Friday, September 25, 2009

Is an Individual Health Insurance Mandate Constitutional?

David Rivkin and Lee Casey this week argued in a Wall Street Journal opinion piece that the mandatory insurance provision in Senator Baucus's health reform bill is unconstitutional. 

The argument goes like this: 

1.  Congress lacks authority under the Commerce Clause to require individuals to purchase insurance, because a "health-care mandate would not regulate any 'activity.'"  The authors reference United States v. Lopez and Gonzales v. Raich.

2.  Because Congress can't do it under the Commerce Clause, Baucus (and other supporters of an individual mandate) have called it a tax.  (Baucus's bill refers to the penalty for failure to insure an "excise tax," to be administered and collected by the IRS.)

3.  But this "excise tax" is plainly a penalty, pushing the bounds of the Supreme Court's Taxing Clause jurisprudence.  The authors:  "The Supreme Court has never accepted such a proposition, and it is unlikely to accept it now, even in an area as important as health care."

The authors are wrong on two counts.  First, an individual mandate is almost certainly the kind of economic activity that the Court would uphold under Congress's Commerce Clause authority under Raich, Lopez, and United States v. Morrison.  These cases allow Congress to regulate activities that have a "substantial effect" on interstate commerce, and they look to the commercial nature of the activity and to the connection between the activity and interstate commerce (among other considerations).  An individual mandate is almost surely commercial in nature--in requiring folks to buy health insurance, it requires a commercial exchange.  Rivkin and Casey argue that the mandate is not commercial in nature, because it's triggered simply by "being an American."  This may be true, but it misses the point of the regulation: It requires Americans to engage in a commercial exchange.  This is the definition of commerce.

Moreover, the individual mandate is closely related to interstate commerce.  The whole argument for an individual mandate is to get health care consumers to internalize their costs, and not spread them to the larger interstate economy.  A health insurance mandate is almost certainly within Congress's Commerce Clause powers, whether Congress calls it an "excise tax" or something else.

Second, Rivkin and Casey misunderstand the Taxing Power.  Congress can adopt an excise tax to an end that is within its other constitutional powers, as here.  But even if Congress is acting outside its other articulated powers, the Court has interpreted the Taxing Power quite broadly, all but eliminating any distinction between a "penalty" and revenue-producing "tax."  See United States v. Kahriger (upholding a federal tax on gambling under Congress's Taxing Power) (overturned on other grounds).

The Supreme Court may be on a path to limiting congressional authority under the Commerce Clause, the Taxing Clause, or any clause.  But even so, the individual mandate all too squarely falls within the recent and settled jurisprudence. 

We've posted on similar constitutional issues in the health care reform debate here, here, and here.

SDS

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Comments

Using the logic of the comment above, one could enact any mandate for any purpose and make it constitutional. It is simply a matter of mandating people do something and then calling it a commercial exchange. While insuring health care may be commercial, providing does not have to be. I can provide limited health care for myself. Family members can be providers as well. Does a parent not have a right to bandage a child's cut knee? This is not commercial exchange. Some people do not believe in modern medicine. They would have no need for any commercial health care. You can also pay for your own health care. A mandate would force citizens to insure against their failure to pay bills that may never materialize.
The government does not have the authority to mandate a citizen to buy anything. Even if a mandate were to be upheld by The Supreme Court, that doesn't make it right. They have been wrong before.
It seems to me, the courts have been piling precedences on top of each other to justify the government getting involved in areas they have no right. It's time this practice is stopped.

Posted by: Bob | Oct 16, 2009 10:15:45 PM

In all the cases you cite, the Congress is regulating or attempting to regulate some kind of activity, commercial, economic or whatever.

How does the complete absence of activity (my NOT buying health insurance) become Commerce or economic activity?

How is the "choice" of going to jail or buying insurance not constitute "duress" which would certainly void any other contract?

How are our Liberty and contract rights under the federal constitution NOT violated by an individual Congressional insurance mandate to purchase private insurance?

Does my not buying a new or used car constitute economic activity that can be regulated by the Interstate Commerce Clause?

Delegate Bob Marshall (R-13th District, VA House of Delegates)

Posted by: bob marshall | Nov 30, 2009 7:54:58 PM

"It requires Americans to engage in a commercial exchange"

Where in the constitution does the Fed govt have the power to FORCE me into a commercial exchange? What next, mandate I buy a new car every year? Dumb argument.

Posted by: Tom Yasnowski | Dec 19, 2009 2:49:50 PM

I have to agree with the basic sentiment of the other comments. While the courts, for technical reasons, may decided that this is constitutional, I think it ultimately points to the unraveling of a very long line of reasoning. This may not be convenient, but it appears to be happening. (Libertarians will say "I told you this is what would happen".)

Loosely speaking, the courts have justified incredibly broad Congressional powers using the Commerce Clause. It is turning out that very questionable things might now end up protected by that broad interpretation: like forcing Americans to purchase a product from a private company under threat of imprisonment or fines. This sounds rather insane for a free country, and would require a pretty caricatured interpretation of what counts as "commerce". It appears to require us to interpret everything that is not commerce as "commerce" because being non-commercial causes it to impact the economy.

