require that emergency rooms and urgent care centers treat those who show up and need care regardless of their ability to pay. and i will disagree with ron paul here and say that i think that is a very good thing. but when a person who does not have insurance shows up and gets treated and run up bills that they can't afford to pay, someone has to foot the bill. and this results in more than -- well an approximately $1,000 increase a year in the average family's insurance premiums and about $30 billion in taxpayer burden as a result of these uninsured costs that are shipped to other participants. so after extensive study, congress chose to address the this crisis through the patient protection and affordable care act. i'm happy to call it obamacare. i think that sounds, you know, lovely, kind of warm and fuzzy. so among other things, obamacare

created incentives for businesses to pay for insurance for their employees, provide it for state exchanges where people can come together to get better deals on their insurance. it established tax credits for eligible families to get insurance on these exchanges, allowed children under the age of 26 to stay on their health insurance plan longer than was previously possible, expanded medicaid to cover millions more of the most vulnerable among us who need health care, and put a ban on insurers discriminating against people based on pre-existing conditions or raising their premiums when they become sick. it also, of course, the subject of today, amended the internal revenue code to provide that insurance to those who cannot afford to do so but do not maintain a minimum level of health insurance, pay a tax

penalty if they choose not to get insurance. this shared responsibility payment paid by those who choose not to purchase insurance is a shared responsibility payment which sounds pretty ronald reagany, but as you know, most people know it as the individual mandate. in putting together this reform package, congress determined that the decisions about whether, when, and how to purchase health insurance were essentially economic. congress also determined that without the individual mandate, many of the provisions of the law would not work. for example, the very popular ban on discriminating against people with pre-existing conditions as well as the guarantee that insurance companies will not raise your premiums if you get sick, which michael refers to as price controls, but i think that many americans, and i think the polls back this up, actually would

support controlling price when it comes to insurance companies jacking up their insurance premiums unnecessarily. but the question of the day is not whether this is a good law. it's whether it's a constitutional law. and i think it clearly is constitution constitutional. and i'll give you three main sources for the authority that congress has to pass the mandate. first, congress' power, express power to regulate interstate commerce among the several states. two, congress' power to pass laws that are necessary and proper to executing this commerce and other delegated powers. and, three, the power to tax and spend for the general welfare. i'm happy to talk about the tax and power more in my questions, but for my comments now i will focus on the necessary and proper clause. so, applying these constitutional principles to the

case of the individual mandate, the arguments in support of the mandate boil down to, one, that the mandate is a valid exercise of congress' commerce clause power because it regulates economic conduct, that is, how and when to pay for health care services in the massive interstate health care market. two, even if you think that the mandate regulates noneconomic conduct, which certainly has been one of the arguments made, it is nonetheless within congress' commerce clause power because the decision not to buy health insurance substantially affects interstate commerce and is part of a broader regulation of the health care industry that is the entire affordable care act. and i don't think that anyone would dispute that congress has the authority to regulate the health care industry more generally. but we'll see.

finally -- well, i guess second to last, three, the mandate is a necessary and proper means of regulating congress that is integral to the affordable care act and, in particular, i think the government would focus on that ban against pre-existing conditions discrimination. and now, i'd like to unpack some of those so we can talk about whether you think that these are truly basic principles of law that should be easily understood. so, first, i think it is difficult to see how the decision to remain uninsured is not economic or at the very least does not have a substantial effect on the interstate market. those who choose not to purchase health insurance inflict costs of approximately $43 billion a year on other market participants and add a thousand

dollars, approximately so, each american family's -- to the average american family's insurance premium. that seems pretty economic to me. but even if you insist on categorying the decision not to purchase health insurance as noneconomic, you know, i think that we can look to justice scalia and see what he thinks. as randy noted in gonzalez versus raich, he wrote a concurrence that said, "congress may regulate even noncommercial activity if it's a more general part of interstate commerce." i think it's very difficult to get around that, and i disagree with randy, i think it will be pretty difficult for justice scalia to get around that when he considers the health care case. i also think it pretty much dooms the opponents of the laws arguments which randy did not make wisely in his arguments.

that there is some sort of activity/inactivity distinction or some focus on noneconomic versus economic. no one can seriously dispute that the affordable care act is a general regulation of the interstate health services market which comprises nearly 20% of our nation's economy. and as for the minimum coverage, if you look back to justice scalia's quote, he says it must be a necessary part of a general regulation. so as far as it being necessary to the aca as a whole, again, we look to u.s. versus comstock, which i respectfully disagree with randy's characterization of. in that case, chief justice roberts joined justice breier's sweeping opinion that said that any means that is rationally related to the implementation of a constitutionally enumerated power is appropriate for congress to use.

