Since federal health reform was enacted, a number of law suits have been filed to prevent its implementation and lawmakers in 39 states have introduced bills opposing it. The piece of reform generating the most attention is the individual mandate to purchase health insurance. Attacks have come from across the political spectrum: On the right, people fear that government is getting too big and exercising too much control over personal decisions; on the left, people fear that the mandate will transfer more wealth and power to private insurance companies that prioritize profits over health. Although this political fight was supposedly decided once President Obama signed the law, these concerns are animating recent legal challenges as well.
Challengers claim that Congress does not have the authority to mandate these kinds of decisions, and that if Congress is allowed to do this, it will set a dangerous precedent that gives the federal government unfettered authority to regulate every aspect of our lives. While the mandate does raise an important question about the scope of the government's power to do something unprecedented - to require individuals to purchase a service from a private entity - concerns by challengers are overblown. The key to understanding why this mandate will likely be found constitutional, and why it does not set a precedent that gives the federal government limitless power, lies in the unique nature of health care and our highly regulated and government subsidized health care delivery system.
The government has defended the individual mandate as a legitimate exercise of two powers granted to Congress in the U.S. Constitution: its power to regulate interstate commerce, and its power to tax and spend for the general welfare. Plaintiffs challenging the law have attacked both of these justifications.
Commerce Power
Article I, Section 8 of the Constitution gives Congress authority to "regulate Commerce ... among the several States" and to "make all Laws which shall be necessary and proper" to execute this power. The Supreme Court has interpreted this broad power to allow Congress to regulate even local activity if it "substantially affects" interstate commerce or is "an essential part of a larger regulation of economic activity." In a motion filed last week in Michigan, the government explained that the health care industry operates in interstate commerce and that there is a long-recognized federal interest in its regulation. Indeed, the federal government already regulated private insurance to some degree before this most recent reform.
Challengers to the law do not dispute Congress' ability to regulate insurance or its connection to interstate commerce. Rather they say that an individual mandate goes too far because it does not regulate activity; it punishes inactivity. At the heart of this challenge is the concern that giving the government power to force individuals to purchase insurance would set a dangerous precedent. For example, in a motion for preliminary injunction filed in Michigan last month, plaintffs warned that if the commerce clause is read broadly enough to allow government to mandate insurance coverage, then government would have "absolute and unfettered power to create complex regulatory schemes to fix every perceived problem imaginable...by ordering private citizens to engage in affirmative acts, under penalty of law, such as taking vitamins, losing weight, joining health clubs, buying a GMC truck, or purchasing an AIG insurance policy." And if that's not scary enough, plaintiffs predict that such a broad reading of the Commerce power would "effectively reverse[] the American Revolution and terminate[] the great experiment founded in the constitutional republic begun by our Founding Fathers." At times the plaintiffs' motion reads more like social science fiction than legal argument; indeed, plaintiffs' conclude that upholding this mandate will transform us into an Orwellian society.
Beneath this hyperbole lies an important and novel legal question about the scope of the federal government's power to mandate action, purely as a condition of residing in the United States. Generally, when disputes about the government's commerce power arise, the answer turns on the nature of the activity being regulated: whether the activity is "economic" and whether there is a sufficient nexus between the activity and interstate commerce. For example, the Supreme Court has struck down federal laws regulating gun possession in school zones and gender-motivated violence because these activities were not viewed as "economic" in nature or essential to a larger regulation of economic activity. On the other hand, the breadth of the commerce power is best illustrated by a 2005 case, Gonzales v. Raich, in which the Court upheld a federal law criminalizing the possession of marijuana, even in cases where it was home grown and intended for personal use only. The Court explained that "economic" activity can include the production and consumption of goods, and that even though the plaintiff's particular activity in that case was not commercial in nature, marijuana is a commodity sold in interstate commerce and the regulation was an essential part of a larger regulatory scheme to prevent illegal drug trafficking across state lines.
