It might seem that all one needs to do to answer this question is look at the specific law or code provision being challenged, assess what it governs in a common sense fashion, and thus determine what is being regulated. But I would argue that it is actually a very complicated inquiry.
This came into clearer focus for me as I was grading 77 constitutional law exams over the past three weeks. One of the issues in my exam concerned an express preemption provision, which stated that a state could not maintain or enforce a law or regulation governing a particular subject. The details are unimportant; there are hundreds of similar express preemption clauses in the United States Code. But for purposes of illustration, it might be helpful to use a specific example.
Consider 46 U.S.C. §4306 (codifying §10 of the Federal Boat Safety Act). It states as follows:
Unless permitted by the Secretary under section 4305 of this title, a State or political subdivision of a State may not establish, continue in effect, or enforce a law or regulation establishing a recreational vessel or associated equipment performance or other safety standard or imposing a requirement for associated equipment (except insofar as the State or political subdivision may, in the absence of the Secretary's disapproval, regulate the carrying or use of marine safety articles to meet uniquely hazardous conditions or circumstances within the State) that is not identical to a regulation prescribed under section 4302 of this title.
What exactly is the activity that this provision regulates? Most directly, it regulates the lawmaking or law enforcement practices of state or local governments. More broadly, or perhaps indirectly, it regulates the manufacture or sale of watercraft in the United States, as the preemption provision is a means of establishing uniform, national safety standards for boats sold in the United States market, at least with respect to matters on which the Coast Guard has issued regulations.
Why does this matter? Well, the enactment or enforcement of laws by state or local governments is generally not considered conduct that is "economic" or "commercial" in nature. Thus, if we looked at §4306 in isolation, and what it directly regulated, we might well conclude that the law does not regulate any "economic activity" or "commercial activity," and thus exceeds Congress's commerce power.
But an express preemption provision like §4306 is plainly constitutional under present law, and uncontroversially so. And the reasoning goes like this: §4306 effectively regulates the commercial activities of manufacturing or selling boats, and thus is within Congress's authority to regulate interstate commerce. (Some might argue, even more precisely, that provisions like §4306 are justified by the Necessary and Proper Clause, as an appropriate means to the regulation of the interstate boat market. But I'm not sure this distinction (or addendum) really matters here, as what we are concerned with is Congress's authority to regulate interstate commerce, whether that stems from the Commerce Clause alone or the Commerce Clause augmented by the Necessary and Proper Clause.)
What does this have to do with the ACA? Well, a critical question that every judge must confront (or at least every judge reaching the merits) is whether the minimum coverage provision (a) regulates conduct in the health insurance market (as the challengers contend), or (b) regulates conduct in the health care services market (as the United States maintains).
In a direct and immediate sense, of course, the individual mandate regulates behavior in the insurance market. But one can easily argue (as with §4306 above) that what it really regulates is the payment for services in the health care service market. Sure, the provision, when examined in isolation, only directly concerns the purchase of health insurance. But the broader scheme, taken as a whole, shows that what Congress was actually regulating--of which the individual mandate is only a part--is the financing of health care services. Congress logically cared whether people carry health coverage not for its own sake, but due to its implications for the financing of services in the health care market, the ultimate object of its regulation.
So which is it? Which market does the minimum coverage provision actually regulate?
Unfortunately, constitutional law does not provide any obvious answer. And I do not think there is even much helpful precedent with respect to how a court is to evaluate the question (though I want to do some more research on this point to be sure). Courts attempting to define the "regulated activity" in enumerated powers cases seem to do so as much by intuition as anything else. Indeed, this is one of those questions that seems deceptively straightforward, to be determined by empirical reality rather than legal categories or doctrinal analysis. But that intuition, as is so often the case, can be misleading.
The larger point is that the relevant "regulated activity"--or, phrased differently, the relevant regulated market--is quite open to debate. The fact that the challenged provision only regulates a particular activity directly (state or local governments' lawmaking in the case of §4306, or the decision whether to acquire health insurance in the case of the ACA) does not provide the answer. The regulated activity or market, for purposes of evaluating whether the challenged provision is within Congress's enumerated powers, may well be different than the conduct that the provision directly governs. Answering the critical question is not as simple as examining the empirical realities of the challenged provision by itself.
I have no great insights to offer here (not that I ever do). Nor can I offer any answer as to how this problem should be approached. Rather, my rather modest point is that what seems like a relatively simple question is actually quite complex.
And it is obviously of enormous importance. For if the relevant market is only that for health insurance, the minimum coverage requirement looks truly unprecedented (and constitutionally problematic). But if the relevant market is that for health care services, then what Congress is regulating is a market in which virtually every American actively participates--and the minimum coverage provision is merely regulating the commercial terms on which that active participation occurs. And this framing, of course, makes it seem well within Congress's authority to regulate interstate commerce.