Paul Clement on Cost shifting

MR. CLEMENT: Well, Justice Kennedy, I don’t think that’s right, certainly in any way that distinguishes this from any other context. When I’m sitting in my house deciding I’m not going to buy a car, I am causing the labor market in Detroit to go south. I am causing maybe somebody to lose their job, and for everybody to have to pay for it under welfare. So, the cost shifting that the government tries to uniquely associate with this market — it’s everywhere.

And even more to the point, the rationale that they think ultimately supports this legislation, that, look, it’s an economic decision; once you make the economic decision, we aggregate the decision; there’s your substantial effect on commerce. That argument works here. It works in every single industry.

MR. CLEMENT: Well, Justice Breyer, are other markets that affect every one -­ transportation, food, burial services — though like to talk about that either. There also are situations where there are many economic effects from somebody’s failure to purchase a product.

And if I could — if I could talk about the difference between the health insurance market and the health care market, I mean, ultimately I don’t want you to leave here with the impression that anything turns on that. Because if the government decided tomorrow that they’ve come up with a great — somebody — some private company has come up with a great new wonder drug that would be great for everybody to take, it would have huge health benefits for everybody; and by the way, also, if everybody had to buy it, it would facilitate economies of scale, and the production would be great, and the price would be cheaper — and force everybody in the health care market, the actual health care market, to buy the wonder drug, I’d be up here making the same argument.

MR. CLEMENT: Justice Kagan, again, with all due respect, I don’t think that’s a limiting principle. My unwillingness to buy an electric car is forcing up the price of an electric car. If only more people demanded an electric car, there would be economies of scale, and the price would go down.

MR. CLEMENT: Justice Kagan, first of all, I do think there — this is not the only place where there’s uncompensated care. If some — if I don’t buy a car and somebody goes on welfare, I’m going to end up paying for that as well.

But let me also say that there’s a real disconnect then between that focus on what makes this different and the statute that Congresses passed. If all we were concerned about is the cost sharing that took place because of uncompensated care in emergency rooms, presumably we’d have before us a statute that only addressed emergency care and catastrophic insurance coverage. But it covers everything, soup to nuts, and all sorts of other things.

And that gets at the idea that there’s two kinds of cost shifting that are going on here. One is the concern about emergency care and that somehow somebody who gets sick is going to shift costs back to other policy areas — holders. But there’s a much bigger cost shifting going on here, and that’s the cost shifting that goes on when you force healthy people into an insurance market precisely because they’re healthy, precisely because they’re not likely to go to the emergency room, precisely because they’re not likely to use the insurance they’re forced to buy in the health care insurance. That creates a huge windfall. It lowers the price of premiums.

And, again, this isn’t just some lawyer up here telling you that’s what it does and trying to second-guess the congressional economic decisions. This is Congress’s findings, Findings (I) on page 43a of the appendix to the Government’s brief.

And then the first point which was — I take it to be the Solicitor General’s point, is, with all due respect, simply a description of the insurance market. It’s not a limiting principle, because the justification for why this is a valid regulation of commerce is in no way limited to this market. It simply says these are economic decisions; they have effect on other people; my failure to purchase in this market has a direct effect on others who are already in the market. That’s true of virtually every other market under the sun.

The second thing is I would urge you to read the license tax case which the Solicitor General says is his best case for why you ignore the fact that a tax is denominated into something other. Because that’s a case where the argument was that because the Federal Government had passed a license, not a tax, that somehow that allowed people to take actions that would have been unlawful under State law, that this was some special Federal license to do something that was forbidden by State law. This Court looked beyond the label in order to preserve federalism there. What the Solicitor General and the government ask you to do here is exactly the opposite, which is to look past labels in order to up-end our basic federalist system.


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