Transcripts For CSPAN2 Tonight From Washington 20120616

lots of funding. a look at the attorneys arguing for the supreme court. solicitor general benighted states, solicitor's verrilli was sworn into dust seven taking over for a lameness that kagan. earned his law degree from columbia university. he started his career as a law clerk for supreme court justice william brennan. attorney general katsas for independent business. a princeton university graduate earned his law degree from clarence tomas. first that the u.s. court of appeals and district of columbia and later when justice thomas join the supreme court. he previously served as assistant attorney general for the justice department's double division. >> richard wolf of "usa today" look at the supreme court oral arguments on the health care law. tell us a bit about the main players the attorneys will hear from over the next several hours. >> well, you will hear from the government solicitor general who argues cases for the justice department.verrilli, paul clement, solicitor general and the bush 43 administration who's been arguing before the supreme court for quite a while. later on, you will be hearing from michael cardan, another attorney for the plaintiffs. he represents the national federation of business. a couple other attorneys will enter into this. they have been appointed by the court to make two arguments that are important, but neither side interests of the mix. one side will get into this that they're the anti-injunction that, and the law of congress prevents this challenge in the first place and also whether under the severability argument, which will also be getting to, whether all a law other than the mandate should be allowed to stand at the individual mandate is struck down. there are appointed attorneys to make both of those arguments. >> let's get into the anti-injunction part of it. that is what the court heard first and whether they would actually make a ruling. what necessitated this argument? >> well, it has been argued that the anti-injunction act says that until a tax is an act than someone pays it, it can't be challenged in court. now there is good reason for that because if you were allowed to challenge a tax before anyone asked you to pay a couple course to be inundated with such challenges. you have people challenge every tax under "the sun" hurts of the last is the anti-injunction act says you cannot challenge a tax until your payday. and there's good reason for that to be inserted into this debate. the reason why it is before the court now is that one appellate court was presented with that argument and bought it. others presented in one appellate court said yes indeed we think the anti-injunction act of 1867 stands in the way of this challenge and can even be brought right now. >> maurice richard wolf brought up or down. read more at "usa today".com. >> the court examines the 1867 anti-injunction act, which prohibits courts from striking down tax laws before they take effect. u.s. solicitor general robert verrilli and robert long arguing for. they present before the court for 90 minutes. >> to hear arguments this morning to case number 11398, department of health and human services versus florida. mr. long. >> mr. chief justice, may it please the court? the anti-injunction act imposes a pay first litigate later rule that is central to federal tax assessment and collection. the act applies to essentially every tax penalty in the internal revenue code. there is no reason to think that congress made a special exception that the penalty imposed by section 5000 may. on the contrary, there are three reasons to conclude that the anti-injunction that applies here. first, congress directed by section 5008 penalty shall be assessed and collect it in the same manner as taxes. second, congress provided that penalties are included in taxes for assessment purposes. and third, the section 5008 penalty bears the key indicia of attacks. congress directed that the section 5008 penalty shall be assessed and collected in the same manner as taxes. that directive triggers the anti-injunction act, which provides that no soup for purpose of restraining the collection of any tax may be maintained in any court by any person. >> well that depends as a government points out on whether that directive is a directive to the secretary of the treasury, as to how he goes about getting this penalty. or rather a directive to him and to the courts. all of the other directors there seem to be addressed to the secretary. the court simply accept the rest adjudicate the cases. >> i have a three-part answer for that, just days scalia. the test does not say the secretary scalia. the test does not say the secretary it says that it shall be assessed the secretary it says that it shall be assessed in the same dinner as a tax without addressing any party particularly. >> collecting in the same manner as a tax. >> well, the other two parts of the entire rsa practical matter. i don't think there is any dispute in this case that the anti-injunction act does not apply, this penalty, the section 5000 a penalty will be in a very different matter. there are three main differences. first, when the anti-injunction act applies, you have to pay the tax or penalty first and then litigate later to get a pop at interest. second, you have to exhaust administrative remedies even after you pay the taxi can't immediately go to report. you you have to give the secretary of the six months to see if the matter can be resolved administratively. and third, you can't define situations in congress has permitted a challenge to a tax or penalty before it is paid. the secretary has to make the first move. the taxpayer is never allowed to rush into court before the secretary sends a notice of deficiency to start the process. now if the anti-injunction act does not apply here, none of those rules apply. that is not just for this case. it will be for every challenge for section 5008 penalty going forward. they will go to court at any time, without exhausting it mistreated gravities where they will be none of the limitations that apply in terms of you have to wait for the secretary. >> why will the administrative remedies rule out the trash and roll? >> well because of the anti-injunction that doesn't apply, there is no prohibition on course restraining this penalty and you can simply -- >> coarser part of the exhaustion rule. i know you've studied this. why couldn't the court -- no injunction. >> you could do that i think is a matter of common law or judicially imposed a. but in the code itself, the anti-injunction act is an absolutely central statute to litigation about taxes. and the code says -- first it says you must pay the tax first and then litigate. so that is the baseline. in addition, he says you must -- it is not, not in the code. you must apply for a refund and wait at least six months. i mean come in many of these provisions are extremely specific with very specific -- >> that they would apply even if the rule is not jurisdictional. the only difference would be that the court could enforce it or not enforce it in particular cases, which brings me to the davis case, which i think is your biggest hurdle, he case quite similar where the social security act was an issue and the government waived its right to insist upon the application of this act. of course if it is jurisdictional you can't waive it. are you asking us to overrule the davis case? >> well, i'll then be davis was decided during a period when this court interpreted the anti-injunction act is simply codified the pre-statutory equitable principles that usually, but not always prohibited a court from joining the assessment or collection of taxes. so that understanding, which was the basis for the decision was project good by the court of williams packing in the series subsequent cases. and so i would say effectively the davis case has been overruled by subsequent decisions of this court. >> mr. long, why have we simply follow the statutory language? i know the davis case has been overtaken by nader cases, but the language of the anti-injunction act is no suit shall be maintained. it's remarkably similar to the language that was at issue. no civil action for infringement shall be instituted in that formulation, no suit may be maintained contracts with the tax injunction act that says the district court shall not enjoying. that tax injunction is the same pattern as 2283 that says the united states might not stay or both of those farmlands, the tia and that no injunction against the state or direct to the court, and the anti-injunction not, like the action has no suit shall be maintained and it has been argued that is directed in contrast to court direct it. >> well, this court has said several times that tax injunction act was based on the anti-injunction act. you're quite right the language is different. but we submit the anti-injunction act itself by saying that no suit shall be maintained his address to court and beginning to end without the active cooperation of the court. >> how is that different with the infringement should be instituted and been teamed in turn on that. >> and is perhaps a party that initiated an action with cooperation of the court but to maintain it from beginning to add again requires the court cooperation. even if the court were inclined to stave the initial matter becoming the forest for the first time today, given all of your recent jurisdiction that she might be inclined to say this is not a jurisdictional statute, a lot of water has gone over the dam here. the court has said multiple times a jurisdictional statute, congress has not disturbed those decisions. >> the court has said that many times. is there any case in which the result would have been different if the anti-injunction that were not viewed as jurisdictional, but instead were viewed as the processing? >> are certainly number of cases where the court dismissing it as jurisdictional. as i read the cases, i don't think any of them would necessarily have come out differently because i don't take we had a case for the argument goes well, the government has waived this, so if it's not jurisdictional. >> the clearest way to establishing between the jurisdictional provision in the mandatory claims processing rules but there can be waived and whether the court feels it has an obligation to face the issue. now, if there is a lot of pieces that call at jurisdictional, but none of them would've come out differently is the anti-injunction act ran mandatory claims processing role. you have got on one side and on the other side you davis, where the court accepted a wafer by the solicitor general come the sunshine anthracite coal case, were there also was a wafer. and there was the williams packing case, which is somewhat hard to understand asked to do in anti-injunction act as a jurisdictional provision. the court said there could be a suit is known in the the government could win on the plaintiff was tougher reparable harm. does not sound like an equitable exception to the anti-injunction act? >> now, the best interpretation of the court case is that it was interpreting a jurisdictional statute and indeed the court said it was a jurisdictional statute. but again, even if you have doubts about simply the cases, there is more than that because congress has not only not disturbed the court decision feeding the statute is jurisdictional, they passed numerous amendments to the anti-injunction act. >> you can't separate those two points. the way congress acquiesced only helps with what we set a fairly consistent. you yourself point out that we've kind of gone back and forth whether this is a jurist fictional provision or not. so even if congress acquiesced, i'm not sure what the acquiesced -- >> which would've said mr. chief justice has been consistent with 50 years. the period of inconsistency was after the first 50 years since the statute was in 1867 and there was a period, as i said some when the court was allowing extraordinary circumstance is, exception an equitable exception, but then very quickly back on that, since william packing soup and utterly consistent. >> even since williams packing that case can also be understood as a kind of equitable exception to the rule, which would be inconsistent with thinking that the rule is jurisdictional. >> well again, i think the best understanding of south carolina is an equitable exception, but it's the court interpreting a jurisdictional statute as it would interpreting a statute in light of its purpose and deciding in that very special case it's a very narrow exception. >> mr. long, the court looks to its long history of appellate issues as being jurisdictional and a traditional sense, none of the claims processing role, but it's a pure jurisdictional rule, the power of the courts to hear a case. from all the questions here, i count at least four cases in the court's history, where the court has accepted a waiver by the solicitor general and reached a tax issue. i have at least three cases, one of them just mentioned by justice kagan, where exceptions to the rule are read in. given that history, regardless of how we define jurisdictional statutes versus claims processing statute in recent times, isn't it fair statement that congress has accepted that an extraordinary case we will hear the case? >> now, justice sotomayor because then many of these cases in the 70s, 90s and 2000, congress has actually framed limited exceptions to the anti-injunction act in jurisdictional terms and has written many exceptions by saying notwithstanding section 7421. >> does not disprove that it must court will impose a claim processing role and any circumstance is answer those in which it specifically doesn't want the court to come it has to be clear? >> or congresses notwithstanding her before 21, the court shall have jurisdiction to reese drained the assessment and collection of taxes. >> back to the question that justice alito asked, assuming we find that this is not jurisdictional, what is the period horror as the gc occurring if we see this a mandatory claim processing role? what kinds of cases do you imagine that courts will reach? the >> well, first of all, i think you're saying that for the refund statute as well as for the anti-injunction act, which is your ambler wording, so the anti-injunction act is not jurisdictional, that's also going to apply to the refund statute, the statute says you have to first ask for a refund within certain time. so it would be both of those statutes. we are dealing with taxes here. >> that isn't my question. my question is the see this a mandatory claim processing role, but cases to imagine course will be, on what grounds assuming the government does its job and comes in and raises the aia has an immediate defense? where can a court then reach the question despite? >> that would certainly be the first classic case that occurs to me, if the government does not reason a kindly way, i would plaintiffs would see if there were some clever way they could get a suit going to wouldn't immediately be apparent. >> that assumes the lack of competency of the government, which i don't. but what other types of cases? >> i don't think you're going to come up with any, but your responses you get it about any jurisdiction rule. if it's not jurisdictional, will happen to still have an intelligent federal board deciding whether you're going to make an exception. and there will be no parade of horrible is because all federal courts are intelligent. [laughter] it seems to me it is a question you can't answer. it is a question which asks, why should there be any jurisdictional rules? >> and justice scalia, honestly i can't predict what would happen, but i would say that not all people who mitigate about federal taxes are necessarily rational. >> we spent all the time so far in jurisdiction night except for dimension and probably awaiting your favorite jurisdiction, but where i see the problem is in the second part because the second part says if restrained and the assessment or collection of any tax hre, congress has nowhere used the word tax. what it says is penalty. moreover, this is not in the internal revenue code, but for purposes of collection. and so, why is this a tax? i know you point to certain sentences that talk about taxes within the code. and this is not attached to attacks. it is attached to a health care requirement. so why does that fall within that word quite >> blaming, the first point is our initial submission is you don't have to determine that this is a tax because