RULE 26.1 CERTIFICATION Pursuant to Federal Rule of Appellate Procedure 26.1, amici the American Hospital Association, Association of American Medical Colleges, Catholic Health Associati
CERTIFICATION
THE CLAIM THAT UNINSURED INDIVIDUALS ARE “INACTIVE” IS LEGALLY IRRELEVANT
The district court’s justification for the individual mandate rests on the premise that compelling many Americans to obtain health insurance is Congress regulating inactivity This line of reasoning—often associated with Virginia ex rel Cuccinelli v Sebelius—frames the mandate as an exercise of federal authority over private health-care choices.
The Commonwealth argues that the individual mandate penalizes passive inactivity and compels an involuntary act, but that argument fails for several reasons The principal flaw is its claim that "activity" is an independent requirement of Congress’s Commerce Clause regulation, which the Supreme Court has never adopted; instead, it has used the term as a descriptive aid to outline Congress’s breadth of power, not as a universal test See United States v Lopez, 514 U.S 549, 567 (1995) and Gonzales v Raich, 545 U.S 1, 17 (2005).
Congress may regulate a practice that threatens the national market; under the Commerce Clause, it is not necessary to treat “activity” as a separate prong of analysis, because the central question is whether the object of congressional regulation has a substantial impact on interstate commerce This approach, reflected in Maryland v Wirtz, 392 U.S 183 (1968), emphasizes evaluating regulatory reach by its effect on commerce rather than by whether Congress is targeting activity.
Indeed, to superimpose an activity requirement “is to plunge the law in endless difficulties,” Steward Machine Co v Davis, 301 U.S 548, 589-590
Whether a regulated individual is engaged in relevant activity depends on the level of generality one adopts, so almost any person subject to regulation can be described as “active” or “inactive” depending on the generality chosen; the law does not hinge on these malleable distinctions, and when such distinctions have been created in the past they have quickly proved unworkable and have been abandoned as failures See Wickard v Filburn, 317 U.S., as discussed infra at 19–22.
111, 120 (1942) (“[Q]uestions of the power of Congress are not to be decided by reference to any formula which would give controlling force to nomenclature such as ‘production’ and ‘indirect’ * * * ”)
Even if an "activity" requirement were necessary to justify a stand-alone regulation—and even if that requirement were absent here, which it is not, as we discuss in detail below—such a scenario would be irrelevant, because the individual mandate is not a free-standing regulation.
It is, instead, an important component of the ACA’s comprehensive regulatory reform of the interstate health care and health insurance markets, underscoring the act’s broad overhaul across state lines See Mead v Holder, Civ Action No 10-950 (GK), F Supp 2d , 2011 WL 611139.
Viewed as a core element of the ACA’s broader regulatory scheme, the individual mandate facilitates Congress’s regulation of an interstate market and falls within the Commerce Clause and the Necessary and Proper Clause The Supreme Court in Raich explained that Congress may regulate individuals—even those not directly participating in interstate commerce—as part of a lengthy, detailed statute that creates a comprehensive framework governing a larger market Hodel v Indiana likewise holds that it is enough that the challenged provisions are an integral part of the regulatory program and that the overall scheme satisfies this test The ACA is precisely such a framework: a lengthy, detailed statute creating a comprehensive regulatory framework for an interstate market, and because the individual mandate plays an integral role in enabling this regulation, it constitutes a valid exercise of Congress’s authority under the Commerce Clause and the Necessary and Proper Clause.
THE CLAIM THAT UNINSURED INDIVIDUALS ARE “INACTIVE” IS FACTUALLY INCORRECT
Amici contend that, even if the Commerce Clause is understood to regulate only “activity,” the case should be decided in favor of reversal because uninsured Americans clearly participate in economic activity by obtaining health care services They do so in large numbers and with high frequency, regularly consuming care, and the costs—borne by patients, providers, and taxpayers—are substantial Thus, an individual’s choice to purchase or forgo health insurance is essentially a decision about how to pay for existing and future health care costs—i.e., how services will be paid for when they are received That decision constitutes a quintessential example of economic activity.
