Roger Vinson rules health care reform unconstitutional

Asds a

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IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF FLORIDA PENSACOLA DIVISION STATE OF FLORIDA, by and through Attorney General Pam Bondi, et al.; Plaintiffs, v. UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, et al., Defendants. ____________________________________/ ORDER GRANTING SUMMARY JUDGMENT On March 23, 2010, President Obama signed health care reform legislation: “The Patient Protection and Affordable Care Act.” Pub. L. No. 111-148, 124 Stat. 119 (2010), as amended by the Health Care and Education Reconciliation Act of 2010, Pub. L. No. 111-152, 124 Stat. 1029 (2010) (the “Act”). This case, challenging the Constitutionality of the Act, was filed minutes after the President signed. It has been brought by the Attorneys General and/or Governors of twenty-six states (the “state plaintiffs”)1; two private citizens (the “individual plaintiffs”); and the National Federation of Independent Business (“NFIB”) (collectively, the “plaintiffs”). The defendants are the United States Department of Health and Human Services, the Department of Treasury, the Department of Labor, and their secretaries (collectively, the “defendants”). I emphasized once before, but it bears repeating again: this case is not about Case No.: 3:10-cv-91-RV/EMT

The states are Alabama, Alaska, Arizona, Colorado, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Louisiana, Maine, Michigan, Mississippi, Nebraska, Nevada, North Dakota, Ohio, Pennsylvania, South Carolina, South Dakota, Texas, Utah, Washington, Wisconsin, and Wyoming.

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whether the Act is wise or unwise legislation, or whether it will solve or exacerbate the myriad problems in our health care system. In fact, it is not really about our health care system at all. It is principally about our federalist system, and it raises very important issues regarding the Constitutional role of the federal government. James Madison, the chief architect of our federalist system, once famously observed: If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary. In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself. The Federalist No. 51, at 348 (N.Y. Heritage Press ed., 1945) (“The Federalist”).2 In establishing our government, the Founders endeavored to resolve Madison’s identified “great difficulty” by creating a system of dual sovereignty under which “[t]he powers delegated by the proposed Constitution to the federal government are few and defined. Those which are to remain in the State governments are numerous and indefinite.” The Federalist No. 45, at 311 (Madison); see also U.S. Const. art. I, § 1 (setting forth the specific legislative powers “herein granted” to Congress). When the Bill of Rights was later added to the Constitution in 1791, the Tenth Amendment reaffirmed that relationship: “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to The Federalist consists of 85 articles or essays written by James Madison, Alexander Hamilton, and John Jay, advocating for ratification of the Constitution. “The opinion of the Federalist has always been considered as of great authority. It is a complete commentary on our constitution; and is appealed to by all parties in the questions to which that instrument has given birth. Its intrinsic merit entitles it to this high rank.” Cohens v. Virginia, 19 U.S. (6 Wheat) 264, 418, 5 L. Ed. 257 (1821) (Marshall, C.J.). It will be cited to, and relied on, several times throughout the course of this opinion.
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the States respectively, or to the people.” The Framers believed that limiting federal power, and allowing the “residual” power to remain in the hands of the states (and of the people), would help “ensure protection of our fundamental liberties” and “reduce the risk of tyranny and abuse.” See Gregory v. Ashcroft, 501 U.S. 452, 458, 111 S. Ct. 2395, 115 L. Ed. 2d 410 (1991) (citation omitted). Very early, the great Chief Justice John Marshall noted “that those limits may not be mistaken, or forgotten, the constitution is written.” Marbury v. Madison, 5 U.S. (1 Cranch) 137, 176, 2 L. Ed. 60 (1803). Over two centuries later, this delicate balancing act continues. Rather than being the mere historic relic of a bygone era, the principle behind a central government with limited power has “never been more relevant than in this day, when accretion, if not actual accession, of power to the federal government seems not only unavoidable, but even expedient.” Brzonkala v. Virginia Polytechnic Institute, 169 F.3d 820, 826 (4th Cir. 1999) (en banc), aff’d sub nom, United States v. Morrison, 529 U.S. 598, 120 S. Ct. 1740, 146 L. Ed. 2d 658 (2000).3 To say that the federal government has limited and enumerated power does not get one far, however, for that statement is a long-recognized and well-settled

In United States v. Lopez, 514 U.S. 549, 115 S. Ct. 1624, 131 L. Ed. 2d 626 (1995), a watershed decision that will be discussed infra, the Supreme Court began its analysis by referring to these limits on federal power as “first principles.” In a manner of speaking, they may be said to be “last principles” as well, for the Lopez Court deemed them to be so important that it also ended its opinion with a full discussion of them. See id. at 567-68. Shortly thereafter, in United States v. Morrison, 529 U.S. 598, 120 S. Ct. 1740, 146 L. Ed. 2d 658 (2000), which will also be discussed infra, the Supreme Court referred to the division of authority and limits on federal power as the “central principle of our constitutional system.” See id. at 616 n.7. Clearly, if the modern Supreme Court regards the limits of federal power as first, central, and last principles, those principles are profoundly important --- even in this day and age --- and they must be treated accordingly in deciding this case.
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truism. McCulloch v. Maryland, 17 U.S. (4 Wheat) 316, 405, 4 L. Ed. 579 (1819) (“This government is acknowledged by all, to be one of enumerated powers. The principle, that it can exercise only the powers granted to it, . . . is now universally admitted.”) (Marshall, C.J.). The ongoing challenge is deciding whether a particular federal law falls within or outside those powers. It is frequently a difficult task and the subject of heated debate and strong disagreement. As Chief Justice Marshall aptly predicted nearly 200 years ago, while everyone may agree that the federal government is one of enumerated powers, “the question respecting the extent of the powers actually granted, is perpetually arising, and will probably continue to arise, so long as our system shall exist.” Id. This case presents such a question. BACKGROUND The background of this case --- including a discussion of the original claims, the defenses, and an overview of the relevant law --- is set out in my order dated October 14, 2010, which addressed the defendants’ motion to dismiss, and it is incorporated herein. I will only discuss the background necessary to resolving the case as it has been winnowed down to the two causes of action that remain. In Count I, all of the plaintiffs challenge the “individual mandate” set forth in Section 1501 of the Act, which, beginning in 2014 will require that everyone (with certain limited exceptions) purchase federally-approved health insurance, or pay a monetary penalty.4 The individual mandate allegedly violates the Commerce Clause,