congress very specifically said that it shall be assessed in collected in the same manner as a tax, even if it is a tax penalty and not a tax. >> that doesn't mean the aia applies. i mean, that may provide exceptions. but it doesn't mean the aia applies. it says in the same manner as it is bad attached to sector 68. it references that has been in the manner as. well, if it is being collected in the same manner as a tax, it doesn't automatically make it a tax, particularly since the reason for the aia archer prevent interference with revenue sources. and here, in a dance attack on this does not interfere with the collection of revenue. in meantime you've read the arguments, but i would like to know which you say assisting lian respond. >> specifically on the argument that it is actually a tax, even setting aside the point that it should be assessed and collected in the same manner from the anti-injunction i doesn't define it so much nicer price, tax is not defined anywhere in the internal revenue code. about the time congress passed the anti-injunction act, tax had a very broad definition. it is pragmatic to include this exact codified in the internal revenue code is part of the taxpayer's annual income tax return. the amount of the liability and whether your liability is based on income assessed and collected with the irs. >> it is a least some doubt about it, mr. long, for the reasons that justice breyer said. and i thought the we have a principle that ousters of jurisdiction are narrowly construed, that unless it is clear, court are not deprived of jurisdiction. i find it hard to think that this is clear, whatever else it is. it is easy to think that it's not clear. >> well, the anti-injunction act applies not only to every tax in the code, but as far as i can tell every tax mot and the code. >> mr. long, you said before and i think you're quite right that the tax injunction act is marbled on the anti-injunction act in under the tax injunction act, what can't be enjoined is an assessment for the purpose of raising revenues. the tax injunction act does not apply to penalties that reduce compliance with a lot of other than to raise revenues. and this is not a revenue raising measure because if it is successful, nobody will pay the penalty and there'll be no revenue to raise. >> well, in bob jones, the court said they've gotten out of the business of trying to determine whether benefaction is primarily revenue raising are primarily regulatory. and this one certainly raises -- is expected to raise substantial amounts of revenues, how they scored billion dollars a year. >> the part in the statute was denominated the exaction as a tax. here we have one where the congress is not to nominating it as a tax. it is denominated in it as a penalty. >> that is absolutely right and that is obviously wide if there were called a tax therapy note question. >> even at the section of the code that you referred to previously, the one following a 7421, the aia, it does very clearly make a difference. 7420 to make a difference between tax. for explicit. >> it does, that is correct. there's many other places in the code. >> the bus collection icon in your favorites in mortimer captain prefer in 1617 as a whole. so i had my law clerk with all this up and it seems to me they all fall into the categories of either one. these are penalties assessed for not paying taxes. or to come and involve matters called at the court taxes. or three come in some instances come to be redeemed by the code to be taxes. and what we have here sent and that is in a different statute that doesn't use the word tax ones, except for a collection device. and in fact and in addition the underlying aia present, which is to say should the solicitor general, we don't care what you think. we in congress don't want you in court with a revenue of the state with a revenue of a federal government is at stake and therefore, you can't we say. now, i typed that. here it is not as they can hear all the differences just mentioned. so he asked that because i want to hear your response. the knock well, there are penalties in the internal revenue code that she really couldn't say a related in any closely to some other tax provision. there is a penalty discussed in the breeze for selling diesel fuel that doesn't play with epa regulations. you know, so there are all kinds of penalties in the code. >> mr. long, are there places in this act, fees and penalties that were specifically put under the injunction act, one on health care plans, one of pharmaceutical manufacturers. .. apply to actually doing more than not and yes, i grant you we could look at section 5000-acre of the individual coverage requirement saying well we could have been more clear about saying the entire engine shaft applied. but again they were trying to accomplish a lot. >> it's easier to talk about the case if we talk about the words for the purpose of restraining assessment or collection in the sense that brings the jurisdictional question and justice breyer's question together. it seems to me and maybe you could just comment is that sort of language contained in the jurisdiction provision? we often don't know the purpose until after the thing is under way. i can see it with malicious prosecution. the language is essentially unchanged since 1867. that's part of the explanation and again in the series of provisions that carefully control the circumstances of which about federal taxes can take place. but if it is another argument that has been made i would like to address and that is all this talk about tax penalties because the suit is not challenging the penalty. it is challenging the must buy provision in the argument is made that if indeed it is constitutional, then the penalty three as a what they are seeking is the determination that must my requirement separate from the penalty that must it says so at the end of the case. if it's not so they are not resisting the penalty. >> i think that argument doesn't work for two reasons. first, if you look at the length of some of the complaints, they clearly challenge the minimum coverage requirement and a penalty to be at page 122 of the attendance they challenged the requirement of the individuals obtain health care coverage or pay a penalty. >> if that is the problem to amend the complaint. >> it is another come plant would be filed but still i think that is a serious problem. but even if they had filed a different complaint the minimum coverage requirement from the penalty because the penalty is the sole means of enforcing of the minimum coverage requirement i think the plaintiffs wouldn't be satisfied if the court were to render judgment saying the requirement is invalidated penalty remains standing then they'd have to pay a penalty equal to the cost of insurance. >> days in your argument puts them in the position of having to discipline the law of their claim. what is your answer to that? >> i can't find it in the record in the declaration. they will never incur a penalty under any circumstances. but even if that were so, what this court has said and americans denied it is the antiinjunction act bars not just the collection of your own taxes but the collection of anyone's taxes. so even if it were really true that these plaintiffs were not interested in the penalty and would never pay the penalty if they were to succeed in this case in the minimum coverage requirement, the inevitable result would be that the penalty would fall as well because the government couldn't collect the penalty for failing to follow an unconstitutional requirement and so it would still be barred because it would prevent the collection of -- >> let's go back to justice kennedy's question about the purpose of language a ticket you interpret the statute to mean the following. for the purpose of means having the effect of, is that correct? >> this course in the bob jones case were a similar kind of argument was being made by the plaintiff in that case said look , where it is inevitable that this is about there are sort of two sides of the same coin, that clearly is a primary purpose of the sood and its -- you can't buy a clever pleading did away from that. >> but aren't you trying to rewrite the statute in a way? >> it has two sections. one is that you have to have insurance, and the other is the sanction. the statute has two different sets of exceptions corresponding to those different sections. you are trying to suggest the statute says it's your choice either you buy insurance or pay the fee. but that's not the latest statute that we use and the converse must eth the statute rt should instead be a regular recommend and penalty attached to that command. >> i wouldn't argue that this statute is a perfect model of clarity, but i do think the most reasonable way to read the entire statute is that it does impose a similar obligation to pay a penalty if you are and applicable individual and not subject to an exemption. the reason i say that if you look at the exemptions from the penalty the very first one is you are exempt from the penalty because you can't afford to purchase insurance. and it just doesn't seem reasonable to me to interpret the statute as congress having said well, this person is exempt from paying a penalty because we find we can't afford to buy insurance so we have an obligation to buy insurance that doesn't seem reasonable. so i do think though the argument is that is the best way to understand the statute as a whole. estimate that isn't essential to the question we are discussing now with whether the antiinjunction act applies. >> would you apply you think the solicitor general was reading creates a problem? >> succumb if the results were to simply this is not -- i'm sorry, the source for general reading -- >> that is the jurisdictional bar that there's an exemption from those items that congress has designated as penalties that are not by taxes. >> i think the solicitor general was reading the fewest problems as i understand it. my main objection to the solicitor general reading is i don't think it makes a whole lot of sense. basically the solicitor general says every penalty in the internal revenue code, every other penalty in the affordable care -- >> that's carrying it too far because as he says if the penalty is designated as a tax by congress and that is most code, the tax code. and he says for those portions of the affordable care act that designates things as texas, the eia applies and i haven't found another statute as well. it's only for those statutes in which congress has designated something solely as a penalty they don't fall. >> i think my take on it is if you adopted the solicitor general's approach there are probably three penalties for alcohol and tobacco related offenses 51, 5684, 5761 it would be difficult to distinguish from this one and possibly the 527j penalty for failure to disclose political contributions if there are no further questions -- >> thank you mr. long. >> mr. chief justice, may i please the court this case presents issues of great moment and the antiinjunction act is indeed part of the court's consideration of those issues. that is so even though the antiinjunction act is a jurisdictional limit that serves what this court described as an exceedingly strong interest in protecting the financial stability of the federal government, and even though the minimum courage provision of the affordable care act is an exercise the congress taxing power as well as commerce, congress has authority end of the taxing power to enact a measure not labeled as a tax, and it did so when it put section 5008 into the internal revenue code but for purposes of the antiinjunction act the precise language used is determinative and there is no language in the antiinjunction act and section 5008 in the affordable care act or the internal revenue code generally that provides a text will instruction. >> you are arguing that penalty is not tax. tomorrow you are going to be back and you will be arguing that the penalty is a tax. has the court ever held that something that is a tax purposes of the taxing power under the constitution is not a tax under the antiinjunction act? >> no, justice alito, but the court has held in the licensed tax cases something can be a constitutional exercise of the taxing power whether or not it is called the tax and that is the nature of the inquiry we will conduct more was different from the nature that we will conduct today. tomorrow the question is whether the congress has the authority under the taxing power to enact in the form of words doesn't have a despondent effect on that analysis. his today we are in putting the tax where the precise trays of words does have its effect. >> their the court said that the tax alone was the tax subject to the cia and then it was beyond the court's taxing power. >> with respect to one of your arguments that my friend from the nfib is a significant problem and i think their arguments are the constitutionality of the power is essentially the affordable care act provision the same thing now is the provision that was held unconstitutional. but on the same day as drexel furniture the court issued against george that provision the court had concluded that it was invalid under the tax power. the reason for that has been clear. now after williams packing and bob jones and that in order to find the antiinjunction act doesn't apply to something that otherwise would be the trigger you have to include there is no substantial argument that can be made in defense of it at tax. you don't have that here so you can't get around the antiinjunction act of the court were to read it has suggested should be read on that theory. >> the basic question about the argument if you're right about the second part that is for the purposes of the statute this penalty does not constitute a tax. then does the court need to decide whether it is the antiinjunction act and other pieces where it does involve the tax as jurisdictional? >> i apologize if i am creating confusion about that, justice ginsburg. we think by far the better route is to understand the statute as we have proposed that it be construed as not applying here. from the perspective of the united states and i would like to take a minute on this, the idea that the antiinjunction act would be construed as not being the jurisdictional provision is very troubling and we don't think it is correct and i would if i could fall on the question, justice ginsburg, that you asked mr. long in terms of the language of the antiinjunction act 7421 which can be found on page 16 of the appendix to the brief. but i asked the court to compare that on the very next provision of the code which is on the next page of the statutory appendix which is the refund statute which we talked about a little bit so far this morning, 7422 a. the refund statute held was jurisdictional and the court felt that the statute of limitations applies to the refund statute case is jurisdictional. the language in 7422 is virtually identical to the language in 74 -- >> that is correct. also in the refund context you have the sovereign immunity problem in which we presume that has not been waived. 