The Commonwealth contends that the uninsured are passive and inactive only if one narrows the focus to the health insurance market and ignores the broader health care market Congress intended to regulate under the ACA, as reflected in 42 U.S.C § 18091(a)(2)(A) The Court should reject this invitation to redefine the lens through which Congress viewed the facts Congress was entitled to regard its task as regulating the entire health care market, not merely the insurance component.
Health insurance serves as a financing mechanism within the broader market Under rational basis review, the Court must respect the level of generality at which Congress chose to act, as reflected in United States v Nascimento, 491 F.3d.
25, 42 (1st Cir 2007) (citing Raich, 545 U.S at 22).
Because The Uninsured Are Virtually Certain To
All Americans—whether insured or uninsured—use the health care system and incur health care costs, making the financing of those costs a universal concern Because everyone must decide how to fund care, this choice becomes an exercise in economic activity, and the individual mandate regulates how people participate in the health care marketplace.
1 Simply stated, uninsured Americans are engaged in economic activity because they seek and obtain large amounts of health care, and someone must pay the tab In 2008 alone, the most recent year for which full statistics are available, the uninsured received $86 billion worth of health care from all providers
Health insurance and health care markets are deeply interdependent: providers’ uncompensated care costs are shifted to private insurers, so the overall decision to forgo insurance, when viewed collectively, leads to higher premiums for those who do have coverage This linkage was acknowledged by the District Court for the District of Columbia in Mead, noting that uninsured care burdens ultimately raise costs for insured individuals and help explain why premiums rise.
Rising health insurance premiums deter a portion of consumers from buying coverage, enlarging the uninsured population and increasing the burden on health care providers In short, regulation of payments in the health care market and changes in the health insurance market are interdependent—actions in one arena ripple into the other, shaping coverage, access, and costs across the system.
Covering The Uninsured 399, 402-403; see infra at 13-15 The uninsured also made more than 20 million visits to hospital emergency rooms U.S Dep’t of Health & Human Servs., New Data Say Uninsured Account for Nearly One-Fifth of Emergency Room Visits (July 15, 2009) 5 And without the individual mandate, those numbers likely would continue to rise The number of adults aged 18-64 who go without health insurance for some portion of the year has been increasing steadily over the past few years Centers for Disease Control and Prevention, Vital Signs: Access to Health Care (Nov 9, 2010) 6 Approximately 50 million people fell into this category over the course of the past twelve months Id
The vast majority of these millions of uninsured individuals—at least 94 percent—seek and receive health care services at some point J E O’Neill and D.M O’Neill, Who Are the Uninsured? An Analysis of America’s Uninsured Population, Their Characteristics and Their Health 21 & Table 9 (2009) (“Who Are The Uninsured”) 7 For example, 68 percent of the uninsured population had a routine check-up in the past five years, and 50 percent had one in the past two years Id at 20 Sixty-five percent of uninsured women had a mammogram within the last five years; 80 percent of uninsured women had a Pap smear in that time frame; and 86 percent of uninsured individuals had a blood pressure check Id at
5 Available at http://www.hhs.gov/news/press/2009pres/07/20090715b.html
6 Available at http://www.cdc.gov/vitalsigns/HealthcareAccess/index.html
20-22 & Table 9 The takeaway is simple enough: “[T]he uninsured receive significant amounts of healthcare[.]” Id at 24 The uninsured thus are not
Although labeled as 'inactive' in the health care market, these individuals are frequent users of health care services Their decision to decline health insurance is an economic choice directly linked to the services they routinely receive In essence, it revolves around how to pay for care—or how others can share those costs—when services are rendered.
2 Nor is there any doubt that the overwhelming majority of uninsured individuals do—and must—participate in this market, even absent the individual mandate Nearly all people, sooner or later, receive health care whether they would have chosen to or not When a person has a medical crisis, or is in a car accident, or falls and breaks a limb, he or she is transported to the hospital and provided care Most Americans thus cannot simply “exit” the health care market The choice they face, instead, is how to pay for the care they inevitably will receive 8 By forgoing insurance, individuals simply shift the burden of their health care payments to others See infra at 13-17 The health care market is unique in this respect The combination of actions it requires of consumers—accepting
7 Available at http://epionline.org/studies/oneill_06-2009.pdf
Although a small percentage of Americans may go without health care, that fact does not alter the constitutional calculus Congress may regulate the health-care market in the aggregate, and the courts will not excise individual components of that larger scheme (Raich, 545 U.S at 22; see also Wirtz, 392 U.S at 192–193) The provision of services and the decision about how to pay for them constitute economic activity, pure and simple, and are subject to congressional regulation under the Commerce Clause.
