROBERTS
: Right. Right. That’s — that’s exactly right, but it doesn’t seem responsive to my concern that there’s no
reason
— once we say this is within
Congress
‘s
commerce

power
, there’s no
reason
other than our own arbitrary judgment to say all they can
regulate
is the
method
of
payment
. They can
regulate
other things that
affect
this now-conceded
interstate

market
in
health care
in which everybody participates.
GENERAL
VERRILLI: But I think it’s
common ground
between us and the
Respondents
that this is an
interstate

market
in which everybody participates. And they
agree
that — that
Congress
could
impose
the
insurance

requirement
at the point of sale. And this is just a question of timing, and whether
Congress
‘s -whether the
necessary and proper
authority gives
Congress
, because of the particular features of this
market
, the ability to
impose
the — the
insurance
, the need for
insurance
, the maintenance of
insurance
before you show up to get
health care
rather than at the moment you get up to show -CHIEF JUSTICE
ROBERTS
: Right. No, I think –
GENERAL VERRILLI
: — show up to get
health care
. And that -CHIEF JUSTICE
ROBERTS
: — unless I’m missing something, I think you’re just repeating the idea that this is the
regulation
of the
method
of
payment
.
And I

understand
that
argument
. And it may be — it may be a good one. But what I’m concerned about is, once we
accept
the
principle
that everybody is in this
market
, I don’t see why
Congress
‘s
power
is
limited
to
regulating
the
method
of
payment
and doesn’t include as it does in any other area. What other area have we said
Congress
can
regulate
this
market
but only with
respect
to prices, but only with
respect
to
means of travel
? No. Once you’re — once you’re in the
interstate commerce
and can
regulate
it, pretty much all bets are off.
GENERAL
VERRILLI: But we
agree

Congress
can
regulate
this
market
.
ERISA
regulates this
market
.
HIPAA
regulates this
market
. The — the
market
is
regulated
at the
Federal level
in very significant ways already. So I don’t think that’s the question, Mr. Chief Justice. The question is, is there a limit to the authority that we’re advocating here under the
commerce

power
, and the answer is yes, because we are not advocating for a
power
that would allow
Congress
to
compel
purchases –
JUSTICE ALITO
: Could you just — before you move on, could you express your limiting
principle
as succinctly as you possibly can?
Congress
can
force
people to
purchase
a
product
where the failure to
purchase
the
product
has a
substantial

effect
on
interstate commerce
— if what? If this is part of a larger regulatory
scheme
? Was that it? Was there anything more?
GENERAL
VERRILLI: We got two and they are — they are different. Let me
state
them. First with
respect
to the comprehensive
scheme
. When
Congress
is
regulating
— is enacting a comprehensive
scheme
that it has the authority to enact that the
Necessary and Proper Clause
gives it the authority to include
regulation
, including a
regulation
of this kind, if it is
necessary
to counteract risks attributable to the
scheme

itself
that people engage in
economic activity
that would undercut the
scheme
. It’s like — it’s very much like
Wickard
in that
respect
, very much like
Raich
in that
respect
. With
respect
to the — with
respect
to the — considering the
Commerce Clause
alone and not embedded in the comprehensive
scheme
, our
position
is that
Congress
can
regulate
the
method
of
payment
by imposing an
insurance

requirement
in advance of the time in which the — the service is consumed when the class to which that
requirement
applies either is or virtually is most certain to be in that
market
when the timing of one’s entry into that
market
and what you will need when you enter that
market
is uncertain and when — when you will get the care in that
market
, whether you can afford to
pay for it
or not and shift
costs
to other
market
participants. So those — those are our views as to -those are the
principles
we are advocating for and it’s, in fact, the conjunction of
the two of them
here that makes this, we think, a strong case under the
Commerce Clause
. JUSTICE
SOTOMAYOR
:
General
, could you turn to the tax clause?
GENERAL
VERRILLI: Yes. JUSTICE
SOTOMAYOR
: I have to look for a case that involves the issue of whether something denominated by
Congress
as a
penalty
was nevertheless treated as a tax, except in those
situations
where the code
itself
or the
statute

itself
said treat the
penalty
as a tax. Do you know of any case where we’ve done that?
GENERAL
VERRILLI: Well, I think I would point the
Court
to the
License Tax Case
, where it was -was denominated a fee and nontax, and the
Court
upheld it as an
exercise
of the taxing
power
, in a
situation
in which the structure of the law was very much the structure of this law, in that there was a separate stand-alone
provision
that set the predicate and then a separate
provision
in closing –
JUSTICE SCALIA
: But fees, you know, license fees, fees for a
hunting license
,
everybody knows
those are taxes. I mean, I don’t think there is as much of a
difference
between a fee and a tax as there is between a
penalty
and a tax.
GENERAL
VERRILLI: And that, and —
and I
think in terms of the tax part, I think it’s useful to separate this into two questions. One is a question of characterization. Can this be characterized as a tax; and second, is it a
constitutional

exercise
of the
power
? With
respect
to the question of characterization, the — this is — in the
Internal Revenue Code
, it is administered by the
IRS
, it is paid on your
Form

1040
on
April 15th
, I think –
JUSTICE GINSBURG
: But yesterday you told me — you listed a number of penalties that are enforced through the
tax code
that are not taxes and they are not penalties related to taxes.
GENERAL
VERRILLI: They may still be
exercise
of the tax — exercises of the taxing
power
,
Justice Ginsburg
, as — as this is, and I think there isn’t a case in which the
Court
has, to my mind, suggested anything that bears this many indicia of a tax can’t be considered as an
exercise
of the taxing
power
. In fact, it seems to me the
License Tax Cases
point you in the opposite direction. And beyond that your -the — it seems to me the right way to think about this question is whether it is capable of being understood as an
exercise
of the tax.
JUSTICE SCALIA
:
The President
said it wasn’t a tax, didn’t he?
GENERAL
VERRILLI: Well,
Justice Scalia
, what the — two things about that, first, as it seems to me, what matters is what
power

Congress
was exercising. And they were —
and I
think it’s clear that — that the — the — they were exercising the tax
power
as well as –
JUSTICE SCALIA
: You’re making two arguments. Number one, it’s a tax; and number two, even if it isn’t a tax, it’s within the taxing
power
. I’m just addressing the first.
GENERAL
VERRILLI: If the President said –
JUSTICE SCALIA
: Is it a tax or not a tax?
The President
didn’t think it was.
GENERAL
VERRILLI:
The President
said it wasn’t a tax increase because it ought to be understood as an incentive to get people to have
insurance
. I don’t think it’s fair to infer from that anything about whether that is an
exercise
of the tax
power
or not.
JUSTICE GINSBURG
: A tax is to
raise
revenue, tax is a revenue-raising device, and the purpose of this exaction is to get people into the
health care
risk —
risk pool
before they need
medical care
, and so it will be successful. If it doesn’t
raise
any revenue, if it gets people to buy the
insurance
, that’s —
that’s what
this
penalty
is — this
penalty
is designed to
affect
conduct. The conduct is buy health protection, buy
health insurance
before you have a need for
medical care
.
That’s what
the
penalty
is designed to do, not to
raise
revenue.
GENERAL
VERRILLI: That — that is true,
Justice Ginsburg
. This is also true of the marijuana tax that was withheld in
Sanchez
. That’s commonly true of penalties under the
Code
. They do — if they
raise
revenue, they are exercises of the taxing
power
, but their purpose is not to
raise
revenue. Their purpose is to discourage behavior. I mean, the — the mortgage deduction
works
that way. When the mortgage deduction is — it’s clearly an
exercise
of the taxing
power
. When it’s successful it raises less revenue for the
Federal Government
. It’s still an
exercise
of the taxing
power
. So, I don’t -JUSTICE
KAGAN
: I suppose, though,
General
, one question is whether the determined efforts of
Congress
not to refer to this as a tax make a
difference
. I mean, you’re suggesting we should just look to the practical operation. We shouldn’t look at labels. And that seems right, except that here we have a case in which
Congress
determinedly said this is not a tax, and the question is why should that be irrelevant?
GENERAL
VERRILLI: I don’t think that that’s a fair characterization of the actions of
Congress
here, Justice
Kagan
. On the — December 23rd, a point of
constitutional

