were true, that would not provide a constitutional argument, would not previed a constitutional limit. the response is okay, fine, health care is different, what is your constitutional limit on the imposition of the power? why is that? because the court is simply not the next time an economic mandate is being used by congress going to have a fact based inquiry in which they decide whether the next act of imposing an economic mandate is like this one, whether the next market is going to be sufficiently similar to the health care market in order to justify an economic mandate in the next case. and that is because the supreme court doesn't get in fact you will -- factual inquiries like that. this is a smoke screen for having no limiting principle at all. if you don't have a principle, upholding the mandate will pose a serious threat, in fact it will end the system of limited and enumerated powers we lived within this country since the founding. the third reason why there is a

problem with the law is that it's unnecessary. congress had powers, that it could have used to accomplish very nearly what it was trying to accomplish here, not the same way, they didn't just have to change the name but they had power, the ones they always use to subsidize activities they don't have the power directly to command. that is their taxing and spending power. they chose not to use that. we know why it is. it was political. which is exactly the constraint that exists on the taxing power. that is the president ran for office saying he would not raise taxes on people making less than $200,000, the democrats on the senate, the 60 democrats in the senate were not prepared to support any kind of tax increase, and as a result, they didn't use the power that they had for strictly political reasons to accomplish what they say they want to accomplish with the bill. because it's unnecessary, it is simply not a justification that -- in other words it's not a justification you have to use the mandate because it's the only means necessary when congress had the power to --

that they could have exercised to solve the problem and yet they chose not to. however, had they done that, it would have been a whole lot better than what they now -- the power they are now trying to claim which brings me to my final point, this particular power is dangerous. why is that? because whether congress tries to in centivize americans, the only consequence they have to forego financial benefit. if you don't want to trade your clunker in, forego the $5000 we're willing to pay new order to destroy that perfectly good car and drive business to the american car companies. so, that is what you have to give up. however, if this individual mandate is upheld as constitutional, even though in this case it's only being enforced by a monetary penalty, in the future, in the future it could be enforced by the full panoply of mechanisms that are used to enforce the commerce clause up to and including

imprisonment. this mandate may seem innocuous but the next mandate doesn't have to be and that is why this power is more dangerous than the tax power would be. now let me conclude just by talking a little about the spin you have been hearing lately in the last week. about why certain conservative justices have to vote to uphold the mandate or they would be contradicting themselves. the first one, the most ludicrous, has to do with chief justice roberts who says has to up hold the mandate because he signed on to an interpretation of the necessary and proper clause in a case called united states versus comstock, involved a sexual predator law that em poulerred the federal prison system to hold on to people adjust indicated sexually dangerous beyond their sentences. the question was could congress do it under the necessary and proper clause? in the comstock opinion there is narrowing language that says comstock is a very modest addition to existing federal

power, an area -- there is an opt out, it accommodates federalism. that is the opinion chief justice roberts signed on to. it had limits built in the text. the ones i told you about. if you hear constitutional law experts talk about comstock, they don't care about the limits, what was written in the opinion. they say congress can do anything under the necessary and proper clause now. read comstock, that is what will happen if the supreme court tries to limit this power by the use of some sort of limits like health care is limit. the final example i'll give is the one about justice scalia who wrote a concurring opinion, the raich case, involving medical marijuana. i was disappointed in the vote. i was disappointed in his opinion, but in his opinion, which he concurred with the majority written by justice stevens, he relied on the necessary and proper clause.

because justice scalia said in that case because it -- because the reaching of my client's marijuana that was being grown for her by caregivers privately and not commercially, because it was essential to the broad prohibition, they would be able to reach intra state, it was contusional. what he held was it was okay to reach my client's marijuana because it was ee sen sthool a broader regulation of interstate commerce, the pro hi by slun of interstate marijuana. i could say a lot more, i'm out of time, let me say one thing about that opinion. justice scalia's opinion, about the necessary and proper clause, was only about the word "necessary" in the necessary and proper clause. the issue was whether essential to a broader scheme would be interpreted in the same way as the word necessary has been

interpreted. justice scalia adopted that approach. much to our disappointment. but here's what the opinion said, not one word about. it said not one word about the word "proper" in the necessary and proper clause. it says congress shall have power to make laws that are necessary and proper to carry into execution the foregoing powers. there is nothing in the raich case about the word proper, it's justice scalia who said the unprecedented imposition of a power to coerce local sheriffs to enforce federal law in the brady act by making them run gun checks, that was beyond the power of congress to enact and he called the necessary and proper clause that was being offered to defend that power the last refuge of those who would defend the ultra virus powers of congress. and to that argument, he said while that law may be necessary, it is not a proper exercise of power. so if there is any justice on the supreme court that will be

very capable of distinguishing a concurrent opinion in raich it's the justice that made the greatest use of the distinction between news and proper. how will he do that? because an individual mandate to make every man, woman and child do business with a private company at the whim of congress, because they think it's convenient is not only unnecessary but highly improper and for that reason it's unconstitutional. thanks. >> thank you so much for having me here. i am also honored to be part of the inaugural event in this wonderful new auditorium here at cato. i also want to thank cato because i carry around in my

purse all the time my pocket constitution, and while i heartily disagree about what cato thinks what is inside the constitution. they have the best covers. this has lasted me for ten years. i would like to carry around for my liberal brethren, you got it right on the cover. let's talk about what is inside the con sit constitution. >> i only represent 333. >> we counted. we filed in support of both the minimum coverage provision, known here today i suppose as individual mandate, and the medicaid expansion which will provide coverage to approximately 16 million more low income americans in the

