tax revenues increase, that that was not going to be a part of it. what did you hear? >> particularly in the house, you have heard leaders say that that should not be part of any deal. senator alexander seemed to be waiting and seeing right now to see what the biden group comes up with. he would not rule out anything in terms of tax increases. that signals to me that particularly on the senate side, republicans may be open to certain revenue options, whether they call them tax increases, fees or oil subsidies, we will see. they are keeping an open mind right now. >> if medicare were to be part of some sort of deal -- democrats said they do not want it to be -- but if it were, what did you hear from the senator about what he would like to see from medicare? >> republican leaders pretty much acknowledge paul ryan's plan to transform medicare into a voucher system will not be on the table inthese talks. even they acknowledge that it will not go anywhere because democrats will not touch it. but what senator alexander said, the distinction he made

that i thought was interesting, he is more in favor of the pete domenici -- former budget committee chairman -- domenici and alice rivlin's plan which is a similar approach to paul ryan's, in that it transforms medicare but it allows people to stay in the traditional program if they do not find a choice they like in the private market. he says he would be more in favor of that kind of approach. politically for republicans, that is a much safer place to be. then when democrats say you want to end medicare as we know it, they say, no, we want to leave medicare as we know it ,but also give people a better choice that they can opt for. that may be where a lot of republicans end up. >> but politically for democrats, joe, that's something they could agree to. >> you've heard some democrats in recent days say they are open to minor changes in medicare and medicaid. but not the more fundamental changes that the republicans are talking about. so they are carving out a little bit of place for changes in the entitlement side.

but they seem nowhere near enforcing any sort of large- scale changes at this point. >> joe schatz, a senior writer for "congressional quarterly, julie hirschfeld-davis, congressional reporter for bloomberg, thank you both for being part of "newsmakers." >> thanks for having me. >> thanks very much. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> this week, pierre thomas discusses some of the stories that he has worked on including the death of osama bin laden and the shooting of congresswoman gabrielle giffords. mr. thomas talks about his sources and how a be news -- abc news handles the stores. our guest tonight 8:00 p.m. eastern and pacific on c-span. >> this weekend on american

history tv, more than 20 years after the end of the cold war, a new york historical society reflects on ronald reagan and mchale or chop. but john hopkins professor on the civil rights movement and the promise of suburbia. a photographer on restoring civil war photographs from post- war charleston. get the complete we can schedule at c-span.org/history, or press the c-span on alert button to get them e-mailed directly to you. >> on wednesday, the obama administration faced another appeals court challenge to the health care law. a three-judge panel at the 11th circuit in atlanta heard oral argument in florida v. hhs. 26 different states have banded together in opposition to the new law. if the state's argument is that congress has exceeded said authority. this is two hours and 25 minutes.

>> this is florida v. hhs. before we put you lawyers on the clock, i want to make a couple of remarks about this case and direct you where i think you need to go with your arguments. clearly we believe the most difficult issue in the case is the individual mandate. but equally difficult is the medicaid expansion issue on the cross appeal. we would ask you to direct your arguments there. and i would asked counsel for the appellants, when you first get up, speak to us briefly about standing. i know that at one point in this case you challenge standing as well as some of the others standings, and it seems to us that there is clearly standing in the case as to the individuals, as far as the individual mandate issue.

clearly standing as to the states in regard to the issue of medicaid expansion. so with that, we will hear from you first. >> thank you, chief judge, in that they may please the court, i would like to frame the merits issue first and think it your comment about standing. after years of debate, congress passed the affordable care act and found that the minimum coverage regulates activity that is commercial and economic in nature, about how and when health care is paid for, that substantially affect interstate commerce, and secondly that it is a as a joke part of this regulation, the absence of which

would undercut a federal regulation of the insurance market, and that it would reduce the federal deficit. those three findings set up three different independent of what -- independent constitutional basis is. they become more weighty when you set it up against their role of the strong presumption of constitutionality to pass the congress. the three arguments are that the minimum coverage provision regulates how people regulate their area that congress found effective. there is no disputed that the end, the address of billions of dollars of cost shifting in the market and the need to make health insurance widely available to the 50 million uninsured americans, a legitimate commerce clause and. the only question is the means by which we get there. that is the question to which congress is entitled substantial

deference. this is just one part of the act that regulates the insurance market. it is essential to make the overall process work. it is it the essential part of a larger regulatory scheme. and the government's broad powers over taxation. >> now tells week for you challenge standing. >> we basically agree with what you said, chief judge. we said that we do not challenge his standing. and with respect to the states, we agreed that they do have standing to challenge the medicaid provision. so we are in agreement. >> but to the states have a standing for the individual mandate? >> we would have to get to the point where you are willing to declare the act unconstitutional, and then

there's the question about seven ability analysis, and whether the district court instructions were right. and with respect to that, we think that while ford has standing to challenge the minimum coverage provision, they do not have challenged -- the medicaid, they do not have standing for the other. that is highly technical. >> accepting all of that's true, accepting the premise of your question, if the mandate went down and there is entertaining that, we could entertain a question of seven ability even if the state's only had standing as to the medicaid provision. >> that is correct, judge marcus. if you believe that it was unconstitutional, they have challenged -- standing to challenge. >> it strikes me as a wholly

academic question. >> it is largely academic. in part, we want to ensure that the court has the full guidance of the united states views about standing in general. the issues come up repeatedly and we would not want to be in a position by in decision with this court would expand standing beyond its confine. >> while we are dealing with housekeeping matters, but assuming for the sake of argument that the mandate is the only thing found unconstitutional, does the whole law -- it can be wholly severed? >> with respect to sever ability, the minimum coverage provision is couple, and this is our second argument on the merits. >> go back to the first question. assuming it is unconstitutional, it does not reference any other provision, does it?

the statutory language to star reference other provisions in the act. >> the words minimum coverage appear in other places in the act. they were challenging just two subsets. >> let me try one more time. the government contends the rest of the act stands. i know you have a backup argument, but your first argument, you can sever that holy and not hurt the rest of the act, am i correct? >> no, our position is that if they were to win their challenge, they would win the challenge on the minimum coverage provision. >> and what else. >> two sides of the same coin, the insurance cup reform. >> so all of the insurance reforms fail? >> no, only what is essential to the act. that was identified in the

district court. >> which ones were identified by congress? i did not see any identification of other provisions that were tied to the individual mandate. >> it is the finding that i just read you moments ago when i open the argument, that that was essential. >> we understand how it operates internally. what else did congress say beside the guaranteed issue? >> i do not think they said anything decide that. our position is that you do not have to reach the sever ability issues. >> we understand that. can beestion that this i wholly severed. >> basically, yes, it is the minimum provision in the

insurance provision that most of the court would reach. >> when you say the insurance provisions, just so i'm clear, you are referring to the mandate that congress imposed on insurance companies not to blacklist or are people with pre-existing conditions or medical histories from being able to obtain insurance. that is the provision you were talking about. >> yes. >> is at the beginning and end of what is tied together? >> yes. >> and there is nothing in the sections that sadek, no time language. >> nothing essential in the findings before. >> so there is no statutory language that helps you with that. you look solely to congressional findings. and the only health reform referred to in the congressional

findings -- i am not saying that is where we're going, i am just saying where we are going with this act. >> yes, and if i could not persuade you not to go there. >> let's talk about the individual mandate. let me tell you what makes this case hard for me. first of all, i have read all the supreme court cases from the very beginning that talk about the commerce clause. i cannot find any case britain -- written that is just like this one. there is no case out there just like this one. >> depending on what you mean by just by this, i guess. >> all right. but they have set in two, -- cases, and those cases were different, they were in the criminal context, but

nevertheless, has brought an expansive as the commerce clause power is, and congress is clearly given expansive power in this area of the law, in both of those cases they say that there are limits, whatever that means. i do not know what that means. but there are some limits out there somewhere. if we uphold the individual mandate in this case, are there any limits on congress's power left? >> absolutely, chief judge dubina. lopez and more as an established rock hard limits on the power of the federal government. nothing we're saying there puts those decisions into question in any way. this court said that lopez and morrison emphasize the non- regulatory matter. when a statute regulates economic or commercial activity,

lopez and morrison are in opposite. but those of the words of this court. while there is not a case that exactly like this one, this case in which congress is doing falls within a long line of supreme court authority. we are not saying that congress can force someone to buy something and the failure to do so is economic activity, you should not reach that question. our point is that people are seeking this could already in untold numbers, the good of health care, almost a universal feature of our existence. and that that failure to pay for that good when they see fit is what causes that cost shifting. congress made a specific finding that $43 billion in cost shifting was occurring because of uncompensated care. increasing the average family premium by $1,000 per year. that is quintessentially economic, chief judge dubina, in

no way that lopez and morrison were not. morrison was about gun laws leading to less commerce. congress said nothing like that here. >> what is the nature of that contact actually being regulated? the government's position seems to shift from coverage to now focusing the conduct of health care. >> i do not believe that we have shifted. we have always emphasize that what congress was doing was language regulating the fact that there were a large number of people who were attempting to self-insure. that is the language of congress. >> 50 million uninsured, and the uninsured are causing $43 billion in uncompensated costs.

