The Individual Mandate and the Limits of Commerce
Estimable commentators (Yglesias, Volsky) have been somewhat hasty, I think, in concluding that the general authority of Congress to regulate insurance under the commerce clause also supports its imposition of the individual mandate, which is, in a sense, a regulation of the uninsured. So let’s hash it out again a bit more methodically.
In the Supreme Court’s customary formulation of the scope of the commerce power, Congress may regulate: (1) the “channels” of interstate commerce, (2) people and things (“agents” and “instrumentalities” in the lingo) in interstate commerce, and (3) “activities that substantially affect” interstate commerce.
In its broadest sweep, the commerce power may also reach even (4) noneconomic, local activities, if doing so is necessary and proper to a general scheme of interstate-commerce regulation. Even Justice Scalia, bane of liberals, endorsed this relatively expansive view of the commerce power in Gonzales v. Raich (2005).
In order to regulate anything under the commerce clause, Congress must act in one of these four categories. The individual mandate is a regulation that targets individuals without insurance. Such individuals are not (1) channels of interstate commerce. Nor are they (2) agents or instrumentalities of interstate commerce with respect to health insurance. By definition, the uninsured are people who are not participating in health-insurance markets.
That leaves (3) and (4). Certainly the uninsured substantially affect the insurance markets. And certainly the individual mandate is integral to the PPACA’s comprehensive scheme of health-insurance regulation. But here’s the nub of it. Both (3) and (4) allow Congress to extend its reach to certain “activities”—namely, those that substantially affect commerce and those that must be regulated to give effect to a general scheme of regulating interstate commerce.
Is being uninsured an “activity”? I would have to say no. Buying insurance is an activity. But not buying insurance is how you describe someone who is not engaged in the activity of buying insurance. It’s not just another way of buying insurance. It would be perverse if not doing X were the legal equivalent of doing X.
It seems to me that we should distinguish between an activity (which can be regulated) and a status (which cannot). Lacking insurance is not something you do. It’s a status. And it’s not the kind of status you obtain as a consequence of doing something else—something that can be regulated. So it’s not like being an uninsured driver, where the status requirement applies only after you engage in the activity. (State law auto-insurance mandates are a common, but unfortunate analogy to the federal health-insurance mandate. The states are not limited by the commerce clause and can regulate on the basis of status, as long as they do not violate the Fourteenth Amendment’s equal protection clause.)
Maybe there is some other activity on which to predicate the health-insurance status requirement. But if there is, it’s not obvious. For example, you might suggest that consuming healthcare resources is a regulable activity. And maybe it is, but it’s often not a freely chosen activity. It’s hard to say whether that matters or not for constitutional purposes.
But, to be clear, for practical purposes none of this should matter! The power of Congress to tax and spend to promote the general welfare should be a more than adequate basis for the individual mandate.
Kangaroo (Hat) Court for Health Reform
Seasoned conservative jurist, Harvard law professor, and Reagan solicitor general Charles Fried told Fox News this week that he would eat a hat made of kangaroo skin if the Supreme Court strikes down the new health reform law. (H/t Igor Volsky). Fried repeatedly invoked the Court’s 2005 decision in Gonzales v. Raich (holding that the feds were authorized under the commerce clause to regulate intrastate activity, even non-economic activity, if necessary and proper to a comprehensive scheme of regulating interstate commerce), as the controlling precedent. Fried suggested that, because health insurance is an $854 billion industry, it is commerce and can be regulated.
As I’ve mentioned before, I’m skeptical that the commerce clause really provides a sound constitutional basis for the new law. Obviously insurance is commerce and, in general, can be regulated. But the legal question here—about the constitutionality of the individual mandate—is much narrower than that. The question is whether Congress may impose a tax penalty on people for failure to obtain health insurance. The size of the health insurance industry is not relevant to that question. What is relevant is whether the individual mandate is necessary and proper to the general scheme of federal regulation of insurance. The answer to that is certainly yes.
Even more narrowly, though, the Court should only have to decide whether Congress has a rational basis upon which to determine that the mandate is necessary to the overall scheme—not whether the mandate is in fact necessary to the scheme. And the answer to that should be, even more certainly and emphatically, yes.
But that doesn’t exhaust the issue. To be subject to regulation under the commerce clause, in my view, you must engage in some positive activity that is meaningfully related to the regulated commerce. And, as I see it, lacking insurance is not an activity; it’s a status. So the question, whether the commerce clause authorizes the individual mandate, is not really the slam dunk that it is often made out to be.
What is a slam dunk on the other hand, is the argument that Congress is authorized to impose the mandate under its taxing power. Just as your tax liability may vary according to whether you are married or not, have kids or not, rent a house or buy one, earn wages or capital gains, or whether you make early withdrawals from your 401(k) or wait till you retire, etc., under the ACA it will vary according to whether or not you are covered by adequate health insurance. Maybe that’s not exactly comparable to anything else in the tax code, but it doesn’t matter. The taxing power is not nearly as limited as the commerce power is. It is hardly limited at all. And that is what makes the case a slam dunk. And it is what makes the now 20-state challenge to the ACA an utterly frivolous exercise in political theater. And it is why Charles Fried will never have to eat his kangaroo-skin hat.
About Me
- I write this blog.
-
My twitter feed:
