i have little doubt both would agree a tax on not having a carriage would have clearly been a direct tax and thought it wasn't a valid regulation of the market in carriages. look at hilton against the united states, that's this court's first directive -- >> let me ask you. can i go back a step, because i don't want to get into a discussion whether this is a good bill or not. some people think it's going to save a lot of money. some people think it won't. so i'm focusing just on the commerce clause. not on the due process clause. the commerce clause, and i look back into history, and i think if we look back into history, we see sometimes congress can create commerce out of nothing. that's the national bank which was created out of nothing to create other commerce out of nothing. i look back into history, and i see it seems pretty clear that if there are substantial effects on interstate commerce, congress can act. and i look at the person who's

growing marijuana in her house, or i look at the farmer growing wheat for home consumption. this seems to have more substantial effects. is this commerce? well, seems to me more commerce than marijuana. i mean, is it, in fact, a regulation? well, why not? if creating a bank is, why isn't this? and then you say, ah, but one thing here out of all those things is different. and that is, you're making somebody do something. i say, hey, can't congress make people drive faster than 45, 40 miles an hour on a road? didn't they make that man growing his own wheat go out into the market and buy other wheat for his -- for his cows? didn't they make mrs. -- if she married somebody with marijuana in her basement, wouldn't she have to go and get rid of it?

affirmative action? i mean where does this distinction come from? it sounds like sometimes you can and sometimes you can't. so it is argued here, there is a large group of -- what about a pech that we sd person that we discover there is a disease sweeping the united states? and 40 million people are susceptible of whom 10 million will die. can't the federal government say, all 40 million get inoculation? here we have a group of 40 million, and 57% of those people visit emergency care or other care which we're paying for, and 22% of those pay more than $100,000 for that, and congress says, they're in the midst of this big thing, we just want to rationalize the system they're already in. so, there. you've got the whole argument, and i would like you to tell me, looking back -- >> looking into those questions in reverse order -- >> well, no.

it's one question. it's looking back at that -- looking back at that history. the thing i can see that you say to some people go by, why does that make a difference in terms of the commerce clause? >> well, justice breyer, let me start at the beginning of your question with mccullum. it was not a commerce -- >> the not? >> no. the bank was not justified as commerce power. that is not a case that says it's okay to conger up the bank as an exercise of the commerce power. of course, what the court didn't say and i think the court would have had a very different reaction to, is we're not just going to have the bank. we're going to force the citizenry to put all their money in the bank. if we do that we know the bank of the united states will be secure. i think the framers would have identified the difference between those two scenarios and i don't think that great chief justice would have said that forcing people to put their

deposits in the bank of the yet was necessary and proper. look through all the cases you mentioned. i do not think you'll find a case like this and i think it's telling you won't. the regulation of the wheat market in wickered against fillburn, all this to address the supply side, what congress was trying to do, support of price's wheat. much more efficient to make everybody in america buy ten loaves of bread? that would have had a much more direct affect of the price of wheat in the prevailing market. but we didn't do that. we didn't say when we had problems in the automobile industry. we're not just giving incentives. not just cash for clunkers. everybody over $100,000 has to buy a new car. >> mr. clement, the key to the government's argument to the contrary is that everybody is in this market. it's all right to regulate in wick ert against fillburn, that's a particular market which the farm her been participating.

every is in this market. that makes it very different than the market for cars or the other hypotheticals you came up with, and all they're regulating is how you pay for it. >> well, with respect, mr. chief justice, i suppose the first thing you have to say, what market are we talking about? because the government, this statute undeniably operates in the health care insurance market and the government can't say that everybody's in that market. the whole problem is that everybody's not in that market, and they want to make everybody get into that. >> doesn't that seem a little bit, mr. clement, cutting the baloney thin jie mean, health insurance exists only for the purpose of financing health care. the two are inextricably interlinked. we don't get insurance so we can stare at our insurance certificate. we get it so that we can go and access health care. >> well, justice kagan, i'm not sure that's right. i think what health insurance does and what all insurance does is allows you to diversify risk. it's not just a matter of, i'm

paying now instead of paying later. that's credit. insurance is different than credit. insurance guaranteed you an up-front locked in payment you won't have to pay more than that even if you incur much greater expenses. every other market i know of for insurance we let people basically make the decision whether they're relatively risk averse, non-risk averse and they can make the judgment. >> but we don't in car insurance? meaning, we tell people -- not we, the states do. although you're going -- i'll ask you the question. do you think if some states decided not impose an insurance requirement that the federal government would be without power to legislate and require every individual to buy car insurance? >> well, justice sotomayor, let me say this which is to say, you're right on the first point to say the states do it, which makes it different right there. >> that's going back to the substantive due process

question. is this a loughner era argument that only the states can do this? even though it affects commerce cars indisputably affects commerce? are you arguing because the states have done it all along the federal government is not longer permitted to legislate in this area? >> no. i think you might make a different argument about cars than you would make about health insurance unless you tried to say -- >> health insurance, i mean, i've never gotten into an accident, thankfully and i hope never. the vast majority of people have never gotten into an accident where they've injured others. yet we pay for it dutifully every year on the possibility that at some point we might get into that accident. >> but justice sotomayor, where it's different, there's lots of people in manhattan, prex for example that don't have car insurance because they don't have cars. they have an option to opt out of. even the car market is different from this market. there's no way to get outside of

the regulatory web. that's one of the real problems with this. because we take as -- >> but the given is that virtually everyone absent some intervention from above, meaning that someone's life will be cut short in a fatal way, virtually everyone will use health care. >> at some point, that's right, but all sorts of people will not say, use health care in the next year, which is the relevant period for the insurance. >> you think you can better than the actuaries or better than the members of congress who worked on it? look at the 40 million people who are not insured and say which ones next year will or will not use, say, emergency care? can do you that any better than if we knew that 40 million people were suffering, about to suffer, a contagious disease and only 10 million would get sick? >> of course not.

>> we don't know which. >> of course not, justice breyer. the point is once congress decides it's going to regulate, it is going to get all sorts of latitude to make the right judgments, actuarial predictions which to rely and which not rely on. the question that's a proper question for this court, though, is whether or not for the first time of in our history congress also has the power to compel people into commerce, because it turns out that would be a very efficient thing for purposes of congress' optimal regulation of that market. >> this goes back to the chief justice's question, of course, the theory behind not just the government's case but behind kniss law that people are in this market right now and they're in this market because people do get sick and because when people get sick, we provide them with care without making them pay. and it would be different, you no e, if you were up here saying, i represent a class of christian scientists. then you might be able to say,

look, you know, why are they bothering me? but absent that, you're in this market. you're an economic actor. >> justice kagan, depends which market we're talking about. if we're talking about the health care insurance market. >> we're talking about the health care insurance market designed to access the health care market. >> with respect to the health insurance market designed to have payment in the health care market, everybody's not in the market. that's the premise of the statute. that's the problem congress is trying to solve. if it tried to solve it through incentives we wouldn't be leer but it's trying to solve it in a way nobody's of tried to solve an economic problem before, which is saying, it would be so much more efficient if you were just in this market. >> they're in the market in the sense that they're creating a risk that the market must account for. >> justice kennedy, i don't think that's right. certainly in any way that sdish distinguishes this from any other context. when i'm sitting in my house deciding i'm not going to buy a car i am causing the labor market in detroit to go south.

causing maybe somebody to lose their job and for everybody to have to pay for it under welfare. the cost shifting the government tries to uniquely associate with this market, it's everywhere. even more to the point, the rationale they think ultimately supports this legislation, look, it's a an economic decision. once you make the economic decision, we aggregate the decision, there's your effect on congress. that argument works here. it works in every single industry. >> of course we do know that there are a few people more in new york city than there are in wyoming, who never will buy a car, but we also know here and we don't like to admit it that because we are human beings, we all suffer from the risk of getting sick and we also all know that we'll get seriously sick. and we also know that we can't predict when, and we also know that when we do, there will be our fellow taxpayers through the federal government who will pay