order
was called to, in fact, with
respect
to this law. The floor sponsor, Senator
Baucus
, defended it as an
exercise
of the taxing
power
. In his response to the point of
order
, the
Senate
voted 60 to39 on that proposition. The
legislative history
is replete with members of
Congress
explaining that this law is
constitutional
as an
exercise
of the taxing
power
. It was attacked as a tax by its opponents. So I don’t think this is a
situation
where you can say that
Congress
was avoiding any mention of the tax
power
. It would be one thing if
Congress
explicitly disavowed an
exercise
of the tax
power
. But given that it hasn’t done so, it seems to me that it’s — not only is it fair to read this as an
exercise
of the tax
power
, but this
Court
has got an obligation to construe it as an
exercise
of the tax
power
, if it can be upheld on that
basis
. CHIEF
JUSTICE ROBERTS
: Why didn’t
Congress
call it a tax, then?
GENERAL
VERRILLI: Well -CHIEF
JUSTICE ROBERTS
: You’re telling me they
thought
of it as a tax, they defended it on the tax
power
. Why didn’t they say it was a tax?
GENERAL
VERRILLI: They might have
thought
,
Your Honor
, that calling it a
penalty
as they did would make it more effective in accomplishing its objective. But it is — in the
Internal Revenue Code
it is collected by the
IRS
on
April 15th
. I don’t think this is a
situation
in which you can say -CHIEF JUSTICE
ROBERTS
: Well, that’s the
reason
. They
thought
it might be more effective if they called it a
penalty
.
GENERAL
VERRILLI: Well, I — you know, I don’t — there is nothing that I know of that — that illuminates that, but certainly -JUSTICE
SOTOMAYOR
:
General
, the
problem
goes back to the limiting
principle
. Is this simply anything that raises revenue that
Congress
can do?
GENERAL
VERRILLI: No. There are certain limiting
principles
under the -JUSTICE
SOTOMAYOR
: So there has to be a limiting
principle
–
GENERAL VERRILLI
: — taxing
power
, and they —
and I
think, of
course
, the
Constitution
imposes some, got to be uniform, can’t be taxed on exports, if it’s a
direct tax
, it’s got to be apportioned. Beyond that, the limiting
principle
, as the
Court
has identified from
Drexel Furniture
to
Kurth Ranch
, is that it can’t be punishment, punitive in the guise of a tax. And there are three factors of
Court
has identified to look at that. The first is the sanction and how disproportionate it is to the conduct; the second is whether there is scienter; and the third is whether there is an — an — an administrative apparatus out there to enforce the tax. Now in — in
Bailey v. Drexel Furniture
, for example, the tax was 10 percent of the company’s profits, even if they had only one
child
laborer for one day. There was a scienter
requirement
, and it was enforced by the
Department of Labor
. It wasn’t just collected by the
Internal Revenue Service
. Here you don’t have any of those things. This — the — the
penalty
is calculated to be no more than, at most, the equivalent of what one would have paid for
insurance
if you forgone. There is no scienter
requirement
, there is no enforcement apparatus out there. So, certain –
JUSTICE ALITO
: Can the — can the
mandate
be viewed as tax if it does
impose
a
requirement
on people who are not
subject
to the
penalty
or the tax?
GENERAL
VERRILLI: I think it could, for the reasons I — I discussed yesterday. I don’t think it can or should be read that way. But if there is any
doubt
about that,
Your Honor
, if there is — if — if it is the view of the
Court
that it can’t be, then I think the — the right way to handle this case is by analogy to
New York v. United States
, in which the —
the Court
read the shall
provision
, shall handle the level of radioactive waste as setting the predicate, and then the other provisions were merely incentives to get the predicate met, and so –
JUSTICE SCALIA
: You’re saying that all the discussion we had earlier about how this is one big uniform
scheme
and the
Commerce Clause
blah, blah, blah, it really doesn’t
matter
. This is a tax and the
Federal Government
could simply have said, without all of the rest of this legislation, could simply have said everybody who doesn’t buy
health insurance
at a certain age will be taxed so much
money
, right?
GENERAL
VERRILLI: It — it used its
powers
together to
solve
the
problem
of the
market
not –
JUSTICE SCALIA
: Yes, but you didn’t need that.
GENERAL
VERRILLI — providing for the –
JUSTICE SCALIA
: You didn’t need that. If it’s a tax, it’s only — raising
money
is enough.
GENERAL
VERRILLI: It’s justifiable under its tax
power
.
JUSTICE SCALIA
: Extraordinary.
GENERAL
VERRILLI: If I may reserve the balance of my time. CHIEF
JUSTICE ROBERTS
: Thank you, gentlemen. We’ll take a pause for a minute or so, Mr.
Clement
. CHIEF JUSTICE
ROBERTS
: Why don’t we get started again. Mr.
Clement
.
ORAL ARGUMENT
OF
PAUL D. CLEMENT
ON BEHALF OF THE RESPONDENTS FLORIDA, ET AL. MR.
CLEMENT
: Mr. Chief Justice and may it please the
Court
. The
mandate
represents an unprecedented effort by
Congress
to
compel
individuals to enter
commerce
in
order
to better
regulate

commerce
.
The Commerce Clause
gives
Congress
the
power
to
regulate
existing
commerce
. It does not give
Congress
the far
greater power
to
compel
people to enter
commerce
to create
commerce
essentially
in the first place
. Now,
Congress
when it passed the
statute
did make findings about why it
thought
it could
regulate
the
commerce
here, and it justified the
mandate
as a
regulation
of the
economic

decision
to forego the
purchase
of
health insurance
. That is a theory without any limiting
principle
. JUSTICE
SOTOMAYOR
: Do you
accept
your -the
General
‘s
position
that you have conceded that
Congress
could say, if you’re going to consume
health services
, you have to pay by way of
insurance
? MR.
CLEMENT
:
That’s right
, Justice
Sotomayor
. We say, consistent with 220 years of this
Court
‘s jurisprudence, that if you
regulate
the point of sale, you
regulate

commerce
, that’s within
Congress
‘
commerce

power
. JUSTICE
SOTOMAYOR
: All right. So what do you do with the impossibility of buying
insurance
at the point of consumption. Virtually, you
force

insurance companies
to sell it to you? MR.
CLEMENT
: Well,
Justice
, I think there is two points to make on that. One is, a lot of the discussion this morning so far has proceeded on the assumption that the only thing that is at issue here is
emergency room
visits, and the only thing that’s being imposed is catastrophic care
coverage
; but, as the Chief Justice indicated earlier, a lot of the
insurance
that’s being covered is for ordinary
preventive care
, ordinary office visits, and those are the
kinds
of things that one can predict. So there is a big part of the
market
that’s
regulated
here that wouldn’t pose the
problem
that you’re suggesting; but, even as to
emergency room
visits, it certainly would be possible to
regulate
at that point. You could simply say, through some sort of
mandate
on the
insurance companies
, you have to provide people that come in — this will be a high-
risk pool
, and maybe you will have to share it amongst yourself or something, but people simply have to sign up at that point, and that would be
regulating
at the point of sale. JUSTICE
KAGAN
: Well, Mr.
Clement
, now it seems as though you’re just talking about a
matter
of timing; that
Congress
can
regulate
the transaction, and the question is when does it make best sense to
regulate
that transaction? And
Congress
surely has within its authority to decide, rather than at the point of sale, given an
insurance
-based mechanism, it makes sense to
regulate
it earlier. It’s just a
matter
of timing. MR.
CLEMENT
: Well, Justice
Kagan
, we don’t think it’s a
matter
of timing alone, and we think it has very substantive
effects
. Because if
Congress
tried to
regulate
at the point of sale, the one
group
that it wouldn’t capture at all are the people who don’t want to
purchase

health insurance
and also have no plans of using
health care services
in the near term. And
Congress
very much wanted to capture those people. I mean, those people are essentially the golden geese that pay for the entire lowering of the premium.
JUSTICE KENNEDY
: Was the
government
‘s
argument
this — and maybe I won’t
state
it accurately — it is true that the noninsured
young adult
is, in fact, an
actuarial
reality insofar as our allocation of
health services
, insofar as the way
health insurance
companies figure risks? That
person
who is sitting at home in his or her
living room
doing nothing is an
actuarial
reality that can and must be measured for
health service
purposes; is that their
argument
? MR.
CLEMENT
: Well, I don’t know,
Justice Kennedy
, but, if it is, I think there is at least two
problems
with it. One is, as
Justice Alito
‘s question suggested earlier, I mean, somebody who is not in the
insurance

market
is sort of irrelevant as an
actuarial
risk. I mean, we could look at the people not in the
insurance

market
, and what we’d find is that they’re relatively
young
, relatively
healthy
, and they would have a certain pool of
actuarial
risks that would actually lead to lower premiums. The people that would be captured by
guaranteed
rating and
community
issue —
guaranteed
issue and
community
rating would presumably have a higher risk profile, and there would be higher premiums. And one of the things, one of the things
Congress
sought to accomplish here, was to
force
individuals into the
insurance

