The administration posits three constitutional sources — the Taxing Power, Commerce Clause, and Necessary and Proper Clause — as authority for PPACA’s mandate that individuals either purchase a government‐prescribed health insurance policy or pay a penalty.
The Taxing Power rationale hasn’t garnered support from any court — principally because the penalty was neither intended nor structured as a tax. The Commerce Clause covers economic activities only; and Congress may not compel such activities in order to regulate them. The mandate is not “Necessary”; indeed, PPACA itself has created the problem that the mandate addresses. Nor is the mandate “Proper”; it cannot be reconciled with the Framers’ design for a federal government of limited and enumerated powers.
The Commerce Clause
Does the power to regulate commerce extend to non‐economic events — that is, events that don’t involve growing, mining, manufacturing, buying, selling, distributing, or consuming? “No,” said the Supreme Court in United States v. Lopez (1995), which struck down a federal law criminalizing possession of a gun near a school. Five years later, in United States v. Morrison, the Court overturned a statute that invoked the Commerce Clause to grant victims of gender‐motivated violence a right to sue in federal court.
Those two cases, together with the infamous Wickard v. Filburn (1942), yield this modern Commerce Clause framework: Congress may regulate the exchange of products — that is, commerce — across state lines, and transportation linked to such exchanges. Congress can also regulate non‐commercial, economic acts having a substantial aggregate effect on interstate commerce, such as growing and consuming wheat in Wickard. But Congress may not regulate non‐economic acts, such as the mere possession of a gun in Lopez or a gender‐based crime in Morrison.
The Commerce Power is expansive. But PPACA’s mandate stretches beyond dictating how a product may be produced, distributed, exchanged, or consumed. The mandate actually compels that a transaction occur — the purchase of health insurance, which cannot legally be acquired across state lines. Neither an act nor an interstate market exists to be regulated. Essentially, the PPACA mandate is regulatory bootstrapping. Congress forces someone to engage in commerce so it can regulate the activity under the Commerce Clause.
The litmus test is economic activity. A mental decision not to buy insurance is not an economic act. In that respect, it’s no different than a decision not to work. Neither decision can be precluded simply because the non‐act, if converted into an act, might have an effect on interstate commerce. As Virginia federal judge Henry Hudson put it, “the subject matter must be economic in nature and affect interstate commerce, and … must involve activity.” Thought processes are not subject to regulation.
Nevertheless, Judge Jeffrey Sutton in his Sixth Circuit concurrence upholding PPACA asserted that “self‐insurance and private insurance are two forms of action for addressing the same risk.” Judge Sutton is wrong on two counts: First, “self‐insurance” may be a convenient descriptive term, but it is not real activity. Insurance is risk transfer; no transfer means no insurance. In effect, “self‐insurance” equates to “self‐financing,” which means do nothing unless and until an outlay is required. Second, if a decision not to buy health insurance is an “activity” that government can ban, then so are other health‐related “activities” such as not to exercise, not to lose weight, or not to obtain preventive medical care. Plainly, that cannot be the state of our law.
Defenders of PPACA also observe that courts have upheld other federal mandates such as jury duty and the military draft. But those mandates are encompassed within specific constitutional provisions. The Sixth and Seventh Amendments guarantee jury trials, which imply a power to select jurors. Article I, section 8 expressly empowers Congress “[t]o raise and support Armies.” When necessary, the Framers knew how to provide an express power, independent of the Commerce Clause.
What about state mandates such as car insurance? First, states exercise police power and are not subject to constraints on federal authority in the U.S. Constitution. Second, mandatory car insurance is designed to protect the rights of innocent third parties — other drivers and pedestrians. No car owner is compelled to buy casualty or comprehensive insurance that reimburses for injury to himself or his property. Third, cars are driven on public roads, so the government can set conditions for use of those roads. Fourth, non‐drivers are not required to purchase car insurance. Driving is a voluntary activity, which has associated responsibilities. The insurance mandate is not voluntary; it is imposed on everyone.