7421 -- >> the language is the same -- originally they were the same statutory provision there were only separated out later. so we think that is the strongest indication, justice ginsburg, that 7421 is the jurisdiction. >> what i asked you is if you are right that this penalty is not covered by section 7421, if you are right about that, why should we deal with the jurisdiction a question at all? because this statute the way that you are reading it doesn't involve the tax to the antiinjunction act. >> you would agree on the correct interpretation statute we need not decide -- >> don't you want to know the answer? [laughter] >> justice kennedy i think we want to know the answer to a lot of things in this case, but i do think that the prudent course is to construe the statute in the manner that we read. islamic the you indicated there was a discussion earlier about why does the government really care the of confident attorneys etc. but then you begin your argument by saying it would be very troubling to say there is no jurisdiction. i would like you to comment on that not to tell us what is in the party's best interest it would seem to me that there might be some instances in which the government would want to litigate the validity of the tax and would want to waive that you see that is not true that it's very troubling. >> one is the problem justice scalia identified that it's not jurisdictional then the courts have authority to craft equitable exceptions and it may seem from where we stand now that it is or could be very tightly cab and if it were to achieve it isn't jurisdictional that does empower the courts to find other circumstances in which they might find an equitable to allow the cases to go forward despite the existence of the act they wouldn't stand up here and disparage in the slightest reality is if this isn't to this fictional than that is the open argument subject to forfeiture in an answer and that is a troubling prospect. the estimate how likely is it if the government is going to be defending these. it seems to me that this is harming the government i by saying it is we've allowed the government option. >> that is not our assessment the right way to go in this case the statute does not apply into the minimum coverage provision of. >> it was the calculation of the interest of the united states your purchases are made in the day of this case there the solicitor general exercised the authority that we sanctioned to waive the antiinjunction act and of course that couldn't be done if it were jurisdictional. >> that's true mr. chief justice. several points about that though. we do agree with mr. long's analysis that davis occurred in the time in which under the standard case the court had interpreted the act as doing no more than codifying the traditional equitable principles which allow the court's discretion to conclude that in the certain circumstances the case could go forward. the packing repudiated that analysis and brought jones against simony and repudiated that analysis. it is true. we do think it is fundamentally inconsistent with the court's understanding. >> if the case were a shareholder sues the corporation and the remedy is the corporation shouldn't pay the money to the tax authority to those in national junction and in the tax authority. in the need for the davis case and was a party so not far as i would like that is restraining the tax and restraining the payment of the tax. is to make the argument here is that it is to this fictional, because its jurisdictional as the court understands the jurisdiction it isn't wavell and therefore we don't think that that part of the decision is good law. and this for their similarities we would point out the provision in question wasn't in title xxviii. it's not in a title 28 and as it is pointed out the provision had numerous exceptions to and there are numerous exceptions that have been created by the courts over the years the question was essentially one about the timing come to court after you filed your registration. the question is on about timing. come to court after you pay your taxes. it also seems a multiple respects with this case. why is that wrong? >> i don't think so, justice. first, i guess i'm repeating myself and i apologize we think the closest is the close provision of the united states code, 7420 to which the court has held as jurisdictional and it is phrased in exactly the same way as 7421. in fact as i said they were the same provision back in the earlier days. that is the closest analogue. this is and -- it is actually 7422 that is the statute that says do something first. but this statute is just a flat out command but we shall maintain to restrain -- >> i get the point if he would comment on the similarities to this case how do you think it is different at all? >> because i think the best answer to that is there are no magic words in that history in the context matter as the court says ann emerson and history in the context here is that 7422 and 7421 function together to protect the strong interest that the court has held with respect to 7422 sufficiently strong that explains the jurisdictional nature of that same interest applies here. this isn't just a matter of do x and then you can come to court. it's a fundamentally different set of interests at stake we think that makes a difference. >> why isn't -- >> you have to pay filing fees to the complaint. >> we do think it's very much of that nature and different from this case, your honor, and one way i think it is helpful to get at this is to look at the history. we cited a string of corporate pillowcases and a footnote in our opening brief and over time it's been very consistent with the courts of appeals have treated the antiinjunction act as a jurisdictional provisions. again, if the court agrees with our stitchery construction you don't need to reach this issue but in the hands in case the district court in that case has dismissed the complaint under the federal b6 court of appeals sent it back with instructions that this mess which is the subject matter of jurisdiction provision. so i do think that to the extent this issue is before the court is jurisdictional but it doesn't need to be before the court because the statutory construction argument. >> is there any other action imposed that wouldn't qualify as a tax for antiinjunction act purposes or as 5,008 just out there all by itself. >> it's not quite out there all by itself. there are other provisions that fall outside the sub chapter be and therefore wouldn't be governed by the instruction of section 7671a which answers the question about the applicability for most penalties. the ones we've identified and media overlapping a little bit with mr. long one is 26 usc 857 which faces certain penalties in connection with the administration of real estate investment trust. there are provisions that mr. long identified in his brief, section 603 thru c which impose certain penalties with respect to the reporting requirements for foreign corporations. we have in addition and footnote 22 page 36 of the brief identified the provisions that mr. long also identified about tobacco. >> could we address the question of whether there are any collateral consequences for the failure to buy, to not buy health insurance is the only consequence the payment of the penalty? the private respondents argue that there are other collateral consequences such as for people on probation for disobeying the law if they don't buy health insurance they would be disobeying dumoulin and could be subject to having their supervisory base rebuilt. the only consequence that ensues is the tax policy and we've made a representation and was a carefully made representation that it is the interpretation of the agencies charged with interpreting the statute of the treasury department and department of health and human services apart from the talks penalty and i do think if i could talk for a couple of minutes about the argument that was discussed as to whether this could be conceived of as a sood just challenging the requirement which is entirely standalone from the exceptions. the exemptions in section 5000 it is true that there are two categories of exemptions. there are exemptions to the penalty and exemptions to the subsection a requirement, but what i think not only is a practical matter but i think is a indication even as a legal matter the but the function as exceptions of the requirement first as a practical matter. page 11a of the appendix to the brief a person that can go to the secretary of hhs with the hardship exemption it excused compliance with a penalty it seeks to me to make very little sense to say that someone who has gone to an official of the united states with an exception would nonetheless be in the position of being a lawbreaker. we think another way that you can get to the same conclusion, slightly differently is by considering the provision on page 108 which is 5,000 saab three members of indian tribes. members of indian tribes are the exempt even from the penalty as a former matter under the structure of the statute here. the reason for that is because members of indian tribes pay their health care for the indian health service for the clinic based system that doesn't involve insurance at all and it's an entirely different system they were taken out of the statute because they get their health care through a different system and it doesn't make any sense to think a person getting their health care through the indian health service are violating because an exempt only from the penalty but still under the legal obligation have insurance from the whole point of this. >> this was drafting by congress. >> to the extent there is an extension under the penalty is an exception from the legal obligation. >> my friends are trying to draw from this there is an additional text one indication of that. it's section 180 it provides a certification that certain individuals can get and it's just a paragraph starting with other provisions contains the quote. and it says an individual with a certification that an individual is exempt from the requirement under section 5008 by reason of section 5008 of such a code is entitled to a certificate that allows for enrollment in particular from this category of people. but you can see here the congress is saying an exemption from under 5,000 which is the exemption from the penalty as the congress says an exemption from the requirement of section 5000. >> tariffs de mcginn individual has the essential coverage and you are saying that it doesn't really mean that. but if you are not subject to the penalty or not under an obligation to maintain the minimum. estimate by virtue of the fact the way the exemptions work we are reading this in context that is the strong reading of the statute. >> it makes it easy for the government to drop the other shoe in the future. you've been under the law subject to this mandate all along you an accident from the penalty so we have to quit a penalty. >> i don't think so mr. chief justice. i don't think it makes it easy for the government in the future. we think this is the fairest reading of the statute that you cannot infer from the fact that somebody is exempt from the penalty they're still under an obligation to have insurance and that is just not the first reading of the statute. >> the nature of the representation that you made that the only consequence is the penalty. suppose a person doesn't purchase insurance a person that is obligated to do so under the statute doesn't do it pays the penalty instead and that person finds herself in a position where she is asked the question have you ever violated any federal law. with that person have violated a federal law? >> our position is that person should give the answer no. >> and that's because? >> if they don't pay the tax they violate a federal law. >> but as far as they pay the penalty. >> than they are in compliance with the law. >> you keep saying tax. >> suppose a person that has been receiving medical care in the emergency room has no health insurance but over the years goes to the emergency room once medical care go to the emergency room and the hospitals as fine you're eligible for medicaid and a person says no i don't want that. >> will the hospital be able to plan to the mandate and say you are obligated to enroll? >> no i don't think so justice alito for the same reason i just gave. i think that the answer in that situation is that what that person is eligible for medicaid they may not be in the situation where they are facing tax penalties. >> they are not facing the tax penalties of the hospital will have to continue to give them care and pay for it themselves and not require them to be enrolled in medicaid and to begin to take the salt and say you should. we have a moral obligation to do it and the congress says you have to enroll. >> i think it is certainly fair to say that the congress wants people in that position to sign up for medicaid. that is absolutely right and the statute is structured to accomplish that objective but the reality still is the only consequence of the compliance is the penalty. >> general, but i thought that the people that were ineligible for medicaid were subject to the penalty. >> i could just be factually wrong. >> the penalty is key to the income, and the -- it is key to a number of things. one is are you making some of the money that you are not obligated to file a tax return and if you are in that situation you are not subject to the penalty it's also it's the cost of insurance would be more than 8% of your income you are not subject to the penalty, so there is not necessarily a precise mapping between somebody's income level and medicaid eligibility the present moment. it will depend on where things are and what the legibilities are. >> of the general matter for buhle below the poverty line it's almost inconceivable that they are never going to be subject to the penalty and they would after the reforms. >> so is you're point that the tax -- what we want to do is get money from these people. most of them have the money by buying the insurance, and that will help pay. but if they don't they are going to pay this penalty and that will help, too and the fact that we put the letter and brings in the taxing power but as far as this act is concerned about the injunction, they called it a penalty and not a tax for a reason. it's a different chapter etc. >> the essence they called a penalty if they didn't give any of our textual constructions in the affordable care act or the internal revenue code fact that it should be treated as a tax. >> if you agree with mr. long and with justice breyer that one of the purposes is to raise revenue. >> it will raise revenue. it's been predicted by the cbo that will raise revenue, your honor, but even though that is the case the would be true of any penalty that would raise revenue. but even though that's the case, they're still needs to be the instruction in the statute that this penalty should be treated as a tax for the antiinjunction act purposes and that is what is lacking. >> there may be a lot of people that assessed a penalty and does agree either with whether they should be assessed a penalty at all or with the calculation and the amount of their penalty. so under your interpretation all of them can now go to court. none of them are barred by the antiinjunction act. >> those are two different things. i think for the reason justice kennedy suggested in one of his questions to mr. long all of the other doctrines in the remedy in the related doctrines would still be there and the united states would rely on them in the circumstances and so, i don't think the answer is they can all go to court. >> the former commissioners filed the brief saying that your interpretation is going to lead to a flood of litigation. are they wrong on that? >> we've taken this position after very careful consideration and we have assessed the institutional interest of the united states and we think that we are in the right place >> tell me something why is in this case subject to the same bar that you listed in your brief. the tax court at least consider as constitutional challenges the statute, so why is in this case subject to a dismissal for failure to exhaust? >> because it would go to the individual amount and that's a different situation from this case. if the court has no further questions. >> thank you congenital. >> thank you. >> mr. chief justice, may i please the court let me begin with the question with the antiinjunction act is jurisdictional. justice ginsberg, for the reasons that you suggested we think that the text of the antiinjunction act is indistinguishable from the text under the statute that was unanimously held to be non-jurisdiction will. that statute says no sood shall be instituted. this says no should be maintained. >> it's also immediately after instituting unless the copyright is registered. >> unless the copyright is registered and this goes to the character of the lawsuit the statute says register your copyright and then come back to court. >> why isn't that the filing fee for you can maintain the sood ferc the copyright infringement you have to maintain your copyright? >> it is a precondition to filing suit. the analogous precondition here is pure taxes and then come back to court. the point is -- >> no, that's not true. the suit here has nothing to do with hearing the action it has to do with the form of release the converse is boring. it's not permitting -- it is not a tax case that can come in afterwards. it's not permitting the court to exercise what otherwise would be one of its powers. it has to be the same challenge, justice sotomayor or they would sit and i injunction act doesn't apply. you are right that once you file -- once you pay your taxes and then file the refund action the act of violence that tax converts from one perspective relief and 21 seeking money damages and in that sense you can think of the