3 The Commonwealth’s “passivity” argument also obscures an important reality: Although the uninsured population seeks and receives significant amounts of preventive care, the uninsured still receive far less preventive care than the insured Who Are The Uninsured at 20-22 & Table 9 The decision of some uninsured individuals to put off regular preventive care actually increases their activity in the health care market in the long run That is because “[d]elaying or forgoing needed care can lead to serious health problems, making the uninsured more likely to be hospitalized for avoidable conditions.” Kaiser Comm’n on Medicaid & the Uninsured, The Uninsured & the Difference Health Care Makes 2 (Sept 2010) 9 As the Centers for Disease Control and
Prevention is essential: about 40 percent of Americans have one or more chronic diseases, and continuity of care is needed to prevent complications, avoid unnecessary long-term costs, and reduce premature mortality For example, skipping care for hypertension can lead to stroke and costly rehabilitation, and neglecting asthma management can result in worsened symptoms and greater health risks.
9 Available at http://www.kff.org/uninsured/upload/1420-12.pdf
Research shows that uninsured patients with heart attacks, strokes, or pneumonia have significantly longer hospital stays than insured patients with the same conditions, a gap partly due to uninsured individuals’ limited access to primary care and preventive services The same studies also indicate higher in-hospital mortality rates among the uninsured, illustrating the consequences of reduced preventive care It makes little sense to claim that people can opt out of the health care market and pledge to use no resources; short-term withdrawal from the market simply shifts more market activity into the medium and long term Congress had the authority to recognize this dynamic and to regulate how uninsured individuals’ payment choices affect overall market activity.
Care Provided To The Uninsured Costs Billions Per Year, And Everyone In The Nation Helps To Pay The Bill
Everyone In The Nation Helps To Pay The Bill
Uninsured Americans regularly obtain health care services and decide how to pay for them, effectively participating in the health care market despite lacking coverage These services are costly, and the uninsured pay a substantial portion out of pocket—about $30 billion in 2008 alone However, the burden is not borne by individuals alone; hospitals shoulder an even larger share of the cost, absorbing substantial uncompensated care and bad debt as a result of uninsured patients.
10 Available at http://www.healthleadersmedia.com/content/QUA-
Evidence shows in-hospital mortality rates are higher for the uninsured, a pattern that affects health systems, doctors, insurers, and even other patients Because the uninsured impose substantial costs on the healthcare market, their care becomes an economic activity with broad financial implications, and this dynamic is a reason Congress may regulate it.
1 To begin with the providers: Of the $86 billion in care the uninsured received in 2008, about $56 billion was uncompensated care provided by hospitals, doctors, clinics, and health-care systems 11 That $56 billion exceeds the gross domestic product of some 70 percent of the world’s nations Covering The
Uninsured 399, 403; see T Serafin, Just How Much is $60 Billion?, Forbes
Magazine (June 27, 2006) 12 All hospitals and health care providers, large and small, shoulder these uncompensated-care costs See National Ass’n of Pub Hosp
Safety-net hospitals, particularly the core safety-net institutions, bear the heaviest costs because they serve a substantial share of uninsured, Medicaid, and other vulnerable patients While the health-care safety net remains largely intact, the financial burden on these facilities highlights ongoing disparities in access to care and the need for policy and system-level support to sustain services for economically disadvantaged populations.