that is what that finding states, correct? >> that is one finding. i was talking about a different one. theet's follow up on the 13 supreme court has drawn the economies, and over time, they have rejected them all. then they came up with economic and non-economic. i have two questions in that regard. to you believe that economic activity is a sufficient limiting principle? another debate on whether we have economic activity, but the government believes that economic activity is a sufficient reason? is that your position? >> it is not our position. to use chief judge dubina's language -- how about a part of your position? >> if is a part of our position.

it provides an important touchdown and it cannot be attenuated. you cannot claim that it a substantially affecting commerce. here we're talking about the very opposite of that. we're talking about $43 billion in cost shifting. the budget of the federal judiciary -- >> let's talk about $43 billion in cost shifting. all of health care is too. $5 trillion. that is 7%. we are costing -- cost shifting of 1.7%. we're also talking about 50 million uninsured. let's put aside the individual mandate over here. in fact, the health care act will take care of at least 10 million of those 50 million by virtue of the medicaid expansion. and we will pick up another 5

million by the extension of dependents age to 26. so we will get a lot of help the young people by virtue of just the extension to age 26. small employers will have to offer coverage or pay a penalty. is that correct? >> yes. >> and we will have no discrimination based on health status. and we've got at least 15 million people trying to get insurance but denied because of discrimination based on health care. they are voluntarily trying to do it. is that correct? >> yes. >> the act is going to take care of that. at the 50 million, the health care costs major reforms are going to reduce that to around 10 million without the individual mandate. i am not saying it is not important, i'm trying to understand how relates to

everything else. >> i am not sure about the numbers. i think congress down did would reduce something like 16 million. >> but over 75% of the uninsured will now have coverage by virtue of the major reforms without even looking to the individual mandate. >> i disagree with that. congress thought of this is a comprehensive package. >> we understand your sever ability argument. but the reality of the act, that is going to occur. >> i do not think that is right, judge hull there you could not have guaranteed issue in the community reform position without a minimum coverage position. they had eight states that try to do this.

>> and the insurer is left that state and that market. >> exactly. >> there are a lot of studies from the cbo and other experts with regard to what will happen under the act. you are familiar with us. i did not see in anyone's brier, a reliance on any of those studies. >> i think that is basically correct. >> we should be able to consider them as part of this case. >> under rational basis standard. >> i want to make sure that we consider the studies. they say without the individual mandate, the number people will get in short, get coverage anywhere. whether the insurers will leave the market is a whole other issue which leads me to this question. i tried to find a steady and the

record that tried to analyze the national market based on these health care reforms and whether insurers will or will not leave the market. there did not seem to be a steady in the record on that point. >> there are several studies, the americans with disabilities brief shows that without a minimum coverage provision, the in shuras left the state. congress made a finding saying that the massachusetts experience work because it coupled these provisions. i think it would be a deep mistake for this court to read some lines from the cbo report that says that you can do some of the problems through other mechanisms. congress found specifically you could not. you could not solve the bulk of the problem, the pre-existing

condition discrimination, without coupling it to the minimum coverage provision. >> and that is a congressional findings. >> it is. and in the market, the only thing we're talking about is whether this is an economic are not. a small percentage of goldman sachs is still a large amount of money. it is still economic. a large percentage of this overall market is fundamentally economic. this is substantial. >> would you call it an economic mandate? the person's health insurance as a mechanism as paying for health care. >> is all about financing. >> it is the purchase of health insurance in order to pay for health care that the government says you are considering right now or certainly will in the future. does that frame the government? >> i would add one more thing.

every person cannot guarantee that they will not need help for -- health care of some point in the future. just like maxwell, there is the potential that any of us, even if we think we will not into the market, we will into the market. >> is it fair to say this is an economic mandate? you brought up economic activity and this is an economic mandate. >> i am not sure what those words mean. i will prefer to use the words that congress used. in the minimum coverage provision, and the reason -- it may be similar to your economic mandate. it is thoroughly about financing. it is about regulating whether someone will pay cash or credit. and in that sense, it is not unusual at all. >> all that is true, but i like

to go back where chief judge dubina began. is there any case out there that you can cite to me -- i cannot find any -- that involves a court or the supreme court having sustained a mandate for telling any private person to purchase any product? frame that narrowly, and i know you challenge the framing of the question as my optically limited, but it is framed in that way, is there any case out there that has sustained on commerce clause grounds the power to compel the purchase of a product on the open market? >> that is not the power we are searching. -- asserting.

>> you say this is stated so narrowly as to misstate what congress is trying to do. i accept that. but going back to the first principle, is there anything out there that's a step -- that suggests that congress can compel a private party to buy private product on the open market if they are not disposed to do so? >> i do want to say a word about this framing. to suppose that there were a precedent from the supreme court calling obama or bush the -- we think that that would be irrelevant to the question you have before you. a question you have before you is that is not the government saying by this good. we're saying that everyone is invariably consuming they could. it is a question of who is going

to pay for. it is about but the year to pay, not the failure to buy. look at the solution for the problem. >> i was like for you to give me an answer to my question as i framed it. i take it the answer is no. >> nothing has come out specifically in those terms. >> there is not a case this says you cannot do it either. >> there are other cases in which congress is essentially forcing people to enter markets. offering a service to sell to people or they have offered a hamburger stand to sell hamburgers. no one is compelling them to into the stream of commerce as an innkeeper for a burger flipper. >> but for the purpose of commerce, i do not think that

matters. >> the trouble with those cases is that at the exact. congress does compel that the sell hamburger, they only do they want to have entered the stream of commerce. >> and that gets to make crucial point. my friends have conceded that the point of sale, the moment that a person sought medical services, then that would be constitutional. >> i understand that. i am trying to get back to the first principle. we will move on in just a moment. but i take it, the trouble with those two cases is that they involve by additional acts. your answer is that this involves acts, too.

wickerd argued in substance, by limiting how much i can grow, you force me to buy a product i otherwise would not want to buy at time and price i would not have to buy. but even there, acustar with the practice that wickerd has chosen to into the stream of commerce to produce wheat. in a sense, it would be closer if the government had said to filburn, you go by so many bushels of wheat on the open market. but they do not say that. >> there is no principle in the commerce clause as to what people chose to or not to do. this is in that sense similar. if i could go back to what i was saying about. a sale, because if congress could pass a lot to say that hospitals will only treat people

that they have lined up insurance ahead of time, they think that is constitutional. it is manifestly improper for congress not to do that, not to say that the rule is if you show up at a hospital, a woman in labor or at trauma victim, that you were turned away -- that is far more coercive what they are acting -- asking the congress to do than what the congress did. this is about timing. they want that timing at the point of sale. >> this case boils >> congress ever but it concedes has the power at the time health care services are consumed to compel the consumer to have insurance and other was penalized him in one form or another if he does not, therefore all congress has done is jump back earlier in time. this is simply a temporal question? >> it is about timing. we're only on the first of the

three arguments. >> i want to come back to the essential question that judge dubina raised. what comes bill -- what constitutional limits are there if the courts were to say this passes constitutional muster? >> our answer is the same -- the rock-solid limit of the text of the constitution and the president of the court. what this court said in the united states vs. peters is the decision established that the absence of all four factors when the regulated activity is non- commercial, the statute contains no jurisdictional requirements. the affects on congress are attenuated. that indicates congress has

strayed far out side of their power. the constitution requires the distinction between what is truly national and local. that setup a number of limits. you cannot have attenuated change of causation. it must be substantially affecting commerce. in general, it has to solve a national problem. it cannot solve local problems like the guns in schools or domestic violence against women which may be national in scope but there is not a barrier to national solutions the way there is -- >> you are basically saying that if it is we -- give it is within the broad and national economy which almost everything is they can regulate it. >> absolutely. >> as long as it is part and parcel of the national economy. it limits don't have to be about

anything other than it is part and parcel of the national economy and it substantially affect commerce. >> i think there are strong limits -- >> i am trying to understand your argument that those are the limits. we don't need an additional limit. findings by congress are sufficient from the government's point of view? >> and they cannot contravene some other clause in the constitution. >> we are not talking about a due process case. into aot compelling some in just something. >> exactly. >> let me ask you the question this way. there is only danger in creating hypothetical to address problems tomorrow in avoiding the problems today. the nature of the case almost impels you to do that. let me ask the question this way.