market
to
subsidize
those that are already in it to lower the
rates
. And that’s just not my speculation, that’s Finding I at 43A of the
government
‘s brief that — it has the
statute
. And that’s one of the clear findings.
JUSTICE GINSBURG
: Mr.
Clement
, doesn’t that work — that work the way
Social Security
does? Let me put it this way.
Congress
, in the ’30s, saw a real
problem
of people needing to have old age and survivor’s
insurance
. And yes, they did it through a tax, but they said everybody has got to be in it because if we don’t have the
healthy
in it, there’s not going to be the
money
to pay for the ones who become old or disabled or widowed. So they required everyone to contribute. It was a big fuss about that in the beginning because a lot of people said — maybe some people still do today — I could do much better if the
government
left me alone. I’d go into the private
market
, I’d buy an annuity, I’d make a great investment, and they’re forcing me to paying for this
Social Security
that I don’t want; but, that’s
constitutional
. So if
Congress
could see this as a
problem
when we need to have a
group
that will
subsidize
the ones who are going to get the benefits, it seems to me you are saying the only way that could be done is if the
government
does it
itself
; it can’t involve the private
market
, it can’t involve the private insurers. If it wants to do this,
Social Security
is its model. The
government
has to do — has to be
government
takeover. We can’t have the
insurance industry
in it. Is that your
position
? MR.
CLEMENT
: No. I don’t think it is,
Justice Ginsburg
. I think there are other options that are available. The most straightforward one would be to figure out what amount of
subsidy
to the
insurance industry
is
necessary
to pay for
guaranteed
issue and
community
rating. And once we calculate the amount of that
subsidy
, we could have a tax that’s spread generally through everybody to
raise
the revenue to pay for that
subsidy
. That’s the way we pay for most subsidies. JUSTICE
SOTOMAYOR
: Could we have an exemption? Could the
government
say, everybody pays a shared
health care
responsibility
payment
to offset all the
money
that we are
forced
to spend on
health care
, we the
government
; but, anybody who has an
insurance policy
is exempt from that tax? Could the
government
do that? MR.
CLEMENT
: The
government
might be able to do that. I think it might
raise
some issues about whether or not that would be a valid
exercise
of the taxing
power
. JUSTICE
SOTOMAYOR
: Under what theory wouldn’t it be? MR.
CLEMENT
: Well, I do think that -JUSTICE
SOTOMAYOR
: We get
tax credits
for having solar-powered homes. We get
tax credits
for using
fuel efficient
cars. Why couldn’t we get a
tax credit
for having
health insurance
and saving the
government
from caring for us. MR.
CLEMENT
: Well, I think it would depend a little bit on how it was formulated; but, my concern would be — the
constitutional
concern would be that it would just be a disguised impermissible
direct tax
.
And I
do think — I mean, I don’t want to
suggest
we get to the taxing
power
to soon, but I do think it’s worth realizing that the taxing
power
is
limited
in the ability to
impose

direct taxes
. And the one thing I think the
framers
would have clearly identified as a
direct tax
is a tax on not having something. I mean, the framing generation was divided over whether a tax on carriages was a
direct tax
or not.
Hamilton

thought
that was a
indirect tax
;
Madison

thought
it was a
direct tax
. I have little
doubt
that both of them would have agreed that a tax on not having a carriage would have clearly been a
direct tax
. I also think they would have
thought
it clearly wasn’t a valid
regulation
of the
market
in carriages. And, you know, I mean, if you look at
Hilton
against the
United States
, that’s this
Court
‘s first
direct tax
–
JUSTICE BREYER
: Let me ask — can I go back for a step, because I don’t want to get into a discussion of whether this is a good bill or not. Some people think it’s going to save a lot of
money
. Some people think it won’t. So I’m focusing just on the
Commerce Clause
; not on the
Due Process Clause
, the
Commerce Clause
.
And I
look back into history, and I think if we look back into history we see sometimes
Congress
can create
commerce
out of nothing. That’s the
national bank
, which was created out of nothing to create other
commerce
out of nothing. I look back into history, and I see it seems pretty clear that if there are
substantial

effects
on
interstate commerce
,
Congress
can act.
And I
look at the
person
who’s growing marijuana in her house, or I look at the farmer who is growing the
wheat
for home consumption. This seems to have more
substantial

effects
. Is this
commerce
? Well, it seems to me more
commerce
than marijuana. I mean, is it, in fact, a
regulation
? Well, why not? If creating a bank is, why isn’t this? And then you say, ah, but one thing here out of all those things is different, and that is you’re making somebody do something. I say, hey, can’t
Congress
make people drive faster than 45 — 40 miles an hour on a road? Didn’t they make that man growing his own
wheat
go into the
market
and buy other
wheat
for his — for his cows? Didn’t they make Mrs. — if she married somebody who had marijuana in her basement, wouldn’t she have to go and get rid of it?
Affirmative action
? I mean, where does this
distinction
come from? It sounds like sometimes you can, and sometimes you can’t. So what is argued here is there is a
large group
of — what about a
person
that we discover that there are — a
disease
is sweeping the
United States
, and 40
million
people are susceptible, of whom
10 million
will die; can’t the
Federal Government
say all 40
million
get inoculation? So here, we have a
group
of 40
million
, and 57 percent of those people visit
emergency care
or other care, which we are paying for. And 22 percent of those pay more than $100,000 for that. And
Congress
says they are
in the midst of this
big thing. We just want to rationalize this
system
they are already in. So, there, you got the whole
argument
, and I would like you to tell me –
JUSTICE SCALIA
: We’ll get to those questions in inverse
order
.
JUSTICE BREYER
: Well, no, it’s one question. It’s looking back at that — looking back at that history. The thing I can see that you say to some people, go buy; why does that make a
difference
in terms of the
Commerce Clause
? MR.
CLEMENT
: Well,
Justice Breyer
, let me start at the beginning of your question with
McCulloch
.
McCulloch
was not a
commerce

power
case.
JUSTICE BREYER
: It was both? MR.
CLEMENT
: No, the bank was not justified and the corporation was not justified as an
exercise
of
commerce

power
. So that is not a case that says that it’s okay to conjure up the bank as an
exercise
of the
commerce

power
. What, of
course
, the
Court
didn’t say, and I think the
Court
would have had a very different reaction to, is, you know, we are not just going to have the bank, because that wouldn’t be
necessary and proper
, we are going to
force
the citizenry to put all of their
money in the bank
, because, if we do that, then we know the
Bank of the United States
will be secure. I think the
framers
would have identified the
difference
between those two scenarios, and I don’t think that the great Chief Justice would have said that forcing people to put their deposits in the
Bank of the United States
was
necessary and proper
. Now, if you look through all the
cases
you mentioned, I do not think you will find a case like this.
And I
think it’s telling that you won’t. I mean, the
regulation
of the
wheat

market
in
Wickard
against
Filburn
, all this effort to address the
supply side
and what producers could do, what
Congress
was trying to do was support the
price
of
wheat
. It would have been much more efficient to just make everybody in
America
buy 10 loaves of bread. That would have had a much more
direct effect
on the
price
of
wheat
in the prevailing
market
. But we didn’t do that. We didn’t say when we had
problems
in the
automobile industry
that we are not just going to give you incentives, not just cash for clunkers, we are going to actually have ever everybody over 100,000 has to buy a new car -CHIEF JUSTICE
ROBERTS
: Well, Mr.
Clement
, the key to the
government
‘s
argument
to the contrary is that everybody is in this
market
. It’s all right to
regulate

Wickard
— again, in
Wickard
against
Filburn
, because that’s a particular
market
in which the farmer had been participating. Everybody is in this
market
, so that makes it very different than the
market
for cars or the other hypotheticals that you came up with, and all they’re
regulating
is how you
pay for it
. MR.
CLEMENT
: Well, with
respect
, Mr. Chief Justice, I suppose the first thing you have to say is what
market
are we talking about? Because the
government
— this
statute
undeniably operates in the
health insurance

market
. And the
government
can’t say that everybody is in that
market
. The whole
problem
is that everybody is not in that
market
, and they want to make everybody get into that
market
. JUSTICE
KAGAN
: Well, doesn’t that seem a little bit, Mr.
Clement
, cutting the bologna thin? mean,
health insurance
exists only for the purpose of financing
health care
. The two are inextricably interlinked. We don’t get
insurance
so that we can stare at our
insurance
certificate. We get it so that we can go and
access

health care
. MR.
CLEMENT
: Well, Justice
Kagan
, I’m not sure that’s right. I think what
health insurance
does and what all
insurance
does is it allows you to diversify risk. And so it’s not just a
matter
of I’m paying now instead I’m paying later. That’s credit.
Insurance
is different than credit.
Insurance
guarantees you an upfront, locked-in
payment
, and you won’t have to pay any more than that even if you incur much great expenses. And in every other
market
that I know of for
insurance
, we let people basically make the
decision
whether they are relatively
risk averse
, whether they are relatively non-
risk averse
, and they can make the judgment based on -JUSTICE
SOTOMAYOR
: But we don’t in
car insurance
, meaning we tell people, buy car — not we, the
states
do, although you’re going to — I’ll ask you the question, do you think that if some
states
decided not to
impose
an
insurance

requirement
, that the
Federal Government
would be without
power
to legislate and require every individual to buy
car insurance
? MR.
CLEMENT
: Well, Justice
Sotomayor
, let me say this, which is to say — you’re right in the first point to say that it’s the
states
that do it, which makes it different right there. But it’s also -JUSTICE
SOTOMAYOR
: Well, that goes back to the substantive
due process
question. Is this a
Lochner era