I previously rejected the defendants’ argument that this penalty was really a tax, and that any challenge thereto was barred by the Anti-Injunction Act. My earlier ruling on the defendants’ tax argument is incorporated into this order and, significantly, has the effect of focusing the issue of the individual mandate on whether it is authorized by the Commerce Clause. To date, every court to consider this issue (even those that have ruled in favor of the federal government) have also rejected the tax and/or Anti-Injunction arguments. See Goudy-Bachman v. U.S. Dep’t of Health & Human Servs., 2011 WL 223010, at *9-*12 (M.D. Pa. Jan. 24, 2011); Virginia v. Sebelius, 728 F. Supp. 2d 768, 786-88 (E.D. Va. 2010); Liberty
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which is the provision of the Constitution Congress relied on in passing it. In Count IV, the state plaintiffs challenge the Act to the extent that it alters and amends the Medicaid program by expanding that program, inter alia, to: (i) include individuals under the age of 65 with incomes up to 133% of the federal poverty level, and (ii) render the states responsible for the actual provision of health services thereunder. This expansion of Medicaid allegedly violates the Spending Clause and principles of federalism protected under the Ninth and Tenth Amendments. The plaintiffs seek a declaratory judgment that the Act is unconstitutional and an injunction against its enforcement. These two claims are now pending on cross motions for summary judgment (docs. 80, 82), which is a pre-trial vehicle through which a party shall prevail if the evidence in the record “shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56. While the parties dispute numerous facts (primarily in the context of the Medicaid count, noted infra), they appear to agree that disposition of this case by summary judgment is appropriate --- as the dispute ultimately comes down to, and involves, pure issues of law. Both sides have filed strong and well researched memoranda in support of their motions for summary judgment (“Mem.”), responses in opposition (“Opp.”), and replies (“Reply”) in further support. I held a lengthy hearing and oral argument on the motions December 16, 2010 (“Tr.”). In addition to this extensive briefing by the parties, numerous organizations and individuals were granted leave to, and did, file amicus curiae briefs (sixteen total) in support of the arguments and claims at issue.

Univ., Inc. v. Geithner, --- F. Supp. 2d ---, 2010 WL 4860299, at *9-*11 (W.D. Va. Nov. 30, 2010); U.S. Citizens Assoc. v. Sebelius, --- F. Supp. 2d ---, 2010 WL 4947043, at *5 (N.D. Ohio Nov. 22, 2010); Thomas More Law Center v. Obama, 720 F. Supp. 2d 882, 890-91 (E.D. Mich. 2010).
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I have carefully reviewed and considered all the foregoing materials, and now set forth my rulings on the motions and cross-motions for summary judgment. I will take up the plaintiffs’ two claims in reverse order. DISCUSSION I. Medicaid Expansion (Count Four) For this claim, the state plaintiffs object to the fundamental and “massive” changes in the nature and scope of the Medicaid program that the Act will bring about. They contend that the Act violates the Spending Clause [U.S. Const. art. I, § 8, cl. 1] as it significantly expands and alters the Medicaid program to such an extent they cannot afford the newly-imposed costs and burdens. They insist that they have no choice but to remain in Medicaid as amended by the Act, which will eventually require them to “run their budgets off a cliff.” This is alleged to violate the Constitutional spending principles set forth in South Dakota v. Dole, 483 U.S. 203, 107 S. Ct. 2793, 97 L. Ed. 2d 171 (1987), and in other cases.5 Under Dole, there are four restrictions on Congress’ Constitutional spending power: (1) the spending must be for the general welfare; (2) the conditions must be stated clearly and unambiguously; (3) the conditions must bear a relationship to the purpose of the program; and 4) the conditions imposed may not require states “to engage in activities that would themselves be unconstitutional.” Supra, 483 U.S. at 207-10. In addition, a spending condition cannot be “coercive.” This conceptional requirement is also from Dole, where the Supreme Court speculated (in dicta at the end of that opinion) that “in some circumstances the financial inducement offered by Congress might be so coercive as to pass the point at which ‘pressure turns into