would congress have the commerce power to regulate -- regulate the following in the area of insurance -- suppose congress were to find that one in four americans will have to consume long-term care of some kind or fashion, maybe institutional in the form of a nursing home or something like that, and if they were to find that the costs associated with doing that are extraordinarily high and indeed we know it consumes a huge part of the budget today. it would not be hard to make that finding. third, congress or to observe that the number of americans who actually hold long-term care insurance is very small, less than one in 20.

one in three will consume the service. could congress under its commerce power compel all americans to purchase long-term care insurance? >> i think the answer to that is probably no. this is the way i would think about it. is the end congress six legitimate? you have to show a cost shifting is akin to the cost shifting that occurred here. >> before you move off that -- you say they could not do it because of the cost shifting t? the cost would be borne by the national government other than those by actually have insurance? why isn't that enough? >> the power that congress is

asserting here is one in which literally they were dealing with money comes out of one person's pocket to pay for another's. whether or not cost shifting to the government make qualified maybe a bit more attenuated change of causation. the other problem with the end -- >> morrison rejected cost shifting. >> i don't think they did. that was about the attenuated cause of causation. >> they rejected it. >> because it was attenuated. this court accepted cost shifting -- >> let's go back to long-term disability. i have difficulty understanding why that is different. >> with the act that congress

enacted, you have the question about the needs. judge marcus, you have said that congress is entitled to substantial deference. if congress pick something -- >> the heart of my question, to make the question as parallel as i committed to this case, is congress chooses to mandate the purses -- the purchase of long- term care and impose some form of penalty financially for the failure to do so. what findings of fact by congress would be pivotal in discerning whether it passes muster or not? >> there would have to be cost shifting sean from one person to another. >> there has to be cost shifting of the covers the cost of private people. >> that's right. the second is that there has to be some sort of barriers to

state-by-state solutions, some structural barrier akin to those here. third, the solution that congress chose, the means is one that is necessary and proper. that is a very deferential standard. congress is inventing something that people are not otherwise doing. there may be an argument that that is not necessary and proper. >> when we come to the well established substantial affect doctrine, the supreme court has embedded in its case law for 50 years now, are we in the territory of necessary and proper cause in clause 18 of article 3? or are we still in the commerce clause? >> we say it does not really matter. >> i asked the question. are we in the territory of the

necessary and proper cause? >> we say those are two different things but we don't think it matters. >> i understand the concurring opinion of justice scalia. the question is -- the aggregation doctrine, is it derived in part from purely the commerce clause or is it derived in part by the necessary and proper in terms of individual interest activity? >> you are correct to say that justice scalia sees it as a necessary and proper clause. the majority did not. >> i thought the majority cited in tandem to gather. >> he was riding in part -- he was writing in part for the consensus opinion. the safest action would be to follow the majority and see them as two separate things. >> one last necessary and proper question -- the government's position is you do not need to

look to the necessary and proper cause. you can sustain this regulation of purely interstate activity under the commerce clause. is that the government's position? >> we think it does not matter. yes, >> you can sustain a purely under the commerce clause? >> yes. >> you are running out of time. why don't you go to the tax-and- spend issue. ? tell us why this is a tax. >> i want to get out the second argument for the commerce clause which this is part of an overall comprehensive regulation. even if you don't see the minimum coverage provision as economic, it is still constitutional under range. with respect to tax, this looks

like a tax. it functions like a tax. therefore it is a tax. we believe that congress will reduce the deficit. the cbo found it would reduce the deficit by a quarter of a billion dollars per year. >> when you look at the text, that is not what congress said. congress said they were imposing a penalty. they did not use the word penalty only once. they used the term penalty repeatedly. they did not use the term tax. in the overall comprehensive act, when they wanted to tax, they well knew how to do it and use the term tax repeatedly. beyond that, they pegged the power to craft the mandate precisely to their commerce power.

how, then, am i to ignore the repeated text with references to penalties when they want to make it penalties and taxes when they want to make it taxes and say that you did not know what you are doing. you are really imposing a tax. >> the text refers to tax alone about 34 times. they used penalty but penalty under the supreme court decision has been meant to mean tax. there are other provisions in the affordable care at that use the word tax but they used them interchangeably with the word penalty. under the supreme court, the test has always been not been a magic word doctrine but does it function like a tax? here it undoubtably functions like a tax. nobody is fooled by this. every april 15 on your tax return, you will have to fill out whether or not you have met

the minimum coverage requirement or not. if you have not, you will have to pay. >> help me with one thing in that respect. i understand the requirement of the mandate. you have to check off a box or you will have to tackle -- check off a box on your personal income tax return reporting whether or not you have insurance, right? , theu don't have insurance penalty kicks in. >> correct. >> is there any enforcement mechanism in the statute? where would i find it? >> it was detailed in a supplemental briefing. the secretary of the treasury would be able to offset future credits against any unpaid taxes. the second is that the united states could bring a lawsuit against the firth -- person for the collection of the taxes. >> it would be clear that the

irs could not do what they hear 24 can do if i have a problem with my taxes. they can levy and encumber and anti assets and they can garnish and do all sorts of things but this statute says they cannot do any of that? >> that is correct. congress thought they were passing a tax and they presented the criminal penalties and said we don't want that part to be applicable. you said that congress made findings about the commerce clause. answeredt's decision that. but you had findings of the commerce clause for copyright -- for a copyright case. it did not matter of congress talk in terms of congress so long as it is justified by the copyright powers. here is undoubtedly justified by the tax power.

this raises billions of dollars per year. it is quince -- it is quintessentially about tax. >> can we tell from the statute whether it was the intent of congress to generate revenue as opposed to compelling compliance? >> i don't think one can tell their intent. the practical effect congress knew very well and that is the

relevance test for this court under the rational basis. large employers placed it on them.

then we go to the mandate. the mandate says he can satisfy minimum coverage by virtue of any plan from an employer sponsorship. >> it includes goals. it restricts them. i will give back to you. -- get back to you. >> all of the government breeds, no one has outlined or summarize the contents of that. it might be helpful if it would go through the act and tell us what is in the pages. i have. the large group employers have very few requirement as to what has to be in their plan.

individual markets are totally different. you can satisfy this mandate by purchasing very little coverage. it makes it up. it makes it not affected. do you understand my point? >> i do. >> does the government agreed that you can satisfy it by purchasing very little coverage? >> it is under page 30. i agree with this. >> how about a large group of employers? are you familiar with what you have to buy it there? -- to buy their? >> i will give back to you on that. congress is entitled to the difference in which it deals with the problem. it is undoubtedly economic.

>> we are going to give you your full time. i want to ask you to questions. as you know, this law was struck down in the district court. the to make the argument in the district court that without an individual mandate the whole bill goes down? was that your argument? >> it was not. >> the second question is, i read somewhere that at one point time this law did have eight clause in it and it was taken out. is that correct? >> there was one in a version of the bill. it became the affordable care act. the supreme court has said that it cannot defer anything.

