Healthcare, environmental law, and the Supreme Court: an analysis under the commerce, necessary and proper, and tax and spending clauses.

• Author: May, James R.

1. INTRODUCTION II. BACKGROUND TO THE PPACA III. THE COMMERCE CLAUSE, SEBELIUS, AND ENVIRONMENTAL LAW A. A Brief Background of Commerce Clause Jurisprudence B. Sebelius and the Commerce Clause C. Sebelius, the Commerce Clause, and Environmental Law IV. THE TAX CLAUSE, SEBELIUS, AND ENVIRONMENTAL LAW V. THE SPENDING CLAUSE, SEBELIUS, AND ENVIRONMENTAL LAW VI. CONCLUSION I. INTRODUCTION

   Construing the Commerce Clause to permit Congress to regulate individuals precisely because they are doing nothing would open a new and potentially vast domain to congressional authority. Every day individuals do not do an infinite number of things. (1)

   On June 28, 2012, in National Federation of Independent Business v. Sebelius, the U.S. Supreme Court issued a wildly mixed and lengthy decision concerning the constitutionality of the 900-page Patient Protection and Affordable Care Act (PPACA). (2) Sebelius is a finite decision with infinite implications for the Commerce, Necessary and Proper, Tax, and Spending Clauses of the U.S. Constitution. The opinion's implications for federal environmental laws are the subject of this Essay.

   While unlikely, Sebelius has the potential to reshape modern environmental law in three ways. First, the logical, if attenuated, extension of the Court's conclusion that the Commerce Clause does not permit Congress to compel individuals to purchase health insurance suggests some limits on the extent to which Congress may compel participation in certain pollution-control and abatement markets. Second, the basis for upholding the individual mandate--the threat of federal tax penalty--has the potential to provide additional constitutional justification for federal environmental laws. Lastly, the Court's decision that Congress cannot "compel" states to adopt the PPACA under threat of losing all Medicaid funding would seem to suggest further limits on the extent to which Congress may withhold funding from states that do not or cannot implement federal environmental laws. As this Essay explains, despite the potential for Sebelius to alter federal environmental law, the case is likely to have a limited impact.

   Part II of this Essay provides a brief background to the PPACA. Part in contextualizes the Court's Commerce Clause discussion in Sebelius, stating that the Court's decision that inactivity does not fall within the reach of the Commerce Clause should have little if any effect on federal environmental laws. Part IV then considers the Court's determination that the Tax Clause provides independent constitutional authority to require that individuals procure health insurance. This component of Sebelius provides Congress with a minor degree of additional means to advance federal environmental laws. Part V explores the Court's constricted reading of the Spending Clause, noting that it has the most potential among the various holdings in Sebelius to adversely affect federal environmental laws that are implemented by means of cooperative federalism. Part VI concludes that although Sebelius may appear to present a threat to the constitutional underpinnings of federal environmental laws, the decision will likely leave this framework intact.

   II BACKGROUND TO THE PPACA

   About 50 million Americans are uninsured due to choice or circumstance, consuming in excess of $100 billion in healthcare services. (3) About 60% of the uninsured visit a physician or emergency room annually. (4) About one-third of these services derive no payment from the patient. (5)

   Enacted in 2010, the PPACA contains two key provisions at issue in Sebelius. The first--known as the "individual mandate"--requires about 40 million uninsured Americans to purchase health insurance from a private company, subject to a penalty paid to the federal treasury in an amount ranging between about $700 and $1,500 for noncompliance. (6) Insurance companies, in turn, are required to tether the cost of coverage to community rates and must not deny coverage for most preexisting conditions. (7) The second--known as "Medicaid expansion"--requires states that accept federal funding to administer the Medicaid program to expand eligibility to cover approximately 16 million additional Americans who previously did not qualify, including those earning up to 133% of the federal poverty level. (8)

   The rationale behind this two-part approach is relatively simple: "shared responsibility." (9) Millions of Americans who do not have health insurance tend to or need to seek medical care in emergency care facilities--i.e., hospital emergency rooms--as a last resort. (10) Many of these care seekers cannot afford or do not pay for these services. (11) These healthcare costs are then passed along to taxpayers, hospitals, physicians, and insurance companies. (12) This spreads the cost of uncompensated care to others, raising taxes and insurance premiums accordingly. (13)

