Why the Individual Health Care Mandate is Unconstitutional

JURIST Guest Columnist Ilya Somin of George Mason School of Law says the lawsuits challenging the constitutionality of the Affordable Care Act are far from frivolous. They deserve to prevail and have a real chance of doing so...
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Twenty-eight states and several private groups have now filed lawsuits challenging the constitutionality of the of the Obama health care plan. One of the cases was filed by twenty-six state governments and the National Federation of Independent Business in a federal court in Florida. Another was initiated by the Commonwealth of Virginia in a federal court in that state. Numerous other suits have been filed by a variety of private groups.

When the first of these suits began a year ago, many denounced them as frivolous political grandstanding. But it is increasingly clear that the plaintiffs have a real chance of winning. More importantly, they deserve to win because the mandate really is unconstitutional. If upheld, it would give Congress a dangerous power that greatly exceeds the bounds of the Constitution.

The cases focus primarily on challenges to the new law's "individual mandate," which requires most American citizens to purchase a government-approved health insurance plan by 2014 or pay a fine. So far, federal district court judges in the Florida and Virginia cases have ruled that the mandate is unconstitutional, while three others have upheld it in cases filed by private parties in Michigan, a different court in Virginia, and Washington, DC.

The federal government claims that Congress has the power to impose the mandate under the Commerce Clause, the Necessary and Proper Clause, and the Tax Clause of the Constitution. All three arguments have a common defect: if accepted by the courts, they would give Congress the power to enact virtually any mandate of any kind. Such a ruling would be unprecedented and would make a hash of the Constitution's carefully defined limits on federal power.

The Commerce Clause

The administration has relied most heavily on the Commerce Clause, which was the basis of all three decisions upholding the mandate. The Clause gives Congress authority to regulate "Commerce . . . among the several states." But the individual mandate regulates that which is neither commercial nor interstate. Virtually all purchases of health insurance are intrastate because a combination of state and federal law makes it illegal to purchase health insurance across state lines. Moreover, the object of the mandate is not even commerce at all. Instead of regulating preexisting commerce, the bill forces people to engage in commercial transactions they would have otherwise avoided.

At the time of the Founding, the framers and ratifiers of the Constitution consistently interpreted the Commerce Clause as only giving Congress the power to regulate interstate transportation and trade in goods and services across state lines. Even Alexander Hamilton, the strongest advocate of broad federal authority among the Founding Fathers, took this view. This was also roughly the approach adopted by the Supreme Court during the first 150 years of American history.

Many defenders of the mandate claim that the Commerce Clause gives Congress the power to impose any regulations that have a significant impact on interstate commerce. But that would render most of the rest of the congressional powers listed in Article I of the Constitution redundant. The very same phrase that gives Congress the power to regulate interstate commerce also gives it the power to regulate "Commerce with foreign Nations" and "with the Indian Tribes." Obviously, both international commerce and Indian commerce (which was a much more important part of the economy in the 18th century than today), have a major impact on interstate commerce and the economy as a whole. If the power to regulate interstate commerce gave Congress the power to impose any regulations that have an effect on the economy, these other powers become completely superfluous. The same goes for many of Congress' other enumerated powers, such as the power to coin money, the power to establish "Post Offices and post Roads," and even the power to "raise and support Armies." The exercise of all of these powers inevitably has major effects on the economy.

Defenders of the individual mandate often cite Chief Justice John Marshall's famous opinion in the 1824 case of Gibbons v. Ogden as a justification for their position. Gibbons did indeed define commerce as "intercourse." But the intercourse in question was economic trade across state lines. Gibbons did not give Congress the power to impose any regulations that might have some economic effect. To make the point clear, Chief Justice Marshall listed a wide range of regulations that fall outside the scope of the commerce power, including "[i]nspection laws, quarantine laws," and most relevant to the mandate case "health laws of every description."

A series of flawed Supreme Court decisions have expanded Congress' Commerce Clause authority well beyond what the text of the Constitution permits. These rulings allow the federal government to regulate almost any "economic activity." But even they do not give Congress the power to impose mandates solely on the basis of a person's residence in the United States. Far from engaging in "economic activity," people who decide not to purchase health insurance are actually refraining from doing so.