>> we do not grow in the entrance. >> the housing dropped. >> thank you very much. >> we gave you your full amount of time. of time. >> there is a great deal about this place that is complicated. i think the constitutional issue with respect to the individual mandate is quite simple. it boils down to the question of whether or not the federal government can compel an individual to engage in commerce to better regulate the individuals. we do not have a case that is directly on point. it is odd. we do not have this case. the reason we do not is that for 220 years, congress never

saw fit to use this particular power. it is a rather astonishing fact. a.q. think about the federal code which is littered with -- if you think about the federal code which is littered with provisions, how much more of fission can the federal government be to compel people to regulate them? to regulate them? i would suggest that this is the dog that did not bark. >> there are a lot of people that do not have insurance already engaged in commerce. at some point in time in their lives, unknown to any of us, they will need health care services. >> they are not engaged in congress. beer city in their livings. they are not doing anything.

-- they are sitting in their living rooms. they are not doing anything. right now, and they are not. >> so we have clear undisputed facts that as we sit here right now, i am not talking about next week or next month, i mean right now, the uninsured make up approximately 20 each year. they have routine checkups. 50% have one in the past, too. if you accept this, as we sit here, and of this group of uninsured, a there are bound 20

million to the emergency room each year. if that is true, why would that not be in every classic sense activity? >> that is activity. this is something they can regulate. >> i want to be sure there is no dispute. dispute. it was disputed on all sides. >> there is no dispute of material facts. there are uninsured people. >> there are large numbers of uninsured americans each year.

the study says 20 million a year if you actually go down to the emergency room to consume services -- who actually go down services -- who actually go down to the emergency room to consume services. tell me why that does not constitute an every meaningful sense activity? it has in the aggregate a it has in the aggregate a substantial effect on commerce. >> that is not the market that this statute regulates. if congress wants to pass is that you -- a statute that says if you pay for your health care in cash it will cost twice as much. that would incentivize them to buy health insurance. it is not sure that that is the market being regulated. the market being regulated is the market for health insurance. the mandate is clear. we must by qualifying health

insurance. that is why the question i submit is whether the federal government has the power to compel you to engage in congress. >> we are regulating how and when you pay for health care. i understand the mandate only says coverage. this is to regulate how and when you pay for health care. >> why is that not part of the equation here? >> as saying it does not make it so. if you look at this statue -- >> u.s.a. in the air not regulating the conception of healthcare. >> the first finding says the mandate will have an effect on congress. this is not what they tell you to look at. but there answering this in the

first sentence. >> it is the same mistake. the mandate has an effect on how people pay for health care. because of the mandate people will be more likely to pay with it for insurance. i do not deny it. that is not what they are regulating. maybe they do not do what they are saying. what they seem to be saying are two things. two things. they seem to me to be saying "we have a problem with 50 million uninsured people." what the problem yields, because many of them get sick at unpredictable times and are forced to go to the emergency room and will not be turned away.

that six powerful cost to other people who do buy -- that shifts powerful cost to other people who do jack up the premium for everyone else. they are concerned about how and when we pay for it the service that they can stand. it is from the finding. they purport to regulate activities that is commercial and economic in nature. their words are economic and financing decisions about how and when health care is paid for. i goes to the consumption of the service itself. they seem to be saying "we are regulating into regulated in sure she is -- into regulated

insurance is." this is what they say they are doing. do you agree they will have the power to regulate in both areas? but not if it involves compulsion. one in the markets fear regulating is the health care insurance market. they have a lot of authority to regulate health insurers. they have a lot to regulate people that voluntarily purchase health insurance. they do not have the authority to compel people. >> this is very important. i thought they conceded that congress could regulate under

the price of payment at the time of consumption. it can compel an individual who does not have helped insurance to pay a penalty at that time. it coerces the mandate. can they do it? >> in the health-care market at the time of consumption, yes. it is coercing someone that is already engaged in activity. it feels coercive if you are an innkeeper and to yardy set up the in. >> i just want to be clear that i understand the position.

at the time of consumption, the government would have to read power the state of an individual with the conditioning this service upon obtaining insurance without which we can penalize you in one way or another. >> i'm with you entirely. that is not what they do. that is not what they do. under this, all the things u to not have requirements. you are forced to buy it. they assume everybody will use it. it. there are lots of different ways congress can incentivize people. they can pass a tax and give

people a tax credit for paying for qualifying insurance. that is the way the federal government usually operates. >> that is another way of saying they could have done what they did better. it was more directly. it. regulated in if it is rational, doesn't my job stop at the end? they can make these kind of calculations and determinations. >> absolutely not. they could have done the same thing constitutionally. instead, they took the easy way out. this is chock full of incentives. what you do not see is when congress goes the last mile and say we are not going to rely on

incentives to get you to do what we want you to do. we are going to force you to do it. the only provision out there is the individual mandate. >> i think this is fair. >> the government points out that both of the cases where criminal conduct cases. criminal conduct cases. >> the area they were regulating generally speaking was traditional police power areas. those cases are different. they may give it some principles. >> i do not think there is a single case just like it. >> it seems to me one of the keys that we see is that

economic activity can be a very important limiting principle. would you agree with that? >> i would agree with that. it is one of the more important imitating -- important limiting principles. this case comes down somewhat to whether or not the decision -- because if you are making a decision, and let me put aside activity. do not call this inactivity. i consider it activity. it does not help me personally. i want to focus on economics. isn't it accurate that when i decide how i spend my money i would rather take this trip by duct then buy health

insurance? how can that be anything other than an economic decision? that is not an economic decision. >> it to assure other characterization that this is an economic mandate. -- it was your other characterization that this is an economic decision. >> i do not know if it is about insurance or health care. and maybe both. and deciding to pay for my health care because i'm not gorgeous i am deciding to pay for my health care because i am not -- i am deciding to pay for my health care because i am not covered. >> that is fair enough. mandate should be very far. >> let me go to the economic mandate. i think this has a team of

economic activity. we go to the economic mandate. you will tell me how to make that economic decision. you would agree that congress would say if i went to the hospital and did not pay, we now recover you -- we now require you to pay for insurance. you to pay for insurance. i can stand healthcare this past year. >> this one's a little hard. >> that is why i asked the question. >> i am not sure they can impose a decision based on tax concept. then there is no choice. >> let's focus on the moment of consumption.

the uninsured walks into a hospital bleeding from a gunshot wound. has no insurance. never had insurance. does not have a dime. does congress have the power to compel, co-workers as a condition of co -- coerce a condition of treating it to buy insurance? can they penalize you for not doing it? " i think they can. >> can they go so far as to say the mandate of hospitals shall not treated those without insurance? >> putting aside that might violate somebody's constitutional right to have their treatment refused, yes.

>> i appreciate your point. i'm just asking about commerce laws. >> no government would ever do that. they could. the fact that there alternatives, it does not weaken it. you are not talking about a choice among rational means. we are talking about one choice the government said that tripped the wire the we have gone 220 years without any concrete stripping it. we did with out any congress tripping it -- we have gone 220 years with out any congress tripping biit. >> this is all about individual liberty. that is really where you are going. what i find so interesting is that you argue that in the

district court. he argued other things. you squarely argued that one of the things francks is that it entrenched on individual liberties. it is made someone buy something they did not want to buy at a time they did not want to. you pegged that specifically to the 10th amendment residual power to the people clause's and to subsistence due process. he made this argument before. am i right that this argument has been abandoned? i have is thatat there seems to be an individual liberty issue. it is looking behind commerce clause analysis. i am trying to analytically

distinguish between the two and it just them plainly and honestly. >> here is why i think that you cannot. cannot. if you look at the supreme court cases, with a horizontal or vertical, almost every one says the reason we do it is to protect individual liberties. it is hard to divide the substance provisions of the constitution's from liberty association. the argument has a home in the text of the commerce clause. it is the word "regulate." compelling someone is not regulating. it is not forcing them. we all except that due process is sort of a last refuge. it is the argument you make when nothing helps you. i think this is almost a clue

here. if they had understood the breath of the modern commerce clause and they understood the commerce clause to include the power to compel, do you really think that we would be a provision of the bill of rights that specifically limited the federal government to exercise the power to compel an to the commerce clause? i'd bet my bottom dollar there be a number of>> the only pointg to get that was when you try to ground that individual liberty, what you have to grounded in is the testament of due process. if you do not do that, you cut adrift. as opposed to the problem you faced in lopez were you had a clear collusion between the national sovereign and the

undeniable state police power of the other. you do not have on the individual mandate, you do not have that kind of tension directly. the tension is between the national sovereign and the compulsion to the individual on the other. >> i tried to distinguish between the due process and the 10th amendment. the 10th amendment is very much in this case. it is a reflection of the limitations of powers. i think the commerce clause only gives the government the power to regulate and not to compel. the 10th amendment reinforces that by giving power to the states. that is the answer as to why this is an individual rights case and a commerce clause enumerated.