statute as a free media limitation on the courts. but whether you think of it as an exhaustion requirement or a remedial limitation, neither of those characterization's is jurisdictional in davis you said that a remedial limitation doesn't go -- >> that seems strange to think of the law that says no court can entertain a certain action and give a certain remedy as a claim processing rule. the court is being ousted from what would otherwise be its power to hear something. >> but it is being delayed i think is the right way of looking at it. the jurisdictional apparatus in the district court is present. perspectives relief number 1331, money damages action number 1346 putative antiinjunction act were a jurisdiction ousting one might have expected it to be in title xxviii to qualify the statutes and to use jurisdiction. >> how do you deal with this case and the recent gonzalez case where we talk about the language of the statute that no appeal will be heard absent the issuance. >> and gonzalez rests on a special spruill that applies with respect to the appeal from one article 3 court to another. that explains gonzalez and those before it to did you have five unanimous opinions in the last decade in which you have strongly on the other direction on what counts as jurisdictional. >> there is an argument that we should just simply say that it applies only to appeals but we haven't said that. >> you came very close. in henderson, you said that bowles is the special rules and understandings governing the appeals from one article 3 court to another and you specifically said that it does not apply to situations involving a party seeking the initial judicial review of agency action which is what we have here you write in the text they are not terribly different. those cases are explained by that principal under henderson it doesn't apply to this case. the text in this case speaks to the suit. the cause of action of the litigant it doesn't speak to the jurisdictional power of the court to read antiinjunction act is placed in a section of the tax code governing procedure. it's not placed in council and all of that in particular. >> you did rely on that as one -- >> another consideration in our favor is the presence of exceptions. he said three cut against jurisdictional characterization. here there are 11. >> many of which themselves speak in very clear jurisdictional languages. >> some of them have no jurisdictional language of all, and not a single one of them uses the word jurisdiction to describe the ability of the court to restrain the assessment of taxes which is what one would have expected. >> there's a difference in the language as relevant or a lot of relevant things. one thing that's relevant in my mind is that taxes are for better or worse the lifeblood of government. and so what the congress is trying to do is say there's a procedure to go through. you can get your money back or go through the tax court but don't do this in advance for the reasons we don't want a 500 federal judges substituting their idea of what is a proper and equitable defense wonders when to be an exception made for the basic rule. so there's strong reason that is there. you try to apply that reason, you can't find it. registration with a copyright that registered is not the life blood of anything. >> it exists regardless. the reasoning isn't there. the language -- i see the similarity of language, but it's the reasoning, the sort of underlining reasoning for not wanting a waiver that has a significant role in my mind of finding that it is to the sectional and they've said it nonstop seems northrop or whatever the other case is. >> justice breyer, as to reasoning, you've given arguments -- you gave an argument why as a policy matter it might make sense to have been on jurisdictional statute, but of course this court's recent case says congress has to rank the statute as long jurisdictional and its text. -- its revenue raising purposes are better served by allowing the party to come into court and leaving its defense. that is what the solicitor general did in the this and this court accepted that waiver. as for the prior cases, we have the holding in davis and the holding in all of the equitable exception cases come so the government is saying -- would want to say its jurisdictional except when the solicitor general is. >> its and the jurisdiction waves it. >> i don't disagree. i don't disagree. it is a contradiction in terms of all of your cases analyze the situation has if a statute is jurisdictional, then it's not subject to waiver. if you were to construe this as such a one of unique statued it seems to me we would still win because the solicitor general with full knowledge of the antiinjunction act argument available to him affirmatively gave it up. this is not just for the church where the government loiter through inadvertence fails to win an argument. this is a case where the -- >> they made it below. they know what it is and not only are they not pursuing it here they are affirmatively pursuing an argument on the evin side. estimate is your basic position that when we are talking about the jurisdiction of the courts statute has to say it is to as fictional to be jurisdictional? >> i wouldn't go quite that far. i think that at a minimum it has to either say that or at least be directed to the courts, which is a formulation used in your teases and which is the formulation of the congress used in the tax injunction act but didn't use in this statute to estimate as opposed to one making a distinction between this case by focusing on the difference between instituting some and maintaining something and suggesting that instituting is more with a ligament does it is more would a judge does we've had an adversarial system of an inquisitorial one the parties meet in the lawsuits i think it is the more natural way of thinking of that. if i can turn to the merits question before my time runs out, the purpose of this lawsuit is to challenge a a requirement, the requirement by health insurance. that requirement itself is not a tax and for that reason alone we think the antiinjunction act doesn't apply with amicus seeks to do is to extend the antiinjunction act but how the statute is written. >> the whole point of the suit is to prevent the collection the penalties, the taxes, mr. chief justice. >> prevent the collection of the taxes, but the idea that if a mandate is something separate, whether you want to call it a penalty or tax doesn't seem to make sense. >> it is entirely separate. there's nothing behind the command. what happens if you don't follow the mandate? the answer is nothing to it seems very artificial to separate the punishment from the crime. >> i'm not sure the answer is nothing but even if assuming it were nothing, it is it seems to be a difference between what all requires and what enforcement consequences happen to you. it is very deliberately written to separate mandate from penalty in several different ways. they are put in separate sections the mandate is described as a legal requirement no fewer than 20 times, three times in the operative text and 17 times in the findings. it is imposed through the use of a mandatory verb so it can't be slavkov as a general exhortation it's backed up by a panel to the congress then separated out mandate exceptions from penalty exceptions. it fined one category of people not subject to the mandate. one would think those are the categories of people lester from the congress is saying you need not follow fill all. it identified a separate category of people not subject to the penalty but subject to a mandate. i don't know that could mean other than -- >> why would you have a requirement that is completely toothless? by insurance or else what? or else nothing. >> because the congress reasonably could think that some people will follow all precisely because it is and let me give you in a symbol of one category of a person that might be. the very poor who are exempt from the penalty but subject to the mandate. mr. long says this must be a mandate exemption because it would be harsh and unreasonable for the congress to expect people who are very poor to comply with the requirement to obtain health insurance when they have no means of doing so. that gets things exactly backwards. the very poor are the people congress would be most concerned about with respect to the mandate to the extent one of the justifications used to prevent emergency room cost shifting when people receive uncompensated care so they would have had a very good reason to make the very poor subject to the mandate and then they didn't do it in a draconian way. they gave the poor a means of complying with the insurance mandate and that is through the medicaid system. >> do you think a person subject to the mandate but not subject to the penalty would have standing? >> yes, i think that person would because that person is injured by compliance with the mandate. >> what would the argument be as to what the injury was? >> when that person is subject to the mandate that person is required to purchase health insurance. that is a forced acquisition of an unwanted a good and it's a classic pocketbook injury but even if i'm wrong about that question, justice, the question of who has standing to bring the challenge that we seek to bring seems to me very different. you're hypothetical plaintiff is very different from the actual plaintiffs. we have individuals who are planning for compliance in order to avoid a penalty which is what their affidavits say and we have the states who will be subject no doubt to all sorts of bad first ramifications if they refuse to enrolled in medicaid the people who are forced into medicaid by virtue of the mandate so we don't have the problem of the web press consequences in the case and then we have the separate distinction between the question of who has article 3 standing in order to maintain the suit and the question of who is subject to the legal obligation, and you've said in your case that even if there may be no one that has standing to challenge the legal obligation like the incompatibility clause or something that doesn't somehow convert the legal obligation into the leal nullity. if we are wrong about everything i've said so far, the state's clearly fall within the exception recognized in south carolina. they are injured by the mandate because the mandate forces 6 million new people want the medicaid rolls. but they are not directly subject to the mandate or could they violate the mandate and incur a penalty. >> quite understand when the states say the injured, are they talking about the people that are eligible now but who are not enrolled or are they also talking about people that will become newly eligible? >> it's people who will enroll -- people that wouldn't have enrolled had they been given a voluntary choice. >> but who are eligible now? >> that's the largest category. i think there could be future eligibles who would enroll because they are subject to a legal obligation but wouldn't have enrolled if they were given a voluntary trice. >> but i am happy to focus on currently eligible people that haven't enrolled in medicaid. that particular class is the one the gives rise to simply in florida alone a pocketbook injury on the order of 500 to $600 million per year. >> that seems odd to suggest the state is being injured because people who could show up tomorrow with or without the law will show up in greater numbers. presumably the state wants to cover people whom it is declared eligible for this and. >> they cut the but they don't. with the state wants to do was make medicaid available to all who are eligible and choose to obtain it. >> why would they choose not to? >> there is a category of people that are medicaid eligible. medicaid doesn't cost them anything. why would they resist enrolling? >> i don't know, justice ginsburg. all i know is the reason to the current enrollees and people who could enroll but have not as it is only $600 million. dhaka. >> it may be just that they haven't been given the position information to understand that this is a benefit for them. >> it's possible that all we are talking about right now is the standing of the state's coming and the on the arguments made against the standing of the state's there is a classic pocketbook injury here the on the arguments made against the standing of the states are number one this results from food party actions. that doesn't work because the third party actions are not unfettered. they are coerced in the dennett versus speer because they are under the legal obligation to do so. the second origination is the state somehow for for their ability to challenge the constitutionality of the provision of federal law because they voluntarily choose to participate. >> i'm a little bit confused. and this is what i am confused about. there is a challenge to the individual mandate. what is the fact that the state is challenging medicaid? how does it give the state standing to challenge an obligation that is not impose on the state? >> the principal pherae for the state's standing as the states are challenging the mandate because the mandate injures them when people are forced to enrolling medicaid. now it is true, they are now directly subject to the mandate. >> lenni try it this way. may i finish? in south carolina versus reagan the state wasn't subject to the tax at issue, the state was harmed because the issuer of the bond and the bondholders were the ones subject to the tax, so the state is injured not because it is the direct object of the federal tax, but because of its relationship to the regulated party as if she were bondholder. >> mr. long, you have five minutes remaining. >> everyone agrees that the section 5000 a penalty shall be assessed and collected in the same manner as taxes. and the party's principal argument why that doesn't make the antiinjunction act applicable is it simply goes to the secretaries activities which. and i would simply ask if you look at chapter 63 and 64 of the internal revenue code which are the chapters on the assessment and collection, they are not just addressed to the secretary. there are many provisions that are addressed to the courts. and indeed, to talk about this interaction, they are very limited situations in which courts are permitted to restrain the assessment and collection of taxes. there was a statement made that there aren't in many of the exceptions to the antiinjunction act or in the assessment and collection provisions there was a statement made that none of these treacly comfort jurisdiction to restrain the assessment and collection of taxes that's not true in footnote 11 of the opening brief. .. >> they did have a couple of exceptions. it is true that all of this language that you call, the first two sentences and so forth, it talks about the text of the irc, it talks about the penalties in my abilities provided by the subchapter and we look at those provided by and collected through the subchapter come and it has nothing to do at the irc. we have it in a separate place, we can see clearly what they are trying to do. they couldn't really care about interfering with this one. are you following me? >> i am trying to get you to focus on that kind of argument. >> i think i am following you. but the fact that it is not in the particular subchapter for it assessable tendencies come in my view, makes no difference. because they said it is still clearly assess and collected in a penalty in that subchapter. those penalties are collected in the same manner as taxes. that is, i think, it is rather leather detail. i think it is a clear indication of the anti-injunction act and if it applies. the refund statute that specifically refer to penalties, that has nothing to do with this argument that it is assessed and collected in the same manner as attacks. that would simply go to the point that it is a tax because they refer to it as a penalty. finally, on jurisdiction, you know, i think the key point is we have a long line of this court's decisions that have really been ratified by congress with all of these exceptions and jurisdictional terms. the just of those decisions was not a sort of special rule about appeals. it is that when we have that situation, which i would cement applies as much to the collection of the federal taxes as a dozen federal district courts, when we have disagreed of the presidents come including precedents from congress in the form of amendments to this anti-injunction act that should be the presumption -- it should be that this is jurisdictional. there