The state plaintiffs alleged in their complaint that the Medicaid provisions also violated the Ninth and Tenth Amendments, but those claims have not been advanced or briefed in their summary judgment motion (except in a single passing sentence, see Pl. Mem. at 25).
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compulsion.’” See id. at 211 (citation omitted). If that line is crossed, the Spending Clause is violated. Preliminarily, I note that in their complaint the state plaintiffs appear to have relied solely on a “coercion and commandeering” theory. Nowhere in that pleading do they allege or intimate that the Act also violates the four “general restrictions” in Dole, nor did they make the argument in opposition to the defendants’ previous motion to dismiss. Thus, as I stated in my earlier order after describing Dole’s four general restrictions: “The plaintiffs do not appear to dispute that the Act meets these restrictions. Rather, their claim is based principally on [the coercion theory].” Apparently expanding that argument, the state plaintiffs now argue (very briefly, in less than one full page) that the Act’s Medicaid provisions violate the four general restrictions. See Pl. Mem. at 44-45. This belated argument is unpersuasive. The Act plainly meets the first three of Dole’s spending restrictions, and it meets the fourth as long as there is no other required activity that would be independently unconstitutional. Thus, the only real issue with respect to Count IV, as framed in the pleadings, is whether the Medicaid provisions are impermissibly coercive and effectively commandeer the states. The gist of this claim is that because Medicaid is the single largest federal grant-in-aid program to the states, and because the states and the needy persons receiving that aid have come to depend upon it, the state plaintiffs are faced with an untenable Hobson’s Choice. They must either (1) accept the Act’s transformed Medicaid program with its new costs and obligations, which they cannot afford, or (2) exit the program altogether and lose the federal matching funds that are necessary and essential to provide health care coverage to their neediest citizens (along with other Medicaid-linked federal funds). Either way, they contend that their state Medicaid systems will eventually collapse, leaving millions of their neediest residents without health care. The state plaintiffs assert that they effectively have
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no choice other than to participate in the program. In their voluminous materials filed in support of their motion for summary judgment, the state plaintiffs have identified some serious financial and practical problems that they are facing under the Act, especially its costs. They present a bleak fiscal picture. At the same time, much of those facts have been disputed by the defendants in their equally voluminous filings; and also by some of the states appearing in the case as amici curiae, who have asserted that the Act will in the long run save money for the states. It is simply impossible to resolve this factual dispute now as both sides’ financial data are based on economic assumptions, estimates, and projections many years out. In short, there are numerous genuine disputed issues of material fact with respect to this claim that cannot be resolved on summary judgment.6 However, even looking beyond these presently impossibleto-resolve disputed issues of fact, there is simply no support for the state plaintiffs’ coercion argument in existing case law. In considering this issue at the motion to dismiss stage, I noted that state Perhaps anticipating this, the state plaintiffs maintained in response to the defendants’ filings that “the entire question of whether the States’ costs might to some extent be offset by collateral savings is legally irrelevant.” See Pl. Opp. at 29. Thus, “even if the States were projected to achieve collateral savings, those savings would in no way lessen the coercion and commandeering of which Plaintiff States complain, because they would still be required to do Congress’s bidding.” Id. at 41-42. However, it would appear from the operative complaint that the coercion claim has always been rooted in the underlying contention that the Act forces the states to expend resources that they cannot afford: “Plaintiff States cannot afford the unfunded costs of participating under the Act, but effectively have no choice other than to participate.” Second Amended Complaint at ¶ 84; see also id. at ¶ 86 (referring to the “fiscal impact” of the Medicaid expansion and explaining that it will compel states “to assume costs they cannot afford”); id. at ¶ 41 (Act will “expand eligibility for enrollment beyond the State’s ability to fund its participation”); id. at ¶ 56 (referring to the projected billions of dollars in additional costs “stemming from the Medicaid-related portions of the Act” which will “grow in succeeding years”); id. at ¶ 66 (referencing the “harmful effects of the Act on [the state] fiscs”).
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participation in the Medicaid program under the Act is --- as it always has been --voluntary. This is a fundamental binary element: it either is voluntary, or it is not. While the state plaintiffs insist that their participation is involuntary, and that they cannot exit the program, the claim is contrary to the judicial findings in numerous other Medicaid cases [see, e.g., Wilder v. Virginia Hosp. Assoc., 496 U.S. 498, 502, 110 S. Ct. 2510, 110 L. Ed. 2d 455 (1990) (observing that “Medicaid is a cooperative federal-state program [and] participation in the program is voluntary”); Florida Assoc. of Rehab. Facilities v. Florida Dep’t of Health & Rehab. Servs, 225 F.3d 1208, 1211 (11th Cir. 2000) (“No state is obligated to participate in the Medicaid program.”); Doe v. Chiles, 136 F.3d 709, 722 (11th Cir. 1998) (Medicaid is a program from which the state “always retains [the] option” to withdraw)], and belied by numerous published news reports that several states (including certain of the plaintiffs in this case) are presently considering doing exactly that. Furthermore, two plaintiff states have acknowledged in declarations filed in support of summary judgment that they can withdraw from the program. See Declaration of Michael J. Willden (Director of Department of Health and Human Services, Nevada) (“Nevada can still consider opting out of Medicaid a viable option.”); Declaration of Deborah K. Bowman (Secretary of Department of Social Services, South Dakota) (conceding that although it would be detrimental to its Medicaid recipients, South Dakota could “cease participation in the Medicaid Program”). When the freedom to “opt out” of the program is viewed in light of the fact that Congress has expressly reserved the right to alter or amend the Medicaid program [see 42 U.S.C. § 1304 (“The right to alter, amend, or repeal any provision of this chapter is hereby reserved to the Congress.”)], and has done so many times over the years, I observed in my earlier order that the plaintiffs’ argument was not strong. See Harris v. McRae, 448 U.S. 297, 301, 100 S. Ct. 2671, 65 L. Ed. 2d 784 (1980) (stating that “participation in the Medicaid program is entirely optional, [but] once a State elects to participate, it
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must comply with the requirements”). Indeed, a survey of the legal landscape revealed that there was “very little support for the plaintiffs’ coercion theory argument” as every single federal Court of Appeals called upon to consider the issue has rejected the coercion theory as a viable claim. See, e.g., Doe v. Nebraska, 345 F.3d 593, 599-600 (8th Cir. 2003); Kansas v. United States, 214 F.3d 1196, 1201-02 (10th Cir. 2000); California v. United States, 104 F.3d 1086, 1092 (9th Cir. 1997); Oklahoma v. Schweiker, 655 F.2d 401, 413-14 (D.C. Cir. 1981); State of New Hampshire Dep’t of Employment Sec. v. Marshall, 616 F.2d 240, 246 (1st Cir. 1980); but see West Virginia v. U.S. Dep’t of Health & Human Servs., 289 F.3d 281, 288-90 (4th Cir. 2002) (referring to a prior decision of that court, Commonwealth of Virginia Dep’t of Education v. Riley, 106 F.3d 559 (4th Cir. 1997), where six of the thirteen judges on an en banc panel stated in dicta that a coercion claim may be viable in that court, but going on to note that due to “strong doubts” about the viability of the coercion theory “most courts faced with the question have effectively abandoned any real effort to apply the coercion theory” after finding, in essence, that it “raises political questions that cannot be resolved by the courts”). In the absence of an Eleventh Circuit case on point, the state plaintiffs’ claim was “plausible” at the motion to dismiss stage. Thus, the plaintiffs were allowed to proceed and provide evidentiary support and further legal support for a judicially manageable standard or coherent theory for determining when, in the words of the Supreme Court, a federal spending condition “pass[es] the point at which ‘pressure turns into compulsion.’” See Dole, supra, 483 U.S. at 211. The evidentiary support is substantially in dispute, as already noted, and further legal support has not been forthcoming. It is now apparent that existing case law is inadequate to support the state plaintiffs’ coercion claim. As the Ninth Circuit has explained in its analysis of an earlier coercion claim made by the State of Nevada:
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We can hardly fault appellant [for not providing the court with any principled definition of the word “coercion”] because our own inquiry has left us with only a series of unanswered questions. Does the relevant inquiry turn on how high a percentage of the total programmatic funds is lost when federal aid is cut-off? Or does it turn, as Nevada claims in this case, on what percentage of the federal share is withheld? Or on what percentage of the state's total income would be required to replace those funds? Or on the extent to which alternative private, state, or federal sources of . . . funding are available? There are other interesting and more fundamental questions. For example, should the fact that Nevada, unlike most states, fails to impose a state income tax on its residents play a part in our analysis? Or, to put the question more basically, can a sovereign state which is always free to increase its tax revenues ever be coerced by the withholding of federal funds --- or is the state merely presented with hard political choices? Nevada v. Skinner, 884 F.2d 445, 448 (9th Cir. 1989). It is not simply a matter of these being generally difficult or complex questions for courts to resolve because, as I have said, “courts deal every day with the difficult complexities of applying Constitutional principles set forth and defined by the Supreme Court.” Rather, as Justice Cardozo cautioned in what appears to have been the first case to hint at the possibility of a coercion theory claim, “to hold that motive or temptation is equivalent to coercion is to plunge the law in endless difficulties.” See Steward Machine Co. v. Davis, 301 U.S. 548, 589-90, 57 S. Ct. 883, 81 L. Ed. 1279 (1937) (emphasis added); see also, e.g., Skinner, supra, 884 F.2d at 448 (“The difficulty if not the impropriety of making judicial judgments regarding a state's financial capabilities renders the coercion theory highly suspect as a method for resolving disputes between federal and state governments.”). In short, while the plaintiffs’ coercion theory claim was plausible enough to survive dismissal, upon full consideration of the relevant law and the Constitutional
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principles involved, and in light of the numerous disputed facts alluded to above, I must conclude that this claim cannot succeed and that the defendants are entitled to judgment as a matter of law. In so ruling, I join all courts to have considered this issue and reached the same result, even in factual situations that involved (as here) the potential withdrawal of a state’s entire Medicaid grant. See, e.g., Schweiker, supra, 655 F.2d at 414 (“The courts are not suited to evaluating whether the states are faced here with an offer they cannot refuse or merely a hard choice.”); California, supra, 104 F.3d at 1086 (rejecting coercion theory argument based on the claim that while the state joined Medicaid voluntarily, it had grown to depend on federal funds and “now has no choice but to remain in the program in order to prevent a collapse of its medical system”). I appreciate the difficult situation in which the states find themselves. It is a matter of historical fact that at the time the Constitution was drafted and ratified, the Founders did not expect that the federal government would be able to provide sizeable funding to the states and, consequently, be able to exert power over the states to the extent that it currently does. To the contrary, it was expected that the federal government would have limited sources of tax and tariff revenue, and might have to be supported by the states. This reversal of roles makes any statefederal partnership somewhat precarious given the federal government’s enormous economic advantage. Some have suggested that, in the interest of federalism, the Supreme Court should revisit and reconsider its Spending Clause cases. See Lynn A. Baker, The Spending Power and the Federalist Revival, 4 Chap. L. Rev. 195-96 (2001) (maintaining the “greatest threat to state autonomy is, and has long been, Congress’s spending power” and “the states will be at the mercy of Congress so long as there are no meaningful limits on its spending power”). However, unless and until that happens, the states have little recourse to remaining the very junior partner in this partnership.
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Accordingly, summary judgment must be granted in favor of the defendants on Count IV. II. Individual Mandate (Count One) For this claim, the plaintiffs contend that the individual mandate exceeds Congress’ power under the Commerce Clause. To date, three district courts have ruled on this issue on the merits. Two have held that the individual mandate is a proper exercise of the commerce power [Liberty Univ., Inc. v. Geithner, --- F. Supp. 2d ---, 2010 WL 4860299 (W.D. Va. Nov. 30, 2010); Thomas More Law Center v. Obama, 720 F. Supp. 2d 882 (E.D. Mich. 2010)], while the other court held that it violates the Commerce Clause. Virginia v. Sebelius, 728 F. Supp. 2d 768 (E.D. Va. 2010). At issue here, as in the other cases decided so far, is the assertion that the Commerce Clause can only reach individuals and entities engaged in an “activity”; and because the plaintiffs maintain that an individual’s failure to purchase health insurance is, almost by definition, “inactivity,” the individual mandate goes beyond the Commere Clause and is unconstitutional. The defendants contend that activity is not required before Congress can exercise its Commerce Clause power, but that, even if it is required, not having insurance constitutes activity. The defendants also claim that the individual mandate is sustainable for the “second reason” that it falls within the Necessary and Proper Clause.7