Intuitively, then, plaintiffs' argument that the mandate is not a legitimate exercise of the commerce power makes sense. By definition, uninsured individuals are not purchasing anything; the mandate forces them to engage in commercial activity. Given that inactivity is the subject of the regulation, how can we even get to questions about its economic character or nexus to interstate commerce? The problem, however, is that this narrow definition of the "activity" being regulated is not a complete or realistic one in light of our existing health care delivery and financing system.
Individuals who do not purchase insurance are nonetheless participants in the health care market in ways that are unpredictable in terms of timing, but that will inevitably produce significant costs and other deleterious effects on the insurance market generally. The "activity" being regulated does not occur at one discrete point in time nor is it simply the choice to buy insurance or not; rather it is a decision about how and when medical care will be purchased, the timing of which is only partially within an individual's control due to the unpredictability of medical need.
Moreover, unlike the parade of horribles plaintiffs use to illustrate what kind of mandates the government will be able to enact next (such as forcing everyone to buy GMC trucks), there is a direct and documented link between uninsurance and the health care delivery and financing system, which operates in interstate commerce. Because of federal protections that guarantee everyone emergency care, the uninsured necessarily benefit from a system that ensures they will have access to emergency care when needed - we no longer allow people to die on the emergency room doorstep due to lack of insurance. Federal subsidies also promote access for non-emergency care in some clinics and hospitals. Consequently, the uninsured receive treatment from private and public providers for which they can not or do not pay. Uncompensated medical care increases financial costs to providers, and to other consumers through higher medical prices and insurance premiums. This, in turn, jeopardizes the availability of affordable and meaningful insurance coverage critical to health care access.
Finally, the individual mandate is essential to the expansion of affordable, meaningful private insurance coverage, a primary goal of the regulatory scheme created in the health reform law. Without a mandate, regulations that prohibit insurance companies from denying coverage, limiting benefits, or charging excessive rates would leave insurers vulnerable to extraordinary risk because people could wait until they think they need benefits before they buy insurance. This would jeopardize insurance companies' ability to pool risk and keep insurance affordable to the community, and it may drive insurers out of business altogether. An individual mandate is "necessary and proper" to ensure the success of a broader health insurance regulatory scheme.
The Taxing Power
Even if plaintiffs could show that the mandate exceeded Congress' commerce power, the power to tax provides a strong, alternative basis for upholding the mandate. Article I, Section 8 of the U.S. Constitution grants Congress authority to "lay and collect Taxes, Duties, Imposts, and Excises to...provide for the...general Welfare of the United States." This power is extremely broad and may allow Congress to regulate activities that it would not have the authority to regulate under its other powers, such as the Commerce Clause.
Under the new health reform law, individuals subject to the mandate (there are several exemptions in the law), but who choose not to purchase insurance, are assessed a tax. Indeed, taxes on individuals, employers, and certain pharmaceutical and medical device companies are an important part of the reform package and will help finance additional coverage. There is no question that such taxes promote the general welfare and health of the public. Indeed the federal government already subsidizes care for the uninsured directly and indirectly: the federal government has used its tax and spend power to create public financing systems, like Medicaid and Medicaire, that play a critical role in the private health delivery and insurance system. Moreover, under the new law, the federal government will directly subsidize insurance coverage for people below a certain income level. The relationship between insurance coverage and health care access is beyond dispute. Everyday we see evidence of how the lack of insurance coverage jeopardizes the ability and willingness of health care providers to provide medically necessary care, especially in economically vunlerable communities. A tax on individuals without insurance helps encourage people to purchase insurance, while raising revenue that could be used to strengthen the existing health care system.
The bottomline is that upholding the individual mandate in the health insurance setting does not mean that government will have unfettered power to force us to consume goods. The role of insurance in health care access presents a unique and compelling circumstance for such a mandate that does not exist in almost any other context. Health care is already a highly regulated and subsidized industry, and there is a long history of the federal government using its interstate commerce and taxing powers to regulate this industry. The individual mandate is just the latest example of such regulation.