for this if we do not buy insurance we will pay nothing. and that happens with a large number of people in this group of 40 million, none of whom can be picked out in advance. now, that's quite different from the car situation, and it's different in only this respect. it shows there is a national problem, and it show there is a national problem that involves money cost insurance. so if congress could do this, should there be a disease that strikes the united states, and they want everyone inoculated, even though 10 million will be hurt, it's hard for me to decide why that isn't interstate commerce, even more so where we know it affects everybody. >> well, justice breyer, there are other markets that affect everyone. transportation, food, burial services that we don't like to talk about that either. there also are situations where

there are many economic effects from somebody's failure to purchase a product. if i can talk about the difference, ultimately i don't want to you leave here with the impression anything turns on that, because if the government decided form they've come up way great -- private k3is come up with a great wonder drug that would be great for everybody to take, would have huge hil benefits for everybody and by the way also if everybody had to buy it it would facilitate economies of scale, production great, price cheaper and force everybody in the health care market, the actual health care market to buy the wonder drug, i'd be up here making the same argument. saying that's not a power that's within the commerce power of the federal government. is something much greater and would have been much more controversial. that's an important thing. federal 45, madison says the commerce power a new power, not one anyone has apprehension about. the reason they didn't have any apprehension about it is because it's a power only operated once

people were already in commerce. you see that from the tefcts clau text of the clause. commerce with foreign nations. did anyone think the fledgening republic had the power to compel this? of course not. in the same way, if the framers had understood the commerce power to include the power to compel people to engage -- >> well, once again, though. who's in commerce and when are they in commerce? if the effect of all these uninsured people is to raise everybody's premiums, not just when they get sick if they get sick, but right now, in the aggregate, and wickered and raish tell us we should look at the aggregate and the aggregate of all these uninsured people are increasing the normal family premium, congress says, by $1,000 a year. those people are in commerce. na they're making decisions that are affecting the price that

everybody pays for this service. >> ms. kagan, with all due respect, i don't think that's a -- my decision to buy an electric car. if more demanded an electric car -- >> this is very different, mr. clement and it's different because of the nature of the let care service that you are entitled to health care when you go an emergency room, when you go to a doctor, even if you can't pay for it. so the difference between your hypotheticals and the real case is the problem of uncompensated care. >> well -- justice containing, it's not. only place where there's -- someone goes on welfare, i end up paying for that also. there's a real disconnect between the focus on what makes this different and the statute that congress passed. if all we were concerned about is the cost sharing that took place because of uncompensated care in emergency rooms,

presumably we'd have before us a statute that only addressed emergency care in catastrophic insurance coverage, but it covers everything. soup to nuts and all sorts of other thing. that gets at the idea that there's two kinds of cost shifting going on here's one is the concern about emergency care and that somehow somebody who gets sick is going to shift costs back to other policyholders but there's a much bigger cost shift going on here. that's the cost shifting that goes on when you force healthy people into an insurance market precisely because they're healthy, precisely because they're not likely to go to the rch room and not likely to use the insurance they're forced to buy in the health care insurance. that create as huge windfall, lowers the price of premiums and again, this isn't some lawyer telling you that's what it does and trying to second guess the congressional economic decisions. this is congress' findings. findings i on page 43a -- >> all that sounds like you're debating the merits of the bill, you ask, really, for limiting

principles. so we don't get into a a matter i think has nothing to do with this case. broccoli. okay? and the limiting principles you've heard three. first, the solicitor general came up with a couple, joined, very narrow ones. you've seen in lopez this court is a that we cannot, congress cannot get into purely local affairs, particularly where they're non-commercial and, of course, the greatest limiting principle of all, which not too many accept, i'm not going to emphasize that, is the limiting principle derived from the fact members of congress are elected from states and that 95% of the law of the united states is state law. that is a principle, though enforced by the legislature. the other two are principles, one written into lopez and one you just heard. it seems to me all of those eliminate the broccoli possibility, and none of them eliminates the possibility that we're trying to take the 40