The Necessary and Proper Clause is not really a separate inquiry, but rather is part and parcel of the Commerce Clause analysis as it augments that enumerated power by authorizing Congress “To make all Laws which shall be necessary and proper” to regulate interstate commerce. See, e.g., Gonzales v. Raich, 545 U.S. 1, 22, 125 S. Ct. 2195, 162 L. Ed. 2d 1 (2005); see also id. at 34-35, 39 (Scalia, J., concurring in judgment); accord Garcia v. Vanguard Car Rental USA, Inc., 540 F.3d 1242, 1249 (11th Cir. 2008) (the Commerce Clause power is “the combination of the Commerce Clause per se and the Necessary and Proper Clause”). Nevertheless, I will consider the two arguments separately for ease of analysis, and because that
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A. Standing to Challenge the Individual Mandate Before addressing the individual mandate, I must first take up the issue of the plaintiffs’ standing to pursue this claim. I previously held on the motion to dismiss that the individual plaintiffs and NFIB had standing, but the defendants have re-raised the issue on summary judgment.8 One of the individual plaintiffs, Mary Brown, has filed a declaration in which she avers, among other things: (i) that she is a small business owner and member of NFIB; (ii) that she does not currently have health insurance and has not had health insurance for the past four years; (iii) that she regularly uses her personal funds to meet her business expenses; (iv) that she is not eligible for Medicaid or Medicare and will not be eligible in 2014; (v) that she is subject to the individual mandate and objects to being required to comply as she does not believe the cost of health insurance is a wise or acceptable use of her resources; (vi) that both she and her business will be harmed if she is required to buy health insurance that she neither wants nor needs because it will force her to divert financial resources from her other priorities, including running her business, and doing so will “threaten my ability to maintain my own, independent business”; (vii) that she would be forced to reorder her personal and business affairs because, “[w]ell in advance of 2014, I must now investigate whether and how to both obtain and maintain the required insurance”; and lastly, (viii) that she “must also now investigate the impact” that compliance with the individual mandate will have on her priorities and whether she