The most expansive Supreme Court Commerce Clause decision of all time was its 2005 ruling in Gonzales v. Raich, which held that Congress had the power to ban possession of medical marijuana that had never crossed state lines or been sold in any market. Raich was an extremely dubious decision that pushed congressional power far beyond its constitutional limits. But even that opinion did not go far enough to justify the individual mandate. In Raich, the Court ruled that Congress could ban the possession of medical marijuana because the latter qualifies as "economic activity," defined as anything that involves "production, distribution, and consumption of commodities." People without health insurance are not producing, consuming, or distributing a commodity of any kind. To the contrary, they have chosen not to do any of these things.

Some defenders of the law claim that the individual mandate is similar to federal laws banning racial discrimination by businesses such as motels and restaurants. But federal anti-discrimination laws apply only to preexisting businesses already engaged in commercial activity in the relevant industry. By contrast, uninsured individuals are not businesses and, by definition, are not participating in the insurance industry. The civil rights laws do not require anyone to open up a business or start hiring employees. They merely forbid discrimination by those who do.

In his decision upholding the mandate in the Michigan case, Judge George Caram Steeh argued that the mandate is constitutional under the Commerce Clause because deciding not to purchase health insurance is an "economic decision." "Economic decisions," he asserted, include decisions not to engage in economic activity. Similar reasoning was adopted by the other two district judges who have upheld the mandate. In the Washington, DC case, Judge Gladys Kessler argued that "[m]aking a choice is an affirmative action, whether one decides to do something or not do something." This approach would allow the Commerce Clause to cover any choice of any kind. Any decision to do anything is necessarily a decision not to use the same time and effort to engage in "economic activity." If I choose to spend an hour sleeping, I necessarily choose not to spend that time working, buying products, or purchasing health insurance. Under Steeh's logic, the Commerce Clause authorizes Congress to force workers to get up earlier in the morning so that they would spend more time on the job.

Judge Kessler managed to go even further than this, suggesting that Congress has the power to regulate "decision-making" because it is "mental activity." Under her reasoning, the Commerce Clause authorizes Congress to regulate thought as well as action and inaction. After all, thinking of any kind is "mental activity" too.

Is Health Care Special?

Recognizing that they probably cannot win under the Commerce Clause by arguing that Congress has the power to impose any mandate with some kind of economic effect, defenders of the insurance mandate have tried to get around the problem by arguing that health care is a special case. The federal government claims that forcing people to purchase health insurance actually does regulate economic activity because everyone eventually uses health care in some form. For that reason, Judge Steeh argues, people who choose not to buy health insurance are making "an economic decision to try to pay for health care later," using some other means of payment. Three district courts have upheld the law in part on this basis. But as Judge Henry Hudson pointed out in the Virginia decision striking down the mandate, "the same reasoning could apply to transportation, housing, or nutritional decisions. This broad definition of the economic activity subject to congressional regulation lacks logical limitation." This logic would give Congress the power to force everyone to purchase a car because everyone eventually uses some form of "transportation."

The fact that most people eventually use health care does not differentiate health insurance from almost any other market of any significance. If you define the relevant "market" broadly enough, you can characterize any decision not to purchase a good or service exactly the same way. Notice that the government does not argue that everyone will inevitably use health insurance. Instead, they define the market as "health care." The same bait and switch tactic works for virtually any other mandate Congress might care to impose.

Consider the famous example of the broccoli mandate raised by Judge Roger Vinson in the Florida case. Not everyone eats broccoli. But everyone inevitably participates in the market for "food." Therefore, a mandate requiring everyone to purchase and eat broccoli would be permissible under the federal government's argument. The same goes for a mandate requiring everyone to purchase General Motors cars in order to help the auto industry. There are many people who don't participate in the market for cars. But just about everyone participates in the market for "transportation." We all need to get from place to place somehow. How about a mandate requiring all Americans to see the new Harry Potter movie? After all, just about everyone participates in some way in the market for "entertainment."