now, whether the one thinks the mandate is good or bad policy, i think it's difficult to say that the minimum coverage provision is not rationally remitted to the indisputably valid regulation of the interstate market in health insurance. so, even if you aren't with me on the commerce clause, i just don't see how you can't be with me on the necessary and proper clause. the grant of power to pass legislation that is necessary and proper was intended to be sweeping. as the founding supreme court held in macculloch versus maryland, the framers of the constitution did not sfwend to impede the exercising of power base withholding a choice of means, unlike the articles of federation, our constitution does not require that everything granted be expressly and minutely described. our first president, the rest of the framer, and the supreme court from the founding to the

present have all recognized that the necessary and proper clause grants congress the power to use means outside the enumerated list of article one powers to achieve the ends contemplated in those powers. so, even if you don't think the minimum coverage provision is a valid regulation of interstate commerce, it can still be constitutional as a means of regulating the nearly 20% of our nation's economy that makes up the health care industry. i just want to take a moment to talk about this unprecedented argument. first, the cries of unprecedented in response to the individual mandate are, well, themselves far from unprecedented. we heard it in response to the founding era charter of a national bank, which this court, of course, rejected in mccccull log versus maryland.

we've heard it in response to the civil rights act. we've heard it in response to social security, environmental laws, the voting rights act, all rejected. and there is a good reason in this case why congress might not have exercised the power to impose an individual mandate like it did in the affordable care act. the health care industry is now nearly 20% of our nation's economy. but that certainly wasn't true at the founding. and, in fact, in the case that i quoted from -- at the beginning of my remarks, gibbons versus ogden, chief justice marshall noted that at that time health care was something that was a purely local activity. i don't think that we could say that anymore, obviously weather 20% of our nation's economy going to the health care industry. now, i want to say finally, because my time is running short, that i totally agree with randy that there should be constitutional limits on the

government's power under the commerce clause. i think, while it's true, the argument that the health care industry is different just isn't enough. you need to be able to show where in the constitution there are limits. but i think there are real and important limits, and unlike apparently the government at some of these press conferences, i'll give you several. first is the limit placed on the commerce clause power by the enst of the constitution itself. if in the is service of health care row re form congress passed a law that allowed unreasonable and warrantless searches into health care companies' records, that regulation would be unconstitutional because it would violate the fourth amendment's guarantee against unreasonable searches and seizures. but there is no right in the constitution to free load off your neighbors if you decide not

to purchase health insurance and run up bills that you can't pay. so, first, anything congress does under the commerce power must not run up against any other provision in the constitution. second, there is the text of the commerce clause itself, which requires that congress regulate interstate commerce, commerce among the several states. well, this, as the court has held, may reach wholly intrastate conduct that affects the interstate market, it does require a nexus between the wholly intrastate conduct and the interstate market that congress is otherwise regulating. as the supreme court held in lopez, the gun free schools act case and united states versus morrison, the court should not need to pile inference upon inference to see the link between the conduct regulated and interstate commerce. now, here, when you have a $43

billion drag on the nation's economy, $43 billion a year drag on the nation's economy, i don't think you have to pile inference upon inference to see the relationship between the decision not to purchase health insurance and its effect on the interstate commerce market. so, these limits are real. upholding the mandate will not lead to some sort of unfettered federal police power. but i get that this doesn't necessarily answer some of the powerful concerns that randy has articulated and that i think many americans have, which is that they don't like being told what to do. they don't like being mandated to do anything. i get it. i don't like to be told what to do either. but when our nation's founders came to philadelphia to craft the constitution, they came with the idea of creating a national government that had the power to create national solutions to

national problems. and they specifically gave congress the very powerful authority to regulate interstate commerce. and at the founding, the idea of regulate included the idea of directing. so, congress has the power to direct certain conduct when it comes to interstate commerce. and, you know, you may not like that and so you vote out the people who direct you in ways you don't like. but that doesn't mean that the constitution doesn't give the authority. and finally, i just want to get to the point that randy made at the end of his remarks about whether or not the conservative justices will or should feel constrained by precedent to vote to uphold the act. now, i'm not going to make any predictions here because you never know what the supreme court will do, but i think that there is a good reason to

believe that the mandate will be upheld and not just by a 5 will have 4 vote with swing justice anthony kennedy voting with the more liberal justices. but i think based on comstock, chief justice roberts might be a possible vote and i think justice scalia and raich will have a very hard time getting around his ruling if he wants to be seen as respecting precedent and the text from history of the constitution, as he claims. so with that, i look forward to your comments and questions, and thank you again for including me. [ applause ] >> well, thank you. i know there must be lots of questions in the audience. while people get ready to do them, i just want to ask michael very quickly to outline what will happen if, a, the mandate is upheld, as a matter of health care policy and economics, and,