is how the defendants have framed and presented their arguments. See Def. Mem. at 23 (contending that the individual mandate is an essential part of the regulatory health care reform effort, and is thus “also a valid exercise of Congress’s authority if the provision is analyzed under the Necessary and Proper Clause”). It was not necessary to address standing for the Medicaid challenge as the defendants did not dispute that the states could pursue that claim.
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can maintain her business, or whether, instead, she will have to lay off employees, close her business, and seek employment that provides qualifying health insurance as a benefit. The other individual plaintiff, Kaj Ahlburg, has filed a declaration in which he avers, inter alia: (i) that he is retired and holds no present employment; (ii) that he has not had health care insurance for the past six years; (iii) that he has no desire or intention to buy health insurance as he is currently, and expects to remain, able to pay for his and his family’s own health care needs; (iv) that he is not eligible for Medicaid or Medicare and will not be eligible in 2014; (v) that he is subject to the individual mandate and he objects to being forced to comply with it as it does not represent “a sensible or acceptable use of my financial resources” and will force him “to divert funds from other priorities which I know to be more important for myself and my family”; and (vi) that he “must now investigate” how and whether to rearrange his finances “to ensure the availability of sufficient funds” to pay for the required insurance premiums. These declarations are adequate to support standing for the reasons set forth and discussed at length in my prior opinion, which need not be repeated here in any great detail. To establish standing to challenge a statute, a plaintiff needs to show “a realistic danger of sustaining a direct injury as a result of the statute’s operation or enforcement” [Babbitt v. United Farm Workers Nat’l Union, 442 U.S. 289, 298, 99 S. Ct. 2301, 60 L. Ed. 2d 895 (1979)]; that is “pegged to a sufficiently fixed period of time” [ACLU of Florida, Inc. v. Miami-Dade County School Bd., 557 F.3d 1177, 1194 (11th Cir. 2009)]; and which is not “merely hypothetical or conjectural” [Florida State Conference of the NAACP v. Browning, 522 F.3d 1153, 1161 (11th Cir. 2008)]. The individual plaintiffs, Ms. Brown in particular, have established that because of the financial expense they will definitively incur under the Act in 2014, they are needing to take investigatory steps and make financial arrangements now
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to ensure compliance then. That is enough to show standing, as the clear majority of district courts to consider legal challenges to the individual mandate have held. See Goudy-Bachman v. U.S. Dep’t of Health & Human Servs., 2011 WL 223010, at *4-*7 (M.D. Pa. Jan. 24, 2011); Liberty Univ., Inc., supra, 2010 WL 4860299, at *5-*7; U.S. Citizens Assoc., supra, 2010 WL 4947043, at *3; Thomas More Law Center, supra, 720 F. Supp. 2d 882, 887-89; but see Baldwin v. Sebelius, 2010 WL 3418436, at *3 (S.D. Cal. Aug. 27, 2010) (holding that plaintiff in that case lacked standing to challenge individual mandate on the grounds that by 2014 he may have secured insurance on his own). As the District Court for the Eastern District of Michigan properly noted in Thomas More Law Center (a case on which the defendants heavily rely because it ultimately upheld the individual mandate): “[T]he government is requiring plaintiffs to undertake an expenditure, for which the government must anticipate that significant financial planning will be required. That financial planning must take place well in advance of the actual purchase of insurance in 2014 . . . There is nothing improbable about the contention that the Individual Mandate is causing plaintiffs to feel economic pressure today.” Thomas More Law Center, supra, 720 F. Supp. 2d at 889.9 Because the individual plaintiffs have demonstrated standing, including NFIB member Mary Brown, that means (as also discussed in my earlier order) that NFIB has associational standing as well. This leaves the question of the state plaintiffs’ standing to contest the individual mandate --- an issue which was not necessary to reach on the motion to dismiss, but which the plaintiffs request that I address now. The state plaintiffs have raised several different grounds for standing. One of those grounds is that some of the states have passed legislation seeking to protect