argument
that only the
states
can do this, even though it
affects

commerce
? Cars indisputably
affect

commerce
. So are you arguing that because the
states
have done it all along, the
Federal Government
is no longer permitted to legislate in this area? MR.
CLEMENT
: No. I think you might make a different
argument
about cars than you would make about
health insurance
, unless you tried to say — but, you know, we’re -JUSTICE
SOTOMAYOR
:
Health insurance
— I mean, I’ve never gotten into an accident, thankfully, and I hope never. The vast majority of people have never gotten into an accident where they have injured others; yet, we
pay for it
dutifully every year on the possibility that at some point we might get into that accident. MR.
CLEMENT
: But, Justice
Sotomayor
, what I think is different is there is lots of people in
Manhattan
, for example, that don’t have
car insurance
because they don’t have cars. And so they have the option of withdrawing from that
market
. It’s not a direct imposition from the
government
. So even the
car market
is
difference
from this
market
, where there is no way to get outside of the regulatory web. And that’s, I think, one of the real
problems
with this because, I mean, we take as a given -JUSTICE
SOTOMAYOR
: But you’re — but the given is that virtually everyone, absent some intervention from above, meaning that someone’s life will be cut short in a fatal way, virtually everyone will use
health care
. MR.
CLEMENT
: At some point, that’s right, but all
sorts
of people will not, say, use
health care
in the next year, which is the relevant period for the
insurance
.
JUSTICE BREYER
: But do you think you can, better than the actuaries or better than the members of
Congress
who worked on it, look at the 40
million
people who are not insured and say which ones next year will or will not use, say,
emergency care
? Can you do that any better than if we knew that 40
million
people were suffering, about to suffer a
contagious disease
, and only
10 million
would get sick -MR.
CLEMENT
: Of
course
not –
JUSTICE BREYER
: — and we don’t know which? MR.
CLEMENT
: Of
course
not,
Justice Breyer
, but the point is that once
Congress
decides it’s going to
regulate
extant
commerce
, it is going to get all
sorts
of latitude to make the right judgments about
actuarial
predictions, which
actuarial
to rely on, which one not to rely on. The question that’s a
proper
question for this
Court
, though, is whether or not,
for the first time
ever in our history,
Congress
also has the
power
to
compel
people into
commerce
, because, it turns out, that would be a very efficient things for purposes of
Congress
‘ optimal
regulation
of that
market
. JUSTICE
KAGAN
: But, Mr.
Clement
, this goes back to the Chief Justice’s question. But, of
course
, the theory behind, not just the
government
‘s case, but the theory behind this law is that people are in this
market
right now, and they are in this
market
because people do get sick, and because when people get sick, we provide them with care without making them pay. And it that would be different, you know, if you were up here saying, I represent a class of
Christian scientists
. Then you might be able to say, look, you know, why are they bothering me. But absent that, you’re in this
market
. You’re an
economic
actor. MR.
CLEMENT
: Well, Justice
Kagan
, once again, it depends on which
market
we’re talking about. If we’re talking about the
health care

insurance

market
-JUSTICE
KAGAN
: Well, we are talking about the
health insurance

market
, which is designed to
access
the
health care

market
. MR.
CLEMENT
: And with
respect
to the
health insurance

market
that’s designed to have
payment
in the
health care

market
, everybody is not in the
market
. And that’s the premise of the
statute
, and that’s the
problem

Congress
is trying to
solve
. And if it tried to
solve
it through incentives, we wouldn’t be here; but, it’s trying to
solve
it in a way that nobody has ever tried to
solve
an
economic problem
before, which is saying, you know, it would be so much more efficient if you were just in this
market
–
JUSTICE KENNEDY
: But they are in the
market
in the sense that they are creating a risk that the
market
must account for. MR.
CLEMENT
: Well,
Justice Kennedy
, I don’t think that’s right, certainly in any way that distinguishes this from any other context. When I’m sitting in my house deciding I’m not to buy a car, I am causing the
labor market
in
Detroit
to go south. I am causing maybe somebody to lose their job, and for everybody to have to
pay for it
under welfare. So the cost shifting that the
government
tries to uniquely to associate with this
market
, it is everywhere. And even more to the point, the rationale that they think ultimately supports this legislation, that look, it’s an
economic

decision
, once you make the
economic

decision
, we aggregate the
decision
, there is a
substantial

effect
on
commerce
. That
argument

works
here. It
works
in every single industry.
JUSTICE BREYER
: Of
course
we do know that there are a few people, more in
New York City
than there are in
Wyoming
, who never will buy a car. But we also know here, and we don’t like to admit it, that because we are
human beings
we all suffer from the risk of getting sick. And we also all know that we’ll get seriously sick. And we also know that we can’t predict when. And we also know that when we do, there will be our fellow taxpayers through the
Federal Government
who will pay for this. If we do not buy
insurance
, we will pay nothing. And that happens with a
large number
of people in this
group
of 40
million
, none of whom can be picked out in advance. Now, that’s quite different from a car
situation
, and it’s different in only this
respect
. It shows there is a
national

problem
, and it shows there is a
national

problem
that involves
money
, cost
insurance
. So if
Congress
could do this, should there be a
disease
that strikes the
United States
and they want every one inoculated even though ten
million
will be hurt, it’s hard for me to decide why that isn’t
interstate commerce
, even more so where we know it
affects
everybody. MR.
CLEMENT
: Well,
Justice Breyer
, there are other markets that
affect
every one: transportation, food,
burial

services
, though we don’t like to talk about that either. There also are
situations
where there are many
economic

effects
from somebody’s failure to
purchase
a
product
. And if I could, if I could talk about the
difference
between the
health insurance

market
and the
health care

market
, I mean, ultimately I don’t want you to leave here with the impression that anything turns on that. Because if the
government
decided tomorrow that they would come up with a great — some of these — some
private companies
come up with a great new wonder drug that would be great for everybody to take, would have huge
health benefits
for everybody; and by the way, also if everybody had to buy it, it would facilitate economies of scale, and the production would be great, and the
price
would be cheaper and
force
everybody in the
health care

market
, the actual
health care

market
to buy the wonder drug, I’d be up here making the same
argument
. I would be saying that’s not a
power
that’s within the
commerce

power
of the
Federal Government
. It is something much greater. And it would have been much more controversial. That’s why the important things. In
Federalist 45
,
Madison
says the
commerce

power
. That’s a new
power
, but it’s not one anyone has any apprehension about. The
reason
they didn’t have any apprehension about it is because it’s a
power
that only operated once people were already in
commerce
. You see that from the text of the clause. The first kind of
commerce

Congress
gets to
regulate
is
commerce
with foreign nations. Did anybody think the fledgling
Republic
had the
power
to
compel
some other nation into
commerce
with us? Of
course
not. And in the same way, I think if the
framers
had understood the
commerce

power
to include the
power
to
compel
people to engage in
commerce
-JUSTICE
KAGAN
: Well, once again though, who’s in
commerce
and what are they in
commerce
? If the
effect
of all these
uninsured
people is to
raise
everybody’s premiums, not just when they get sick, if they get sick, but right now in the aggregate, and
Wickard
and
Raich
tell us we should look at the aggregate, and the aggregate of all these
uninsured
people are increasing the
normal family
premium,
Congress
says, by a thousand
dollars
a year. Those people are in
commerce
. They are making decisions that are affecting the
price
that everybody pays for this service. MR.
CLEMENT
: Justice
Kagan
, again, with all due
respect
, I don’t think that’s a limiting
principle
. My unwillingness to buy an
electric car
is forcing up the
price
of an
electric car
. If only more people demanded an
electric car
there would be economies of scale, and the
price
would go down. JUSTICE
KAGAN
: Not necessarily, Mr.
Clement
. And it’s different because of the nature of the
health care
service, that you are entitled to
health care
when you go to an
emergency room
, when you go to a doctor, even if you can’t
pay for it
. So the
difference
between your hypotheticals and the real case is the
problem
of uncompensated care which -MR.
CLEMENT
: Justice
Kagan
, first of all, I do think there — this is not the only place where there’s uncompensated care. If some — if I don’t buy a car and somebody goes on welfare, I’m going to end up paying for that as well. But let me also say that there is a real disconnect then between that focus on what makes this different and
statute
that
Congresses
passed. If all we were concerned about is the cost sharing that took place because of uncompensated care in
emergency rooms
, presumably we have before us a
statute
that only addressed
emergency care
and catastrophic
insurance

coverage
. But it covers everything, soup to nuts, and all
sorts
of other things. And that gets at the idea that there is two
kinds
of cost shifting that are going on here. One is the concern about
emergency care
and that somehow somebody who gets sick is going to shift
costs
back to other policy areas — holders. But there is a much bigger cost shifting going on here, and that’s the cost shifting that goes on when you
force

healthy
people into an
insurance

market
precisely because they are
healthy
, precisely because they are not likely to go to the
emergency room
, precisely because they are not likely to use the
insurance
they are
forced
to buy in the
health care

insurance
. That creates a huge windfall. It lowers the
price
of premiums. And again, this is not just some lawyer up here telling you that’s what it does and trying to second-guess the congressional
economic
decisions. This is
Congress
‘s findings, findings I on page 43 A of the appendix to the
government
‘s
JUSTICE BREYER
: All that sounds like you’re debating the merits of the bill. You ask really for limiting
principles
so we don’t get into a
matter
that I think has nothing to do with this case:
broccoli
, okay? And the limiting
principles
, you’ve heard three. First, the Solicitor General came up with a couple joined, very narrow ones. You’ve seen in
Lopez
this
Court
say that we cannot,
Congress
cannot get into purely local affairs, particularly where they are noncommercial. And, of
course
, the greatest limiting
principle
of all, which not too many
accept
, so I’m not going to emphasize that, is the limiting
principle
derived from the fact that members of
Congress
are elected from
States
and that 95 percent of the law of the
United States
is
State law
. That is a
principle
though enforced by the legislature. The other two are
principles
, one written into
Lopez
and one you just heard. It seems to me all of those eliminate the
broccoli
possibility, and none of them eliminates the possibility that we are trying to take the 40
million
people who do have the medical cost, who do
affect

