The Supreme Court Arguments on Obamacare Have a Local Angle

Day Two (March 27) of the three days of Supreme Court arguments on Obamacare (officially, the Affordable Care Act) focused on the constitutionality of the law's "individual mandate," which requires everyone to buy health insurance whether they want it or not.  The transcript of the Day Two argument makes a number of references to Wickard v. Filburn, the 1942 Supreme Court case of which the New York Times recently noted, "[i]f the Obama administration persuades the Supreme Court to uphold its health care overhaul law, it will be in large part thanks to a 70‑year old precedent involving an Ohio farmer named Roscoe C. Filburn."

Filburn is commonly viewed as standing for the proposition that Congress' power under the Constitution to regulate interstate commerce can extend to purely local (i.e., intra-state) activity that, when "aggregated," has an "effect" on interstate commerce.  More generally, it is the case cited as exemplifying the breadth of Congress' power under the Commerce Clause.

In terms of local legal history, Filburn was also "probably the most significant case ever decided in the District Court for the Southern District of Ohio" (Roberta Sue Alexander, A Place of Recourse:  A History of the U.S. District Court for the Southern District of Ohio, 1803-2003, p. 127 (Ohio University Press 2005)), which is the district that includes Dayton and Cincinnati, where our firm's offices are located.

The plaintiff, Roscoe Filburn, owned a farm in Montgomery County, Ohio on land that later became the site of the Salem Mall, near Dayton, Ohio.  The case arose because Filburn grew more wheat on his farm than he was allowed under the Agricultural Adjustment Act of 1938.  That Act established a scheme to support wheat prices, under which each individual farm in the country was assigned an acreage "allotment" (i.e., a maximum limit), the purpose being to control supply and thereby control "abnormally low or high wheat prices."  Filburn's 23 acres planted with wheat exceeded his allotment of acres by over 100%.  His "farm marketing excess" of 239 bushels resulted in a penalty of $0.49 per bushel, costing him $117.11 in total (for perspective, note that wheat then sold for under a dollar a bushel).

Filburn, represented by, among others, the President of the Dayton Bar Association, Harry Routzohn, challenged the penalty in a suit filed in the Southern District of Ohio.  The case was heard by a three judge panel (now, an unfamiliar and nearly obsolete procedure; the once-numerous statutes providing for certain cases to be heard by a three-judge panel have been repealed except as to legislative reapportionment cases).  The panel consisted of two of the Southern District's three district judges, Robert R. Nevin (Dayton) and John H. Druffel (Cincinnati), plus Sixth Circuit Judge Florence Allen.  The case was tried, most efficiently, on the pleadings and a stipulation of facts, which included stipulations as to "the economics of the wheat industry."  The panel, in a 2‑1 decision (Allen dissented) enjoined enforcement of the penalty against Filburn.

The Secretary of Agriculture appealed directly to the Supreme Court (as allowed under the three judge panel procedure), which unanimously reversed.  The Court conceded the broad sweep of the law, which "extend[ed] regulation to production not only intended in any part for commerce, but wholly for consumption on the farm."  Further, "[p]enalties do not depend upon whether any part of the wheat, either within or without the quota is sold or intended to be sold."

Filburn argued that such activities, "local in character," are beyond the scope of the Commerce Clause.  Interestingly, though, the stipulation of facts did not claim that Filburn never sold wheat on the open market:  it says he grew wheat partly to feed the poultry and livestock on the farm (he had a herd of dairy cattle and sold milk, as well as poultry and eggs), partly for seed, and partly to make flour for consumption on the farm, but it was also stipulated that he would, on occasion, "sell a portion of the crop," and "[t]he intended disposition of the crop here involved has not been expressly stated."

Nevertheless, the Court decided the issue as if the facts were that Filburn grew this particular wheat crop solely for home use.  The Court's key holding was that "even if appellee's activity be local and though it may not be regarded as commerce, it may still, whatever its nature, be reached by Congress if it exerts a substantial economic effect on interstate commerce."

The Court found that Congress' power to regulate the price of wheat "can be accomplished as effectively by sustaining or increasing the demand as by limiting the supply," and that this case was an example of the former.  The statute not only "restrict[ed] the amount which may be produced for market" but also took steps to limit the extent to which "one may forestall resort to the market by producing to meet his own needs."  Home-grown wheat, if one "assume[s] that is never marketed … supplies a need of the man who grew it which would otherwise be reflected by purchases in the open market.  Home-grown wheat in this sense competes with wheat in commerce."  While the effect of Filburn's usage on demand might have been "trivial by itself… his contribution, taken together with that of many others similarly situated, is far from trivial."  In other words, by growing his own wheat for home use, instead of buying it on the market, Filburn, and other independent family farmers like him, reduced the demand for wheat, and therefore put downward pressure on its price, contrary to the goal of the statute to maintain price stability.

What does this have to do with the health care debate?  Filburn is attractive to supporters of Obamacare due to the conventional view that Filburn's interpretation of the Commerce Clause power is so broad as to make virtually any exercise of that power by Congress immune from challenge -- and in fact only once in the seven decades since Filburn has the Court (in U.S. v. Lopez, in a 5‑4 decision) struck down a federal statute as unconstitutional under the Commerce Clause.  Also, the facts and circumstances of Mr. Filburn's plight -- which seem straight out of a law school professor's hypothetical ("what if you had a law dealing with the price of wheat, which penalized a farmer who grew wheat only for home use…") -- make the case an attractive and easily-understood illustration of the breadth of the Commerce Clause:  a Constitutional power broad enough to prevent you from growing your own food is probably broad enough to require you to carry health insurance.

Proponents cite Filburn not only for its generally expansive view of the Commerce Clause but also to draw specific analogies between its facts and those of the Obamacare case.  Proponents argue that the voluntarily health insurance-free can be forced under the Commerce Clause power to pay a penalty even though, like Mr. Filburn, they choose not to participate in the market.  The Obamacare scheme, in order for private insurance companies to have any chance of offering relatively affordable insurance, needs young and relatively healthy persons who have little risk of incurring substantial health care costs to purchase health insurance, therefore putting themselves in the actuarial pool.  Yet, it is precisely those persons, because of their lower risk, who are more likely to forego buying insurance -- they are more likely to "self-insure."  The self-insured person's wallet, in Filburn's language, "supplies a need … that would otherwise be reflected by purchases in the open market," which results in financial harm to the overall statutory scheme.  Opponents, though, argue that the Commerce Clause allows Congress only to regulate commerce; it does not permit Congress to force someone to engage in commerce by buying a product they don't want.  They distinguish Filburn on the basis that, while Filburn may not have sold wheat, he was hardly a self-sufficient consumer -- he sold milk, chicken, and eggs, so that his farm was in fact involved in commerce (and so was his wheat, to the extent he fed it to his cows and chickens and it thus led to marketable products).  In contrast to Obamacare's effect on the self-insured, the Agricultural Adjustment Act wasn't forcing Filburn to engage in commerce -- he was already doing it.  Proponents counter that that fact does not distinguish Filburn, on the ground that the currently insurance-free will eventually need health insurance, so that they will inevitably participate in the health insurance market, and thus, like Mr. Filburn, will probably also be involved in interstate commerce voluntarily at some point.

In short, if the health care law is upheld, it is likely that the decision will rely heavily on Filburn.  Legal scholars may very well note that the seeds of that decision were sown on a Dayton-area farm 70 years ago.  (For the record, Mr. Filburn himself will not benefit from, or suffer the consequences of, Obamacare – he died in 1987 at the age of 85.)

About The Author

Don Burton | Faruki Attorney