If the court does end up supporting this viewpoint, I will be very interested to read the opinion. I don't see how the ruling could possibly be worded narrowly enough to prevent it from becoming a "do anything you want and get away with it" card.

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Posted by: Weight Loss | Dec 27, 2009 8:48:03 PM

Like Tom, I really have trouble with mandates using the commerce clause as authority.

I might be able to more easily justify it under the tax and spend clause. The tax law presently "encourages" us all to buy houses and gives us a deduction if we do, which may or may not lower our tax liability depending upon our income. If we don't want to buy a house, we may pay more tax, or we may not, depending on our income.

A health insurance mandate might work the same way. Purchasing health insurance might give us a lower tax liability and it might not. Failing to purchase health insurance might increase our tax liability and it might not.

Posted by: davidgmills | Jan 5, 2010 8:21:48 PM

Congress has the power to regulate interstate commerce, not to create it. The author's view of the Commerce Clause is too broad: it would permit Congress to force Americans into behavior that may have only a tangential effect on interstate economic activity.

Posted by: TN | Jan 7, 2010 8:05:10 AM

It's a horrible dilemma.

A healthy population is better for everybody. Having health insurance, today, is better than not having it.

The constitution does not grant our federal government to force a choice or behavior.

Article 1, Section 8, 3rd paragraph: "To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;"

That's it--that's all it says. Definition of commerce? Not stated. Any dictionary describes commerce as actions, choices expressed in exchanges, reciprocal agreements.

Where does it say government can compel a choice? Once a choice is expressed, it can be regulated. But to force a choice?

And powers not stated in the Constitution are left to the states, or not valid at all.

One example: in California, auto insurance is mandated if one chooses to drive an automobile, unless one can post an equivalent bond. If you don't choose to drive, you are not required to have auto insurance.

Posted by: michael | Feb 1, 2010 8:36:29 PM

As a retired law enforcement officer, I am very familiar with the adage, "Bad arrests result in bad case law." An example would be the exclusionary rule and its progeny. The inverse corollary that I would propose exists concerning Congress is that, "Bad lawmaking results in good case law."

To propose, as the author does, that the Commerce Clause justifies the Government to mandate its citizens to purchase goods and services from private purveyors, is a screaming invitation for the Judiciary to rein in an overstepping legislatures. In fact, the author clearly contemplates that the U.S. Supreme Court will strike down such a mandate. Despite the fact that a "justification" for a mandate can be contrived via torturing the logic contained in current case law, it does not support an argument that a mandate would be "constitutional." It simply evidences that someone knowledgeable of the law can construct an argument in favor of against just about anything. Trust me, I've seen this particular dynamic in practice many times.

Posted by: Tom Convery | Mar 16, 2010 11:15:18 AM

P.S. It is my understanding that the only way Government can mandate it citizens to fund universal health coverage is via its taxing authority. Once the Government received the funding, I believe it would then be at liberty to either pay medical bills directly, or contract with an insurance company or companies to administer the program. Under our Constitution, process is important.

Posted by: Tom Convery | Mar 16, 2010 11:30:09 AM

The activity being demanded is intrastate given the bill's establishment of statewide exchanges. The notion that "limiting" activity within a state has an impact on interstate commerce is on an obvious slippery slope about which Kennedy has expressed some concern (not to mention the obvious four). This is hardly black letter law.

Posted by: Fabio Escobar | Mar 22, 2010 8:42:00 AM

It seems that under the under the author's arguments, the Supreme Court could also argue that a boycott (or strike amongst workers) against a company could also be prohibited under the Constitution, if Congress were to pass a law prohibiting all boycotts or strikes.

Consider if consumers by the millions across the country decided to boycott Wal-Mart, the largest retailer in this country. This would certainly affect interstate commerce, considering the largest inter-state retailer and all it's suppliers (and a huge provider of employment) would be losing business drastically. Would Congress then have the power to stop this boycott, since the choice not to buy from Wal-Mart was negatively affecting interstate commerce, and mandate that every American spend at least $100 monthly at Wal-Mart to keep the largest retailer in the country alive? According to the author, Congress could do this. Seems like Congress could create a whole new system of bail-outs, where Americans are simply forced to buy products from business to rescue said businesses.

Posted by: Dan Abenroth | Mar 22, 2010 9:33:06 PM

Another question:

If the federal govt is granted power to regulate interstate commerce in the healthcare industry, would not such powers be limited to transactions occuring with coroporations that cross state lines?

In other words, considering most insurance companies are based entirely within a state, the purchasing of policies by citizens into such an insurance pool would be limited to citizens entirely within that state. How then, do the entirely intra-state transactions (that are also entirely limited to intra-state risk pools) in Washington State affect similar intra-state insurance purchasing limited entirely to Rhode Island? It would seem that attempting to use interstate regulatory powers in this instance are stepping into intra-state commerce.

Please explain how this could be justified.