are no further questions. >> mr. long come you are invited by this court to defend the proposition that the anti-injunction act are this litigation. you have ably carried out that responsibility for which the court is grateful. we will continue the argument in this case tomorrow. >> a look at the u.s. supreme court oral arguments on the constitutionality of the 20 tenet healthcare luck continues. the court is expected to rule on the case for justices leap for the summer break. next, two hours of argument on the commerce clause and the constitution. that is on the issue of credibility. questioning what would happen if the individual mandate is unconstitutional. after that committee expansion of medicaid and whether states would be forced to expand their programs or risk loss of funding. >> a look at the attorneys arguing before the supreme court. tran-fours representing florida and other states. he previously served under george w. bush. he is a graduate of georgetown university school of foreign service. earned a masters degree from darwin college of the university of cambridge, and he earned his law degree from harvard university. he also clerked for antonin scalia. robert long is arguing for the anti-injunction after the former assistant solicitor genera earn his degree at the university of chapel hill. mr. long started his career as a clerk for supreme court justice lewis powell. >> richard wolf. one of your articles mention that this next portion is called the main event. what is the issue? >> the issues, to me it is because this has been something that is called heart of the law, and that is the individual mandate, which states that everyone with few exceptions, but with some exceptions, has to buy health insurance. the purpose of this is to get young, healthy adults, largely into the insurance pool, because those are the people who have little use for health insurance. hopefully they remain healthy for through their 20s and '30s. they are going to pay more insurance than they will use in terms of accessing health care. because those people remain out of the insurance pool, insurance is more expensive for everybody else. if you bring them into the insurance pool, it lessens the cost for everybody and insurers have access to a group of people who aren't going to be using health care very much. they law, such as guaranteed provisions, which means you can't be excluded pre-existing conditions, the law, the congress said we are going to make a mandate similar to the massachusetts mandate that was enacted under mitt romney when he was governor that says virtually everybody has to get into the pool. it seems like this one came down to an argument over whether the federal government can do this and make the so-called individual mandate as opposed to whether they should do it. which side has the strongest argument? both have legal precedence for the challengers to say that never before has the commerce clause on which is the key part of the constitution, then used to compel people to get to enter into commerce. in other words, the commerce clause allows congress to regulate interstate commerce when people are buying and selling and etc. in this case, congress is saying that the commerce clause allows them to tell you a healthy 25-year-old, to go out and buy insurance, much like states completed by car insurance. but the federal government, supposedly one of limited powers and has never been allowed to do something like this before. you could argue that in this case, unlike maybe some of the other parts of the law that will be challenged in court, but the conservatives -- they have a good argument. when you don't enter into health insurance marketplace, and then, you go to the hospital and don't pay for, you are actually influencing interstate commerce. by not buying the insurance, and then by accessing expensive health care, you are influencing the costs paid by everybody else. therefore, this is not such a stress for the government to say we are going to regulate whether you enter into commerce in the first place. >> how many americans seem to be affected on the court's decision on this particular portion of the lawsuit. >> a number that has been used a lot is about 32 million americans would gain insurance under this law. either by being allowed to have insurance, these would be people who wanted by accessing medicaid or by being allowed to get government subsidies, which would make it easier for them to buy insurance on the open market. part of that is also people, in essence, who don't want to, but they are being compelled to get into the insurance racket place by virtue ofdemanding. they are not really compelled because there is a penalty they can pay. some would call it attacks come and that is an interesting issue that was also argued in court. they can pay the penalty and knocked it in. the penalty is not that severe. that is 32 million, and it would take some time to get to that 32 million. in addition to that, it goes to how many people are influenced by this? and the costs paid by virtually everybody in health insurance market, which is probably well over 100 million people, i don't know the exact figure, all of them are influenced to some degree, although in most cases, so you have an employer provided insurance plan. your situation -- your opinions eventually could. >> richard wolf on the supreme court decision on health care. you can read more at usa today.com. >> during this two-hour argument, anthony kennedy describes the individual mandate as unprecedented. the court is examining whether congress can mandate americans buy health insurance under the commerce clause of the united states constitution. this is an appeal from the 11th circuit court from atlanta. >> we will continue argument this morning in case 11398, the department of health and human services versus florida. >> deportable care act addresses a fundamental and enduring problem in our health care system and our economy. insurance has become the predominant means of paying for health care in this country. for more samaritans americans, the insurance system does provide effective access. excuse me. for more than 40 million americans, who do not have access to health insurance come, either through their employer or through government programs such as medicare or medicaid, the system does not work. those individuals who must resort to the individual market, in that and that market does not provide a portable health insurance. it does not do so because the multibillion-dollar subsidies that are available for the employer market are not available in the individual market. it does not do so because hip of regulations that preclude discrimination against people based on their medical history, do not apply in the individual market. that is an economic problem and it begets another problem. >> where can they adjust it directly? >> they can address it directly, just as antonin scalia, and they are doing so through this act by regulating the means by which health care is purchased. that is the way that this act works great under the commerce clause, what congress has done is an act the reforms of the insurance market, that preclude discrimination based on pre-existing conditions that require guaranteed issue. it uses, and the minimum provision is necessary to carry into execution those insurance reform spread enact can we create commerce in order to regulate a? >> that is not what is going on here. we are not seeking to defend the law on this basis. in this case, what is being regulated as a method of the purchase of health care. that itself is economic activity with a substantial effect on interstate commerce. >> any self purchasing? my failure to purchase something in that market subjects in regulation. >> no, that is not our position at all, justice scalia. the health care market is characterized by the fact that aside from the few groups that congress chose to exempt from the minimum coverage requirements, those who for religious reasons don't participate, those who are incarcerated, indian tribes, virtually everybody else is either in that market, and the distinguishing feature of that is that people cannot generally control when they enter that market for what they need when they enter that market. >> the same would be true, safe in the market in emergency services. police, fire, ambulance, roadside assistance, whatever. you don't know when you're going to need it, you're not sure that you will, but the same is true for health care. you don't know if you're going to need a heart transplant or if you ever will. there is a market there. to some extent, we all participate in it. can the government require you to buy a cell phone? because that would facilitate responding when you need emergency services, you can just dial 911 no matter where you are? >> no, mr. chief justice, i think that is different. i don't don't think we think about is a market. this is a market. this is market regulation, in addition, not only were people enter in voluntarily as when they enter and they will won't be able to control what they need. >> it seems to me that that is the same as what is in my hypothetical. don't know when you will need police assistance, you can't predict the response, but when you do -- and the government provides it. i thought that was an important part of your argument. when you need health care, government will make sure that you get it. >> when you need police assistance or fighter assistance or ambulance assistance, the government is going to make sure to the best extent that it can but you got it. >> i think the fundamental difference, mr. chief justice, that is not an issue of market regulation. this is an issue of market regulation, and that is how congress -- that's how congress looked at this problem. there is a market that insurance has provided through a market system. >> you think there is a market for other service contract services like burial services? >> burial services? >> i walked around downtown washington during lunch hour and we stopped a couple of healthy young people. we said you are financing your burial services. eventually you will die in somebody and somebody is going to pay for it, and if you don't have burial insurance and you haven't saved money for, you're going to shift the cost to someone else. this is a very artificial way of talking about what someone else is doing. why isn't it equally artificial to say that somebody who is doing nothing about health care is financing health care services? >> i think it is completely different. the reason is the burial example is not -- the difference is here, you are regulating the method by which you are paying for something else. health care. in the insurance requirement, i think, the key thing here is, my friends on the other side acknowledge that it is within the authority of congress under article one of the commerce power to impose their key issue and community rating forms, and, to impose them in regards to the coverage provision. >> i don't see the difference. if you get burial insurance come you can get health insurance. most people will need health care. almost everybody. everybody is going to be buried or cremated at some point. >> one big difference, justice alito, is you don't have the cost shifting to other market process depends. >> sure, you do. if you don't have money from the state will pay for it. >> that is a difference and it is a significant difference. in this situation, one of the economic effects congress is addressing is that the many billions of dollars of uncompensated costs are transferred directly to other market participants. it is transferred directly because health care providers charged higher rates in order to cover the cost of uncompensated care and insurance was like that in higher premiums, which congress translates to $8000 per family. >> isn't that a small part of what the mandate is doing? you can correct me if these figures are wrong. it appears to me that the cbo has estimated that the average premium for a single insurance policy in the nongroup market will be roughly $5800 in 2016. the economist that responded said that a young healthy individual targeted by the mandate, on average consumes $854 in health services each year. the mandate is forcing these people to provide a huge subsidy to insurance companies. for other purposes that the act which is to serve. if those figures are right, isn't it the case that with this mandate is really doing is not requiring the people who are subject to it to pay for the services that they are going to consume. it is requiring them to subsidize services that would be received by someone else. >> i do think that is what the respondents argue. it is just not right. i think it really gets to the fundamental problem. >> if you have insurance, that is how it works. >> if you have insurance come and that's how it works, but the problem they are identifying is not the problem. the guaranteed issue reform does not have the effect of forcing insurance companies to take on lots of additional people who they then can afford to cover because they tend to be sick. the exact opposite happens here. you do so in the absence of the minimum coverage provision, it is not that insurance companies take on more and more people and then need a subsidy to cover it, it is that fewer and fewer people end up with insurance because the rates are not regulated, insurance companies, when they have to offer insurance, they are entitled to make a profit. they charge rates sufficient to cover only the sick populations. >> help me with this. assume, for the moment, you may disagree, assume for the moment that this is unprecedented. this is a step beyond what our cases have allowed. the affirmative duty to ask to go into commerce. did you do not have a heavy burden of justification, i understand that we must pursue the loss of the constitution. even so, when you're changing the relationship -- when it changes the relationship of the individual and government, do not have the responsibility to show [inaudible] >> first, we think this is people's participation in the health care market. all of this minimum coverage provision does, you say that instead of requiring insurance at the point-of-sale, that congress has the authority under the commerce power to ensure that people have insurance in advance of the point-of-sale, because of the unique nature of this market. because this is a market in which -- although most of the population is in the market, most of the time. 83% visiting position every year. ninety-six over 110% over a five-year period. you have to pay for it in health care that you get. the predominantly in which it is pay for is insurance. and the respondents agree that congress could require that you have insurance in order to get health care or prevent health care from being provided. >> it may well be that everyone needs health care, but not everybody needs a heart transplant. not everybody needs a liver transplant. >> could you define? >> everybody has to buy food, it therefore everybody is in the market, you can make people buy property. >> that is quite different. the food market, while it shares that traded everybody is in it, it is not a market in which were participation is unpredictable and often involuntary. it is not a market in which you often don't know before you go when what you need, and it is not a market in which, if you go in, and seek a product or service committee will get it -- >> that is a very cool basis for distinction is from other situations. you know, you could also say that the person said that this has blue eyes. that would distinguish it from other situations. >> it is the basis that explains why the government is doing this, but it -- is the basis that is going beyond the system of enumerated powers allows the government to do with. >> yes, for two reasons. first, the test scores articulated, is congress regulating economic activity with a substantial effect on interstate commerce, the way in which this statute satisfies the tests is on the basis of the factors that i have identified. >> i thought that your main point is that unlike food or like any of the market, when you made the choice, not to buy insurance, even though you have every intent in the world to self-insure and save or, when disaster strikes, you may not have the money. the tangible result of it is you were told there was one brief -- that hospital bills bill some percent more than they would if there were no uncompensated costs. i thought what was unique about this is that it is not my choice