11 This is derived by subtracting $30 billion in uninsured self-payment from the
$86 billion total See supra at 9-10 Of the $56 billion in uncompensated care, some $35 billion is provided by hospitals, and the rest by doctors, clinics, and other providers Covering The Uninsured 402-403
12 Available at http://www.forbes.com/2006/06/27/billion-donation-gates- cz_ts_0627buffett.html
13 Available at http://literacyworks.org/hls/hls_conf_materials/
Endangered (2000) 14 For these hospitals, uncompensated care amounts to some
21 percent of total costs What is a Safety Net Hospital? 1
Hospitals incur substantial costs to fulfill their charitable mission, yet an uninsured individual's decision to seek care still triggers economic activity Under EMTALA, nearly every hospital with an emergency department is required to provide emergency services to anyone, regardless of ability to pay Even when care is not emergent, hospitals offer free or deeply discounted services Most hospitals’ policies specify that certain patients—those who do not qualify for Medicare or other coverage and whose household incomes fall within a defined percentage of the Federal Poverty Level—may receive reduced charges or free care.
FPL will not be charged at all for the care they receive, according to the Healthcare Fin Mgmt Ass’n in A Report from the Patient Friendly Billing Project (2005) The report also cites other patients, such as those with incomes up to some higher specified percentage of the
FPL,” will “qualify for discounts on their hospital bills.” Id
14 Available at http://www.iom.edu/~/media/Files/Report%20Files/2000/
Americas-Health-Care-Safety-Net/Insurance%20Safety%20Net%202000%20% 20report%20brief.pdf
15 Available at http://www.hfma.org/HFMA-Initiatives/Patient-Friendly-
Most uninsured and underinsured patients with incomes that exceed these levels still struggle to pay for medical services, especially when an extended hospital stay is required; despite their higher incomes, some may qualify for reduced-price care under hospital policies that assist the medically indigent—i.e., individuals who cannot afford essential medical care.
Some patients may have relatively high incomes, yet their hospital bills still exceed a certain share of their annual income or assets To assist others, hospitals offer financial counseling, flexible payment plans, interest-free loans, and help applying for grants or Medicaid While these services advance the hospital’s mission to serve the community, they require substantial time and resources, adding to the already heavy costs hospitals absorb to treat the uninsured.
2 In the final analysis, hospitals and other health care providers provide tens of billions of dollars worth of uncompensated care per year, including services to the uninsured and under-insured Fact Sheet 4 They do not shoulder the burden alone, however Supplemental Medicare and Medicaid payment programs also fund care for the uninsured—in other words, American taxpayers share the cost Covering The Uninsured 403-404 State and local governments—taxpayers again—likewise fund certain of these expenses Id at 405 Finally, insured patients (and their insurers) end up effectively paying some portion of the bills generated by their uninsured counterparts: As hospitals and other providers absorb
Uncompensated care reduces funds available for reinvestment and to cover ongoing expenses, which drives costs higher The enormous cost of caring for the uninsured is borne by the rest of the country and influences prices in both the health-care and health-insurance markets Saying the uninsured render themselves “inactive” by not buying insurance misses the reality: they still receive care, and others pay for it Overall, uninsured coverage gaps push up prices and reshape market dynamics across the health system.
Attempts To Analogize This Case To Lopez Fail
The Commonwealth argued that it is a mere inference that uninsured individuals use the health care system and shift billions in costs to third parties But the facts, set forth above, speak for themselves This case could not be further from Lopez, where the Supreme Court has deemed the inferential chain between the regulated event and its effect on commerce to be too attenuated.
In United States v Lopez, the chain of inferences needed to tie gun ownership in a school zone to a substantial effect on interstate commerce was long and indirect, and unquantifiable It would require assuming that firearm possession in a school zone increases violent crime; that such violence threatens the learning environment; and that these disturbances would, in turn, produce a substantial impact on economic activity across state lines Because these steps are speculative and attenuated, Congress’s attempt to regulate possession of a gun in a school zone exceeded the Commerce Clause authority.
Some argued that guns in school zones would handicap the educational process, yielding a less productive citizenry They warned that this diminished productivity would, in turn, dampen the national economy, a concern noted in Lopez, 514 U.S at 563.
Unlike the rest of the chain, whose steps were largely conjecture, the connection between a lack of prepaid health-care purchases and interstate commerce is immediate and demonstrable: the uninsured receive care, yet many cannot pay out of pocket, forcing third parties to absorb tens of billions of dollars annually and distort the market Congress recognized this, citing 42 U.S.C § 18091(a)(2)(F), and its findings were not merely plausible—they were plainly correct, as noted in Mead.