>> does the power congress has include the power to stimulate commerce? >> it does. >> you understand why i asked. >> there is a difference between stimulation and compulsion. what was the federal government doing screwing around with these incentives for wheat production? they were trying to preserve, stimulate the price of wheat. the more direct way is to mandate people buying wheat. >> he makes that argument. he walks in and says, a book, if you penalize me and say i cannot grow more wheat, to consume at myself for my own family, if you do not let me do that, you are forcing me to buy the product on

the open market. your compelling need to do it. i do not want to do it. the supreme court says in one word that is tough. we can make you do it because they have the power to regulate. roscoe was taking activity in an economic market. that is what the supreme court reiterated. they also said in the same opinion there is the difference between supply and demand. i bet that justice jackson would have had a differ reaction in that case if it forced individuals to buy wheat as opposed to put limits on how much roscoe could produce. i think those are different regulations. that does not mean the means is important. >> it was very telling in a case where a homegrown marijuana was

just an instant away from the interstate market. this is a temporal problem. we are an instant away from needing health care. this is not come parable. even though you are not currently consuming health care, just like the homegrown just like the homegrown marijuana, why are we not all, 25 million are consuming health care without paying for it. why isn't everyone else an instant the way? >> there is a constitutional difference between being an instant away because you're engaged in economic activity.

my problem is, in every market we are all an instant away from participating if the government can tell if you have to participate now. >> we are not an instant the way for making economic decisions not to buy insurance. the uninsured have already made the economic decision. they are operating under no insurance. so it is not a matter of something in the future. it is going on right now. >> the idea that most of the uninsured already made that decision as opposed to fighting themselves uninsured. >> they have made that decision. that is part of the findings. >> with respect, the way they responded to that promise to say, we will make you make

another decision. >> i want you to help me which way you prefer to have it. you say the purpose of the commerce clause argument is that this is not an essential part of larger regulation. is that correct? it is not an essential part of this larger regulation because of the clause. >> i want to be careful how i answer you. >> before you answer, the other part is you say to strike the mandate. because it is an essential part of regulation. it seems like you have to pick one. >> i am going to try not to. it is not in the way congress used the term in cases like barbie. they're trying to make the argument you can put anything

as part of a broader regulatory regime. that escapes the lemon. -- limit. somehow that might be ok. we do not think that is the right way to look at it. we think it is distinct. you have to analyze the mandate as the mandate. we will take the position that when you look at this act, it is not a simple matter of saying it is a mandate. look at the way the mandate -- it is the driving force between all the health insurance. how're they going to do that? when you look at the people that are out there, there's a part of peace that to the response to every group. for the people already qualified for medicaid, those people, even if they have not enrolled, they assume medicaid will take care of that.

they force them to enroll. as the people between the current enrollment limit, medicaid will take care of those people. between 133% of the poverty level, there are subsidies and the health-insurance market that the statute creates. for people above that level, it is the employer mandates that the care of them. it is hard to say -- if you take away the driver 10 -- >> there is still the 10th amendment argument. there is some tension there. >> there is some tension there. it is on both sides. byis the judge's reaction the number of times he read in the brief how essential the individual mandate was to the rest of the statute. >> your position is if the

mandate tells it all fails. suppose the government says if the mandate fails, the only thing that needs to -- is the preexisting guaranteed. that you could limit it. that is where they would limit and say the rest stance. would you take the position that if you're going to fund the mandate, you could do that. ? there is no other provision that must bell as a matter of constitutional law if the mandate fails. >> we take the position that the secondary matter, that the government has got itself pregnant on the health care reform. i think they are right. you cannot separate the individual mandate from the guaranteed issue. i do not think it is any different for the other provisions, the medicaid reform, the employer mandate,

and the health exchanges. all of those are equally tied. >> you do not think the issue is more tied and then a number of others? >> i do not. i think they are tied together. they are reforms. they are reforms. >> we are about to run out of time. i want you to speak about medicaid expansion in just a moment. the supreme court created the coercion doctrine. as far as i can tell, it is still viable lot. it is on the books. every circuit save one, the fourth circuit, the rest of the circuits seem to ignore the cores and doctored. it is a pretty powerful argument that you have on this medicaid expansion. >> a couple of things, a chief justice. i think it is true. there are a lot of circuits to seem to deem coercion -- despite

what the court has said. if you want to look at those cases and the pathology of how the circuits got to the wrong answer, i think it is because a lot of them started with the d.c. circuit case that was decided before dole. the court picked up that language and the ninth circuit picked up on that even though it was after dole. of course there is no limits on spending power. under garcia, there are no limits on the -- >> accepting with you that the doctrine of coercion is alive and well, it is abundantly clear that it is, there is holding that applies and rejects the doctrine in that case. what you can help me with is its

application to the circumstances of this case. the supreme court teaches us that there is a difference between into spent on the one hand and coercion on the other. why is this provision coercive? >> a special when you couple with that that every single state can opt out if they choose state can opt out if they choose to opt out. >> in theory, but not in fact. it is telling that 26 states do not like the conditions. none of them have pulled out. it is unthinkable. there are two reasons why this is the case that crosses the line. the sheer volume of the federal money as they combine with the fact that the money that is tied to these conditions is not limited to the new money or the new conditions. the best illustration of that is

the maintenance of effort provision. that tells the states then anything they voluntarily did anything they voluntarily did before, they can not change until a point in the future. it is a backward looking provision. it ties into what they did in the past. we should be focused on the preexisting pool of money. they condition the whole thing on that one department. here is the second thing. the biggest problem on the commerce clause is the lack of a limit in principle. when we make that argument, we do not have a limiting principle. i think there is a limiting principle. principle. i think you can strike this case down as unduly coercive. the key is the relationship between the medicaid conditional program and the individual mandate. no other spending condition i am

aware of is tied as this to a mandate. i want to be clear about this. there is no plan be in the statute. there is no alternative for how the individual mandate is going to be satisfied for individuals above and below the poverty level other than medicaid. we know congress wants to force a mandate on the demand side. on the supply side, the only way the statute supplies anything to those people is a conditional medicaid program. the only reason congress can overcome the disconnect between having a mandate and a condition on supply is the statute knew the states did not have a choice. >> let me ask the question differently. as i understand the thrust of the argument, uncle sam pays

between 50% and 80% of all of the medicaid expenses that all of the states consume. the difference is the nature of the service provided. what the government has said is, if he do not comply with the expansion of to 133%, you are out. we will not give you a dime. that is coercive because the amount of money is so large, larger than any other course in case. the question i have is, congress did something else, too. it seems to have removed some of the sting from the argument. they said, we mandate you cover everybody up to 133%.

but we're going to pay for it ourselves. for the first three years. we will bear all 100% of the cost. in 2017, we will bear 95%. in 2020, we will bury 90% of all the costs forever so that the actual cost in terms of your money tends not to be quite so great given that the federal government has assumed all of the cost or virtually all of the cost. dozen that remove some of the course of bite? >> no. this is the critical thing. part of what is critical for the spending clause argument is that they have not limited the new conditions to new money.