million people who do have medical costs, do affect interstate commerce and provide a system that you may like or not like. >> justice breyer -- let me take them in turn. i would enturg this court not to garciaize the commerce clause and simply say it's up to commerce to police the commerce clause. i don't think that's a limiting principle. >> that's exactly what justice marshall said in gibbons. he says that it is the power to regulate, the power like all others rested in congress is completed itself, maybe exercised to its utmost extent and acknowledges no limitations. other than those prescribed in the constitution, but there is no constriction in the -- set forth in the constitution with respect to regulating commerce. >> i agree 100% and i think that was the chief justices point, which was once you open the door to compelling people into commerce based on the narrow

rationales that exist in this industry, you are not going to be able to stop that process. >> see, that's -- >> i would like to hear you address justice breyer's other -- other two -- >> the other two principles are lopez and this case really is not -- i mean, lopez is a limit on the affirmative exercise of people already in commerce. the question is, is there any other limit to people who aren't in commerce? and so i think this is the case that really asks that question. and then the first point, which was, the solicitor general's point, with all due respect, simply a description of the insurance market. it's not a limiting principle, because the justification for why kniss is a valid regulation of commerce is in no way limited to this. these are economic decisions that have affects on other people. my failure to purchase in this market has a direct affect on others already in the market. that's true of virtually every other market under this clause. >> and now return to justice

sotomayor's question. >> i'd be delighted to. once you're in the commerce sub the lopez limit, and that's exactly why i think it's very important for this court to think seriously about taking an unprecedented step of saying that the commerce power not only includes the power to regulate, prescribe the rule by which commerce is governed, the rule of givens against ogden but to go further, saying it's not just prescribing the rule for congress that exists but it is the power to compel people to enter into commerce in the first place. i'd like to say two very brief things about the taxing power, if i could. lots of reason why this isn't a tax. wasn't denominated a tax, wasn't structured as a tax. if it is a tax at all, it is a direct tax, article i, section 9, clause 4, the framers would have had no doubt that a tax on not having something is not an exkreis tact but a forbidden direct tax. one more reason why this is not proper legislation because it -- it violates that. the second thing is i would urge you to read the license tax case which the solicitor general says

is his best case for why you ignore the fact that a tax is denominated into something other, because that's a case where the argument was that because the federal government had passed a license, not a tax, that somehow that allowed people to take actions that would have been unlawful under state law, that this was some special federal license to do something forbidden by state law. this court looked beyond the label in order to preserve federalism there. what the solicitor general and the government asks you to do here is exactly the opposite which is to look past labels in order to upend our basic federalist system. >> would you tell me, do you think the states could pass this mandate? >> i represent 26 states. i do think the states could pass this mandate, but -- >> is there any other area of commerce, business, where we have held that there isn't concurrent power between the state and the federal government to protect the welfare of commerce? >> well, justice sotomayor, i have to resist your premise

because i didn't answer yes, the states can do it because it would be a valid regulation of intrastate commerce. i said yes the states can do it because they have a police power, and that is the fundamental difference between the states on the one hand and the limited enumerated federal government on the other. >> thank you, mr. clement. mr. carbon. >> thank you, mr. chief justice. may it please the court. aid like to begin with the solicitor general's main premise which is that they can compel the purchases of health insurance in order to promote commerce in the health market because it will reduce uncompensated care. if you accept that argument, you have to fundamentally alter the text of the constitution and give congress plenary power. it simply doesn't matter whether or not this regulation will promote health care commerce by reducing uncompensated care. all that matters is whether the activity actually being

regulated by the act negatively affects commerce or negatively affects commerce legislation so that it's within the commerce power. if you agree with us that this is -- that this exceeds commerce power the law doesn't somehow become redeemed because it has beneficial policy effects in the health care market. in other words, congress does not have the power to promote commerce. congress has the power to regulate commerce, and if the power exceeds permissible regulatory authority then the law is invalid. >> surely the -- >> sorry. >> surely regulation includes the power to promote. ever since the new deal we've said regulation -- there's a market in agricultural products. congress has the power to subsidize, to limit production, all sorts of things. >> absolutely, chief justice, and that's the distinction i'm trying to craw. when they are acting within their enumerated power, then obviously they are promoting