interstate commerce
and provide a
system
that you may like or not like. That’s where we are in limiting
principles
. MR.
CLEMENT
: Well,
Justice Breyer
, let me take them in turn. I would encourage this
Court
not to
Garcia
-ize the
Commerce Clause
and just simply say it’s up to
Congress
to police the
Commerce Clause
. So I don’t think that is a limiting
principle
. Second of all -JUSTICE
SOTOMAYOR
: Yes, but that’s exactly what Justice Marshall said in
Gibbons
. He said that it is the
power
to
regulate
, the
power
like all others vested in
Congress
is complete in
itself
, may be exercised to its utmost extent, and acknowledges no limitations other than those prescribed in the
Constitution
. But there is no conscription in the, set forth in the
Constitution
with
respect
to
regulating

commerce
. MR.
CLEMENT
: I
agree
100 percent, and I think that was the Chief Justice’s point which was once you open the door to compelling people into
commerce
based on the narrow rationales that exist in this industry, you are not going to be able to stop that process.
JUSTICE SCALIA
: I would like hear you address
Justice Breyer
‘s other, other two
principles
. MR.
CLEMENT
: Well, the other two
principles
are
Lopez
— and this case really is not — I mean, you know,
Lopez
is a limit on the affirmative
exercise
of people who are already in
commerce
. The question is, is there any other limit to people who aren’t in
commerce
? And so I think this is the case that really asks that question. And then the first point which was I take it to be the Solicitor General’s point is, with all due
respect
, simply a description of the
insurance

market
. It’s not a limiting
principle
, because the justification for why this is a valid
regulation
of
commerce
is in no way
limited
to this
market
. It simply says, these are
economic
decisions, they have
effect
on other people, my failure to
purchase
in this
market
has a
direct effect
on others who are already in the
market
. That’s true of virtually every other
market
under the sun. CHIEF
JUSTICE ROBERTS
: And now maybe return to Justice
Sotomayor
‘s question. MR.
CLEMENT
: I’d be delighted to, which is — I mean, I — you are absolutely right. Once you’re in the
commerce

power
, there is not — this
Court
is not going to police that
subject
maybe to the
Lopez
limit. And that’s exactly why I think it’s very important for this
Court
to think seriously about taking an unprecedented step of saying that the
commerce

power
not only includes the
power
to
regulate
, prescribe the rule by which
commerce
is governed, the rule of
Gibbons v. Ogden
. But to go further and say it’s not just prescribing the rule for
commerce
that exists but is the
power
to
compel
people to enter into
commerce

in the first place
. I would like to say two very brief things about the taxing
power
, if I could. There are lots of reasons why this isn’t a tax. It wasn’t denominated a tax. It’s not structured as a tax. If it’s any tax at all, though, it is a
direct tax
.
Article I
,
Section 9
,
clause 4
, the
Framers
would have had no
doubt
that a tax on not having something is not an
excise tax
but a forbidden
direct tax
. That’s one more
reason
why this is not
proper
legislation because it violates that. The second thing is I would urge you to read the
License Tax
case which the Solicitor General says is his
best case
for why you ignore the fact that a tax is denominated into something other. Because that is a case where the
argument
was that because the
Federal government
had passed a license not a tax, that somehow that allowed people to take actions that would have been unlawful under
State law
, that this was some special
Federal
license to do something that was forbidden by
State law
. This
Court
looked beyond the label in
order
to preserve federalism there. What the Solicitor General and the
government
ask you to do here is exactly the opposite, which is to look past labels in
order
to up-end our
basic

federalist system
. In this -JUSTICE
SOTOMAYOR
: Would you tell me, do you think the
States
could pass this
mandate
. MR.
CLEMENT
: I represent
26 States
. I do think the
States
could pass this
mandate
, but
I -JUSTICE SOTOMAYOR
: Is there any other area of
commerce
, business, where we have held that there is a
concurrent power
between the
State
and the
Federal Government
to protect the welfare of
commerce
? MR.
CLEMENT
: Well, Justice
Sotomayor
, I have to resist your premise, because I didn’t answer yes, the
States
can do it because it would be a valid
regulation
of intrastate
commerce
. I said yes, the
States
can do it because they have a
police power
, and that is the
fundamental

difference
between the
States
on the one hand and the
limited
, enumerated
Federal Government
on the other. CHIEF
JUSTICE ROBERTS
: Thank you, Mr.
Clement
. Mr.
Carvin
.
ORAL ARGUMENT OF MICHAEL A. CARVIN ON BEHALF OF THE RESPONDENTS NFIB
,
ET AL
. MR.
CARVIN
: Thank you, Mr. Chief Justice, may it please the
Court
: I’d like to begin with the Solicitor General’s main premise, which is that they can
compel
the
purchase
of
health insurance
in
order
to
promote

commerce
in the health
market
because it will reduce uncompensated care. If you
accept
that
argument
, you have to fundamentally alter the text of the
Constitution
and give
Congress

plenary power
. It simply doesn’t
matter
whether or not this
regulation
will
promote

health care

commerce
by reducing uncompensated care; all that matters is whether the
activity
actually being
regulated
by the act negatively
affects

Congress
or negatively
affects

commerce

regulation
, so that it’s within the
commerce

power
. If you
agree
with us that this is — exceeds
commerce

power
, the law doesn’t somehow become redeemed because it has beneficial policy
effects
in the
health care

market
. In other words,
Congress
does not have the
power
to
promote

commerce
.
Congress
has —
Congress
has the
power
to
regulate

commerce
. And if the
power
exceeds their permissible
regulatory authority
, then the law is invalid. CHIEF
JUSTICE ROBERTS
: Well, surely -MR.
CARVIN
: I’m sorry. CHIEF
JUSTICE ROBERTS
: Well, surely
regulation
includes the
power
to
promote
. Since the
New Deal
we’ve said that
regulation
in — there is a
market
agricultural products;
Congress
has the
power
to
subsidize
, to limit production, all
sorts
of things. MR.
CARVIN
: Absolutely, Chief Justice, and that’s the
distinction
I’m trying to draw. When they are acting within their
enumerated power
then obviously they are promoting
commerce
, but the Solicitor General wants to turn it into a different
power
. He wants to say we have the
power
to
promote

commerce
, to
regulate
anything to
promote

commerce
, and if they have the
power
to
promote

commerce
then they have the
power
to
regulate
everything, right? Because -CHIEF
JUSTICE ROBERTS
: I don’t — I don’t think you’re addressing their main point, which is that they are not creating
commerce
in — in
health care
. It’s already there, and we are all going to need some kind of
health care
; most of us will at some point. MR.
CARVIN
: I’d — I’d like to address that in two ways, if I could, Mr. Chief Justice.
In the first place
they keep playing mix and match with the statistics. They say 95 percent of us are in the
health care

market
, okay? But that’s not the relevant statistic, even from — as the
government
frames the issue. No one in
Congress
and the Solicitor General is arguing that going to the doctor and fully paying him creates a
problem
. The
problem
is uncompensated care, and they say the uncompensated care arises if you have some kind of catastrophe — hit by a bus, have some prolonged illness. Well, what is the percentage of the
uninsured
that have those
sorts
of catastrophes? We know it has got to be a relative small fraction. So in other words, the relevant -CHIEF JUSTICE
ROBERTS
: Yet we don’t know who they are. MR.
CARVIN
: We don’t. No, and we don’t know in advance, and — and — but that doesn’t change the
basic

principle
, that you are nonetheless forcing people for paternalistic reasons to go into the
insurance

market
to ensure against risk that they have made the voluntary
decision
that they are not — have decided not to. But even –
JUSTICE GINSBURG
: But the
problem
is — the
problem
is this they are making the reinvent of us
pay for it
, because as much as they say, well, we are not in the
market
, we don’t know when the — the timing when they will be. MR.
CARVIN
: Which is –
JUSTICE GINSBURG
: And the — the figures that how much more families are paying for
insurance
because people get sick, they may have intended to self-insure, they haven’t been able to meet the bill for — for cancer, and
the rest of us
end up paying because these people are getting cost-free
health care
, and the only way to prevent that is to have them pay sooner rather than later, pay up front. MR.
CARVIN
: Yes, but my point is this. That, with
respect
,
Justice Ginsburg
, conflicts the people who do
result
in uncompensated care, the free riders. Those are people who default on their
health care
payments. That is an entirely different
group
of people, an entirely different
activity
than being
uninsured
. So the question is whether or not you can
regulate

activity
because it has a statistical connection to an
activity
that harms
Congress
. And my
basic
point to you is this:
the Constitution
only gives
Congress
the
power
to
regulate
things that negatively
affect

