Tuesday, March 27, 2012

In today's Supreme Court argument about the required coverage provision in the healthcare act, Justice Kennedy asked, "Can you create commerce in order to regulate it?” and Chief Justice Roberts Jr. asked if the government could compel the purchase of cell phones.

As typical of the court, these questions get at the heart of the matter, here whether the mandate is an allowable authority of Congress under the interstate commerce clause: "[The Congress shall have Power] To regulate Commerce with foreign Nations, and among the several States, and with the Indian tribes"

The literal answer to Kennedy's question is no, but the question infers a flawed assumption. The Constitution does not grant Congress authority to create commerce, as is apparent in a plain reading of the clause. But Kennedy's question presumes there is no existing commerce being regulated by the "mandate". But there obviously is. (It's not really a mandate, no more than a speeding sign is a mandate. People can freely not be covered, just as they can freely speed- they just may have to pay a modest penalty for choosing so.) Every human being needs and receives healthcare. And this healthcare is conducted by professionals, who are engaged in commerce via the healthcare market/industry. The healthcare market is the largest market by far in the United States. At over $2 trillion a year, it is larger than the oil industry, or tech, or food or anything else. It is hard to argue there is then no existing commerce going on.

Every human who is born, who gets sick, who cuts themselves, who gets a shot, get their teeth or eyes checked, or dies receives healthcare. Kids cannot attend public school without receiving a basic set of healthcare. Even more fundamentally, humans cannot be born without getting a set of basic health services- health services that in the United States are virtually all monetized and thus commerce. Sure, rarely someone is born for "free" in a car, but also occasionally people are friends with their auto mechanics and get "free" tire rotations. This does not mean the automotive industry is suddenly not engaging in commerce because occasionally someone gets "free" service, just as it does not mean that hospitals and health care providers are not part of commerce. (In mainstream economics, there is no such thing as "free" but it is meant in a colloquial sense here).

Only people who never interact with the world, mortality, or bacteria never engage in healthcare. And of course these people are of the fictitious kind. The fact is that every human being engages in healthcare commerce. Whether Kennedy purposefully omitted this aspect from the supposition contained in his question is unknowable now. My guess is he is just playing with the issue, and the question cannot be taken at face value.

If it is to be taken at face value, and he truly believes the mandate is creating commerce where there is none, then the law is in serious jeopardy. I would recommend Justice Kennedy visit any emergency room across America and see that everyone is in fact engaged in healthcare commerce. They may not pay for it themselves, but society is. Commerce is not payer discriminant; it depends only on the exchange of goods or services. And when someone goes to the ER to get a service and public monies reimburse the provider of those services- that is commerce. The individual is engaged in commerce, just not of a responsible or sustainable variety.

Healthcare is unique in this regard, namely that the universal mandate applies to a service that is already universally required. The same is not true of virtually anything else. Not everyone has a cell phone, and no one "needs them". People did live in the 1950s, and there were no cell phones. But there was healthcare. Just like there was in the 1850s, and 1750s, and 1650s ad infinitum. So Roberts' question is also on its face a very naive one, in that cell phones and health care are fundamentally different types of services, one is a commodity purchased at an individuals' discretion. The other non-voluntary service needed for life to exist and continuing to exist. Surely, Roberts knows his comparison is apples to oranges; the question really is what was the motivation in asking the question? Was it to show this difference, or test the government's attorney? I think it was the latter, in which case the Solicitor General totally botched the answer, and as an aside I think he botched the whole thing today. He was stilted and uptight, probably from over-preparation- something the government bureaucracy specializes in.

Justice Kennedy will almost certainly cast the swing vote. So are Kennedy and Roberts smart like a fox with their questions, or smart like a book worm?

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