b, if let's take the government's position on severability is struck down. what will be the policy and economic consequences? really quickly. >> the policy consequences if only the mandate were struck down? >> if the -- everything is upheld or -- >> everything is upheld. this regulatory structure is a pretty rickety one to begin with, even with the mandate in place. a lot of americans will be able to save thousands of dollars per year by dropping their health insurance coverage, paying the penalty and waiting until they're sick to purchase coverage, which can lead to what economists say adverse selection death spiral that causes insurance markets to collapse. even with the mandate in place, it could collapse. and the federal government does not have the authority under the law to put in place another essential component, those subsidies, in health insurance exchanges, which is where all the magic of obamacare is supposed to happen, created by

the federal government as yet another reason why this law may collapse. >> if the states do not set them um. >> if the states do not set them um. now, what will happen if the supreme court strikes down the mandate and the price controls, the pre-existing conditions, what we'll be left with are health insurance subsidies, an expanded medicaid program and a lot of cuts to medicare and taxes. that is -- that's not going to -- those are not going to destabilize the health insurance market. it may destabilize employer-sponsored insurance because presumably the employer mandate might be struck down as well, but because of that it could still be so unstable that congress will have to revisit this law, reopen it, and as we know, there will be at least one house or a high likelihood there will be at least one chamber of congress that will only be at satisfied with full repeal of the law.

>> okay. wait for the microphone. let's start right here. state your name and any affiliation. and plesac actually ask a question. >> okay. my name is jim, no affiliation, and this question is directed to miss wydra. you mentioned a bill of rights as a restraint on the commerce clause. congress first sat under the constitution in march of 1789. the bill of rights was ratified on december 15th, 1791. are you saying that between those two days it proper for co authorize searches and seizures under the commerce clause? >> no. i mean, that was -- the fourth amendment was simply an of the n addition to the amendments to it, also serve as a limit on the exercise of any of the other provisions this the constitution. you know, you have things -- so for the necessary and proper

clause, it says "proper." that means several things. it has to be a properly enacted law, according to the ways that the constitution sets out for legislation to be passed, you know, by both houses of congress, et cetera, et cetera. and it also means proper in terms of not violating any other provision of the constitution. that means both any amendments to the constitution or any provision of theon ielf. >> sure. >> many of the supporters of the bill say that one of the limits on the commerce power is the bill of rights, for example. you can't use the commerce power to violate the bill of rights. they stress this even more than elizabeth does. yet, that is just a concession that the commerce power -- it's an indirect way of admitting that under their theory the commerce itself has no power. it's unlimited except when ispe.

that's the same degree of power that states have. the state's power and police power is unlimited unless it violates the violates the freed speech. so essentially what the argument is, is that the scope of the congress power is the same as the state's power, which is the police power. as you point out, it was two years before there was a bill of rights which would suggest the national power was changed and nobody thought that at the time. in fact what they thought at the time was the bill of rights -- many people thought, but not everybody thankfully, is that the protection of individual liberty was to be provided be article 1, section 8. that was the protection of individual liberty that the federal government would be limited. and that is the proposition that the supreme court unanimously affirmed last year in the opinion by justice kennedy in which he said that an individual citizen has standing to bring a claim that congress has exceeded its powers because it's not only the states protected but the

individuals and their liberty that are protected and that was a decision that just came out last year authored by justice kennedy. >> but it's not the same as the state's police power because it has to be related to commerce among the several states. so that's another example where the constitution itself places the limit on the commerce power. >> that's true. and it's a useful concession. i would say if you take the theory of the necessary and proper clause, that anything that has an economic effect, including, you'll notice, the euphemisms here, a decision not to engage in commerce, a decision not to enter a marketplace is then deemed an economic decision. and the economic decision to refrain from entering the marketplace is said to have an effect on interstate commerce, which of course it does. then by that route you're back to a up limited police power in the federal government. >> i hope everyone was listening to that. this colloquy is the key to this whole thing. right back there. >> thank you. i may have missed the key. i'm not an attorney. >> i'm sorry, i can't hear you, so i don't know.