whether i want to buy a product to keep me healthy. it is enforcing other people if i don't. if i don't buy the product sooner rather than later. >> that is definitely a difference that distinguishes this market and justifies this at. >> if that is your difference, i am somewhat uncertain about your answers, for example, justice kennedy asked, can you come under the commerce clause. congress, create commerce. where previously none existed. >> i thought the answer to that was, since mcculloch versus maryland, when the court said congress could create the bank of the united states, which did not previously exist, which job was to create commerce that did not previously exist. since that time, the answer has been yes. i would've thought that your answer, can the government in fact require you to buy cell phones or variables, that if we have proposed comparable situations, if we have, for example, a uniform united states system of paying for it ariel, such as medicare burial, medicaid burial, and a burial that congress wanted to rationalize that system, the answer would be yes, of course they could. the same with the computers or the cell phones come if you're driving by the side of the highway and there is a federal emergency service, just as you say you have to buy certain mufflers for your car that don't hurt the environment. doesn't depend on the situation? >> it does come up and if congress were to enact laws like that, -- >> i would defend him on a rational like that. i do think we are advancing a narrower. [talking over each other] >> the question is whether or not there are any limits on the commerce clause. can you identify for us some limits on the commerce clause. >> yes. the rationale under the commerce clause that we are advocating here, would not justify force purchases of commodities for the purpose of stimulating demand. he would not justify purchases of insurance for the purposes and situations in which insurance does not serve as a method of payment. >> why not? if congress says that the interstate commerce is effective -- isn't, according to your view, that the end of the analysis? >> no. we think that the difference between that situation and the situation is that most situations congress would be moving to create commerce. here, congress is regulating existing commerce. economic activity that is already going on. people's participation in the health care market and is regulating to deal with this in effect. >> it is a passage that i didn't quite grasp. it is the same point that you say, health insurance is not purchased for its own sake, like a car or brockway. it is a means of financing health care consumption and covering universal risks. >> i don't understand. health insurance is the means of payment for health care. >> means of satisfying a basic human need. insurance is means of satisfying this. >> that is the difference between existing commerce activity in the market already occurring, people in the health care market purchasing entertaining healthcare services, and the creation of commerce and the principle that we are advocating here under the commerce clause, it does not take the step of justifying the regulation. >> the justice asked a question, can we go back and tell me if i'm wrong about this, i thought a major point of your argument was that those who do not participate in this market are making it much more expensive for the people who do. that is a good number will get services that they can't afford at the point when they need them, and the result that everyone else has a premium tickets raised. it is not your free choice just to do as he pleased. it is going to affect others in a major way. >> that absolutely is a justification for congress' action here. existing economic activity, the congress is regulating. >> you could say that about buying a car. if people don't buy cars, the price with those who do buy cars pay will have to be higher. so you can say, in order to bring the price down, you are hurting these other people by not buying a car. >> that is not what we are saying. >> i thought it was. other people have to pay more for insurance because you are not buying it. >> no, it is because you are going in the health care market and you're going into the market without the ability to pay for what you get. getting the health care service anyway as a result of the social norms that allow -- to which we have obligated ourselves. >> i can't imagine that the commerce clause would pervade congress from taking your account. [talking over each other] >> you could do it, but that does expand your ability to issue mandates to the people. >> this is not a purchase mandate. this is a law that regulates a method of paying for a service and the class to whom it applies. >> general, i see or have seen three strands of arguments in your briefs. one of them is active today. the first strand that i see is that congress can pass any necessary laws to affect those powers within its rights. i.e., because it has made a decision to affect mandatory issuance of insurance, that it could also obligate the mandatory purchase of it. the second strand that i see is self-insurance affects the market. and so the government can regulate those who are self-insured. the third argument, is that what the government is doing. i think it is the argument you are making today. that what the government is saying is that if you pay for -- if you use health services coming have to pay with insurance. because only insurance will guarantee that whatever needs for health care that you have will be covered. because virtually no one, perhaps with the exception of 1% of the population, can afford the massive cost if the unexpected happens. this third argument seems to be saying, what we are regulating is health care. when you go for health services coming have to pay for insurance. since insurance won't issue, at the moment that you consume the product, we can reasonably, necessarily, tell you to buy it ahead of time. because you can't buy it at the moment that you need it. >> congress began issuing reform, if so, it deals with the problem that results resulted 40 million people not being able to get insurance, and therefore not access to the health care market. everybody agrees in this case that those are within. the minimum coverage provision is necessary to treat those provisions into execution. without them, without those provisions, without minimum coverage, it will make matters worse, not better. there will be fewer people covered, it will cost more. >> so you are entering a permanently to my colleagues at us to the question, can the government force you into commerce? >> and there is no limit to that. >> no, no because that is the first part of our argument. the second part of our argument is that the means here, that congress has chosen, the minimum coverage provision, is a means that regulates economic activity, mainly your transaction in the health care market with substantial effects on interstate commerce. it is the conjunction of those two that we think provides the particular -- particularly secure foundation. >> general come you have talked a couple of times about other alternatives that congress might have had, other alternatives that the respondents have to deal with this problem. in particular, the alternative of mandating insurance at the point that someone goes to the er and asked for care. did congress consider those alternatives? why did he reject them? how should we think about the question of alternative ways of dealing with these problems? >> i do think, justice kagan, that the point of difference between my friends on the other side and the united states is one of timing. they agree that commerce has authority to impose an insurance requirement or other penalties at the point-of-sale. they have agreed that congress has the authority to achieve the minimum objectives. this is a situation with which we are talking about the means. congress gets substantial deference in the choice of means, and if one thinks about the difference of means that congress should have chosen and that means that congress did choose, you can see why late -- see why it was this way. >> i'm not sure that congress has alternate means. let's just say they can use tax power to raise revenue. how does that factor into her analysis. in one sense, it can be argued. this is what the government is doing, it ought to be honest about the power it is doing and use the correct power. on the other hand, it means that since the court can do it -- congress can do it anyway when we give them a certain amount of latitude. i'm not sure where it goes. >> turned into that and getting back to the question he asked me earlier, i do think one striking feature, this is a novel exercise of power, is that congress chose to rely on market mechanisms and a in a method that has more choice than with the traditional medicare and medicaid type model. this is unprecedented in the same way that the sherman act was unprecedented. when the national labor relations act -- >> there was no doubt that what was being related was commerce. here you are regulate them someone that isn't commerce. i don't agree that the relevant argument is health care. you are regulating insurance. it is the insurance market you are addressing, and you're saying that some people that are not in it must not be in it. that is different from regulating in any manner. commerce already exists out there. >> to the extent that we are looking at the conference of scheme, is regulating commerce that art exists out there. the means in which that regulation is made affected here, the minimum coverage provision, is a regulation of the way in which people participate, the method of their payment in the health care market. that is what it is command i, and i do think, justice kennedy, getting back to the question that you asked before, what matters is whether congress is choosing a tool that is reasonably adapted to the problem that congress is confronting. that may mean that the tool is different from a tool that congress has chosen to use in the past. that is not something that counts against the provisions in a commerce clause. >> it is both necessary and probable. what you just said addresses what is necessary. is reasonably adapted. >> it was something that violated the sovereignty of the states, which was in the constitutional structure. the argument is that this also is maybe necessary, but it is not proper because it violates, it violates an equally evident principle in the constitution, which is that the federal government is not supposed to be a governor that has all power. it is supposed to be a government of limited powers. that is what all this questioning has been about. what is left if the government can do this, what else? what else can it not do? >> this does not violate the norm improper, it does not interfere with the states as sovereigns. this is a regulation. >> that was my point. that is not the only constitutional principle that exists. it is evident principle is the principle that the federal government is a government of enumerated powers. the vast majority of powers remain in the states and do not belong to the federal government. you acknowledge that that is possible? >> of course, we do, your honor. >> the way in which this court and its cases has pleased the boundaries as to what is in the national spirit and local sphere, as to whether congress is regulate economic activity with substantial effect on interstate commerce. i think it is really impossible in the view of our history to say that congress is invading the states fear. this is a market in which 50% of the people in this country get their health care through their employer. there is a massive federal tax subsidy of $250 billion a year that makes that much more affordable. hipaa regulates back, to ensure that the kinds of bands on pre-existing determination and practices that are in the individual market don't occur. >> whatever the states have chosen not to come in the federal government can do. >> not just to the states, but the states and the people. the argument here is that the people were left to decide whether they want to buy insurance or not. >> it could be a very substantial departure from what the court has said. congress relating economic activity with interstate commerce, that will be of help. that is what is going on here. to embark on, i was met with all due respect, to embark on the kind of analysis that my friends on the other side just to embark on, is to import the process -- [talking over each other] >> the key is that we were talking about regulation of the states. and the states are not limited to enumerated powers. the federal government is -- it seems to me it is an entirely different question when you ask yourself whether or not they're going to be limits on the federal powers, as opposed to limits on the states. >> i agree and accept, mr. justice, is that the way in which you ensure that the federal government is protected is by policing the boundary, is the boundary having a effect on interstate commerce. >> it requires the individual to an affirmative act in the law of torts, the tradition of law has been if you don't have the duty to rescue someone -- if that person is in danger, if someone walks in front of a card on shankar, you do not have the duty to stop them. >> severe moral criticisms are of that rule. that is generally the rule. here the government is saying, the federal government has a duty to tell the citizen and must act. that is different from what we have had in previous cases. it changes the relationship of the federal government to individual in a very fundamental way. >> i don't think so, justice kennedy, because it is credited on the participation of these individuals for the market of health care services. it happens to be that this is a market in which come aside from the group that the statute excludes, virtually everybody participates. it is a regulation of their participation in that market. >> it is critical how you define the market. if i understand the law, the policies that are requiring people to purchase involved content must contain provisions for maternity and newborn care, pediatrics services and substance abuse treatment. it seems to me that you cannot say that everybody is going to need substance abuse treatment, substance use treatment or pediatric services, and yet, that is part of what you require them to purchase. >> it is part of what the statute requires insurers to offer. i think the reason is because this trying to define minimum essential coverage, because that's. >> my theory is that there is a market in which everyone participates, because everybody might need a certain range of health care services. unlike you are never going to leave everybody -- we everybody to participate in the service of. >> with respect with what insurance has to cover, your honor, congress can make judgments about the appropriate scope of coverage. the problem is you may think you're perfectly healthy and you're being forced to subsidize someone else, but this is not a market in which you can say that there isn't a mutable class of healthy people who are being forced to subsidize the unhealthy. this is a market in which you may be healthy when they come and a very unhealthy participant in the next day. and that is a fundamental difference. >> that is not the question i was posing, which doesn't apply to what you are requiring people to purchase. he gestured services, maternity services. you cannot say that everyone is going to participate in the substance abuse treatment market coming, and yet you require people to purchase insurance coverage for that. >> congress is not enacting regulation here, it has latitude to define attributes of coverage. that doesn't seem to be implicating whether congress is engaging in economic regulation and solving of economic problems. >> if you took the group of people who are subject to the mandate, and you calculate the amount of health care services, this whole group -- figure out a cost of the policy that that group would consume, it would be much less than the kind of policy that these people are now going to be required to purchase. under the affordable healthcare act. >> well, while they are young and healthy that would be true. could they are not going to be young and healthy forever. they are going to be on the other side of the actuarial equation at some point. of course, you don't know which among that group is the person that is going to be, if they get a definitive diagnosis -- >> you take into account