I note that Thomas More Law Center is on appeal to the Sixth Circuit, and in their recently-filed appellate brief the Department of Justice has expressly declined to challenge the district court’s conclusion that the plaintiffs had standing.
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their citizens from forced compliance with the individual mandate. For example, on March 17, 2010, before the Act passed into law, plaintiff Idaho enacted the Idaho Health Freedom Act, which provides in pertinent part: (1) The power to require or regulate a person's choice in the mode of securing health care services, or to impose a penalty related thereto, is not found in the Constitution of the United States of America, and is therefore a power reserved to the people pursuant to the Ninth Amendment, and to the several states pursuant to the Tenth Amendment. The state of Idaho hereby exercises its sovereign power to declare the public policy of the state of Idaho regarding the right of all persons residing in the state of Idaho in choosing the mode of securing health care services free from the imposition of penalties, or the threat thereof, by the federal government of the United States of America relating thereto. (2) It is hereby declared that . . . every person within the state of Idaho is and shall be free to choose or decline to choose any mode of securing health care services without penalty or threat of penalty by the federal government of the United States of America. I.C. § 39-9003 (2010). Similarly, on March 22, 2010, also before the Act became law, Utah passed legislation declaring that the then-pending federal government proposals for health care reform “infringe on state powers” and “infringe on the rights of citizens of this state to provide for their own health care” by “requiring a person to enroll in a third party payment system” and “imposing fines on a person who chooses to pay directly for health care rather than use a third party payer.” See generally U.C.A. 1953 § 63M-1-2505.5. Judge Henry Hudson considered similar legislation in one of the two Virginia cases. After engaging in a lengthy analysis and full discussion of the applicable law [see generally Virginia v. Sebelius, 702 F. Supp. 2d 598, 602-07 (E.D. Va. 2010)],
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he concluded that despite the statute’s declaratory nature, the Commonwealth had adequate standing to bring the suit insofar as “[t]he mere existence of the lawfullyenacted statue is sufficient to trigger the duty of the Attorney General of Virginia to defend the law and the associated sovereign power to enact it.” See id. at 605-06. I agree with Judge Hudson’s thoughtful analysis of the issue and adopt it here. The States of Idaho and Utah, through plaintiff Attorneys General Lawrence G. Wasden and Mark L. Shurtleff, have standing to prosecute this case based on statutes duly passed by their legislatures, and signed into law by their Governors.10 In sum, the two individual plaintiffs (Brown and Ahlburg), the association (NFIB), and at least two of the states (Idaho and Utah) have standing to challenge the individual mandate. This eliminates the need to discuss the standing issue with respect to the other state plaintiffs, or the other asserted bases for standing. See Watt v. Energy Action Educ. Found., 454 U.S. 151, 160, 102 S. Ct. 205, 70 L. Ed. 2d 309 (1981) (“Because we find California has standing, we do not consider the standing of the other plaintiffs.”); Village of Arlington Heights v. Metropolitan Housing Dev. Corp., 429 U.S. 252, 264 n.9, 97 S. Ct. 555, 50 L. Ed. 2d 450 (1977) (“Because of the presence of this plaintiff, we need not consider whether the other individual and corporate plaintiffs have standing to maintain this suit.”); see also Mountain States Legal Foundation v. Glickman, 92 F.3d 1228, 1232 (D.C. Cir. 1996) (if standing is shown for at least one plaintiff with respect to each claim, “we need not consider the standing of the other plaintiffs to raise that claim”). Having reaffirmed that the plaintiffs have adequate standing to challenge the individual mandate, I will consider whether that provision is an appropriate exercise of power under the Commerce Clause, and, if not, whether it is sustainable under

I note that several other plaintiff states passed similar laws after the Act became law and during the pendency of this litigation. Other states have similar laws still pending in their state legislatures.
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the Necessary and Proper Clause. The Constitutionality of the individual mandate is the crux of this entire case. B. Analysis (1) The Commerce Clause The current state of Commerce Clause law has been summarized and defined by the Supreme Court on several occasions: [W]e have identified three broad categories of activity that Congress may regulate under its commerce power. First, Congress may regulate the use of the channels of interstate commerce. Second, Congress is empowered to regulate and protect the instrumentalities of interstate commerce, or persons or things in interstate commerce, even though the threat may come only from intrastate activities. Finally, Congress’ commerce authority includes the power to regulate those activities having a substantial relation to interstate commerce, i.e., those activities that substantially affect interstate commerce. United States v. Lopez, 514 U.S. 549, 558-59, 115 S. Ct. 1624, 131 L. Ed. 2d 626 (1995) (citations omitted); accord United States v. Morrison, 529 U.S. 598, 608-09, 120 S. Ct. 1740, 146 L. Ed. 2d 658 (2000); see also Hodel v. Virginia Surface Min. & Reclamation Assoc., Inc., 452 U.S. 264, 276-77, 101 S. Ct. 2352, 69 L. Ed. 2d 1 (1981); Perez v. United States, 402 U.S. 146, 150, 91 S. Ct. 1357, 28 L. Ed. 2d 686 (1971). It is thus well settled that Congress has the authority under the Commerce Clause to regulate three --- and only three --- “categories of activity.” Lopez, supra, 514 U.S. at 558; see also, e.g., Garcia v. Vanguard Car Rental USA, Inc., 540 F.3d 1242, 1249-51 (11th Cir. 2008) (discussing in detail the “three categories of activities” that Congress can regulate); United States v. Maxwell, 446 F.3d 1210, 1212 (11th Cir. 2006) (noting that, “to date,“ Congress can regulate only “three categories of activities”). The third category is the one at issue in this case.

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As will be seen, the “substantially affects” category is the most frequently disputed and “most hotly contested facet of the commerce power.” Garcia, supra, 540 F.3d at 1250. This is because, while under the first two categories Congress may regulate and protect actual interstate commerce, the third allows Congress to regulate intrastate noncommercial activity, based on its effects. Consideration of effects necessarily involves matters of degree [and] thus poses not two hazards, like Scylla and Charybdis, but three. If we entertain too expansive an understanding of effects, the Constitution’s enumeration of powers becomes meaningless and federal power becomes effectively limitless. If we entertain too narrow an understanding, Congress is stripped of its enumerated power, reinforced by the Necessary and Proper Clause, to protect and control commerce among the several states. If we employ too nebulous a standard, we exacerbate the risk that judges will substitute their own subjective or political calculus for that of the elected representatives of the people, or will appear to be doing so. United States v. Patton, 451 F.3d 615, 622-23 (10th Cir. 2006). Before attempting to navigate among these three “hazards,” a full review of the historical roots of the commerce power, and a discussion of how we got to where we are today, may be instructive. (a) The Commerce Clause in its Historical Context Chief Justice Marshall wrote in 1824, in the first ever Commerce Clause case to reach the Supreme Court: As men, whose intentions require no concealment, generally employ the words which most directly and aptly express the ideas they intend to convey, the enlightened patriots who framed our constitution, and the people who adopted it, must be understood to have employed words in their natural sense, and to have intended what they have said. Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1, 188, 6 L. Ed. 23 (1824). Justice Marshall
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continued his opinion by noting that if, “from the imperfection of human language,” there are doubts as to the extent of any power authorized under the Constitution, the underlying object or purpose for which that power was granted “should have great influence in the construction.” Id. at 188-89. In other words, in determining the full extent of any granted power, it may be helpful to not only focus on what the Constitution says (i.e., the actual language used), but also why it says what it says (i.e., the problem or issue it was designed to address). Both will be discussed in turn. The Commerce Clause is a mere sixteen words long, and it provides that Congress shall have the power: To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes. U.S. Const. art I, § 8, cl. 3. For purposes of this case, only seven words are relevant: “To regulate Commerce . . . among the several States.” There is considerable historical evidence that in the early years of the Union, the word “commerce” was understood to encompass trade, and the intercourse, traffic, or exchange of goods; in short, “the activities of buying and selling that come after production and before the goods come to rest.” Robert H. Bork & Daniel E. Troy, Locating the Boundaries: The Scope of Congress’s Power to Regulate Commerce, 25 Harv. J. L. & Pub. Pol’y 849, 861-62 (2002) (“Bork & Troy”) (citing, inter alia, dictionaries from that time which defined commerce as “exchange of one thing for another”). In a frequently cited law review article, one Constitutional scholar has painstakingly tallied each appearance of the word “commerce” in Madison’s notes on the Constitutional Convention and in The Federalist, and discovered that in none of the ninety-seven appearances of that term is it ever used to refer unambiguously to activity beyond trade or exchange. See Randy E. Barnett, The Original Meaning of the Commerce Clause, 68 U. Chi. L. Rev. 101, 114-16 (2001) (“Barnett”); see

