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The Individual Mandate: An Unconstitutional Exercise of Congressional Power
By Sheldon H. Laskin
It is generally agreed, by both proponents and opponents of the Administration’s health reform bill, that the lynchpin of the legislation is the individual mandate requiring uninsured Americans to obtain health insurance, or pay a tax penalty for failing to do so. Without the mandate, even the Administration’s wildly exaggerated cost savings estimates simply cannot work. The whole plan is predicated on enlarging the risk pool by bringing in younger, healthier people who currently lack the means or the incentive – or both – to purchase health insurance.
Given the centrality of the mandate, it is somewhat surprising that little attention has been paid to the critical legal question of whether Congress has the constitutional authority to require Americans to purchase a commodity from a private, for-profit corporation. Other than some limited commentary on the Right -- George Will and Orrin Hatch both had columns on this topic in the Washington Post and the Heritage Foundation recently published a detailed legal analysis of the question – there has been almost no critical discussion of the issue. The silence on this issue is even more amazing in view of the fact that the Congressional Budget Office raised a red flag on the question during the Clinton Administration’s abortive effort at health care reform:
A mandate requiring all individuals to purchase health insurance would be an unprecedented form of federal action. The government has never required people to buy any good or service as a condition of lawful residence in the United States.
CONGRESSIONAL BUDGET OFFICE, THE BUDGETARY TREATMENT OF AN INDIVIDUAL MANDATE TO BUY HEALTH INSURANCE, (1994) available at http://www.cbo.gov/ftpdocs/48xx/doc4816/doc38.pdf.
Unlike the states, Congress cannot enact any law even if doing so would foster public safety and health. Under our federal system of government, Congress can only enact laws that are of a type authorized by a provision of Article I of the Constitution, which sets forth the powers of Congress. Proponents of the individual mandate typically cite the Commerce Clause of the Constitution as granting Congress the authority to require individual Americans to purchase health insurance.
Article I, Section 8 of the Constitution grants Congress the power “[t]o regulate Commerce with foreign Nations, and among the several States, and with the Indian tribes.” Therefore, in order for Congress to have the authority to require Americans to purchase health insurance, the purchase of health insurance must constitute “commerce” within the meaning of the Commerce Clause. It does not.
In 1982, the Supreme Court declared that, in order for a commodity to be considered an article in commerce, it must be capable of being sold. Sporhase v. Nebraska,
458 U.S. 941 at 949 -- 950 (1982). While there is no doubt that the sale of health insurance by an insurer constitutes commerce, it does not follow that the purchase – or more precisely, the failure to purchase – health insurance by a consumer also constitutes commerce. Health insurance, once purchased by a consumer, is not capable of being further sold in commerce because there is no market for it; who would purchase a health insurance policy naming someone else as the insured?
In order to understand the point better, it might be helpful to contrast health insurance with life insurance. Because paid-up life insurance has a cash value, an industry has developed in purchasing life insurance benefits from terminally ill patients. Known as viatical settlement companies, they will pay a percentage of the value of an insurance policy to a terminally ill patient if the corporation is named as the beneficiary of the policy. The patient gets the cash up front, to pay medical bills or
to support his family, and the corporation makes a profit on its investment when the insured dies. Because there is a market for life insurance benefits, the purchase of those benefits may be regulated under the Commerce Clause to make sure that the patient is not coerced by the Tony Soprano Benevolent Society to name it as beneficiary.
But there is no market for health insurance benefits once the policy is
issued. No one would buy my health insurance, because no one other than I
can derive any benefit from it. Since there is no market, health
insurance is not an article of commerce once issued. If it is not an
article of commerce, Congress lacks authority under the Commerce Clause to
require me to purchase it.
There are two Supreme Court cases that proponents of the individual mandate often cite in support of their position that Congress may require individuals to purchase health insurance. The first case involved government regulation of the amount of acreage used by farmers to grow wheat. A farmer who was fined for exceeding his acreage allotment challenged the fine, asserting that since he was using the excess acreage for personal consumption (he used it either to feed his chickens or to make bread for his family), Congress lacked authority under the Commerce Clause to regulate that excess acreage. The Court rejected this argument, pointing out that even wheat grown for personal consumption is marketable and that therefore the farmer’s excess acreage affected the supply and demand for wheat in interstate commerce. Wickard v. Filburn, 317 U.S. 111 at 137 (1942). Using similar reasoning, the Supreme Court recently affirmed congressional authority under the Commerce Clause to regulate the production and use of marijuana as applied to individuals who personally use marijuana for medicinal purposes under state laws that legalize such use. Gonzales v. Raich, 545 U.S. 1 (2005). Again, Congress had commerce clause authority to regulate personal consumption in this context because marijuana for home consumption is “a fungible commodity for which there is an established, albeit illegal, interstate market.” 545 U.S. at 18.
Unlike wheat or marijuana, health insurance is not a fungible commodity and is therefore not marketable. Again, no one would purchase my health insurance – it is personal to me and cannot be sold for any price.
Finally, proponents of the mandate often cite the fact that states require drivers to purchase auto insurance as justifying a federal individual mandate for health insurance. This is a facile comparison that ignores the constitutional differences between federal and state authority to regulate. As noted above, Congress can only legislate when there is a specific provision of Article I of the Constitution that authorizes it to enact that type of law. Conversely, the states have virtually unlimited legislative authority to pass laws that foster the public welfare, health and safety. Driving is a privilege, and the states are free to impose any reasonable condition on the exercise of that privilege that they choose. In any event, the states have limited the auto insurance requirement to the purchase of liability insurance to cover injuries sustained by third parties. No state requires drivers to purchase insurance to cover their own injuries.
For single-payer advocates, a very powerful argument is that, while the individual mandate to purchase private health insurance is unconstitutional, Congress can lawfully tax to support a government financed health insurance program. Article I empowers Congress to use its taxing powers in support of government programs that foster the public welfare; this is the constitutional authority for Social Security and Medicare. But to extend that authority to requiring Americans to purchase a private commodity raises profound civil liberties issues. If Congress can compel the purchase of insurance from a for profit insurance company, it can compel the purchase of any commodity if there is an arguable public policy to support it. The auto industry is collapsing? Forget Cash for Clunkers, just order Americans to buy cars or tax them if they don't. Obesity crisis? Order Americans to join health clubs, or tax them if they don't. If Congress gets away with this, there is no stopping point and Big Business will have succeeded in making Americans into involuntary consumers whenever it so chooses.
*Sheldon H. Laskin is an attorney who has appeared in the United States Supreme Court. He is an Adjunct Professor in the Graduate Tax Program at the University of Baltimore Law School. Mr. Laskin specializes in state tax cases under the Commerce Clause of the US Constitution.