   The individual mandate requires many previously uninsured Americans, whether they need care or not, to purchase insurance from a private insurance carrier. (14) Those who choose to refrain must pay a surcharge, called a "penalty," to the Internal Revenue Service annually. (15) The individual mandate does not apply, however, to select groups, including those who cannot afford coverage and Native Americans. (16)

   Medicaid is a federal program designed to serve the most needy members of society. It has elements of cooperative federalism in that it is state-administered and federally funded. (17) Currently, all fifty states accept federal funding to administer Medicaid. (18) Medicaid covers more than 55 million Americans, (19) and the Act is estimated to add roughly 15 million more eligible enrollees by 2014. (20)

   Medicaid subsidizes between 50% and 85% of healthcare costs for those who are eligible, depending on the state. (21) In contrast, the federal government will pick up 100% of the Medicaid expansion when the PPACA program goes into effect in 2014, transitioning to 90% by 2020. (22)

   As with Medicaid, states have the option of declining to administer the Medicaid expansion. The rub is that the PPACA permits the federal government to withhold all Medicaid funding from any state that declines to administer the Medicaid expansion, even those that continue to administer the pre-PPACA Medicaid program. (23)

   Numerous states and other parties challenged the law in litigation across the country. (24) The Supreme Court consolidated two of these cases to address the following questions: 1) whether the individual mandate fell within Congress's enactment authority under either the Commerce or Tax Clauses of the U.S. Constitution, and 2) whether the authority to withhold all Medicaid funding from those states that decline to administer the PPACA expansion violated the Spending Clause. (25)

   In a wildly mixed and close decision written by Chief Justice John Roberts, the Court essentially issued three separate but related opinions. First, it ruled 5-4 (Chief Justice Roberts, joined by Justices Alito, Kennedy, Scalia, and Thomas) that the individual mandate violates the Commerce Clause by unconstitutionally regulating inactivity--that is, an individual's decision to refrain from participating in the insurance marketplace. (26) Second, the Court nonetheless upheld the individual mandate by a 5-4 margin (Chief Justice Roberts, joined by Justices Breyer, Kagan, Ginsburg, and Sotomayor) as a constitutional exercise of congressional taxing authority. (27) Last, in a portion of the decision that garnered the most support, the Court held 7-2 (Justices Ginsburg and Sotomayor, dissenting) that the federal government's authority to withhold all Medicaid funds from those states that opt out of the Medicaid expansion did not offer the states a "genuine choice" and was therefore unconstitutional coercion under the Spending Clause. (28) Some commentators consider the decision to be a bellwether for states' rights, (29) one that "reaffirmed] that the Constitution creates a federal government of limited and enumerated powers." (30)

   The question for present purposes is how this holding will affect environmental law as applied under the Constitution's Commerce Clause, Necessary and Proper Clause, Tax Clause, and Spending Clause. The following Parts discuss each of these core constitutional provisions, along with the opinion's implications for U.S. environmental laws.

3. THE COMMERCE CLAUSE, SEBELIUS, AND ENVIRONMENTAL LAW

   The Court's Commerce Clause analysis in Sebelius could, by logical extension, have a substantial effect on environmental law. However, such effect is not likely to occur. This Part lays out the primary principles of Commerce Clause case law, and then considers how the Commerce Clause analysis in Sebelius might affect federal environmental laws.

   1. A Brief Background of Commerce Clause Jurisprudence

      The Commerce Clause provides, in part, that "Congress shall have the power to ... regulate Commerce ... among the several states." (31) The Court's Commerce Clause jurisprudence has waxed and waned through the years, evolving from agnostic to skeptical to permissive, and most recently, to what can fairly be characterized as schizophrenic. (32)

      Until recently, the Court had little trouble upholding congressional authority to enact federal environmental laws under the Commerce Clause. (33) In Hodel v. Virginia Surface Mining & Reclamation Ass'n, (34) the Court upheld Congress's authority to require private mining companies to restore adversely affected lands under the Surface Mining Control and Reclamation Act. The Court found that Congress had a "rational basis" for determining that surface coal mining could substantially affect interstate commerce. (35)

      Although he concurred, Justice Rehnquist remarked in Hodel that the Commerce Clause does not grant Congress the power to regulate "to the 'nth degree.'" (36) This proved a harbinger of the Court's heightened review of Commerce Clause authority over the last two decades, as...