that some people are going to be hit by a bus. some people are going to be unexpectedly contract will be diagnosed with a disease that is very expensive to treat. take the cost and it can calculate, that is a lot less than what they are required to pay. >> you can just justify this on the basis of they are trying to shift their costs onto other people. can you? >> the people in that class get benefits. they get the guaranteed issue benefits that they would not otherwise have, which is an enormously valuable benefit. in terms of the subsidy rationale, i think he would be unusual to say that it is an illegitimate exercise of the commerce power for some people to subsidize others. the way in which some people paid rates that were much higher than their cost in order to subsidize. >> only if you make phone calls. >> to live in the modern world, everyone needs a telephone. the same thing with respect -- that the court upheld in wrightwood gary and lock royal. i suppose it is free of radically true that you can raise your kids about not, but the reality is you have to go to the store and buy milk. [talking over each other] in this context from the subsidizes eventually become the subsidize. >> that was the point i was trying to to make, justice kagan, you are young and healthy one day, but you don't stay that way in the system works overtime. but just don't think it is a fair characterization of it. and it does give back to, i think, a problem that is important to understand -- >> we are not stupid. they don't want to buy insurance later. they are young and need the money now. when they think they have a risk of incurring high medical bills, they will buy insurance like the rest of us. i don't know why you think they are never going to buy it. >> that is the problem, justice scalia. that is exactly the experience of the state's have that made the imposition of the guaranteed ratings not only ineffectual, but highly counterproductive. for example, at it rates in new jersey went from 180,000. the reason for that is that when people have that guarantee, but they can get insurance -- they are going to make that calculation that they won't get it until they are sick and need it. the pool of people in the insurance market gets smaller and smaller. the rates you have to charge you higher and higher. this is not a situation in which you are conscripting -- you are forcing insurance companies to cover very large numbers. >> you can solve that problem by not requiring the insurance company to sell it to somebody who has a condition that is going to require medical treatment. at least not requiring them to sell it to him at a rate that it is sold to other people. but you don't want to do it. >> is to say, justice scalia, that that is the problem here. [talking over each other] >> we cannot solve the problem through standard economic regulation. i do not think that can be the premise of our understanding. >> whatever problems this economic revelation produces, whatever they are -- i think congress can do something to counteract them. requiring somebody to enter into the insurance market. >> it is not a problem of congress' creation. the problem is that you have 40 million people who cannot get affordable insurance through the means that the rest of us get a formal insurance. congress, after a long study and careful deliberation and viewing the experiences of the states in a way that they try to handle this problem, adopted a package of reforms. and subsidies and the minimum coverage provision or a package of reforms that solve that problem. but it is highly artificial to do this is a problem of congress' own creation. >> is your argument limited to insurance? or means of paying for health care? >> yes, it is limited to insurance. >> why is that? once you establish that you have a market for health care. i would suppose congress' power under the clause means that they have a power to regulate a market. it would be going back to lochner if we were put in a position of saying no, you can use your commerce power to regulate insurance, you cannot use your commerce power to regulate this market in other ways. i think that would be a very significant. once we figure there's a market come up and some would say that people are already participating in it. it seems to me that we can say there are limitations on what congress can do under its commerce power, just like in any other area. all given significant deference that we accord to congress in this area. you can regulate that market in any rational way. >> this is insurance as a method of payment for a health care services. >> exactly. that is the area that congress has chosen to regulate. there is this health care market, everybody is in it, so we can regulate it, and we are going to look at a particular service problem, which is how people pay for it. baxter, they can decide that everybody is in this market. we are going to look at a different problem. this is how they are going to regulate it. we can compel people to do things. purchase insurance in this case. something else in the next case. this is a market in which everybody has participated. >> i would like to answer that and then moved to the tax -- >> cannot tell you something else -- while you're answering -- something also that everybody has to exercise. because there is no doubt that lack of exercise causes illness and that causes health care costs to go up. the federal government says, everybody has to join an exercise club. that is for something here. >> that would not justify this year. health club membership is not a means for anything in the market. >> it is not responded to my concern that there is no reason, once we say this is within congress' commerce power, there is no reason, other than her own arbitrary judgments as they, all they can regulate is the method of payment. they can regulate other things that affect this now conceded interstate market in health care in which no everybody participates. >> it is common ground between us and the response that this is an interstate market in which everyone participates. and he agreed that congress could impose this at the point of sale. this is a question of timing and whether congress is -- whether the necessary and proper authorities gives the congress, because of the particular features of this market, the ability to impose the insurance -- the need for insurance. the need for insurance before you get health care, rather than at the moment two. >> i think you are repeating the idea that this is the regulation of the method of payment. i understand that argument. it may be a good one. what i am concerned about is that once we accept the principle that everybody is in this market, i don't see why congress' power is limited to regulate the method of payment, what other area had we said that congress can regulate this market? but only with respect to prices. but only with respect to means of prices. once you're in the interstate commerce and you can regulate it, that is it. >> we agreed that congress can regulate this or that. hipaa regulates its market. the market is regulated by the federal level and very significant ways already. i don't think that is the question, mr. chief justice. the question is -- is there a limit to the authority that we are advocating and the answer is yes because we are not advocating for a power that would allow congress -- [talking over each other] >> before you move on, could you express your principle as simply as you possibly can. >> congress can force people to purchase a product when they sell you the product and it has a substantial effect on interstate commerce. if, what? >> if this is part of a larger regulatory scheme? >> we have to, and they are different, let me speak. first, they are different to the conference of scheme. when congress is regulating and enacting a conference of scheme, has the authority to enact. the necessary and proper clause gives it the authority to include it is necessary to include and -- but what is very much like wicker in that respect. with respect -- with respect to the, to considering the commerce clause alone, not a conference of scheme from our position is that congress can regulate the method of payment by imposing an insurance requirement in advance of the time in which the services are consumed. when the class to which that requirement applies is or were virtually is certain to be in that market. when the timing of one's entry into that market and what you will need when you enter that market is uncertain. and, -- when you will get the care in that market when you can afford to pay for it or not. it shift costs to other market participants. those who argue that those are the principles we are advocating for. it is good conjunction that makes us rethink it under the commerce clause. >> could you turn to the tax clause? >> yes, thank you. >> [inaudible] >> except in the situation where the code itself or situation itself said treat the penalty of attacks. do you know any case where we've done that? >> i think i would point to the licensed tax case, where it was denominated by a feed instead of attacks. and the court had the exercising text are, in the situation where the structure is free much like the structure of this law, in which there was a separate stand-alone provision that set the predicate, and -- >> license fees, fees for hunting license, everybody knows those are texas. i don't think there is as much as a difference between a fee and attacks as there is between a penalty and attacks. >> is useful to separate this into two questions. one is a question of characterization. can this be characterized as a tax. and is it in her position of power. in the internal revenue code, it is administered by the irs and paid on the form 1040 on april april 15. listed penalties that were enforced in the tax code that are not taxes and -- >> they may still be exercising of the taxing power, as the still is, justice ginsburg. to my mind, anything that there's this much of attacks cannot be considered as an exercise of the taxing power. it seems to me in the licensed tax cases, and beyond that -- there seems to me to be the right way to think about this question, whether it is capable of being understood as a tax rate. .. if it gets people to buy the insurance that's what this penalty is designed to affect conduct. the conduct is to buy health protection, by health insurance before you have the need for medical care. that is what is designed to do is to raise revenue. >> that is true, justice ginsburg. that is true also of the tax that was upheld in sanchez. it is commonly true of penalties. if they raise revenue they are exercises of the taxing power, but the purpose is not to raise revenue it is to discourage behavior. the mortgage deduction works that way. when the mortgage deduction is an exercise of the taxing power when its successful which raises less revenue for the federal government it's still an exercise of the taxing power. >> one question is the kitchen determining effort of the congress not to refer to this as a tax to make a difference you are suggesting we should just look to the practical operation we shouldn't look at labels, and that seems right except here we have a case in which congress determinedly said this is not a tax and the question is why should that be irrelevant? >> i don't think that's a fair characterization on the actions of congress, justice kagan. on september 23rd with respect to the law the sponsor center bachus defended as an exercise of the taxing power and the responsive point of order the senate voted 60 to 39 on that proposition. the legislative history is replete with members of congress explaining that its constitutional as an exercise of power by its opponent, so i don't think it is a situation where you can say that congress was avoiding any mention of the tax priority. one thing the congress explicitly disavowed and exercised it seems to me that it's not only is it fair to read this as an exercise of the tax power, but this court has an obligation construed as an exercise if it can be upheld. >> why didn't the conference call that a tax? >> the thought of it as the tax and defended it on the tax power. why didn't they say it was? >> they might have thought calling it a penalty as they did would make it more effective in accomplishing its objectives but it is in the internal revenue code and is why the irs. >> that's the reason. they thought it might be more effective if they called it a penalty. >> there's nothing i know of that eliminates that. >> the problem goes back to the limiting the principal. this is simply anything that raises revenue the congress can do. there has to be -- >> i think the constitution imposes some. can't be tax on imports. if it is a direct tax push. beyond that the limiting is identified from drexel furniture to the ranch that it can't be punishment punitive in the tax and three factors identified to look at that. the first is the sanction and how disproportionate it is to the conduct. the second and third is the administrative apparatus to enforce the tax. now in drexel furniture for example the tax was 10% of the company's profit even if they had only one child labor for one day. it was enforced by the department of labor it wasn't just collected by the internal revenue service. here you don't have any of those things. the penalty is calculated to be no more than at most the equivalent of what one would have paid for insurance. there is no requirement, there's no enforcement apparatus. >> candy view it as a tax if it does impose a requirement on people who are not subject to the penalty or the tax? >> i think it could for the reasons i discussed yesterday. i don't think it can or should be read that way but if there is any doubt about that, your honor, if the view of the court can't be, then i think the right way to handle this case is by an allergy of new york against the united states, in which the court read the provision in loan radioactive waste is setting the predicate. >> are you saying the discussion we had earlier about how this is one big uniform scheme in the commerce clause it really doesn't matter if this is a tax and the federal government could simply have said it could have simply said everybody who doesn't buy health insurance at a certain age will be taxed so much money. >> but you didn't need that. >> it is justifiable under its tax. >> we take a pause for a minute or so. >> why don't we get started. again. >> mr. chief justice may i please the court. the mandate represents an unprecedented effort by congress in order to better regulate congress. the commerce clause gives congress the power to regulate existing commerce. it doesn't give the farmer who greater power to compel people to enter commerce to enter the commerce essentially in the first place. now, congress when it passed the statute did make findings about why it thought it could regulate here and did justified the mandate as a regulation of the economic decision to forgo the purchase of health insurance. that is a theory without any limiting principal. >> do you accept the general position that you have conceded that the congress could say if you are going to consume health services you have to pay by way of insurance? >> that's right, just so the am i or. with 220 years of this year's jurisprudence if you regulate the point of sale you regulate commerce that is within the time. >> so what do you do with the impossibility of buying insurance at the point of consumption? >> virtually you force insurance companies to sell that to you? >> there are two points to make on that. one is a lot of the discussion this morning so far has proceeded on the assumption that the overall thing that is at issue here is the emergency room visits and the only thing that is being catastrophic coverage but as earlier a lot of the entrance is being covered its for ordinary preventive care, ordinary office does its and those are the kind of things that one can predict. there's a big part of the market is regulated here that wouldn't pose the problem that you are suggesting. but even if the emergency room visits, it certainly would be possible to regulate at that point you could simply say there is a mandate on the insurance companies to have to provide people that come in this would be a high-risk pool and you have to share among yourself but simply people have to sign up at that point and the would be regulating at the point of sale. >> now it seems as though you were just talking about a matter of timing the congress can regulate the transaction and