if of congress did was cover people between 100% of the poverty level, we will give me a whole bunch of money, we would not be here saying that was coercive. the problem is the people who are already eligible. what happens to those people? right now, there are a lot of people who are eligible for medicaid benefits but are currently enrolled. -- not enrolled. those people will be forced into medicaid by the individual mandate. that is the reason that states have independent standing to object to the mandate. the individual mandate makes the maintenance of the medicaid program for people who are currently eligible vastly more expensive. to give you an idea of the magnitude, this is an expert -- excerpt. the state of florida estimates

the state of florida estimates that that people, people already eligible but not enrolled, it will cost the states $574 million. that is the impact for which there is no new money. to make matters worse, that is why this maintenance provision is so pernicious. the rational reaction of any state would be to say, whoa. we are going to get all these new people. let's modify our program so we can reduce the cost of servicing all these people. that is what the maintenance provision tells them they cannot do. they cannot change the level of benefits. the individual mandates forces these people want to them. they were eligible, but there were not enrolled. but now federal law tells them they must. that imposes a huge cost. it is enough to create a

spending clause problem. >> let me ask you one final question. you have gone over your time. because we have vast to these questions. with respect to the question that judge hall has asked concerning sever ability, i want to flip around the conventional theme. if the mandate was if the mandate was constitutional, but were beyond congress's spending power, with those provisions be tied together at the hip or would they be separate? >> i was a separate but i would concede that the argument is not as strong. individual mandate is the center

of the wheel. all of these various provisions for how the individual mandate is satisfied are the spokes. if you got rid of one of the spokes, like the medicaid expansion, the hub would come down/ . . if you take that out, the spokes come with that. >> to you agree that it hardly matters whether it's you have -- there are plaintiffs to do. the states to not have to. it makes no real difference. we do not have to answer the academic question if whether the states can carry this forward. it does not matter here. doesn't matter to you? >> i want to agree with the general on this by saying i do

not think it matters. the only way my matter is for the scope of the injunction. i am looking forward to a day when there is that injunction. i see that is a good thing. there is an argument that you might want to say that everybody has -- for the reason i just explained, the argument that states have a standing is not that difficult. because of the individual mandate -- >> i want you to make the -- does that matter? does that matter? >> the only way i could see is the way an injunction is written. you could probably right around that and not have to decide the issue. >> back to the effects, the same question, is that in the commerce clause or in both? >> i do not know that my answer is much different on that. i would be happy to live in a world where justice scalia's

opinion was the law of the land. as the general said, justice scalia is so clear about that. it is necessary and proper. he is trying to correct the -- >> can you get at it? can you articulate that doctrine? ordeal have to bring in the necessary clause. that is my question. >> i find it difficult to explain why it is the federal government as to regulate substantial effects without relying on the necessary cause. >> that is what i thought. it is hard to know what is going on. >> we are going to take a 15 minute recess. >> all rise.

>> i would like to start by answering the main question this morning. are we regulating health insurance for the payment. it is undisputed that it is only regulation of health insurance that is going on. you have to pay a penalty if you do not buy health insurance. they impose a penalty without regard if you see a doctor or failed to pay the doctor. the government says one of our reasons is to make sure that doctors are paid when they provide service. that is true as well. it does not matter. they are using an improper means to beneficially affect health care service. congress made explicit findings

that violence against women caused billions of dollars. the court said that is a permissible goal. it is the same we're dealing with the dead. but you used improper means. you are not regulating commerce. you are not regulating commerce. here they are regulating the economic decision to stay out of the the commerce. the other point is there is a subset of the people we are regulating. they do go to the doctor and they do not pay the doctor. that is commerce-affecting activity. that is negative. it is irrelevant. it does not matter whether the classification happens to encompass people that they could have regulated. if that were true, lopez would have been decided differently. at least 90% of the people had

the guns near the school. they got them through interstate commerce. a huge subset of the people being regulated could have been regulated under a proper commerce law. whether they had gone through interstate. the court did not say it does not matter if it is over broad and improper. they said you cannot capture things that are not commerce. congress has not given the power to beneficially affect commerce. congress -- >> let me tell you why lopez does not give you very far. there was a single statute. congress put in the interstate nexus. the law was upheld. you follow me? lopez does not help you at all. let's go to morrison. what part of lopez has anything

to do with this case? to do with this case? how could it possibly help you? >> the thesis of the government is this, if we over regulate, as long as a subset of the people we to regulate engaged in commerce, it is ok. my point is that a very substantial subset of the people regulated in the lopez la were engaged in commerce. >> that is the same thing here. health insurance is in interstate commerce. >> it is not buying insurance. >> howdy is described not buying insurance as inactivity? >> i am happy with your characterization. let's call it an economic decision. my decision is to not buy insurance. the government is compelling

need to make a decision i do not want to make. by their on finding it is a disadvantage to me. the congress's expressed findings was that the mandate would lower insurance premiums. by 15%. the only way my insurance company can lower everybody else's is if i have made a bad deal. what really the government is telling you is because some some said -- subset of the group, these people.e >> do you agree if i'm going to the hospital, i have to buy insurance? >> that is a point i would like to focus on. that is right.

>> they could do that. you agree. >> yes. >> can you do it in advance or must you do it at the time of consumption? so it is now a temporal issue. >> let's think about the temporal issue. every 22 year-old is going to enter the job market. there is all kind of restrictions you can impose on employees to contribute to pension. pension. the only difference between a law requiring employees to contribute to 401k's and college students is temporal. the real difference is the employees have entered the labor market than the students have not. if you give congress the power to regulate people who are not in the market, you give them the power to regulate everything. lopez told us that things affecting congress as too broad,

now we're talking about things that -- >> why isn't everyone in the health-care market because of the uniqueness of health care? >> i would like to make two points. that is a factual distinction. this is a smoke and mirrors attempt to create a principle. the judiciary cannot tell congress if they have the power to regulate purchases. by definition, as the government points out, those policy decisions are given substantial deference by the judiciary. what difference does it make if it is unique? >> the judge's question is the difference is we are faced with a real argument, not an

insubstantial one that there is this parade of hypothetical problems at the doorstep. if you do this, they can do that. to which the answer that the question is suggesting is not so fast. if this is really different and unique, then you have nothing more than a holding. you take the next case at the next time in the crucible of the next set of facts. if it is not unique, if what is common dominates over what is disparate, that may be a very germane to the thrust of the argument that two out swept the door open and limited power. i would suggest to you that whether or not this market is

unique is an important part of the calculus. even though it requires you look at the economic reality. >> i have two points. even if it is unique, that is for congress to decide. if the have the power to do it, they do not have to limit themselves. number two, let's examine the next case. let's see how unique this is. but they say it is unique because you have to enter the market. >> is it different from life insurance? flood insurance? >> it is not different from flood insurance for anybody who lives near water. and taxes and death are inevitable. we know everyone will eventually die. any time you fail to pay a service provider for a good or service, you are shifting costs.

>> that is true insofar as it goes. the additional point is it is not just the youth have cost shifting. the market is unique because unlike a whole bunch of others, virtually everyone will find themselves in the unfortunate position of having to consume health care services. while other people might have to consume food and shelter, they do not involve cost shifting in the same way because here we know the hospital and providers will not and cannot turn away someone knocking at the door with a stroke or a gunshot wound.

that is what makes this different. >> there is some moral imperative to provide health care. i agree with that. i cannot believe people think there is not the same imperative to feed starving people. the government can require private individuals to provide those kinds of services. they come provide doctors and insurance companies to provide low-cost circumstance -- services. how do we deal with that? we have dealt with it through the spending power. if i constrict one individual to serve another below cost, i will compensate him because he is serving the public interest out of the treasury. congress did not want to do that. instead they constricted my client and others to bring them into subsidized these premiums that they neither need nor want

to give this $30 billion a year subsidy to those people. that is not regulation of commerce. that is the now we way we have done it throughout our history. we have required services, but we have compensated them. >> you are making policy arguments as opposed to constitutional arguments. >> if i sounded -- >> congress makes those decisions. whether if it is up the outer edge of the commerce clause. >> your honor, when we make the constitutional argument this is not commerce. all i hear is policy arguments. they have to solve the problem. i am saying, you are right. that is not a decision for the court.

the only question is whether they are regulating power. compelling people to buy health insurance is not regulating commerce. this will create a huge problem if we allow these people not to pay those doctors. the subsidy they are mandating is $28 billion annually. it outstrips any kind of concern they have about unpaid care over -- on their own analysis. at most, for all the reasons you went through, -- >> i do not think you concede the first point. the government suggests that the limiting principle is that we are regulating economic activity. i know you disagree with that characterization. if economic activity that

affects interstate commerce is constitutional. >> that is a truism. they're confusing what is required with what they are regulating. >> we're trying to determine if there regulating economic activity. >> i would say making an economic decision not to engage in the activity of purchasing health care cannot be economic activity. they try and twisted by saying -- >> is at an economic decision? >> every decision to be inactive, not to buy something, it is an economic decision. if that gives congress the power to regulate, they can tell school boards, we are overriding your decision not to buy this kind of textbook. we are compelling you to buy this kind. the activity we are compelled is economics. purchasing textbooks.

guns. the most basic requirements of child care. all these sorts of things we thought were reserved for the state as some kind of limiting principle in terms of what the spheres of influence between state and fudge of government are. >> the collision of the tension is not between the national sovereigns and the state postal police power but between the national power and some notion of individual liberty. isn't that really the tension we face on the mandate as opposed to the issue of coercion with the medicaid provision? >> i have two answers. the reason the economic liberty is important -- >> i am not saying it is not important. the nature of the tension that

you are arguing is of a different character than the tension the supreme court was troubled about in lopez where was a collision between a national sovereign and the invasion of the state's constitutional power. here we are not concerned about the states police power as that residual clause in terms of individual liberty. isn't that the reality we face in regard to the mandate? >> i would respectfully disagree for three reasons. the first is, as we know, congress is limited to certain powers not to protect the states. as these court has said, to protect individual liberty against centralized government. so no, it is at the core what

lopez was saying. we do not -- there would be one government with police power. they can only do things that are necessary and proper. here they have taken a new power. they have taken upon themselves the power to compel contracts. that cannot be proper because it is not incidental to commerce power. it is not appropriate that as it is not the sort of thing the federal government the -- does. it is what states do. it is at the outermost boundary of the police power and raises the most serious kinds of due process if the state were to compel somebody to buy goods. we know it needs to be within the spirit of the constitution.

>> let me go back to my question. the same question i had put to your colleague. have you abandoned the claim that there is a fifth amendment issue and/or a 10th amendment issue as well? what we have to focus on the commerce power issue and that issue alone? >> yes and no. no on the 10th amendment. it references people as well as the state. the state. for other reasons, if congress feeds its power is it is by definition invading the provinces of sovereignty. it is absolutely at the core. close to what thiit is

the courts found. it can pre-empted. but it cannot tell us to pass a law or tell us to enforce a law. when someone enters commerce, congress has little power arbor what they can do. they cannot compel them to engage in commerce. the court found this distinction in essential to its necessary finding. >> accepting that as true, you still have to apply that principle to the residual clause in the amendment dealing with the people. a similar kind of analysis ought to be adopted as to the people

the supreme court crafted and adopted as to powers reserved to the state. you have to do that. you have to make that analog. you have to make that jump. is there no case out there anywhere that has done that? this would be the first time. >> i must respectfully disagree. i think lopez and morrison were all about individual liberty. they were not concerned about a law regulating guns. it would not be concerned if they had prohibited violence against women. >> i thought the problem in lopez that cheap justice rehnquist was dealing with was that the national sovereign had presumed to regulate in a non-

economic area. an area dealing with criminal conduct, possession of a gun within 1,000 feet of a school. the fear that animated that opinion was a powerful concern. that national sovereign was invading the state. i am not sure you can make the same argument in quite the same way with respect to the individual. i'm not sure i understand how you get around that issue. >> we are on the same page. obviously they are concerned about the federal government about the federal government asserting state like police powers. the court has told us because it denying the federal government is designed to ensure individual liberty.

they have said that in every federalism and separation of powers case. the reason is not because of some state legislature in georgia, but that the citizens should be subjected to a regime far away. i do not disagree that the problem was them asserting the police power. i do not think it is much of a leap to say the reason they are concerned is because it infringes on individual liberty. i do not believe the notion that it was criminal was what motivated lopez and morrison. i take the supreme court at its word. everything affects economic activity. you can use any means to affect economic activity, you have exceeded the congress' power. that exactly the government is

making. we want to beneficially affect economic activity down the road. if congress has the power to affect economic activity, it has the power to do anything. violence against women affects economics. guns and commerce affects activity. you need to come up with a limit in principle. -- limiting principle. every compeled picture is economic activity. every failure to pay as a cost shifting. it may not be to an insurance company but it shifts to the seller or other consumers. it creates this unprecedented

and a historical power to compel people to engage in economic activity even to their disadvantage. it is difficult to understand why they could not eliminate restrictions and lopez. if that does not do it, the regulation argument does. >> in morrison, they severed the provision. there was a regulatory scheme. the supreme court severed a narrow provision. i want to speak of that here. i understand what judge vincent did. the plan to support that position. and some that if it were unconstitutional, why would not be wholly severed as a legal matter? is there any health care provision that must fail?

i know there are arguments why it is essential, but are there -- >> it never deals with unconstitutional parallels. >> there is a presumption even without a clause. >> there is a presumption which is weekend if you delete it. >> likening not sever the mandate from the rest of the provision? tell me legally why you cannot do that? >> i would like to agree with the government on this point. it is inextricably intertwined with the provision. >> all of them? >> guaranteed issue was the statutory provision. >> pre-existing is what he said. >> the other provisions were the

community -- >> how about annual limits? does that fails? >> necessarily it does for the same reason. >> all health-care reforms fail. >> this is a central part of the act. this is the patient protection and affordable care act. >> is that based in anything written in the statute? written in the statute? is there anything in the statute that intertwines the mandates in title 26 or title 42? >> i do not know of anything in the u.s. code is intertwined. >> related or anything. cracks in the findings they said this is --

>> i am in the statute. >> than i am at a loss. i do not know of such a statute. it is not in this act. it is not in any act anywhere as far as i know. the answer is no. the supreme court has told us to look at whether or not congress would have passed the law anyway because the main purpose of the law -- >> it is impossible to tell whether they would have done it without the mandate. >> we have better information than we do with most laws. we know that the house passed a rule that said you cannot change a comma. that was the vote. we know it was almost not passed because of provisions involving abortion in all these other things. that they viewed as essential to

getting it through. in a more realistic level, i have never seen a statute so intertwined. the name was to insure sick people. the individual mandate was designed for the expressed purpose of compensating the insurance companies for the cost. we are protecting patients on the one hand. we are compelling people to come to the individual insurance market. that is the operative assumption which every other part of the act was based on. that there would be affordable insurance out there. when you mandate employers to do it. when you put these taxes on companies. when you set of these health care exchanges. the dominant premise was that there would be affordable insurance out there. without the mandate, without the subsidy they are imposing on my client, $30 billion a year, none

of this insurance is going to be affordable. congress would have never impose the requirements. >> would they bring healthy people into the market? the extension, your kid a large pool of new consumers, healthy individuals. is that correct? is the answer yes? >> yes. >> there are provisions that will aid the insurance companies with regard to the insurance pool. >> maybe i did not understand the question. the requirement they can limit cost hertz the insurance companies. the requirement they have to ensure people up to 26 hurts them because they are adding new clients whose health-care expenses they have to pay. it is basically all additional cost. you have to expand your client

pool. >> not bigger than the health market reforms. is that what you're saying? >> but the government said we will pick up the tab for a lot of people you do not want to ensure. we're going to expand medicaid. that helps them. it is taking them off the doll. congress is trying sang, at this point you cannot afford the individual mandate. we're going to put you on the state one. again that is based on the assumption that there is universal coverage that tries down the insurance clause. they subsidize people for these health care exchanges. that number was set on the assumption that the health care costs would be driven down by conscripting young people to engage to their detriment which

were dry everyone else -- >> healthy people can still buy catastrophic coverage. >> i do not think -- i still think of a 31-year-old as young. they cannot buy a catastrophic insurance. what they call catastrophic is not anyone's normal idea of a catastrophic coverage. you have to have the health benefits of the savings act. there needs to be a number of benefits. the deductible includes the three primary physician visits per year. getting hit by lightning in a serious disease, what most people think of catastrophic. that is not an option available. that is part of the cruel irony of forcing them to buy this plan when it is economically

disadvantageous. i see my time is running out. >> we thank you. >> thank you. i have four points i would like to start with. the first is that the plaintiffs had made a major concession. the government can regulate to the point of fail. now the only dispute is about timing, the means congress chose. chose. congress has since -- substantial deference. their solution is to ban the an insured and leave waiting victim's at the door. that is what happens if people do not have money to pay under

their system. it is proper for congress not to have to do that. congress is reacting to a real- world problem, a problem worth $43 billion in uncompensated care. they say other solutions exist. as judge marcus points out, if anything, congress's means are far more rational. they decided to build the system. >> to say it is a temporal jump does not yield the inevitable conclusion that the jump is not a big deal. you understand? you can make the jump in a lot of different industries. your colleague throughout the question, mr. carvin, i think it is a fair question to ask, i wanted to ask it to you