congress, but the solicitor general wants to turn it into a different power. he wants to say we have the power to promote commerce, to regulate anything to promote commerce, and if they have the power to promote commerce, then they have the power to regulate everything, right? >> i don't think you're addressing their main point which is that they are not creating commerce in health care. it's already there, and we're all going to need some kind of health care, most of us will, at some point. >> i'd like to address that in two ways, if i could, mr. chief justice. in the first place, they keep playing mix and match with the statistics. they say 95% of us are in the health care market, okay? but that's not the relevant statistic, even as the government frames the issue. no one in congress or the solicitor general is arguing that going to the doctor and fully paying him creates a problem. the problem is uncompensated care, and they say the uncompensated care arises if you have some kind of catastrophe. hit by a bus, have some prolonged illness. well, what is the percentage of

the uninsured that have those sorts of catastrophes? we know it's got to be a relatively small fraction, so, in other words -- >> but we don't know who they are. >> we don't, and we don't know in advance, and -- but that doesn't change the basic principle that you are nonetheless forcing people for paternalistic reasons to go into the insurance market to insure again risks that they have made the voluntary decision that they have decided not to. >> but the problem is -- the problem is that they are making rest of us pay for it, because as much as they say, well, we're not in the market, we don't know the time when they will be and the -- and the figures that how much more families are paying for insurance because people get sick, they may have intended to self-insure, they haven't been able to meet the bills for cancer, and the rest of us end up paying because the people are

getting cost-free health care, and the only way to prevent that is to have them pay sooner rather than later, pay up front. >> but my point is this. with respect, justice ginsburg, conflicts the people who do result in uncompensated care, the free riders. those are the people who default on the health care payments. that's an entirely different group of people, an entirely different activity than being uninsured. so the question is whether or not you can regulate activity because it has a statistical connection to an activity that harms others. and my basic point to you is this. the constitution only gives congress the power to regulate things that negatively affect commerce or regulate things that are statistically connected to things that negatively affect commerce. i'm sorry. >> please. >> i was just going to say because if they have that power, they obviously have the power to regulate everything because everything in the aggregate is

statistically connected to something that negatively affects congress and every compelled purchase promotes congress. >> so in your view right there -- in your view right there -- >> i'm sorry. >> i'm picking on something, if it turned out there was some terrible epidemic sweeping the united states and we couldn't say that more than 40% or 50%, can i make the numbers as high as i want, but the -- you'd say the federal government doesn't have the power to get people inoculated to require them to be inoculated because that's just statistical. >> i think in all candor morris must have decided that issue, right, because people -- >> is your answer to that yes or no? >> my answer is, no, they couldn't do it -- >> they could not do it. they cannot require people even if this disease is sweeping the country to be inoculated. the federal government has no power, okay, fine. please turn to justice kagan. >> may i please explain why. >> violence against women is -- obviously creates the same negative impression on fellow

citizens as this communicable disease, and it has huge effects on the health care of our country. congress found that it increased health care costs by -- >> i agree with you that it had big effects, but the majority thought that was a local matter. >> i think that's his point. >> i don't know why having a disease is any more local than beating up a woman, but -- but my basic point is that notwithstanding its very profound effect on the health care market. this court said the activity being regulated, ie violence against women, is outside the commerce clause power so regardless of whether it has beneficial downstream effects, we must say no. congress doesn't have that power. why not? because everything has downstream effects on commerce, and every compelled purchase promotes commerce. by definition it helps the sellers and existing -- >> mr. carrin, isn't there this difference between justice breyer's hypothetical and the

law that we have before us here? in his hypothetical the harm to the other people from the communicable disease is the result of the disease. it is not the result of something that the government has done, whereas here, the reason why there's cost shifting, is because the government has mandated that. it has required hospitals to provide emergency treatment, and instead of paying for that through a tax which would be borne by everybody is has required -- it has set up a system in which the cost is surreptitiously shifted to people who have health insurance and who pay their bills when they go to the hospital. >> justice alito, that's exactly the government's argtsd and it's extraordinarily illogical argument. >> if that's so, let me just change my example under pressure and say that in fact it turns out that 90% of all automobiles driving interstate without certain equipment put up pollution which travels te