commerce
or
commerce

regulation
. It doesn’t give them the
power
to
regulate
things that are statistically connected to things that negatively
affect
the
commerce
-JUSTICE
KAGAN
: Well, Mr.
Carvin
-MR.
CARVIN
: Because — I’m sorry. JUSTICE
KAGAN
: Please. MR.
CARVIN
: I was just going to say, because if they have that
power
, then they obviously have the
power
to
regulate
everything because everything in the aggregate is statistically connected to something that negatively
affects

commerce
, and every compelled
purchase
promotes
commerce
.
JUSTICE BREYER
: In your view, right there — in your view right there -MR.
CARVIN
:
Justice Breyer
–
JUSTICE BREYER
: Can I just -MR.
CARVIN
: I’m sorry.
JUSTICE BREYER
: I’m just picking on something. I’d like to just — if it turned out there was some terrible epidemic sweeping the
United States
, and we couldn’t say that more than 40 or 50 percent — I can make the number as high as I want — but the — the — you’d say the
Federal Government
doesn’t have the
power
to get people inoculated, to require them to be inoculated, because that’s just statistical. MR.
CARVIN
: Well, in all candor, I think
Morrison
must have decided that issue, right? Because people who commit violence against –
JUSTICE BREYER
: Is your answer to that yes or no? MR.
CARVIN
: Oh, I’m sorry; my answer is no, they couldn’t do it, because
Morrison
–
JUSTICE BREYER
: No, they could not do it. MR.
CARVIN
: Yes.
JUSTICE BREYER
: They cannot require people even if this
disease
is sweeping the
country
to be inoculated. The
Federal Government
has no
power
, and if there’s — okay, fine. Go ahead. MR.
CARVIN
: May –
JUSTICE BREYER
: Please turn to Justice
Kagan
. MR.
CARVIN
: May I just
please explain
why?
JUSTICE BREYER
: Yes. MR.
CARVIN
: Violence against women obviously creates the same negative impression on fellow citizens as this
communicable disease
, but the — and it has huge
effects
on the
health care
of our
country
.
Congress
found that it increased
health care

costs
by –
JUSTICE BREYER
: I
agree
with you that -MR.
CARVIN
: Well, but –
JUSTICE BREYER
: — that it had huge negative
effects
but the majority
thought
that was a local
matter
.
JUSTICE SCALIA
: I think that’s his point. MR.
CARVIN
: I — I don’t know why having a
disease
is any more local than — that beating up a woman. But — but — my
basic
point is, is that notwithstanding its very profound
effect
on the
health care

market
, this
Court
said the
activity
being
regulated
, i.e., violence against women, is outside the
Commerce Clause

power
. So regardless of whether it has beneficial downstream
effects
, we must say no,
Congress
doesn’t have that
power
. Why not? Because everything has downstream
effects
on
commerce
and every compelled
purchase
promotes
commerce
. It by definition helps the sellers of existing –
JUSTICE ALITO
: Mr.
Carvin
, isn’t there this
difference
between
Justice Breyer
‘s hypothetical and the law that we have before us here? In his hypothetical harm to other people from the
communicable disease
is the
result
of the
disease
. It is not the
result
of something that the
government
has done, whereas here the
reason
why there is cost shifting is because the
government
has mandated that. It has required hospitals to provide
emergency treatment
, and instead of paying for that through a tax which would be born by everybody, it has required — it has set up a
system
in which the cost is surreptitiously shifted to people who have
health insurance
and who pay their bills when they go to the hospital. MR.
CLEMENT
:
Justice Alito
, that is exactly the
government
‘s
argument
. It’s an extraordinarily illogical
argument
.
JUSTICE BREYER
:
Fine
. Then if that’s so, is — let me just change my example under pressure –
JUSTICE BREYER
: — and say that in fact it turns out that 90 percent of all automobiles driving
interstate
without certain equipment put up pollution, which travels
interstate
— not 100 percent, maybe only 60 percent. Does the
EPA
have the
power
then to say you’ve got to have an antipollution device? It’s statistical. MR.
CARVIN
: What they can’t do — yes, if you have a car, they can require you to have an anti-pollution –
JUSTICE BREYER
: Then you’re not going on statistics; you’re going on something else which is what I’d like to know what it is. MR.
CARVIN
: It’s this. They can’t require you to buy a car with an anti-pollution device. Once you’ve entered the
market
and made a
decision
they can
regulate
the terms and conditions of the car that you do, and they can do it for all
sorts
of reasons. What they can’t do it
compel
you to enter the
market
.
JUSTICE BREYER
: Now we — now you’ve changed the ground of
argument
, which I
accept
as — as totally legitimate. And then the question is when you are born, and you don’t have
insurance
, and you will in fact get sick, and you will in fact
impose

costs
, have you perhaps involuntarily — perhaps simply because you are a
human being
— entered this particular
market
, which is a
market
for
health care
? MR.
CARVIN
: If being born is entering the
market
, then I can’t think of a more
plenary power

Congress
can have, because that literally
means
they can
regulate
every human
activity
from cradle to grave.
thought
that’s what distinguished the plenary
police power
from the very
limited

commerce

power
. I don’t disagree that giving the
Congress

plenary power
to
mandate
property transfers
from A to B
would be a very efficient way of helping B and of accomplishing
Congress
‘s objectives. But the
framers
–
JUSTICE BREYER
: I see the point. You can go back to, go back to Justice
Kagan
. Don’t forget her question. JUSTICE
KAGAN
: I’ve forgotten my question. MR.
CARVIN
: I — I was facing the same dilemma, Justice
Kagan
.
JUSTICE GINSBURG
: Let me — let me ask a question I asked Mr.
Clement
. It just seems -JUSTICE
KAGAN
: See what it
means
to be the junior justice?
JUSTICE GINSBURG
: It just seems very strange to me that there’s no question we can have a
Social Security system
besides all the people who say: I’m being
forced
to pay for something I don’t want. And this it seems to me, to try to get care for the ones who need it by having everyone in the pool, but is also trying to preserve a role for the
private sector
, for the private insurers. There’s something very odd about that, that the
government
can take over the whole thing and we all say, oh, yes, that’s fine, but if the
government
wants to get — to preserve private insurers, it can’t do that. MR.
CARVIN
: Well I don’t think the test of a law’s constitutionality is whether it more adheres to the libertarian
principles
of the
Cato Institute
or the statist
principles
of
someone else
. I think the test of a law’s constitutionality is not those policy questions; it’s whether or not the law is
regulating
things that negatively
affect

commerce
or don’t. And since obviously the failure to
purchase
an item doesn’t create the kind of
effects
on supply and demand that the
market
participants in
Wickard
and
Raich
did and doesn’t in any way interfere with
regulation
of the
insurance companies
, I don’t think it can pass the
basic
–
JUSTICE GINSBURG
: I
thought
— I
thought
that
Wickard
was you must buy; we are not going to let you use the home-grown
wheat
. You have got to go out in the
market
and buy that
wheat
that you don’t want. MR.
CARVIN
: Oh, but let’s be careful about what they were
regulating
in
Wickard
,
Justice Ginsburg
. What they were
regulating
was the supply of
wheat
. It didn’t in any way imply that they could require every American to go out and buy
wheat
. And yes, one of the consequences of
regulating
local
market
participants is it’ll
affect
the supply and the demand for the
product
. That’s why you can
regulate
them, because those local
market
participants have the same
effect
on the
interstate

market
that a
black market
has on a legal
market
. But none of that is true — in other words, you can
regulate
local bootleggers, but that doesn’t
suggest
you can
regulate
teetotalers, people who stay out of the liquor
market
, because they don’t have any negative
effect
on the existing
market
participants or on
regulation
of those
market
participants. JUSTICE
KAGAN
: That’s why I suggested, Mr.
Carvin
, that it might be different if you were raising an as-applied challenge and presenting a class of people whom you could say clearly would not be in the
health care

market
. But you’re raising a facial challenge and we can’t really know which, which of the many, many, people that this law addresses in fact will not
participate
in the
health care

market
and in fact will not
impose

costs
on all
the rest of us
. So the question is can
Congress
respond to those facts, that we have no crystal ball, that we can’t tell who is and isn’t going to be in the
health insurance

market
, and say most of these people will be and most of these people will thereby
impose

costs
on
the rest of us
and that’s a
problem
that we can deal with on a class-wide
basis
? MR.
CARVIN
: No again. The people who
impose
the
costs
on
the rest of us
are people who engage in a different
activity
at a different time, which is defaulting on their
health care
payments. It’s not the
uninsured
. Under your theory you could
regulate
anybody if they have got a statistical connection to a
problem
. You could say, since we could
regulate
people who enter into the mortgage
market
and
impose

mortgage insurance
on them, we can simply
impose
the
requirement
to buy private
mortgage insurance
on everybody before they have entered the
market
because we are doing it in this prophylactic way before it develops. CHIEF
JUSTICE ROBERTS
: No, no, that’s not — I don’t think that’s fair, because not everybody is going to enter the mortgage
market
. The
government
‘s
position
is that almost everybody is going to enter the
health care

market
. MR.
CARVIN
: Two points, one of which Mr.
Clement
‘s already made, which is the
health insurance

market
is different than the
health care

market
. But let me take it on full-stride. I think everybody is in the milk
market
. I think everybody is in the
wheat