states. but as i was preparing these briefs, i came across a quote from the great chief justice marshall's opinion in gibbons versus ogden, which having done debates with randy before, immediately made me think of him. and here's the quote. "powerful and in genius minds" randy," the powers expressionly granted to the government of the union are to be contracted by construction into the narrowest possible compass and the original powers of the states are re tained if any possible construction will retain them may by course of well digested by refined and metafisz i cal reasoning founded on these premises explain away the constitution of our country and leave it a magnificent structure indeed to look at, but totally unfit for use. they may so intangle and perplex

the understanding as to obscure principles before thought quite plain, and induce doubts where if the mind were to pursue its own course, none would be perceived. now i think randy's arguments that you've heard here today and that he has written in his briefs on behalf of his clients are very compelling. but i think that they might be of the sort that chief justice marshall was warning us about when he spoke of the brilliant and clever advocates who are trying to convince us that basic principles are essentially controversial and up for grabs. and i think next week when we hear paul clement stand up on behalf of the 26 states who challenged the affordable care act we'll hear more of that. paul clement is a brilliant, wonderful, gifted advocate. but before i get into why i think these arguments are not true to basic uncontroverted principles of the constitution, i want to talk about the

affordable care act itself. because i disagree with the characterization of the act that michael gave earlier, perhaps unsurprisingly, and while i am also myself merely a simple constitutional lawyer, nobel prize winning economists have disagreed with his take on the law and its consequences, so i would take his presentation with a grain of spin -- i mean a grain of salt. i don't know why i said that. anyway, the act was a response to what i hope everyone would agree was a national crisis in the health care system. tens of millions of americans do not have health insurance either because they cannot afford the skyrocketing premiums, they would like to purchase insurance even at any price, but are refused coverage because of pre existing medical conditions, or simply because they choose not

to purchase insurance and gamble that they will not need medical treatment beyond -- that cost more than what they have in their own pockets. these uninsured shift more than $43 billion a year to other market participants. this is in part because in american law and culture, we require 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 they can't afford to pay, someone has to foot the bill. and this results in more than -- approximately $1000 year in the average family's premiums and $30 billion in taxpayer burden

as a result of uninsured costs, shifted to other participants. after extensive study congress chose to address the crisis through the affordable care act. i'm happy to call it obamacare. created incentives for businesses to pay insurance, pay for insurance for their employees, provided for state exchanges where people come together to get better deals on their insurance. established tax credits for eligible families to get insurance on the exchanges. allowed children under the age of 26 to stay on their parents 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, in the subject of today, amended the internal revenue code to provide that insurance who can't 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 without the individual mandate, many provisions. lay would not work. for example, the very popular

ban on discriminating against people with preexisting 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, 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 constitutional. i'll give you three main sources for the authority that congress has to pass the mandate. first, congress express power to regulate interstate commerce among the several states. two, congress' power to pass laws 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 questions for my comments right now i will focus on the commerce clause and necessary and proper clause. so, applying these constitutional principles to the case of the individual mandate, 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 the mandate regulates non-economic conduct, which has been one of the arguments made, it's 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. i don't think anyone would dispute congress has the authority to regulate the health care industry more generally. but we'll see. finally, second to last, three, the mandate is a necessary and proper means of regulating commerce, that is integral to the affordable care act. in particular i think the government would focus on the ban against pre-existing conditions discrimination. and now, i would like to unpack some of those, so we can talk about whether you think that these are truly basic principles of law that are -- that should be easily understood. so, first, i think it's 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 that choose not to purchase health insurance inflict costs of approximately $43 billion a year on other market participants and add $1000 approximately to each american family's -- average american family's insurance premium. that seems economic to me. but even if you insist on categoring the decision not to purchase health insurance as non-economic, 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 non-economic local activity if that regulation is a necessary part of a more general regulation of interstate commerce. i think it's difficult to get around that and i disagree with

randy, i think it will be 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 law's arguments which randy did not make, wisely, in his arguments, that there is some sort of activity, inactivity distinction or some focus on non-economic versus economic. no one canc dispute it's a general regulation of the interstate health services market which comprise sz nearly 20% of the nation's economy. and as for the minimum coverage, if you look back to justice scalia's quote. he said 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 disagree with randy's interpretation of. chief justice roberts 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 intend to

impede the exercise of enumerated powers by withholding a choice of means, noting that articles of federation, our constitution does not require that everything granted be expressly and minutely described. our first president, the rest of the framers, 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 natia, of course rejected in mcculloch versus maryland. we've heard iwe've heard it in 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 di the health care industry is now nearly 20% of our nation's economy.lyasn't true at the founding. and, in fact, in the case that i quoted from at teg of my remarks, gibbons versus ogden, chief justice marshall noted that at that time health care was something that was a re i don't think that we could say that anymore, obviously weather

with 20% of our nation's economy going to the health care industry. now, i want to say finally, because my time is running sh 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 rest of the constitution itself. allowed unreasonable andin thee

warrantless searches into health care companies' records, that unconstitutional because it would violate the fourth amendment's guarantee against unreasonable searcs but there is no right in the ti 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 intrastate 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 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 agfo [ 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 severalability, the mandate 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 -- >> the mandate is upheld. well, this regulatory structure is a pretty rickety one to begin with. each 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 and 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 up. >> if the states do not set them up. now, what will happen if the supreme court strikes down the mandate and the price controls, the preexisting provision conditions, well, then what we'll be left with are a lot of 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, bube