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also id. at 116 (further examining each and every use of the word that appeared in the state ratification convention reports and finding “the term was uniformly used to refer to trade or exchange”). Even a Constitutional scholar who has argued for an expansive interpretation of the Commerce Clause (and, in fact, has been cited to, and relied on, by the defendants in this case) has acknowledged that when the Constitution was drafted and ratified, commerce “was the practical equivalent of the word ‘trade.’” See Robert L. Stern, That Commerce Which Concerns More States than One, 47 Harv. L. Rev. 1335, 1346 (1934) (“Stern”). The Supreme Court’s first description of commerce (and still the most widely accepted) is from Gibbons v. Ogden, supra, which involved a New York law that sought to limit the navigable waters within the jurisdiction of that state. In holding that “commerce” comprehended navigation, and thus it fell within the reach of the Commerce Clause, Chief Justice Marshall explained that “Commerce, undoubtedly, is traffic, but it is something more: it is intercourse. It describes the commercial intercourse between nations, and parts of nations, in all its branches, and is regulated by prescribing rules for carrying on that intercourse.” 22 U.S. at 72. This definition is consistent with accepted dictionary definitions of the Founders’ time. See 1 Samuel Johnson, A Dictionary of the English Language (4th ed. 1773) (commerce defined as “Intercourse; exchange of one thing for another; interchange of any thing; trade; traffick”). And it remained a good definition of the Supreme Court’s Commerce Clause interpretation throughout the Nineteenth Century. See, e.g., Kidd v. Pearson, 128 U.S. 1, 20-21, 9 S. Ct. 6, 32 L. Ed. 346 (1888) (“The legal definition of the term [commerce] . . . consists in intercourse and traffic, including in these terms navigation and the transportation and transit of persons and property, as well as the purchase, sale, and exchange of commodities”). As Alexander Hamilton intimated in The Federalist, however, it did not at that time encompass manufacturing or agriculture. See The Federalist No. 34, at 212-13
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(noting that the “encouragement of agriculture and manufactures” was to remain an object of state expenditure). This interpretation of commerce as being primarily concerned with the commercial intercourse associated with the trade or exchange of goods and commodities is consistent with the original purpose of the Commerce Clause (discussed immediately below), which is entitled to “great influence in [its] construction.” See Gibbons, supra, 22 U.S. at 188-89.11 There is no doubt historically that the primary purpose behind the Commerce Clause was to give Congress power to regulate commerce so that it could eliminate the trade restrictions and barriers by and between the states that had existed under the Articles of Confederation. Such obstructions to commerce were destructive to the Union and believed to be precursors to war. The Supreme Court has explained this rationale: When victory relieved the Colonies from the pressure for solidarity that war had exerted, a drift toward anarchy As an historical aside, I note that pursuant to this original understanding and interpretation of “commerce,” insurance contracts did not qualify because “[i]ssuing a policy of insurance is not a transaction of commerce.” Paul v. Virginia, 75 U.S. (8 Wall.) 168, 183, 19 L. Ed. 357 (1868) (further explaining that insurance contracts “are not articles of commerce in any proper meaning of the word” as they are not objects “of trade and barter,” nor are they “commodities to be shipped or forwarded from one State to another, and then put up for sale”). That changed in 1944, when the Supreme Court held that Congress could regulate the insurance business under the Commerce Clause. United States v. South-Eastern Underwriters Assoc., 322 U.S. 533, 64 S. Ct. 1162, 88 L. Ed. 1440 (1944). “Concerned that [this] decision might undermine state efforts to regulate insurance, Congress in 1945 enacted the McCarran-Ferguson Act. Section 1 of the Act provides that ‘continued regulation and taxation by the several States of the business of insurance is in the public interest,’ and that ‘silence on the part of the Congress shall not be construed to impose any barrier to the regulation or taxation of such business by the several States.’” Humana Inc. v. Forsyth, 525 U.S. 299, 306, 119 S. Ct. 710, 142 L. Ed.2d 753 (1999) (quoting 15 U.S.C. § 1011). Thus, ever since passage of the McCarran-Ferguson Act, the insurance business has continued to be regulated almost exclusively by the states.
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and commercial warfare between states began . . . [E]ach state would legislate according to its estimate of its own interests, the importance of its own products, and the local advantages or disadvantages of its position in a political or commercial view. This came to threaten at once the peace and safety of the Union. The sole purpose for which Virginia initiated the movement which ultimately produced the Constitution was to take into consideration the trade of the United States; to examine the relative situations and trade of the said states; to consider how far a uniform system in their commercial regulation may be necessary to their common interest and their permanent harmony and for that purpose the General Assembly of Virginia in January of 1786 named commissioners and proposed their meeting with those from other states. The desire of the Forefathers to federalize regulation of foreign and interstate commerce stands in sharp contrast to their jealous preservation of power over their internal affairs. No other federal power was so universally assumed to be necessary, no other state power was so readily relin[q]uished. There was no desire to authorize federal interference with social conditions or legal institutions of the states. Even the Bill of Rights amendments were framed only as a limitation upon the powers of Congress. The states were quite content with their several and diverse controls over most matters but, as Madison has indicated, “want of a general power over Commerce led to an exercise of this power separately, by the States, which not only proved abortive, but engendered rival, conflicting and angry regulations.” H.P. Hood & Sons, Inc. v. Du Mond, 336 U.S. 525, 533-34, 69 S. Ct. 657, 93 L. Ed. 865 (1949) (citations and quotations omitted). The foregoing is a frequently repeated history lesson from the Supreme Court. In his concurring opinion in the landmark 1824 case of Gibbons v. Ogden, supra, for example, Justice Johnson provided a similar historical summary:

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For a century the States [as British colonies] had submitted, with murmurs, to the commercial restrictions imposed by the parent State; and now, finding themselves in the unlimited possession of those powers over their own commerce, which they had so long been deprived of, and so earnestly coveted, that selfish principle which, well controlled, is so salutary, and which, unrestricted, is so unjust and tyrannical, guided by inexperience and jealousy, began to show itself in iniquitous laws and impolitic measures, from which grew up a conflict of commercial regulations, destructive to the harmony of the States, and fatal to their commercial interests abroad. This was the immediate cause, that led to the forming of a convention. Gibbons, supra, 22 U.S. at 224. In the Supreme Court’s 1888 decision in Kidd v. Pearson, Justice Lamar noted that “it is a matter of public history that the object of vesting in congress the power to regulate commerce . . . among the several states was to insure uniformity for regulation against conflicting and discriminatory state legislation.” See Kidd, supra, 128 U.S. at 21. More recently, Justice Stevens has advised that when “construing the scope of the power granted to Congress by the Commerce Clause . . . [i]t is important to remember that this clause was the Framers’ response to the central problem that gave rise to the Constitution itself,” that is, the Founders had “‘set out only to find a way to reduce trade restrictions.’” See EEOC v. Wyoming, 460 U.S. 226, 244-45, 103 S. Ct. 1054, 75 L. Ed. 2d 18 (1983) (Stevens, J., concurring). The foregoing history is so “widely shared,” [see id. at 245 n.1], that Constitutional scholars with opposing views on the Commerce Clause readily agree on this point. Compare Stern, supra, at 1344 (“There can be no question, of course, that in 1787 [when] the framers and ratifiers of the Constitution . . . considered the need for regulating ‘commerce with foreign nations and among the several states,’ they were thinking only in terms of . . . the removal
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of barriers obstructing the physical movements of goods across state lines.”), with Bork & Troy, supra, at 858, 865 (“One thing is certain: the Founders turned to a federal commerce power to carve stability out of this commercial anarchy” and “keep the States from treating one another as hostile foreign powers”; in short, “the Clause was drafted to grant Congress the power to craft a coherent national trade policy, to restore and maintain viable trade among the states, and to prevent interstate war.”). Hamilton and Madison both shared this concern that conflicting and discriminatory state trade legislation “would naturally lead to outrages, and these to reprisals and wars.” The Federalist No. 7, at 37 (Hamilton); see also The Federalist No. 42, at 282 (Madison) (referencing the “unceasing animosities” and “serious interruptions of the public tranquility” that would inevitably flow from the lack of national commerce power). To acknowledge the foregoing historical facts is not necessarily to say that the power under the Commerce Clause was intended to (and must) remain limited to the trade or exchange of goods, and be confined to the task of eliminating trade barriers erected by and between the states.12 The drafters of the Constitution were aware that they were preparing an instrument for the ages, not one suited only for the exigencies of that particular time. See, e.g., McCulloch, supra, 17 U.S. at 415 (the Constitution was “intended to endure for ages to come” and “to be adapted to the various crises of human affairs”) (Marshall, C.J.); Weems v. United States, 217 U.S. 349, 373, 30 S. Ct. 544, 54 L. Ed. 793 (1910) (explaining that constitutions Although there is some evidence that is exactly what Madison, at least, had intended. In one of his letters, he wrote that the Commerce Clause “‘grew out of the abuse of the power by the importing States in taxing the non-importing, and was intended as a negative and preventive provision against injustice among the States themselves, rather than as a power to be used for the positive purposes of the General Government.’” West Lynn Creamery, Inc. v. Healy, 512 U.S. 186, 193 n.9, 114 S. Ct. 2205, 129 L. Ed. 2d 157 (1994) (quoting 3 M. Farrand, Records of the Federal Convention of 1787, p. 478 (1911)).
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“are not ephemeral enactments, designed to meet passing occasions,” but rather are “designed to approach immortality as nearly as human institutions can approach it . . . [and], therefore, our contemplation cannot be only of what has been, but of what may be”); accord New York v. United States, 505 U.S. 144, 157, 112 S. Ct. 2408, 120 L. Ed. 2d 120 (1992) (the Constitution was “phrased in language broad enough to allow for the expansion” of federal power and allow “enormous changes in the nature of government”). As Hamilton explained: Constitutions of civil government are not to be framed upon a calculation of existing exigencies, but upon a combination of these with the probable exigencies of ages, according to the natural and tried course of human affairs. Nothing, therefore, can be more fallacious than to infer the extent of any power, proper to be lodged in the national government, from an estimate of its immediate necessities. There ought to be a capacity to provide for future contingencies as they may happen; and as these are illimitable in their nature, it is impossible safely to limit that capacity. The Federalist No. 34, at 210-11 (emphasis in original). Thus, the exercise and interpretation of the commerce power has evolved and undergone a significant change “as the needs of a dynamic and constantly expanding national economy have changed.” See EEOC, supra, 460 U.S. at 246 (Stevens, J., concurring). But, I will begin at the beginning. (b) Evolution of Commerce Clause Jurisprudence Some have maintained that the Commerce Clause power began as, and was intended to remain, a narrow and limited one. See, e.g., Raoul Berger, Federalism: The Founders D

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