In her decision upholding the mandate, DC district court judge Gladys Kessler argued that health care is special because providers are required to provide emergency services to the uninsured, which is not true of most other markets. But why is that difference constitutionally relevant? The answer seems to be that failure to purchase thereby has adverse economic effects on producers. Put that way, of course, failure to purchase health insurance turns out to be no different from failure to purchase any other product. Any time someone fails to purchase a product, be it cars, movie tickets, or broccoli, producers are made economically worse off than they would be if the potential buyer had made a different decision. This is true regardless of whether the producers must provide services to some consumers for free or not. At most, the latter condition exacerbates the negative impact on producers, but all sorts of other market conditions and government regulations can negatively affect producers as well. Moreover, Judge Kessler's approach would allow Congress to impose any mandate of any kind so long as producers must provide their product to at least some consumers for free. This too is a road to virtually unlimited federal power to impose mandates. Producers in any industry would be happy to accept a minor "free service" obligation so long as it was coupled with a more lucrative purchase mandate.

The Tax Clause

The federal government also contends that the mandate is constitutional because it is a tax authorized by Congress' power to impose taxes for the "general Welfare." All four federal judges who have ruled on this claim so far have rejected it, including two who concluded that the mandate is constitutional under the Commerce Clause. They correctly recognized that the mandate is a financial penalty for refusing to comply with a federal regulation. As Judge Vinson pointed out, congressional leaders consistently emphasized before the law's enactment that it was not a tax.

As recently as 1996, the Supreme Court reiterated the crucial distinction between a penalty and a tax. It ruled that "[a] tax is a pecuniary burden laid upon individuals or property for the purpose of supporting the Government," while a penalty is "an exaction imposed by statute as punishment for an unlawful act" or - as in the case of the individual mandate - an unlawful omission. The individual mandate is a clear example of a penalty, where Congress requires people to purchase health insurance, and then punishes them with a fine if they fail to comply.

In September 2009, President Obama himself noted that "for us to say that you've got to take a responsibility to get health insurance is absolutely not a tax increase." He was right. If the mandate qualifies as a tax merely because it punishes violators with a fine, then Congress could require Americans to do almost anything on pain of having to pay a fine if they refuse. It could use this power to force citizens to buy virtually any product, including broccoli, General Motors cars, or anything else.

Even if the individual mandate does somehow qualify as a tax, it is not one of the types of taxes that Congress is authorized to impose. The Constitution gives Congress the power to enact several types of taxes: Excise taxes, duties and imposts, income taxes, and "direct taxes" that must be apportioned among the states in proportion to population.

No one, including the federal government, claims that the individual mandate is a duty or an impost. The individual mandate is not an income tax because an income tax must target some "accession to wealth," in the words of Commissioner of Internal Revenue v. Glenshaw Glass Co., the leading Supreme Court case on the subject. The fine imposed by the mandate does not target any accession to wealth or flow of income. It simply forces individuals to pay a penalty if they disobey the federal government's regulatory requirement. The fact that low-income individuals are exempted does not change this analysis. A fine for jaywalking would not become an income tax if low-income individuals were exempted from it. The same goes for a fine imposed for violation of a law requiring the purchase of health insurance.

It is even more implausible to suggest that the mandate is an excise tax. Excise taxes apply to economic transactions or the use of property of some kind. For example, a tax on the sale of alcoholic beverages qualifies as an excise. The individual mandate does not tax any kind of activity, use of property or economic transaction. It therefore cannot be an excise tax.

If the mandate is not a tariff, impost, income tax, or excise tax, it is either a direct tax or no tax at all. And if it is a direct tax, it would be an unconstitutional one, because it is not apportioned among the states in proportion to population as the Constitution requires.

The Necessary and Proper Clause

The federal government also argues that the mandate is authorized by the Necessary and Proper Clause, which gives Congress the power to "make all Laws which shall be necessary and proper for carrying into Execution" other powers Congress is granted by the Constitution.

The Supreme Court has defined "necessary" broadly to include anything that is "useful or convenient" for the execution of any federal power. Under this broad definition of "necessary," the mandate arguably qualifies. The federal government argues that requiring people to purchase health insurance is needed to ensure that people will not wait to buy health insurance until after they get sick, something they may be incentivized to do because the health care bill forbids insurance companies from turning away customers with preexisting conditions.

But even if the mandate is "necessary," it is not "proper" under our constitutional system of limited federal authority. In cases such as Printz v. United States in 1997, the Court has emphasized that these are two separate requirements imposed by the Clause. Congressional legislation must meet both.