*16 (“[I]individuals are actively choosing to remain outside of a market for a particular commodity, and, as a result, Congress’s efforts to stabilize prices for that commodity are thwarted.”) No “inference” is required.
The Commonwealth’s Attempt To Characterize The
Although the Commonwealth insists that the uninsured are “inactive” in the health-insurance market and that Congress is “compelling” their participation—which it argues would be beyond the outer limits of the Commerce Clause and the associated Necessary and Proper Clause as measured by Supreme Court precedent (Cuccinelli, 728 F Supp 2d at 771-72, 779)—this approach goes too far: nearly any behavior that could be regulated could be labeled “inactivity.” The Heart of Atlanta Motel, Inc v United States, 379 U.S 241 (1964), for example, deemed motel owners “inactive” because they refused to serve black patrons.
Under Wickard v Filburn, farmers were described as "inactive" because they refused to participate in the public wheat market and were "forced into the market to buy what they could provide for themselves," showing that Congress could regulate even conduct that appears passive if it affects interstate commerce The principle extends to other situations where an individual is effectively inactive, yet Congress could regulate; for example, protesters who sit passively at the entrances to nuclear power plants, blocking essential workers, illustrate a scenario in which Congress would be entitled to forbid that.
“inactivity” if it found that it substantially affected the interstate energy market
The Commonwealth would likely argue that each example involves an active component, such as walking to a nuclear facility to initiate a protest The same logic applies here: uninsured individuals seek and obtain health care services within a vast national market, and this active participation in health care transactions has a substantial effect on interstate commerce.
Commonwealth’s argument thus merely underscores the fact that whether a regulated individual is sufficiently “active” is a matter of perspective As the
Stating that Heart of Atlanta involved motel owners simply because they once chose to operate a hotel does not answer the point; activity in the stream of commerce is a matter of perspective Uninsured individuals participate in the stream of commerce to the same extent as the motel owners in Heart of Atlanta: motel operators run motels, while uninsured people seek and receive billions of dollars’ worth of health care services every year.
In the Mead court decision, the idea that opting out of health insurance is merely semantic and amounts to no “acting” is rejected, because such a choice has serious economic and health consequences for individuals and affects everyone who makes that decision Mead, 2011 WL 611139, at *18.
That fact dooms their case because courts do not overrule Congress when it comes to characterizing the relevant facts The Supreme Court has made clear that its role is not to substitute its own factual assessment for Congress’s; rather, it asks only whether there exists a rational basis to conclude that the challenged activity, taken in the aggregate, affects interstate commerce See Raich, 545 U.S at 22 (“We need not determine whether respondents’ activities, taken in the aggregate, substantially affect interstate commerce in fact, but only whether a ‘rational basis’ exists for so concluding.”); Wirtz, 392 U.S at 190, reinforcing the same rational-basis framework for connecting activity to interstate commerce.
(“[W]here we find that the legislators * * * have a rational basis for finding a chosen regulatory scheme necessary to the protection of commerce, our investigation is at an end.’ ”) (quoting Katzenbach v McClung, 379 U.S 294, 303-
Legal doctrine holds that within broad limits, Congress—not the courts—decides how to define a class of activity, a point cited in Nascimento, 491 F.3d at 42 In this case, Congress found that the individual mandate regulates activity that is commercial and economic in nature, specifically economic and financial decisions about how and when health care is paid for (42 U.S.C § 18091(a)(2)(A)) Congress was entitled to
People are active participants in the health care market, and choosing to forgo health insurance is not simply a decision about consuming a particular good or service It is, rather, a choice about how health care services will be financed and who will pay for them.
21 understand the market in that way, just as it was entitled to conclude that motel owners were “active” when they refused service to black customers and that
Roscoe Filburn was active when he refused to buy wheat at retail, and the central question before the Court was whether Congress’s determination was rational It was, for all the reasons outlined above.
The District Court’s Slippery-Slope Hypotheticals Are
The District Court warned that if Congress can require participants in the health care market to buy insurance, it would effectively authorize “unbridled federal police powers,” and could extend to regulating individuals’ transportation, housing, or nutritional decisions This broad-control scenario is a trope favored by detractors of the Act In Florida ex rel Bondi v U.S Department of Health and Human Services, the court even hypothesized a future where Congress could require everyone above a certain income threshold to buy a General Motors automobile.