directly. if they can compel this, what purchase could they not compel? >> as i said earlier, we are not arguing that the failure to buy something is what causes the economic activity that congress is regulating. he is looking at the wrong side of the transaction. he is looking at the means and saying if you can do that, the failure to buy something, it will always be commerce. that is not what congress said. congress said the status quo was once that was leading to cost shifting. you can imagine a president that forbade the government from forcing the purchase of a good in terms of a substantial commerce clause authority. it would not matter one bit. we're talking about the means. with respect to that, while there may be jumps in timing, in

many circumstances this is not one of them. here health insurance is the way that most health care is paid for. 80% comes from non-out of pocket cost. will congress decided to do -- >> it pays for a 37% of health care. medicaid, medicare, many other ways account for 70%. private health insurance pays for 30%. >> of course congress allows medicaid to be part of the solution. my only point is that congress was building on this existing apparatus. it was not a jump in some dramatic step. the incentives and other plans would not work. they knew that if they wanted to get rid of discrimination

against those who have pre- existing conditions. the way to do that was to have a minimum coverage provision. there was not another option. they said the massachusetts solution was the way to do it. if you are a truck driver, you have to have insurance. that brings me to my second point. about rates and how we were an instant away from the market there. i think that is right. millions of americans need health care. that is what makes this market unique. i take my friends do not disagree. one brief points to the rational

decision to sell insurance. his answer here to you was, that was economic. the failure to buy something is not economic. this court dealt with and responded to -- >> they have not enter the stream of commerce gap. >> exactly. this court dealt with that question in maxwell. the panel said that child pornography, it was not commercial. it was impossible to think of anything farther away from the commercial. then this court said where congress meant regulates activity, whether economic or not. so long as the ability do so undermines our ability to effectively -- >> that is the majority opinion.

>> it is. >> let's go back to the question about making an individual purchase of anything. field for the energy example. consumption is a national problem. it has life affects as well as does health care. everybody consumes energy on some level. by then, couldn't you require the purchase of certain types of cars or solar panels? once we go down this road, because there is a a health care problem, we are going to require you to purchase health insurance. >> absolutely not. >> and none of those car, theances, the ca food, you have a right to go in

there. if you walk campanulas, you cannot say to give it to me. healthcare is different. it is why his question was correct to say. this is unique. that is what stops the slippery slope. shifting have the cost here have here. >> can congress increases by >> can congress increases by passing a lawyer shop provide health care -- and pass a law providing an healthcare? >> on page 25, they say precisely that in responding to it. if you are worried about it, how can you increase your power to the activity? there will be no limits. that is exactly what this judge

said in maxwell one. it took courage congress to paint with a factor brush. on page 25, it rejects that. it is up to congress. >> let me ask a question about insurance generally. i agree with you that health insurance is unique to the extent that we really cannot predict when someone will need it. i think that it does differentiate health-insurance from other projects such as automobiles and so forth. i am not sure that makes health insurance unique. it isn't that really an aspect of the insurance industry as a whole? flood insurance, fire

insurance, home insurance, life insurance, natural disaster insurance, although those pride for eventualities that are known. >> absolutely. >> how does that make health insurance unique from all the other kinds of insurance? >> there is cost shifting here. someone else picks up the tab when you do not have insurance. that is why it is activity to not be insured. congress found specific findings of $1,000 a year to you and me. when they say it seemed unusual to compel the purchase of a good, i think that is a liberty

of market. they did not have a president that says -- precedent that says the court can mix and match liberty concerns. >> why not? >> i think they both it dealt with that. did they deal with them in separate places. >> the reality is that there is a powerful factual different between claiming there is some liberty interest to grow marijuana in your backyard in california and telling someone they have to buy a product they do not want to buy life insurance. it is critical. >> dealing with the forced detention of individuals after they served their sentence, the court said that is a due process challenge.

we will not consider this with respect to it. i think there is clear guidance from the supreme court. the concerns are off the table. i know they tried to get a lot of rhetorical forest. maybe the argument that violate the attention of ayn rand but not the united states. they also said congress had not done anything like this for 220 years. >> is that accurate? >> i do not want to quibble. >> congress has not done anything at all like this and 220 years. i do not know. is that accurate? >> here are some examples we think are close. the order people to have guns and knapsacks.

>> it was not specifically pegs. this is just a question of books proper. if i could spend a couple of minutes on the conversion. the first point is that even if you think that there is some coercion doctor, this is opposed. >> the supreme court has said there is. this case is not close to the line. did you do not hear a word in theargument about what district court pointed to. >> i do not understand what you just said. it seems to me that the supreme

court of the united states says with respect to whether spending and taxing goes too far beyond the constitutional limits, that a limit provide it. it says we have a four part test that we will apply. what is more on top of that, we are concerned about the problem of coercion. when it morphs into coercion, that may bring a bell that yields the conclusion that the legislation has gone too far. the federal government said he will deprive the status of dakota 5% of the money they would otherwise get.

but i think it is forceful. maybe it is not. there is a specific statute that says congress reserves the right to "alter, amend, or appeal any provision." states have been on notice. congress can change the rule. >> is it your view that all they have to do is to place tax legislation. we are giving you money. we reserve the right to change the terms and conditions and that it can never be the worst? >> that is precisely what they say with respect. they point to the specific statute. he can now change the rules.

that is actually happened several times. conagra said the exact same thing it is doing today. you have to cover patients appeared in 1989, pregnant women and children under the age of sex. same exact threat to the overall brand appeared >> it is not overall relevant to looking at overall coercion. -- the same exact a threat to the overall brand. overall relevant to looking at the overall coercion appeared >> it is the same threat the the -- coercion. it is the same threats. statue to 1396c says that if the

state is the not meet the education requirement comment the secretary has a good there a long process over exactly what she will do. >> i understand this. i thought that what congress said was you have got to increase your coverage to include 133% of the poverty level. in the past, you only had to go up to the poverty level but was 12,000 and change for individual. if you do not do that, we -- the power is there to cut the state's off from a dime from any medicaid coverage at all. what did they fall within the first hundred term or the 33%.

-- whether they fall within the first 100% or the 33%. >> it is in the power. you also have lesser remedies available. >> what to be a lesser remedy? >> partial withdrawals of funds as opposed to full. in the west virginia case, it said we should wait and let that process play out and see what the secretary does before getting into it. that makes sense. these days do not have to spend a dime for the expansion of medicare costs. >> your suggestion is to wait till another day. >> that is part of the answer. this is not even come close. >> u.s. and counsel for my purposes of the question that

congress and the secretary says to the state of florida by way of example, if you do not to raise the eligibility pool to 133%, if you will not get a dime for medicaid. we are cutting out what we did you which amounts to billions you which amounts to billions of dollars. would that be coercive? >> you have that statute. this is about eligibility to a program. it is our program. it is our dollars. >> i want to turn back to the

enforcement mechanism. the government argues it. it is essential to the entire regulation. individuals have a choice. the penalty is $95 to begin with. is this correct? >> yes. >> there may look at i'm not going to buy insurance to pay the penalty. there is no interest that accrues. accrues. there is no levy.

my question is how is that penalty even more the medical bills? >> i do not think it'll be any different. how can that be so essential to reducing unpaid medical bills? it is collectible. it is collectible. >> it'll cost more to pursue the lawsuit. >> we will make sure that the statute does not say 695. sometimes it can be more or less. >> for most wages adobe $6.90 -- it will be 695.

>> this is the appropriate way of enforcing it. it would reduce days that are uninsured by millions and millions. >> the cbo says even with this mandate 8 million will be exempt. out of that 8 million, only about 4 million will pay the penalty. that is how it works. >> i'm not sure if that is correct. it is a substantial number. there is no distinction in the

wall that is more essential than the difference between a constitutional argument in a policy argument. much about what we heard about today, it they turned out to be policy arguments. and do not think they go to the commerce clause. commerce clause. if they say congress cannot regulate, then on the grounds that it is not interstate commerce, i wondered what the limits are in future cases. >> thank you. i want to take this opportunity to thank all of you lawyers. this was very helpful to us.

it was a very difficult case. it will certainly affect all of the citizens of our nation. the citizens of our nation.