Defending the Individual Mandate
Robert Pear has a piece in the Sunday Times about the administration’s defense of the health reform law’s individual insurance mandate. The headline—Changing Stance, Administration Now Defends Insurance Mandate as a Tax—has a bit of a “gotcha” flavor to it, but that’s fair enough. The story itself discusses constitutional challenges under both the taxing power and the commerce power, but it doesn’t leave its readers with a clear sense that these are two separate issues; and it leaves out one obvious but crucial piece of context: the government only needs to win one of the two arguments for the law to be upheld. Congress doesn’t need to act under both the commerce clause and the tax clause to create a valid law. One source of constitutional authority will do. Lack of clarity on that point and conflation of the two constitutional issues may leave readers with the feeling that the law’s challengers and defenders are evenly matched. They’re not.
As I’ve written many times before, the argument that the individual mandate exceeds the commerce power is not frivolous and may even be a close call. The weight of Supreme Court precedents probably favors deference to legislative judgment, but there are opportunities aplenty for the Court to distinguish the issue from prior cases and to articulate a new rule defining the outer bounds of the commerce power.
But while the commerce clause argument gives the mandate’s challengers a leg to stand on, the taxing and spending clause does not. Congress’s power of taxation is limited only by the requirement that any tax laid be conducive to the general welfare; and Congress decides whether a tax is conducive the general welfare. Pear’s article is fine up to this point. But then we get this:
Opponents contend that the ‘minimum coverage provision’ is unconstitutional because it exceeds Congress’s power to regulate commerce.
And that’s followed by Orrin Hatch and various other conservative politicians’ statements about mandates exceeding the commerce power, followed by the administration’s response to the commerce clause arguments. But not another word about the taxing power.
And that’s the problem. The article makes it sound like the administration has the upper hand on the taxing clause (a.k.a., the “general welfare clause”) argument, but the challengers are still in the fight and coming out swinging with their commerce clause argument. But it’s not really like that. Because you can’t answer a general welfare clause argument with a commerce clause argument. And if the government wins on either issue, the fight is over.
What’s more, not only does the article fail to alert readers on that decisive point, it also glides right by this essential observation: that the challengers have no legal argument at all to dispute the validity of the mandate as an exercise of the taxing power.
It’s as if the administration is arguing that Congress can get 2 by adding 1 + 1 or 3 + -1, and the challengers are responding that negative numbers don’t count.
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.
Constitutional Challenges Part 2: Health Reform and the Commerce Clause
There is no doubt that the federal government may regulate health insurance under its authority to regulate interstate commerce. And it can regulate not only the interstate aspects of the insurance markets—not only the transactions that cross state lines—but it can also regulate any activities which substantially affect interstate commerce.
Indeed, as the following passage from Justice Scalia’s concurrence in Gonzales v. Raich (2005) suggests, the regulation of commerce may even reach non-economic activity, if doing so would be integral to a comprehensive scheme of regulation of interstate commercial activity:
The regulation of an intrastate activity may be essential to a comprehensive regulation of interstate commerce even though the intrastate activity does not itself “substantially affect” interstate commerce. Moreover, as the passage from Lopez quoted above suggests, Congress may regulate even noneconomic local activity if that regulation is a necessary part of a more general regulation of interstate commerce. See Lopez, supra, at 561. The relevant question is simply whether the means chosen are “reasonably adapted” to the attainment of a legitimate end under the commerce power.
Igor Volsky cites this passage as evidence that the Affordable Care Act (ACA) is unlikely to be overturned in court, which is true, though not necessarily because of the broad scope of the commerce power. As broad as that power is, it has limits. The arch of major commerce clause caselaw and scholarship has largely been about what counts as economic activity, or what counts as affecting interstate economic activity. But the individual mandate raises an even more basic question: what counts as “activity”?
It seems to me plausible that the Court would say something like this: In order for individuals to be brought within the sphere of federal regulatory authority, those individuals must have taken some relevant, positive action—they must do something—that triggers the application of the regulations to them. Something more than just breathing or walking. Something that requires affirmatively choosing to participate in some aspect of the activity reached by a comprehensive regulatory scheme.
Scalia distinguishes Morrison and Lopez (two major cases from the 1990s which struck down federal statutes as exceeding their authority under the commerce clause) from Raich (which upheld federal regulation of purely intrastate activity) by noting that the laws concerned in Morrison and Lopez were not integral to a comprehensive scheme of regulation. Now, the ACA does not do everything possible to fix our healthcare system, but no one could seriously deny that it takes a comprehensive approach to health-insurance regulation. So it would seem that even Justice Scalia should agree to uphold the individual mandate as an integral policy component that is necessary and proper to a comprehensive scheme of health-insurance regulation under the commerce clause. But an account that turns on the distinction between an activity and the absence of that activity is just the kind of thing Scalia would go for. With relish.
The upshot of a ruling like this would be to require that the individual mandate penalty be triggered by some affirmative activity of the individual, and not merely the individual’s uninsured status. The reasoning would be something like this: The decision to abstain from insurance is not an activity that substantially affects commerce. It is not an activity at all. It does substantially affect commerce, but it is not an activity.
Perhaps an activity requirement could be satisfied by something as simple as receiving medical treatment. Go to the doctor, and you’re subject to the mandate. Or maybe it wouldn’t be so simple. People often do not “choose” out of free volition to get medical care. If free choice is a component of the triggering activity, it might be harder to impose a blanket mandate under the authority of the commerce power.
But that last bit is the key. This limitation would only apply to regulations enacted under the commerce clause. The whole discussion is moot, as I mentioned in the first post, because the individual mandate has a much firmer basis in Congress’s power to tax and spend to promote the general welfare. I’ll do another follow-up on that another time.
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