Not so A key distinction exists between the Affordable Care Act (ACA) and the hypothetical laws described above Under the ACA, the activity people are being forced to undertake—the payment itself—is a mere financing mechanism for a service they already consume: health care Congress did not compel people to obtain health care in new or different quantities, and the question here is not whether Congress could do so Instead, the ACA makes sure people pay for what they receive Put differently, Congress did not compel anyone to buy a General Motors vehicle; it simply ensures that no one can drive a GM vehicle off the lot and bill their neighbor (or absorb the cost themselves).
Slippery-slope hypotheticals fail for a second reason: they ignore that Congress cannot assert a substantial effect on interstate commerce through unlikely inferential chains This principle is reinforced by the Supreme Court in Lopez v United States (514 U.S 563), which cautions against regulatory conclusions drawn from tenuous or improbable connections.
Some argue that upholding the ACA could allow Congress to mandate a weekly intake of broccoli simply because broccoli is healthy.
Under the ACA, individuals are not actually compelled to buy health insurance; instead, those who opt out are subject to a penalty assessed through the federal tax system, per 26 U.S.C § 5000A(b)(1).
Analogies to the auto industry highlight the health care sector's unusual economics: in the auto industry, buyers typically pay upfront or commit to a payment or financing plan to obtain goods or services, while health care often does not require such upfront payment This key difference creates a distinctive market dynamic, underscoring the need for policy tools like the individual mandate to address the problems arising from this unique payment environment.
20 D Kam, U.S judge in Pensacola weighs Florida, 19 other states’ challenge of health care law, Palm Beach Post News, Friday, Dec 17, 2010 (“Palm Beach Post Article”)
Broccoli’s health benefits are argued to substantially affect interstate commerce, but this relies on inference-upon-inference logic that was disapproved in Lopez The reasoning goes: broccoli is healthy; people do not consume enough broccoli; increasing broccoli consumption will prevent disease; preventing disease in this way would reduce health-care costs This kind of chain of inference mirrors the faulty logic Lopez rejected, underscoring the need for a concrete link between interstate commerce and actual commercial activity rather than health outcomes.
Lopez, 514 U.S at 563) For this reason, too, the fact that Congress can regulate financing mechanisms in the nation’s largest economic sector hardly means it has
“federal police powers.” Cuccinelli, 728 F Supp 2d at 788
Finally, these alarmist hypotheticals are not only misguided but unrealistic, because they overlook the political process that constrains Congress’s actions For two centuries, the Supreme Court has recognized that while the Commerce Clause grants broad power, Congress is restrained by the electorate; in other words, there are effective restraints on the exercise of the Commerce power.
Policy must proceed from political rather than judicial processes, a standard articulated in Wickard v Filburn and reinforced by Gibbons v Ogden Imagining Congress mandating universal purchases—whether a certain car, a fixed weekly amount of broccoli, or prescribed sleep times—belongs to a parade of fantastical hypotheticals that undermines faith in representative democracy.
Hospitals will continue to care for the uninsured, as they have for generations, regardless of patients’ ability to pay, and for many hospitals this service sits at the core of their mission Yet the choice to forgo health insurance is not a passive one; it carries concrete consequences for individuals and the healthcare system, affecting access to care and how hospital resources are used.
Health care for uninsured Americans carries real costs The decisions they make about seeking care and how they pay for it drive economic activity with a substantial impact, imposing billions of dollars in annual costs on the national economy Congress has ample authority to regulate the national health care system and address these costs by changing how uninsured Americans finance the services they receive.
The District Court’s judgment should be reversed
President National Association of Public Hospitals and Health Systems
Vice President, General Counsel/ Compliance Officer
The Catholic Health Association of the United States
President and Chief Executive Officer National Association of Children’s Hospitals
CERTIFICATE OF COMPLIANCE WITH RULE 32(a)
Pursuant to Fed R App P 32(a)(7)(C), I hereby certify that this brief contains 5,540 words, excluding the portions of the brief exempted by Fed R
App P 32(a)(7)(B)(iii), and has been prepared in a proportionally spaced typeface using Microsoft Word 2003 in Times New Roman 14-point font