Posted by: Dan Abenroth | Mar 22, 2010 9:52:54 PM

I understand the argument that requiring a person who does not wish to engage in a certain type of commerce, namely the purchase of an insurance policy, is potentially different than regulating that commercial activity when and if it occurs. The argument is that it is one thing to regulate automobiles, and quite another thing to make someone purchase an automobile.

However, in many thousands of examples, when a person becomes ill they can and often do make other people ill. This is more likely to occur if the sickness goes untreated because of a lack of health insurance. The second person who contracts the illness incurs a cost to be treated, which puts that person and anyone else they infect in the stream of commerce for their healthcare.

I realize that an insurance policy is a product, and if you look at it only in that way then you may try to compare it to other products like toaster ovens or jet skis. But in reality it is more than that. Whether or not you purchase a toaster oven or a jet ski does not potentially affect every other person you come into contact with, and create financial obligations for them, in the way that a sick person with a contagious illness may do if they cannot afford treatment.


Posted by: OCallison | Mar 23, 2010 3:30:01 PM

Governments force people to engage in commerce all the time. See, e.g., auto insurance.

Posted by: Mickey | Mar 23, 2010 4:30:41 PM

So, I gather, in the interest of interstate commerce, the Nevada bordello industry should be extended to all states, under the equal protection clause, and every citizen required to purchase the services of a whore once a year under the commerce clause. Why should married males get a free ride from supporting bordello costs by virtual of a sexual monopoly granted by the state?

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Posted by: david | Mar 31, 2010 4:44:59 AM

I would think that this would also be against the 13 Amendment to the United States Constitution. This prohibits slavery and "Involuntary Servitude" This being the United States legal and constitutional term for a person laboring against that person's will to benefit another, under some from of coercion. So if we don't buy the insurance we will be fined money for not doing so. I have to work to pay others insurance. If I don't buy it myself with my own money I get fined. Sounds like coerion to me. I do not want to work {X} amount of hours to have to foot this bill. To me that makes it "Involuntary Servitude"

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Posted by: convection toaster oven | Apr 5, 2010 2:49:19 AM

Perhaps a more fruitful question would be: what, if anything, can't the Feds do (as long as they're not violating individual rights protected by specific amendments, like 1st, 14th, etc.). Then, look to see how similar Obamacare is to those "prohibited" activities.

From a "structure and relationship" POV - it would seem to be that the "flaw" here is that Obama is purporting not to raise taxes, but is imposing a state mandate that will require States to raise taxes. Thus, its a little "bait and switch" - like going to war without declaring war (even though Congress continues to fund the war).

To draw another analogy -- could Feds cease home delivery of mail, delivering it only to centrally located bureaus at each State capital, and then mandate that the States take care of delivering it to the individual residences in their State?

That would save Fed dollars, clearly impact interstate commerce -- but isn't the Federal government supposed to raise its own taxes to provide benefits it wants to provide? Not mandate that someone else do the dirty work?

Posted by: Don | Apr 7, 2010 1:02:28 PM

The automobile insurance analogy is entirely misplaced, for the simple reason that it is only imposed if you own a car. It is not even imposed if you drive someone else's car (at least in my state, and I believe most states).

Thus, it is not even required as a condition of getting a driver's license, only as a requirement of buying (or leasing) a car. That's because its the car (albeit hurtling at many miles per hour) that does the damage, usually -- not the driver getting out of the car and punching or shooting the other driver, e.g.,

Posted by: Don | Apr 7, 2010 1:05:42 PM

Dear Don,

These are certainly some of the arguments against the individual health insurance mandate. Just a couple reactions:

1. The federal government regulates "doing nothing" all the time. Consider any federal criminal law: they all put obligations upon us (not to violate the law), even when we're simply being. Some have said that the difference here is that the individual health insurance mandate requires us to act (and doesn't merely prohibit us from acting). I don't believe this matters under the Constitution (even if it matters for different reasons): there's nothing in Article I, Section 8 (or anywhere else in the Constitution, as far as I can see) that bars Congress from requiring us to do something.

2. You're right that the federal government can't commandeer states or their officers. But the individual health insurance mandate doesn't do this. It's a direct tax on individuals who decline to insure, or a direct regulation on all of us. (The mandate as enacted can be understood as a tax, or a regulation, or a little of both.)

I realize that my claims are contestable (and actually contested!). We've posted several times on various aspects of this dispute, most recently on Ilya Shapiro's offer to debate the constitutionality of health care reform anytime, anywhere.

Best,
Steve

Posted by: Steven D. Schwinn | Apr 9, 2010 9:40:03 PM

Don't people benefit from this mandate? Of course. As one blogger I read commented, health insurance is a right. The question, hence the problem, would be the cost that is passed on to the individual.

Posted by: Health Insurance | Apr 14, 2010 12:35:00 AM

Thanks for a great blog. Many Americans cannot afford their own health insurance and this will be a step in the right direction of keeping everyone as healthy as possible.

Posted by: George Grant | Jun 11, 2010 3:34:24 PM

I agree with your opinion,I think that the Individual Health Insurance is depend on everyone,everyone has different ideas about Individual Health Insurance,so the government should not contribute to people's choice.

Posted by: sto credits | Jul 14, 2010 8:55:01 PM

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