people's participation in the health care market and is regulating to deal with existing effects. >> that seems to me it's a passage in your reply brief that i didn't quite grasp. it's the same point you say health insurance is not owsake a car or broccoli. it is a mean os of financing health care consumption and cov. a car or broccoli aren't purchased for their own sake either. they're purchased fo e of trps or broccoli covering e need for food. i don't understand that distinction. >> the difference mr. chief justice is health insurance is the means of payment for health care. >> that's a significant -- i'm sorry. >> broccoli is not the means of payment for anything else. >> it's the means of satisfying a basic human need just as

insurance is the means of satisfying -- >> i do think that's the difference between existing commerce activity in the market already occurring, the people in the health care market purchasing obtaining health care services and the creation of commerce and the principal that we're advocating here under the commerce clause does not take the step of justifying the creation of -- >> can we go back to, justice breyer asked a question and kind of interrupted your answer to my question. tell me if i'm wrong about this, but i thought a major, major point of your argument was that the people who don't participate in this market are making it much more expensive for the people who do. that is, they will get a good number of them will get services that they can't afford at the point when they need them.

and the result is that everybody else's premiums get raised. it's not just your free choice. what you do is going to affect others. affect them in a major way. >> that absolutely is a justification for congress' action here. that is existing economic activity that congress is regulating -- >> you could say that about buying a car. if people don't buy cars, the price that those who do buy cars pay will have to be higher. so you could say in order to bring the price down, you're hurting these other people by not buying a car. >> that is not what we're seeing. >> that's not what you're saying? >> i thought it was. you were saying other people are going to pay more for insurance because you're not buying it. >> no, it's because you're going in the health care market you're going into the market without the ability to pay for what you get, getting the health care service anyway as a result of

the social norms that allow -- that to which we've on littled ourselves. >> don't obligate yourself to that. you can do it, but does that expand your ability to issue mandates to the people? >> this is not a purchase mandate. this is a law that regulates the liesod of paying for a service re inevitably consuming. >> general, i see or have seen three strands of arguments in your briefs. and one of them is echoed today. the first strand that i've seen is that congress can pass any necessary laws to effect those powers within its rights. ie because it made a decision that to affect -- to affect mandatory issuance of insurance that it could also obligate the

mandatory purchase of it. the second strand i see is self-insurance affects the market. and so the government can regulate those who self-insure. the third argument, see all of them as different is that what the government is doing -- i think it's the argument you're making today that what the government is saying is if you pay for -- if you use health services you have to pay with insurance. because only insurance will guarantee that whatever need for health care that you have will be covered. because virtually no one, perhaps with the exception of 1% of the population can afford the massive costs if the unexpected

happens. this third argument seems to be saying what we're regulating is health care. and when you go or have services you have to pay for insurance. and since insurance won't issue at the moment that you consume the product, we can reasonably, necessarily, tell you to buy it ahead of time. because you can't buy it at the moment that you need it. is tt are all of them your argument? i'm not sure. >> let me try to state it this way. the congress enacted reforms of the insurance market. guaranteed issuing community rating reforms. it did so to deal with a very serious problem that results in 40 million people not being able to get insurance and therefore not access to the health care market.

everybody agrees in this case that those are within congress's article one powers. the minimum coverage provision is necessary to carry those provisions into execution because without them, without those provisions -- without minimum coverage guaranteeing issuing community rating will make matters worse not better. there will be fewer people covered. it will cost more. >> so on that ground, you're answering affirmatively to my colleagues that have asked you the question, can the government force you into commerce? there's no limit to that power? >> no. that's the first part of our argument. the second part of our argument is that the means here that congress has chosen, the minimum coverage provision is a means that regulates the -- that regulates economic activity, namely your transaction in the health care market with substantial effects on

interstate commerce. it is the conjunction of those two that we think provides the particularly secure foundation for this statute under the commerce power. >> we've talked a couple of times about the other alternatives that congress might have had. other alternatives that the respondents suggest to deal with this problem. in particular the alternative of mandate and insurance at the point at which somebody goes to a hospital or an emergency room and asks for care. >> they've agreed that congress has article one authority to impose an insurance requirement or other penalty at the point of sale.