the question is when does it make best sense to regulate that transaction. >> it is rather than a point of the sale given an assurance based mechanism it makes sense to regulate it earlier. it's just a matter of timing. >> we don't think it is a matter of timing alone and we think it has very significant substantive effect is because of congress to regulate the point of sale the one group that it wouldn't have to not all are the people who don't want to purchase health insurance, and also have no plans of using health care services in the near term and the congress very much wanted to capture those people. those people essentially or the golden geese that pay for it the entire lowering of the premium. >> it is true that the non-ensure young adults are in fact an actuarial reality in so far as our allocation of health services in so far as the way health insurance companies figure risks. that person who's sitting at home in the living and doing nothing and is an actuarial reality that can and must be measured for health service purposes. is that their argument? >> i don't know, justice kennedy but if it is there are at least two problems with it one is as suggested earlier somebody not in the insurance market is irrelevant as an act real risk. we can get people not in the insurance market and we find is relatively young and relatively healthy and that is certain pool factorial risked the would need to lower premiums. the people captured by guarantee ratings and community issues would presumably have a higher risk profile and the would be higher premiums and one of the things congress sought to accomplish your enforce them and to subsidize those already in it to lower their rates 43 a of the government briefs that has a statute. >> dozen that work? there are people needing to have old age and survivors. and yes they did it through a tax that they say everybody's got to be in that because if we don't have healthy in net it's not bring to be the money to pay for the ones that become old or disabled and will require to continue. there's a fuss because people said many people still do today. i could do much better for the government and going to the private market and make a great investment and that forces me to pay for this social security that i don't want. if congress needs a group to subsidize the ones that are going to get the medicare. it seems to me you're saying the only way that can be done is if the government does it itself can't involve the private market. it involves a private insurance. if it wants to do this, social security is modeled, the government has to be takeover. we can't have the insurance industry in it. is that your position? >> i don't think it is. i think there are other options available. the most straightforward would be what amount of subsidy to the insurance industry is necessary to pay for the guaranteed issuing of community ratings and once we calculate the amount of the subsidy we could have the tax that spreads generally through everybody to raise the revenue to pay for the subsidy. that's the way we pay for most subsidies. spec is there an exception? could the government say everybody pays a shared health care responsive to the payment to offset all of the money that we are forced to spend on health care, we've the government. but anybody that has an insurance policy is exempt from that tax. could the government do that? >> the government might be able to do that. they could raise issues whether or not the would be a valid exercise of the taxing power to the estimate under what ury? >> the tax credits for having solar power homes we get tax credits for using fuel efficient cars. why couldn't we get a tax credit for having health insurance and saving the government for caring for us? >> i think it would depend a little bit on what is formulated, but my concern and become the constitutional concern would be that it would just be a disguised in permissible direct tax and i do think -- i don't want to suggest we get to the taxing power to assume that i do think it is realizing the taxing power is limited in the given to impose direct taxes and the one thing i think the framers would have clearly identified as a direct tax is the tax on not having something. the generation was divided over whether the tax on carriages was a direct tax or not. hamilton thought i was a direct tax and madison thought it was a direct. i have little doubt both of them would agree that tax on of having the carriage would have clearly been a direct tax and i think they would have thought it clearly wasn't a valid regulation of the marketing carriages. if you look at helping versus the united states -- >> can i go back for a step because they don't want to get into the discussion of whether this is a good bill or not. some people think is going to save a lot of money. some people think it won't. so i'm focusing just on the commerce clause. not on the due process clause the commerce clause. i look back in history, and i think if we look back in history we see sometimes congress can create problems of nothing. that is the national bank created of nothing to create other commerce out of nothing. i look back in history and it seems pretty clear if there are substantial effects on interstate commerce the congress can act and i look at the person who is growing marijuana in their house or before that is growing wheat for home consumption this seems to have more substantial affect. it's this commerce. what seems to me more commerce than marijuana. i mean, is it in fact a regulation, well, why not? is creating the bank is, why isn't this? and then you say but one thing here out of all of those is different and that is your making somebody do something. can't congress make people drive faster than 35, 40 miles an hour on a road? didn't they make that man growing his own we'd go out into the market and by other week for his cowles? if you marry somebody with marijuana in the basement, wouldn't she have to go and get rid of it? affirmative action. i mean, where does this distinction comes from? it sounds like sometimes you can and sometimes you can't. what's argued here is there is a large group -- what about a person that we discovered that there are a disease sweeping the united states and 40 million people are susceptible from 10 million will die. can't the federal government say all 40 million get inoculated? so here we have a group of 40 million. and 57% of those of their care which we are paying for and 22% of those to more than $100,000 for that if they are in the midst of this big thing. we just want to rationalize the system they are already in the street estimate a topical government and i would like to tell me looking at those questions in reverse order -- [laughter] petraeus connect looking back at history, the thing that i concede that you say to some people to go and buy, why does that make a difference in terms of the commerce clause. >> let me start at the beginning of the question. mccaul was in the commerce power case. >> that is not a case that says it is okay to contract the banks as an exercise of the commerce power. and of course the court didn't say and i think the court would have had a different reaction to is we are not just going to have the bank because it is a necessary and in proper we're going to force them to put the money in the bank because if we do that we know the bank of the united states will be secure. they would have identified the difference between those two scenarios, and i don't think the the great chief justice would have said that they were forcing people to put deposits in the bank of the united states was a necessary and improper. if you look for the cases i mentioned i do not think you will find a case like this. and i think it is telling the you won't. the regulation of the market and all of this effort to address the supply side in which producers could do what congress was trying to do is support the price of wheat. it's much more efficient to make everybody in america by ten loaves of bread. that would have had a much more direct effect on the price of wheat in the prevailing market. but we didn't do that. we didn't say when we had problems in the automobile industry. we are not just going to give you an incentive cash for clunkers. we are going to have everybody over $100,000 has to buy a new car. >> the key to the government's argument to the contrary is that everybody is in this market. it's all right to regulate because that's a particular market in which a farmer had been participating. everybody is in this market, so that makes it very different than the market for cars with the other hypothetical that you came up with and all they are regulating is how you paid for it. >> as it was the first thing you have to see is what markets are we talking about because the statute undeniably operates in the health care insurance market and the government can't say that everybody's in that market read the whole problem is everybody is not in that market and they want to make everybody get in that market. >> doesn't that seem cutting the bologna thin. health insurance exists only for the purpose of financing health care. the two are inextricably interlinked. we don't get insurance so that we can stare at our insurance certificates. we get it so that we can go and access of care to read >> i'm not sure that's right. i think what health insurance does and what all insurance does is allows you to diversify risk. it's not just a matter of i'm paying now instead of paying leader. that's credit. insurance is different than credit. it guarantees you an up front looked in payment you want to pay any more than that even if you incur greater expenses and every other market i know of we let people basically make the decision whether they are relatively brisk at first, whether they are what we non-risk averse and they can make the judgment. >> with our insurance we tell people, not weaken the state's two although i will bless you the question, do you think said it some states decided not to impose an entrance requirement that the federal government would be without power to legislate and require every individual to buy a car insurance? >> let me say this you are right on the first point to say states can do it which makes it different right there. >> that goes back to the substantive due process question. is this an argument that only the states can do this even though it affects the commerce, indisputably affects commerce. when you were doing because the states have done it all along the federal government is the longer permitted to legislate in this area? >> they could make a different argument about cars and could about health insurance unless you try to say. >> i hope the vast majority of people have never gotten into an accident where the injured others, yet we pay for it dutifully every year on the possibility that at some point we might get into that accident. >> there's lots of people in manhattan for example but don't have car insurance because they don't have cars, so they have the option of withdrawing from that market. it's not a direct position from the government even the car market is different from this market where there's no way to get out of the web and that is one of the problems with this because we take it -- virtually everyone absent some intervention from above meaning that someone's life would be cut short in a feeble way to read virtually everyone will use health care. >> at some point that's right but all sorts of people will not say use health care in the next year which is the relevant period for the insurance. >> do you think that you can better than the actuaries or better than the members of congress who worked on at the the people that are not insured and see which ones next year will or will not use say emergency care. can you do that any better than if we knew that 40 million people were suffering about this, a contagious disease and only 10 million would get sick? we don't know which. >> of course not, justice breyer but the point is that commerce decides it is going to regulate its credit the latitude to make the judgments that were real positions which actuarially to rely and not to rely on. whether or not for the first time ever in our history the commerce also has the power to compel people into commerce because it turns out that there would be a very efficient thing for purposes of the congress optimal regulation of the market. >> this is the to the chief justice question the of course the few behind not just the government but the theory behind this is that people learn in this market right now and they are in this market because people do get six and when people get sick we provide them with care without making them pay and would be different. if you're appear saying i represent a class of christian scientists then you might be able to say look, why are they offering me? but absent that, you are in this market as an economic actor. >> once again, it depends on which market we are talking about. if we are talking about the health care insurance market -- >> it is designed to access the healthcare market. >> with respect to the health insurance market that's designed to have payment in the health care market everybody is not a market and that is the premise of the statute and the problem the congress is trying to solve. it's trying to solve it in a way that nobody's ever tried to solve economic problems before if you're creating a risk the market must attempt for. >> 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 and causing the labour market in detroit to go south, and causing maybe somebody to lose their job. and for everybody to have to pay for it under welfare, the cost shifting that the government tries to uniquely associated with this market it's everywhere and even more to the point the rationale that they think openly supports this legislation that would it's an economic decision once you make the economic decision, the aggregate the decision there for the substantial to on commerce that argument works here in every single industry. there are some in new york city than in wyoming who never will buy a car. we all suffer from the risk of getting set and we also know we will get seriously sick animals and we can't predict when and we also know and for the federal different will pay for this and with insurance will pay for nothing and that happens with a large number of people in this group of 40 million many of whom can be picked out in advance. now that's quite different from the car situation and this respect. it shows there is a national problem, and shows there is a national problem that involves money costs insurance. so if the congress could do this should there be a disease that strikes the united states. >> it's hard for me to do what ever is an interstate commerce even more so when we know it affects everybody to this gimmick there are other markets that affect everyone, transportation and food, burial services the we don't like to talk about that either. they're also are situations where there are many economic effects from somebody's failure to purchase a pro but. and if i could talk about the difference between the health insurance market and the health care market ultimately don't want you to leave with the impression that anything turns on that because of the government decided tomorrow that they could come up with a great wonder drugs that would be better for everybody to take would have huge health benefits for everybody and by the we also everybody had to buy it it would facilitate the economies of scale the production would be great and price would be cheaper and everybody in the health care market the actual health care market to buy the wonder drug i would be up here making the same argument saying that is not a power that is within the commerce power of the federal government. it is something much greater and would have been much more controversial. that's one of the important things in the federalist 45 madison says that's a new power but it's not one anyone has apprehension about. the reason to have apprehension is it is a power that only operated once people were already in commerce. uzi that from the text. did anybody think the republic had the power to compel some other nation in commerce with this? of course not. in the same way i think of the framers had understood the commerce power to include the power to engage -- >> who is in commerce and why are the and commerce clerks if the effect of all of these uninsured people is to raise

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