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