and if one thinks about the difference between the means they say congress should have chosen and the means congress did choose, we with see why it was more imminent for congress to choose the way it chose. >> i'm not sure which way it cuts, if the congress has ultimate means. the national health service. how does that factor into our analysis? in one sense it can be argued this is what the government is doing and ought to be honest about using the correct power. on the other hand, since the court can do it any way, i'm not sure which way the argument moves? >> let me try to answer that and get back to the question you asked me early per's earlier. i do think one striking feature of the argument here that this

is a novel exercise of power is that what congress chose to do was to rely on market mechanisms and efficiencies and a method that has more choice than would the traditional medicare or medicaid-type model. seems a little ironic to suggest that that counts against it, but beyond that, in the sense that it's novel, this provision is novel in the same way, or unprecedented in the same way the sherman act was unprecedented when the court upheld in the northern securities case or the packers and stockyards act was unprecedented or the national labor relation act when the was upheld or the dairy price supports and right with dairy -- >> no, it's not. all involved commerce. there was no doubt what was regulated was commerce and here you're regulating somebody who isn't commerce. by the way, i don't agree with you that the relevant market

here is health care. you're not regulating health care. you're regulating insurance. it's the insurance market that you're addressing and you're saying that some people who are not in it must be in it. and that's -- that's different from regulating in any manner. commerce that already exists out there. >> to the extent we're looking at the comprehensive scheme, justice scalia it is regulating commerce that already exists out there and the means in which that regulation is made effective here, the minimum coverage provision, is a regulation of the way in which people participate a method of their payment in the health care market. that is what it is. and i do think, justice kennedy, getting back to the question you asked before, what matters here is whether congress is choosing a tool that's reasonably adapted to the problem that congress is confronting. and that is different from the way has chose ton use in the

past. not something that counts against the provision in a commerce law. that's -- >> it's both necessary and addresses what's necessary. yes. has to be adapt the. necessary does not mean essential. just reasonably adapted. in addition to being necessary it has to be proper. and we've held in two cases that something that is reasonably adapted was not proper, because it violated the sovereignty of the states. which was implicit in the constitutional structure. the argument here is that this also is maybe necessary, but it's not proper, because it violates and equally evident principle in the constitution, which is that the federal government is not supposed to be a government that has all powers. that is supposed to be a government of limited powers and that's what all this questioning has been about.

what is left? if the government can do this, what else can it not do? >> look, this does not violate the norm of proper, as this court articulated in prints or in new york, because it does not interfere with the state's sovereigns. this is a regulation -- >> no. that wasn't my point. that is not the only constitutional principle that exists. >> but -- >> an equal li evident constitutional principle is the principle that the federal government is a government of enumerated powers and that the vast majority of powers remain in the states and do not belong to the federal government. do you acknowledge that that's -- >> of course we do, your honor. that's why we're talking about it. >> and the way in which this court and its cases has policed the boundary, that what's national sphere and what's in the local sphere, ask whether congress is regulating economic activity with an effect on interstate commerce. here it's really impossible in view of our history to say congress is invading the states sphere. this is a market in which 50% get their health care through

their employer. it's $250 billion a year makes it much more affordable. orissa and hipaa regulate that to ensure the kinds of bans on pre-existing condition discrimination and pricing practices that occur in the individual market don't occur. >> i don't understand your point. whatever the states have chosen not to do the federal government can do? >> no. not at all. >> the tenth amendment says the powers not given to the federal government are reserved not just to the states but to the states and the people. and the argument here is that the people were left to decide whether they want to buy insurance or not. >> but -- but, your honor, what the court has said and it would be a substantial departure from what the court has said, when congress is regulating economic activity with a substantial effect to interstate commerce that will be upheld nap is

what's going on here. to embark, i submit with all due respect to embark on the analysis my friends on the other side suggest court ought to embark is on is to import loughner style due process -- >> excuse me. >> the key in loughner is that we were talking about regulation of the states. right? and the states are not limited to enumerated powers. the federal government is. and seems to me it's an entirely different question when you ask yourselves whether or not there are going to be limits on the federal power as opposed to on the states which was the issue in loughner. >> i agree, except, mr. chief justice, what the court has said, as i read the court's cases, is that the way in which you ensure that the federal government stays in its sphere and the sphere reserved to the states is protected is by

policing the boundary. is the national government regulating economic activity with substantial effect on interstate commerce? >> but the reason this is concerning is because it requires the individual to do an affirmative act in the law of torts, our tradition, our law has been that you don't have the duty to rescue someone if that person's in danger. the blind man's walking in front of a car, you do not have a duty to stop him. absence some relation between you. and there's a severe moral criticism of that rule bu that's generally the rule. and here the government is saying that the frost government has a duty to tell the individual citizen that it must act, and that is different from what we have in previous statements. that changes the relationship of the federal government to the individual in a very fundamental way. >> i don't think so, justice kennedy, because it is predicated on the participation