>> yeah. i would like to address this question to anyone on the panel. as a professionally trained clinician working in health care. mr. cannon was asked what would be the consequences if this law was upheld or not upheld.s not reform. and for those of us who are --i physicians, but is this an appropriate thing to pass without tort reform or will it be something that will have to go back and be revisited r part care law. >> mike, if you want to address the policy. >> i think the constitutionality is probably the more important. >> well, i have a niece who's a doctor in philadelphia, and she says that if it weren't for the threat of tort liability, she wouldn't perform some 90% of the tests she has to perform and she wouldn't keep 90% of the people who have to stay for an

overnight stay except for the fact that if they would release these people without performing that test and some doctor anywhere would say that that test -- they would have prescribed that test, then she and her hospital are on the hook under the state tort liability. that has substantially driven up the cost of both health care and the insurance to pay for health care and it's something that must be addressed. however, it's something that has to be addressed at the state level because tort law has historically been a matter of state law and it should be a matter of state law. the only way congress could claim power to effect a reform of tort law would be to claim the same kind of expanded commerce clause power that they are doing with obamacare and that's something they shouldn't do. >> elizabeth, do you have anything on that? >> no. >> let's go right there. >> if the penalty is considered

to be a tax for not adhering -- i guess this is all for the constitutional lawyers too. is that tax then considered a direct tax and, therefore, subject to aproportionment? and if so, what sort of problems do you see that causing? >> so i think the question whether it's a tax is really -- the dispute has been whether it's a tax at all. and so the argument that it is constitutional under the taxing power is that it raises revenue. it's not punitive. and the -- the supreme court has held that the label given to a tax is not going to be determinative. so the fact that it's called a penalty does not necessarily mean that it's not actually a tax. and i want to get to -- i don't think anyone is talking about the aia so i want to raise an interesting point about that. as randy mentioned in his

opening remarks, the anti-injunction act could punt this issue until the individual mandate goes into effect in 2014 and the tax or penalty or whatever you want to call it is paid on your tax return in 2015. so if the court does that and decides that the anti-injunction act applies, i think that's a pretty big endorsement that it thinks that the mandate is a constitutional tax. so even though the obama administration might not have won on the merits if the court applies the anti-injunction act, i think it will go a long way toward saying that the supreme court will eventually say that it is a constitutional tax. >> i don't want to get into the aia. there's an op-ed that i wrote in your packets on that. but interestingly enough in a development only lawyers can love, this could be a tax for anti-injunction act purposes but not for constitutional purposes and vice versa. the fourth circuit, which is the

court that ruled applying the anti-injunction act to bar one of the lawsuits there specifically dropped a footnote to make that point and this is commonly held. i'm not going into why that is. it's very, very technical. >> can i say a word about the tax power? i'm trying to do that in two minutes because it's an argument that will come up. there's several reasons why this is not a tax and i'm going to address the direct tax question. first of all, it's not called a tax. i agree what something is called is not dispositive but they didn't call it a tax, a lot of other things. there's a reason why they didn't call it a tax because they didn't want political accountability for having called it a tax. secondly, it doesn't fit the definition of a tax. a tax is defined by the supreme court as a measure, the purpose of which is to raise funds for the general government as opposed to a penalty which is defined as a sanction for the failure to perform an act or for the performance of an act that the government does or does not want you to perform.

which does this look like? it is a penalty and it functions like a penalty and it was not among the revenue raising provisions of the bill and wasn't scored as a revenue raising provision of the bill so it doesn't fit a definition of a tax. but if it were a tax, it would be a direct tax. it would be a tax -- a direct tax -- now this is really arcane, but a direct tax which congress has the power to impose direct taxes, but if they do, it has to be apportioned by population of the direct states. a direct tax is on you. you have to pay a tax because you're you. that's what this is. so, for example, congress imposed a tax on carriages. a license tax on carriages and that was held to be an excise tax. that was held to be not a direct tax. but i bet your bottom dollar had congress imposed a tax on the people who did not own carriages to require them that they should own a carriage that that would be found to have been a direct tax. if it was a direct tax, it needs

to be apportioned. since this bill does not apportion it, it would be unconstitutional. having said all that, i don't believe the court is going to reach this issue. for one thing, they don't want to talk about that question, direct tax. if they're going to uphold it, it will be for reasons that elizabeth said. that it's commerce, it's economic, it's necessary and proper. that's what the opinion is going to look like. so this whole tax theory, which was the darling of the academic professoriate, it's simply not going to be -- it's going to be a nonstarter in the supreme court. i mean there may be some talk about it, but likely from the justices who are probably disinclined to uphold the law. disinclined to strike the law down, sorry. i said it backwards. >> hi, my name is james.

i'd like to go back to the debate that wydra and barnett were having about what's left for the states. let's say this law is determined to be constitutional. is there any activity that i could do in my everyday life that could only be regulated by the states and could not be preempted by the federal government if this law is determined to be constitutional? i'd like to hear from both of you on that. >> absolutely. any activity that does not have a substantial effect on interstate commerce. you know, i think that what's important to note in all of these hypothetical, you know, broccoli, blah, blah, blah, you have to say, okay, what is the enumerated power that congress is using. how in the world is that regulation necessary and proper to achieving that enumerated power. and third, do you need