Leader's Edge Legal Ease Return to Table of ContentsTell the Editor
Leader's Edge Challenging times

Constitutional challenges to healthcare reform will fail because Congress has both the right to regulate interstate commerce and to tax those who refuse to pay.

By  Scott Sinder

Now that the new healthcare bills have become law, the political is turning legal. Immediately after President Obama signed the first healthcare reform bill into law, more than 10 state attorneys general (and counting) filed lawsuits asserting that the new law is unconstitutional. I know many of you are pinning your hopes on the success of these challenges. My advice: Don’t.

I do not believe that any of the arguments advanced so far will bear fruit, at least not in any credible court of law.

The primary argument is that requiring businesses and individuals to purchase health insurance is not within Congress’s power to regulate interstate commerce. The premise is that Congress may legislate only in areas allocated to it under the Constitution; all other legislative powers are reserved to the states. All would agree that this is a correct statement.

The proponents of the unconstitutionality argument then assert that mandating insurance coverage is not tantamount to regulating “commerce among the states” because these activities do not “substantially affect interstate commerce.” In evaluating this claim, two things must be kept in mind.

First, since the mid-1930s, the Supreme Court has taken an expansive view of the activities that may be regulated by Congress because they “substantially affect interstate commerce.” Two examples: In 2005 the court upheld congressional restrictions on the growth and sale of medical marijuana for intrastate use (this was consistent with a 1942 case allowing Congress to regulate the personal use of homegrown wheat); and in 1964 the court upheld congressional rules imposed on hotels and inns that catered only to intrastate travelers.

Second, the sole exceptions to this now 60-year-old line of authority are two fairly recent cases. In 1995, in U.S. v. Lopez, the court struck down a congressional statute criminalizing the possession of a handgun in a school, finding that any relationship between such conduct and the regulation of interstate commerce was too incidental to constitute a permissible regulation of interstate commerce. For the same reasons, in 2000 the court also struck down congressional civil penalties imposed under the Violence Against Women Act.

It is fitting that Virginia filed the first constitutional challenge to the healthcare law because in an 1869 case known as Paul v. Virginia, the Supreme Court found that insurance was not “commerce” and, thus, Congress had no authority to regulate it. Unfortunately for the current Virginia attorney general, in 1944 the Supreme Court overruled Paul v. Virginia in the now infamous South-Eastern Underwriters case. “Perhaps no modern commercial enterprise directly affects so many persons in all walks of life as does the insurance business,” the court noted in South-Eastern Underwriters. “Insurance touches the home, the family and the occupation or the business of almost every person in the United States.”

At some level, that’s the point here, isn’t it? That healthcare coverage—and, more precisely, the financing of healthcare coverage—is such a big part of our economic system that it must be evaluated as a national concern. That point will be difficult to overcome, especially given that the government need not prove the point. It needs only to demonstrate that health insurance does bear on interstate commerce and Congress is therefore within its rights to regulate it.

Opponents will argue that the mandates are impermissible and unfair because they impose a purchase mandate on individuals and businesses. But that argument is factually incorrect. If an individual chooses not to buy insurance, he or she is subject to a tax; if a large business chooses not to provide health coverage to its employees, it is subject to a tax. Congress’s power to levy taxes is broad and relatively unfettered, and the Court has repeatedly upheld both the Social Security Act and the Medicare Act as being permissible exercises of that taxation power.

Those wanting to strike a blow against the new law might take comfort in more surgical challenges. For example, under the law, advisory boards that are not presidentially appointed will determine whether a “preventive service” must be offered under the minimum benefits plans. It is constitutionally impermissible for such boards to exercise such federal power. Although this part of the law has received scant public attention, I believe it will become a flashpoint, especially after the Supreme Court issues its opinion challenging the authority of the Public Company Accounting Oversight Board, which is expected in the next few months.

Sinder, a partner at Steptoe & Johnson, is CIAB General Counsel. The Council is 6-0 in constitutional cases that Sinder has brought on its behalf.


Send Email to Author

Email PagePrint PageArticle reprintsArticle tools sponsored by


Full Leader's Edge Archive. Previously published articles, listed by subject below.

arrow Industry Leaders    arrow Wholesalers    arrow Legal Issues   arrow Regulatory Issues  
arrow International Risk arrow Management    arrow Industry News    arrow Regulatory News
arrow Market News   arrow Cartoons