of these individuals in the market for health care services. now it happens to be that this is a market in which aside from the groups that the statute excludes virtually everybody re participation in that market. >> well, but it's critical how you define the market. if i understand the law, the policies that you're requiring people to purchase involve, must contain provision for maternity and newborn care, pediatric services, and substance use treatment. it seems to me you cannot say that everybody is going to need substance use of treatment, substance use treatment, or pediatric services and yet that is part of what you require them to purchase. >> well, it's part of what the statute requires the insurers to offer and i think the reason is because it's trying to define minimum essential coverage, because -- >> yeah, but your theory is there is a market in which everyone participates, because everybody might need a certain range of health care services. and yet the -- the -- you're requiring people who are never going to need pediatric or maternity services to

participate in that market. >> the -- with respect to what insurance has to cover, your honor, i think congress is entitled with lat nude making the judgments of what the appropriate scope of coverage is and the problem in this market is that -- you might think you're a perfectly healthy and that you're not -- that you're being forced to subsidize somebody else, but this is not a market in which you can say there's an immutable class of healthy people who are being forced to subsidize the unhealthy. this is a market in which you may be healthy one day and you may be a very unhealthy participant in that market the next day, and that is a fundamental difference, and you -- >> i was posing that question, that doesn't apply to a lot of what your requiring people to purchase. pediatric services, maternity r.

you cannot say that everybody is going to participate in the substance use treatment market. and yet you require people to purchase insurance coverage for that. >> congress has -- congress is enacting economic regulation here. it has latitude to define essential, the attributes of essential coverage. that doesn't -- that doesn't seem to me implicate the question whether congress is engaging in economic regulation and solving an economic problem. >> are you denying this? if you took the group of people who are subject to the mandate and you calculated the amount of health care services, this whole group would consume, and figured out the cost of an insurance policy to cover the services that group would consume, the cost of that policy would be much, much less than the kind of policy that these people are now going to be required to purchase under the affordable care act? >> well, while they're young and healthy, that would be true, but they're not going to be young and healthy forever. they're going to be on the other side of that actuarial at some

point and you don't know which among that group is going to be hit by the bus or get the definitive diagnosis. >> that's not the point. you take into account that some people in that group are going to be hit by a bus. some people in that group are going to unexpectedly contract or be diagnosed with a disease that is very expensive to treat. but if you take their costs and you calculate that, that's a lot less than the amount that they're going to be required to pay. >> so you can't just justify this on the basis of their trying to shift their costs off to other people. can you? >> well, the people in that class get benefits, too, justice alito. they get the guaranteed issued benefit they would not otherwise have, which is an enormously valuable benefit and in terms of the subsidy rationale, i think it's, it would be unusual to say that it's an illegitimate exercise of the commerce power for some people to subsidize

others. telephone rates in this country for a century were set via the telephone rates in this country for a century were set via the versus of the commerce power in a way in which some people paid rates that were much higher than their costs to subsidize -- >> only if you make phone calls. >> well, right, but everybody, to live in the modern world, everybody needs a telephone, and the same thing with respect to the, you know, the dairy price supports that the court upheld and wright with dairy. you can look at those as forced transfers. i suppose it's theoretically true you could raise your kids without milk, but the reality you have to go to the store to buy milk and you're subsidizing somebody else. >> this is especially true, spt et, generally varelli because the subsidizers become the subsidized? >> that's what i was trying to make -- you're young and healthy but you don't stay that way, and this

system works over time. i don't think it's a fair characterization of it and it comes back to a problem -- >> people aren't stupid. they're going to buy insurance later. when they think they have a substantial risk of incurring high medical bills they'll buy insurance like the rest of us. but i don't know why you think that they're never going to buy it. >> that's the problem, justice scalia. and that's exactly the experience that the states had that made the imposition of guaranteed and community rating not only the ineffectual but highly counterproductive. rates, for example, in new jersey doubled or tripled. went from 180,000 people went from 180,000 people covered this market down to 80,000 people covered in this market. kentucky, every insurer left the market and the reason for is that because when people have that guarantee of, that they can get insurance they're going to won't get it until they're sick and need it so the pool of e rkle in the insuranc gets smaller and smaller. the rates you have to charge to cover them get higher and

higher. it helps fewer and -- insurance coverers, fewer and fewer until the system ends. it's not a situation in which you're conscripting, forcing insurance companies to cove very large numbers -- >> you could solve that problem by simply not requires the insurance company to sell it to somebody who has a condition that is going to require medical treatment, or at least not require them to sell it to him at a rate that he sellitnto do >> that seems to me to say, justice scalia, that's the problem here. that's -- it cannot solve the problem through standard economic regulation, and that -- and i do not think that can be the premise of our understanding of the -- >> whatever problems congress' economic regulation produces, whatever they are, i think congress can do something to counteract them.

