[JURIST] The US Supreme Court [official website] on Tuesday heard the second day of oral arguments in United States Department of Health and Human Services v. Florida [transcript; JURIST report], the challenge to the Patient Protection and Affordable Care Act (PPACA) [text; JURIST backgrounder]. Tuesday’s arguments focused specifically on the constitutionality of the “individual mandate” provision [text], which requires every person, with some exceptions for religious and other reasons, to purchase some form of health insurance by January 1, 2014, or be subject to a penalty equal to either a percent of that individual’s income or flat rate of $695. Arguments began with US Solicitor General Donald Verrilli, who argued that the mandate is a valid exercise of Congress’ Article I Commerce Clause [Cornell LII backgrounder] power in that the choice not to purchase health insurance has a substantial effect on interstate commerce. He argued that, unlike virtually all other markets where Congress may not be able to compel consumers to purchase products, the health care market is one that every person enters at some point, and there is no way for a person to know when he or she will enter. Verrilli argued that an undue burden is placed on the already willing participants of the health care market when an uninsured person is forced to enter and cannot pay. Emergency health care services, for example, must be provided by law, so when a person cannot pay the cost is pressed on taxpayers and willing market participants. Chief Justice Roberts pointed out that allowing the government to compel people to act, instead of preventing them from taking certain actions, is an unprecedented exercise of Congressional power. Verrilli, however, maintained that every person is part of the health care market, and so Congress has the power to require certain actions in order to regulate and promote that market. He also argued that, although the penalty itself has not been called a tax, it is within Congress’ taxing power [Cornell LII backgrounder] because it serves a revenue-raising purpose, as opposed to a penalty disguised as a tax like the one struck down by the court in Bailey v. Drexel Furniture Co. [opinion]. He also argued that the Court has previously allowed penalties that were considered fees, not taxes, as being within Congress’ taxing power in the License Tax Cases [opinion].

Washington attorney Paul Clement argued on behalf of Florida and 25 other states, followed by attorney Michael Carvin, representing the National Federation of Independent Businesses [official website], all of whom are challenging the individual mandate. Clement argued that Congress does not have the power to mandate that people participate in commerce, a practice he claims is essentially “creating commerce” in order to regulate. He responded to challenges that Congress has essentially created commerce before, for example by creating a national bank, by claiming that such action would not have been upheld if Congress had tried to force every citizen to put money in the bank. He also argued that this regulation is of the health insurance market, not the health care market, and everybody is not a part of the health insurance market, as insurance is not the only way to pay for health services. To bring people into this market, Clement argued, is not within Congress’ power to regulate. He also claimed that this market is no different than any other, as a person’s choice not to participate in other forms of commerce also results in higher prices for everyone in those markets and loss of jobs to people working in them—but Congress cannot mandate participation in every such market. Clement went on to differentiate health insurance from car insurance, which citizens of all states are required to purchase, for two reasons: first, people can opt out of the requirement by choosing not to have a car, and second, because state laws mandate car insurance, there is no conflict with the limited scope of the Commerce Clause. Finally, Clement argued that the individual mandate is not a tax, as Congress did not call it a tax and it is not structured like one. He also stated that, if it was a tax, it would be a direct tax and thus unconstitutional. Following Clement, Carvin reiterated that the individual mandate is outside of Congress’ Commerce Clause power, arguing that the government’s main focus is on the costs that result when emergencies and catastrophes happen to those who are uninsured, whereas the majority of the plans people will be forced to buy cover routine health issues, and people have the right to choose not to purchase and participate in such plans. Carvin also argued that the individual mandate is unprecedented, specifically because in all other markets Congress can only restrict and regulate a person once they have voluntarily entered, but cannot compel a person to enter in the first place. On Wednesday the court will hear final arguments regarding whether Congress overstepped its bounds in requiring states to adopt new coverage and eligibility standards in order to remain in the Medicaid program.