If the Clause allows Congress to adopt the individual mandate, the same logic would justify almost any other requirement Congress might impose on individuals, thereby gutting the principle of limited federal power. Pretty much any mandate could be defended as "useful or convenient" for the execution of one congressional power or another. Since the Court has ruled that the Commerce Clause gives Congress the power to regulate almost any "economic activity," any purchase mandate will fly. After all, such a mandate can always be portrayed as part of a plan to regulate the relevant market. Thus, the broccoli mandate would be upheld as an effort to regulate the market in food, the auto purchase mandate as a regulation of the market in cars, and so on.

The Supreme Court has provided very little guidance on the definition of "proper." But evidence from the Founding era suggests that a proper statute must, at the very least, not depend on a constitutional rationale that gives Congress virtually unlimited power to impose any mandates of any kind. As James Madison explained in Federalist 39, the Constitution does not give the federal government "an indefinite supremacy over all persons and things." The federal government's interpretation of the Clause threatens to do just that.

Why This Slippery Slope Matters

Lawyers are notorious for inventing imaginative but unrealistic slippery slope arguments. The slippery slope that would result from a decision upholding the individual mandate, however, is all too real. If Congress is given unconstrained authority to impose purchase mandates, many interest groups could follow where the health insurance industry has led.

There are numerous industry interest groups that would dearly love to get congressional legislation requiring people to buy their products. And Congress has a long history of enacting dubious interest group legislation. Indeed, the individual health insurance mandate was itself partly the result of such interest group pressure. During the 2008 presidential campaign, Barack Obama harshly criticized Hillary Clinton for proposing the idea, saying that "[f]orcing people to buy health insurance [in order to provide them with health care] is like forcing the homeless to buy a house to eliminate homelessness." Yet he later reversed his position in part as a result of a political bargain the administration struck with insurance companies.

In a time of tight budget constraints, a purchase mandate has obvious attractions to politicians seeking to aid politically influential industries. A mandate can transfer money to the favored industry without requiring additional government spending or tax increases. It is difficult for the federal government to directly transfer as much money to an industry as it would by forcing millions of new customers to make purchases.

Moreover, there is a wide variety of ways that purchase mandates could be sold to the public. Congress need not admit that they are intended to help powerful interest groups at the expense of the general public. They could instead use the same justification for government bailouts of banks and auto manufacturers - stimulating the economy by helping a vital industry. Forcing people to purchase broccoli or other food could also be defended as a public health measure. Indeed, paternalists have successfully advocated numerous coercive regulations on precisely those kinds of grounds. There is no reason why they could not use similar strategies to justify purchase mandates. An alliance between well-intentioned paternalists and rapacious industry interest groups is precisely the kind of "baptist-bootlegger" coalition that has often been successful in the past. Just as moralists once united with bootleggers to promote alcohol prohibition, paternalistic public health activists could unite with industry lobbyists to push through purchase mandates.

Finally, it is important to emphasize the sheer range of interests that come into play here. The logic of the pro-health care mandate argument can justify virtually any mandate to purchase or do anything. This opens the door to the machinations of an extraordinarily large number of interest groups. It is likely that at least a few of them will figure out a way to take advantage of the opportunity.

The legal battle over the mandate is far from over. The five district court rulings issued so far are just the first stage of the process. All of them will be reviewed by federal courts of appeals. Eventually, the issue is likely to be decided by the Supreme Court. There, the anti-mandate plaintiffs still face a difficult struggle. The Supreme Court rarely strikes down a law that is a centerpiece of the political agenda of the president and his party. Nonetheless, it is now clear that the lawsuits are far from frivolous. They deserve to prevail and have a real chance of doing so.

Ilya Somin is an Associate Professor at George Mason University School of Law, where he teaches constitutional law and has written extensively on constitutional limits on federal power. He has filed amicus briefs on behalf of the Washington Legal Foundation, a prominent public interest law firm, a group of constitutional law scholars, and several members of Congress, in three of the cases challenging the health care mandate.

Suggested citation: Ilya Somin, Why the Individual Health Care Mandate is Unconstitutional, JURIST - Forum, May 4, 2011, http://jurist.org/forum/2011/05/ilya-somin-mandate-is-unconstitutional.php.

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