here, requiring somebody to enter the insurance -- >> it's not a problem of congress' creation. the problem is in a you have 40 million people who cannot get affordable insurance through the means that the rest of us get affordable insurance. congress, after a long study, careful deliberation, and viewing the experiences of the states in a way they tried to handle this problem, adopted a package of reforms. guaranteed issue and community rating, and subsidies, and minimum coverage, package of reforms that solved that problem. i think it's highly artificial to view this as a problem of congress' own creation. >> is your argument limited to insurance or means of paying for health care? >> yes. it's limited to insurance. >> now, why is that? once you establish that you have a market for health care, i would suppose congress' power under the commerce clause meant they had a broad scope in terms

of how they regulate that market? and it could be -- it would be going back to loughner if we were put in a position of saying, no. you can use your commerce power to regulate insurance, but you can't use your commerce power to regulate this market in other ways. i think that would be a very significant intrusion by the court into congress' power. so i don't see how we can accept your, it's good for you in this case to say oh it's just insurance, but once we say there is a market and congress can require people to participate in it as some would say or as you would say some are already participating in it, it seems to me we can't say there are limitations over what congress can do under its power just like in every other area given deference that we accord to congress in this area all bets are off and you can regulate that market in any rational way. >> but this is insurance as a method of payment for health care services.

>> exactly. you're worried, that's the area that congress has chosen to regulate. there's this health care market. everybody's in it. so we can regulate and it we're going to look into a serious problem which is how people can pay for it. next year they can decide, everybody's in the market. we're going to look at a different problem now and this is how we'll regulate it and we can compel people to do things, purchase insurance in this case. something else in the next case, because we've accepted the argument that this is a market in which everybody participates. >> mr. chief justice, let me answer that and then if i may i'd like to move to the tax power argument. >> can i tell you what the "something else is." the something else is everybody has to exercise. because there's no doubt that lack of exercise causes illness and that causes health care costs to go up. so the federal government says, everybody has to join an exercise club. that's the "something else."

>> no. the position we're taking here would not justify that rule, justice scalia, because health club membership is not a means of payment for consumption of anything in a market. >> right. that's exactly right. but it doesn't seem responsive to my concern that there's no reason, once we say this is within congress' commerce power, there's no reason other than our own arbitrary judgment to say, all they can regulate is the method of payment. they can regulate other things that affect this now conceded interstate market in health care, in which everybody participates. >> but i think it's common ground between us and the respondents that this is an interstate market in which everybody participants and they agree that congress could impose the insurance requirement at the point of sale. this is just a question of timing and whether the necessary and proper authority gives congress, because of the particular features of this market, the ability to impose the -- the insurance -- the need for insurance, the maintenance of insurance, before you show up

to get health care rather than at the moment you -- get health care. >> unless i'm missing something. i think you're just repeating the idea that this is the regulation of the methods of payment, and i understand that argument. and it may be a good one, but what i'm concerned about is once we accept the principle that everybody is in this market i don't see why congress' power is limited to regulating the method of payment and doesn't include, as it does in any other area. what other area have we said congress were regulate this market but only with respect to prices, but only with respect to means of credibility? no. once you're in the interstate commerce and can regulate it, pretty much all bets are often. >> but we agree congress can regulate this, orissa regulates it, hipaa regulates it. it's in various ways already. i don't think that's the question, mr. chief justice. the question is, is there a limit to the authority that we're advocating here in the

commerce power? and the answer is yes, because we are not advocating for a power that would allow congress to -- >> could you just say, before you move on, could you express your limiting principle as simply as you possibly can? congress can force people to purchase a product where the failure to purchase the product has a substantial affect on interstate commerce if -- what? if this is part of a larger regulatory scheme? is that it? anything more? >> we got two, and they're different. let me state them. first with respect to the comprehensive scheme, congress has the authority to enact. that the necessary and proper clause gives it the authority to include regulation, including a regulation of this kind, if it is necessary to counteract risks attributable to the scheme itself that people engage in economic activity that would undercut the scheme.

it's like -- very much like wickard in that respect. with respect to the -- with respect to the, considering the commerce clause alone and not embedded in the comprehensive scheme, our position is that congress can regulate the method of payment by imposing an insurance requirement in advance of the time in which the -- the service is consumed, when the class to which that requirement applies either is or virtually is certain to be in that market when the timing of one's entry into that market and what you will need when you enter that market is uncertain and when -- when you will get the care in that market, whether you can afford to pay for it or not and shift costs to other market participants. so those are the principles we're advocating for, and in fact the conjuncti