product market
. But that doesn’t
suggest
that the
government

compel
you to buy five gallons of meat or five bushels of
wheat
because they are not
regulating

commerce
. Whether you’re a
market participant
or not, they are still requiring you to make a
purchase
that you don’t want to do, and to get back to your facial example -JUSTICE
SOTOMAYOR
: I mean, but that’s true of almost every
product
. MR.
CARVIN
: I’ve sorry? JUSTICE
SOTOMAYOR
: It’s true of almost every
product
, directly or indirectly by
government regulation
. The
government
says, borrowing my colleague’s example, you can’t buy a car without
emission control
. I don’t want a car with
emission control
. It’s less efficient in terms of the horsepower. But I’m
forced
to do something I don’t want to do by
government regulation
. MR.
CARVIN
: You are not
forced
to buy a
product
you don’t want.
And I

agree
with you that since the
government
regulates all markets there is no limiting
principle
on their compelled
purchase
. When they put these environmental controls on the -JUSTICE
SOTOMAYOR
: They
force
me to buy -MR.
CARVIN
: I’m sorry. JUSTICE
SOTOMAYOR
: They
forced
me to buy if I need unpasteurized foods, goods that don’t have certain pesticides but have others. There is
government
compulsion in almost every
economic

decision
because the
government
regulates so much. It’s a condition of life that some may rail against, but -MR.
CARVIN
: Let’s
think about it
this way. Yes, when you’ve entered the marketplace they can
impose
all
sorts
of restrictions on you, and they can
impose
, for example, all
kinds
of restrictions on
States
after they have enacted laws. They can wipe out the laws. They can condition them. But what can’t they do? They can’t
compel

States
to enact laws. They can’t
compel

States
to carry out
Federal law
.
And I
am arguing for precisely the same
distinction
, because everyone intuitively understands that
regulating
participants after A and B have entered into a contract is fundamentally less intrusive than requiring the contract. JUSTICE
SOTOMAYOR
: We let the
government

regulate
the manufacturing process whether or not the goods will enter into
interstate commerce
, merely because they might statistically. We — there is all
sorts
of
government regulation
of
manufacturing plants
, of agricultural farms, of all
sorts
of
activity
that will be purely intrastate because it might
affect

interstate

activity
. MR.
CARVIN
: I fully
agree
with you, Justice
Sotomayor
. But I think -JUSTICE
SOTOMAYOR
: So how is that different from saying you are self-insuring today, you’re foregoing
insurance
? Why isn’t that a predecessor to the need that you’re eventually going to have? MR.
CARVIN
: The
cases
you referred to I think effectively eliminated the
distinction
between participants in the intrastate
market
vis-�-vis participants in the
interstate

market
. None of those
cases

suggest
that you can
regulate
people who are outside of the
market
on both an intrastate and
interstate
level by compelling them to enter into the
market
. And that –
JUSTICE BREYER
: What about — the simplest counter-example for me to
suggest
is you’ve undoubtedly read Judge
Sutton
‘s concurring opinion. He has about two pages, it seemed to me, of examples where everyone accepts the facts that under these
kinds
of regulations the
government
can
compel
people to buy things they don’t otherwise want to buy. For example, he gives, even in that farm case, the farmer who was being
forced
to go out and buy grain to feed to his animals because he couldn’t
raise
it at home. You know and he goes through one example after another. So what — what is your response to that, which you’ve read? MR.
CARVIN
: Judge
Sutton
is wrong in each and every example. There was no — there was no compulsion in
Raich
for him to buy
wheat
. He could have gotten
wheat
substitutes or he could have not sold
wheat
, which is actually what he was doing. There is a huge
difference
between conditioning
regulation
, i.e., conditioning
access
to the
health care

market
and saying you must buy a
product
, and forcing you to buy a
product
. And that, that — I’m sorry.
JUSTICE GINSBURG
: I
thought
it was
common ground
that the
requirement
that the insurers — what was it, the
community
-based one and they have to insure you despite your health status; they can’t refuse because of preexisting conditions. The
government
tells us and the
Congress
determined that those two won’t work unless you have a pool that will include the people who are now
healthy
. But so — well, first, do you
agree
with your colleague that the
community
-based — and what’s the name that they give to the other? MR.
CARVIN
: The
guaranteed
-issue.
JUSTICE GINSBURG
: Yes. That that is legitimate
Commerce Clause
legislation? MR.
CARVIN
: Oh, sure. And that’s why -but we don’t in any way impede that sort of
regulation
. These nondiscrimination regulations will apply to every
insurance company
just as
Congress
intended whether or not we buy
insurance
.
JUSTICE GINSBURG
: Well then, what about the determination that they can’t possibly work if people don’t have to buy
insurance
until they are — their health status is such that the
insurance company
just dealt with them on its — as it will? I won’t insure you because you’re — you’re already sick. MR.
CARVIN
: It depends what you mean by “work.” It’ll work just fine in ensuring that no sick people are discriminated against. What — what — but when you do that —
Congress
–
JUSTICE GINSBURG
: But the sick people, why would they insure early if they had to be protected if they get
insurance
late? MR.
CARVIN
: Yes. Well, that’s — this is the
government
‘s very illogical
argument
. They seem to be saying look, we couldn’t just
force
people to buy
insurance
to lower
health insurance
premiums. That would be no good. But
we can do it
because we’ve created the
problem
. We,
Congress
, have driven up the
health insurance
premiums, and since we’ve created that
problem
, this somehow gives us authority that we wouldn’t otherwise have. That can’t possibly be right. That would -JUSTICE
SOTOMAYOR
: Do you think that there’s — what percentage of the
American people
who took their son or daughter to an
emergency room
and that
child
was turned away because the parent didn’t have
insurance
— do you think there’s a large percentage of the American population who would stand for the death of that
child
-MR.
CARVIN
: One of the most -JUSTICE
SOTOMAYOR
: They had an allergic reaction and a simple shot would have saved the
child
? MR.
CARVIN
: One of the more pernicious, misleading impressions that the
government
has made is that we are somehow advocating that people be — could get thrown out of
emergency rooms
, or that this alternative that they’ve hypothesized is going to be enforced by throwing people out of
emergency rooms
. This alternative; i.e. conditioned
access
to
health care
on buying
health insurance
, is enforced in precisely the same way that the
Act
does. You either buy
health insurance
or you pay a
penalty
of $695. You don’t have doctors throwing people out on the street. And — and so the only -JUSTICE
SOTOMAYOR
: I’m sorry, did you say the
penalty
‘s okay but not the
mandate
? I’m sorry. Maybe I’ve misheard you. MR.
CARVIN
: No. No. I was — they create this strawman that says look, the only alternative to doing it the way we’ve done it, if we condition
access
to
health care
on buying
health insurance
, the only way you can enforce that is making sick people not get care. I’m saying no, no. There’s a perfectly legitimate way they could enforce their alternative; i.e. requiring you to buy
health insurance
when you
access

health care
, which is the same
penalty
structure that’s in the
Act.
There is no moral dilemma between having people have
insurance
and denying them
emergency service
.
Congress
has made a perfectly legitimate
value judgment
that they want to make sure that people get
emergency care
. Since the founding, whenever
Congress
has imposed that public responsibility on private actors, it has subsidized it from the
Federal Treasury
. It has not conscripted a subset of the citizenry and made them
subsidize
the actors who are being hurt, which is what they’re doing here. They’re making
young

healthy
people
subsidize

insurance
premiums for the cost that the nondiscrimination provisions have put on
insurance
premiums and
insurance companies
. JUSTICE
SOTOMAYOR
: So the -MR.
CARVIN
: — and that — that is the
fundamental

problem
here. JUSTICE
SOTOMAYOR
: So the — I — I want to
understand
the choices you’re saying
Congress
has.
Congress
can tax everybody and set up a public
health care system
. MR.
CARVIN
: Yes. JUSTICE
SOTOMAYOR
: That would be okay. MR.
CARVIN
: Yes.
Tax

power
is -JUSTICE
SOTOMAYOR
: Okay. MR.
CARVIN
: I would
accept
that. JUSTICE
SOTOMAYOR
:
Congress
can — you’re taking the same
position
as your colleague,
Congress
can’t say we’re going to set up a
public health system
, but you can get a
tax credit
if you have private
health insurance
because you won’t
access
the public
system
. Are you taking the same
position
as your colleague? MR.
CARVIN
: There may have been some confusion in prior colloquy. I fully
agree
with my brother
Clement
that a
direct tax
would be unconstitutional. I don’t think he
means
to
suggest
, nor do I, that a
tax credit
that incentivizes you to buy
insurance
creates
problems
.
Congress
incentivizes all
kinds
of activities. If they gave us a
tax credit
for buying
insurance
, then it would be our
choice
whether or not that makes
economic
sense, even though -JUSTICE
SOTOMAYOR
: So how is this different than this
Act
which says if a taxpayer fails to meet the
requirement
of having
minimum

coverage
, then they are responsible for paying the shared responsibility
payment
? MR.
CARVIN
: The
difference
is that the taxpayer is not given a
choice
. It’s the
difference
between banning cigarettes and saying I’m going to enforce that legal ban through a $5 a pack
penalty
, and saying look, if you want to sell cigarettes, fine. I’m going to charge you a tax of $5 a pack. And that’s -JUSTICE
SOTOMAYOR
: I think — I think that’s what’s happening, isn’t it? MR.
CARVIN
: No. Not -JUSTICE
SOTOMAYOR
: We’re paying — I
thought
that everybody was paying, what is it, $10 a pack now? I don’t even know the
price
. It’s pretty high. MR.
CARVIN
: Right. And everyone understands -JUSTICE
SOTOMAYOR
: I think everybody recognizes that it’s all taxation for the purposes of dissuading you to buy it. MR.
CARVIN
: That’s precisely my point. And everyone intuitively understands that that
system
is dramatically different than saying cigarettes tomorrow are illegal. It is different.
JUSTICE BREYER
: It is different. It is different. I
agree
with that. But you pointed out, and I
agree
with you on this, that the
government
set up these
emergency room
laws. The
government
set up
Medicaid
. The
government
set up
Medicare
. The
government
set up
CHIP
, and there are 40
million
people who don’t have the private
insurance
. In that world, the
government
has set up
commerce
. It’s all over the
United States
. And in that world, of
course
, the
decision
by the 40
million
not to buy the
insurance

affects
that
commerce
, and substantially so. So I
thought
the issue here is not whether it’s a violation of some
basic
right or something to make people buy things they don’t want, but simply whether those decisions of that
group
of 40
million
people substantially
affect
the
interstate commerce
that has been set up in part through these other programs. So that’s the part of your
argument
I’m not hearing. MR.
CARVIN
: Let me –
JUSTICE BREYER
: Please. MR.
CARVIN
: It is clear that the failure to buy
health insurance
doesn’t
affect
anyone. Defaulting on your payments to your
health care
provider does.
Congress
chose for whatever
reason
not to
regulate
the harmful
activity
of defaulting on your
health care
provider. They used the 20 percent or whoever among the
uninsured
as a leverage to
regulate
the 100 percent of the
uninsured
.
JUSTICE KENNEDY
: I
agree
— I
agree
that that’s what’s happening here. MR.
CARVIN
: Okay.
JUSTICE KENNEDY
: And the
government
tells us that’s because the
insurance

market
is unique. And in the next case, it’ll say the next
market
is unique. But I think it is true that if most questions in life are matters of degree, in the
insurance
and
health care
world, both markets — stipulate two markets — the
young person
who is
uninsured
is uniquely proximately very close to affecting the
rates
of
insurance
and the
costs
of providing
medical care
in a way that is not true in other industries. That’s my concern in the case. MR.
CARVIN
: And, Your — I may be misunderstanding you,
Justice Kennedy
. I hope I’m not. Sure. It would be perfectly fine if they allowed — you do
actuarial
risk for
young people
on the
basis
of their risk for
disease
, just like you judge
flood insurance
on the homeowner’s risk of flood. One of the issues here is not only that they’re compelling us to enter into the marketplace, they’re not — they’re prohibiting us from buying the only economically sensible
product
that we would want. Catastrophic
insurance
. Everyone agrees the only potential
problem
that a 30-year-old, as he goes from the
healthy
70 percent of the population to the unhealthy 5 percent. And yet
Congress
prohibits anyone over 30 from buying any kind of catastrophic
health insurance
. And the
reason
they do that is because they needed this massive
subsidy
.
Justice Alito
, it’s not our numbers.
CBO
said that injecting my clients into the
risk pool
lowers premiums by 15 to 20 percent. So,
Justice Kennedy
, even if we were going to create exceptions for people that are outside of
commerce
and inside of
commerce
, surely we’d make
Congress
do a closer nexus and say look, we’re really addressing this
problem
. We want these 30-year-olds to get catastrophic
health insurance
. And not only did they — they deprived them of that option.
And I
think that illustrates the dangers of giving
Congress
these
plenary powers
, because they can always leverage them. They can always come up with some
public policy
rationale that converts the
power
to
regulate

commerce
into the
power
to
promote

commerce
, which, as I was saying before, is the one that I think is plenary. JUSTICE
KAGAN
: Mr.
Carvin
, a large part of this
argument
has concerned the question of whether certain
kinds
of people are active participants in a
market
or not active participants in a
market
. In your test, which is a test that focuses on this
activity
/inactivity
distinction
, would
force
one to confront that
problem
all the time. Now, if you look over the history of the
Commerce Clause
, what you see is that there were sort of unhappy periods when the
Court
used tests like this -direct versus indirect,
commerce
versus manufacturing. I think most people would say that those things didn’t really work. And the question is, why should this test, inactive versus active, work any better? MR.
CARVIN
: The
problem
you identify is exactly the
problem
you would create if you bought the
government
‘s bogus limiting
principles
. You’d have to draw distinctions between the
insurance industry
and the
car industry
and all of that. We turn you to the
Commerce Clause
jurisprudence that bedeviled the
Court
before the
1930s
, where they were drawing all these
kinds
of distinctions among industries; whereas our test is really very simple. Are you buying the
product
or is
Congress
compelling you to buy the
product
? I can’t think of a brighter line. And again, if
Congress
has the
power
to
compel
you to buy this
product
, then obviously, they have got the
power
to provide you — to
compel
you to buy any
product
, because any
purchase
is going to benefit
commerce
, and this
Court
is never going to second-guess
Congress
‘s policy judgments on how important it is this
product
versus that
product
.
JUSTICE ALITO
: Do you think they are drawing a line between
commerce
and everything else that is not
commerce
is drawing an artificial line, drawing a line between
Congress
and manufacturing? MR.
CARVIN
: The words “inactivity” and ”
activity
” are not in the
Constitution
. The words ”
commerce
” and “noncommerce” are. And again, it’s a
distinction
that comes, Justice
Kagan
, directly from the text of the
Constitution
. The
Framers
consciously gave
Congress
the ability to
regulate

commerce
, because that’s not a particularly threatening
activity
that deprives you of
individual freedom
. If you were required, if you were authorized to require A to transfer property to B, you have, as the early
cases
put it, a monster in legislation which is against all
reason
in justice, because everyone intuitively understands that
regulating
people who voluntarily enter into contracts in setting changing conditions does not create the possibility of
Congress
compelling wealth transfers among the citizenry. And that is precisely why the
Framers
denied them the
power
to
compel

commerce
, and precisely why they didn’t give them
plenary power
. CHIEF
JUSTICE ROBERTS
: Thank you, Mr.
Carvin
.
General Verrilli
, you have four minutes remaining. REBUTTAL
ARGUMENT
OF
DONALD B.
VERRILLI, JR., ON BEHALF OF THE PETITIONERS
GENERAL
VERRILLI: Thank you, Mr. Chief Justice.
Congress
confronted a grave
problem
when it enacted the
Affordable Care Act
. The 40
million

Americans
who can’t get
health insurance
and suffered often very terrible consequences. Now, we
agree
, I think — everyone arguing this case agrees that
Congress
could remedy that
problem
by imposing the
insurance

requirement
at the point of sale. That won’t work. The
reason
it won’t work is because people will still show up at the hospital or at their physician’s office seeking care without
insurance
, causing the cost shifting
problem
. And Official
Subject
to
Final Review Mr
.
Clement
‘s suggestion that they can be signed up for a high
risk pool
at that point is utterly unrealistic. Think about how much it would cost to get the
insurance
when you are at the hospital or at the doctor. It would be — it would be unfathomably high, that will never work.
Congress
understood that. It chose a
means
that will work. The
means
that it saw work in the
States
and in the
State of Massachusetts
and that, and that it had every
reason
to think would work on a
national

basis
. That is the kind of
choice
of
means
that
McCulloch
says that the
Constitution
leaves to the democratically accountable branches of
government
. There is no temporal limitation in the
Commerce Clause
. Everyone
subject
to this
regulation
is in or will be in the
health care

market
. They are just being
regulated
in advance. That’s exactly the kind of thing that ought to be left to the judgment of
Congress
and the democratically accountable branches of
government
.
And I
think this is actually a paradigm example of the kind of
situation
that
Chief Justice Marshall
envisioned in
McCulloch

itself
, that the provisions of the
Constitution
needed to be interpreted in a manner that would allow them to be effective in addressing the great crises of human affairs that the
Framers
could not even envision. But if there is any
doubt
about that under the
Commerce Clause
, then I urge this
Court
to uphold the
minimum

coverage

provision
as an
exercise
of the taxing
power
. Under
New York v. United States
, this is precisely a parallel
situation
. If the
Court
thinks there is any
doubt
about the ability of
Congress
to
impose
the
requirement
in 5000A(a), it can be treated as simply the predicate to which the
tax incentive
of 5000A(b) seeks accomplishment. And the
Court
— as the
Court
said in
New York
, has a solemn obligation to
respect
the judgments of the democratically accountable branches of
government
, and because this
statute
can be construed in a manner that allows it to be upheld in that way, I respectfully submit that it is this
Court
‘s duty to do so. CHIEF
JUSTICE ROBERTS
: Thank you,
General
. Counsel, we’ll see you tomorrow.