Finally, PPACA supporters contend that requiring health insurance is no different than requiring advance purchase of health care. Nearly everyone ultimately consumes health care; and consumption is clearly an economic act. Why then, so the argument goes, wouldn’t the Commerce Clause allow the federal government to direct that health care be purchased now, by obtaining insurance, rather than later when the medical bill comes due? In other words, buying health insurance is just a timing decision about when, not whether, to incur medical costs.
Yet, virtually all forms of insurance represent timing decisions — paying up front for burial costs, loss of life, disability, supplemental income, and more. Only a federal government of unbounded powers could mandate that every American insure against such risks. At least for now, the Supreme Court’s tortured Commerce Clause jurisprudence does not reach that far.
The Necessary and Proper Clause
Here’s the administration’s fallback position: Even if the mandate doesn’t qualify as a direct regulation of interstate commerce, the Constitution authorizes implicit powers under the Necessary and Proper Clause. If government can show that the mandate is (a) necessary for Congress to regulate interstate health care, and (b) a proper means of doing so, then the courts are unlikely to intervene.
Note that the government’s argument is still premised on its underlying Commerce Clause authority — but over health care, not health insurance. An insurance mandate is ostensibly permissible, but only because it’s a necessary and proper means of regulating the national health care system. That assertion is the corollary of two underlying contentions, both of which are flawed.
First, the mandate is said to be necessary because its elimination would perpetuate the problem of the uninsured: Without the mandate, responsible, insured consumers would have to pay the health costs of irresponsible, uninsured consumers.
Yet, as Judge Roger Vinson observed in the Florida case, cost shifting by the uninsured is not inevitable. It arises only if a person gets sick, seeks medical care, cannot pay, and has no access to funds from family, friends, or private charities. That cost can be more efficiently addressed if and when it arises. Instead, PPACA penalizes all uninsured persons, not just those who seek reimbursement from taxpayers for costs they should have borne themselves. And PPACA does more than mandate coverage; it prescribes certain provisions that each policy must include. For example, many Americans who prefer Health Savings Accounts with high deductible coverage will be told by their federal overseers that such coverage isn’t adequate.
Besides, an insurance mandate does not eliminate the cost of uncompensated care. It simply transfers the cost to insurance companies, which recoup their outlays by selling PPACA‐mandated policies to individuals who prefer not to own them. In fact, total healthcare costs will increase as more persons become insured. That’s the moral hazard predicament. Insured persons demand more medical services than persons who pay their own way. Higher demand means higher prices. It’s no accident that the costs of LASIK and cosmetic surgery, which are not covered by insurance, have declined while the cost of MRIs, which is covered by insurance, has skyrocketed.
Admittedly, non‐purchasers of health insurance sometimes impose costs on others; but so do non‐purchasers of many other products that could reduce health costs — such as nutritional foods and health club memberships. Does the government also claim authority under the Necessary and Proper Clause to coerce purchase of those products? If so, why stop with health care? Defaults on credit cards and mortgages surely impose substantial costs on non‐defaulters. Can government compel credit card and mortgage insurance?
The administration’s second rationale for invoking the Necessary and Proper Clause is no more convincing: Namely, it is essential that everyone be covered for preexisting conditions, and the insurance mandate is key to accomplishing that goal.
In McCulloch v. Maryland (1819), Chief Justice John Marshall rejected the commonplace meaning of “necessary” — i.e., required, essential — and broadened it to include all means “plainly adapted” to achieving a designated objective. Applying that expansive standard, the administration now argues that compulsory health insurance is “plainly adapted” even if not indispensible to facilitate coverage of preexisting conditions.
Once again, Judge Vinson saw through the sophistry: The mandate is necessary only because insurance companies must now cover preexisting conditions. The mandate “is actually being used as the means to avoid the adverse consequences of the Act itself. … Under such a rationale, the more harm the statute does, the more power Congress could assume for itself under the Necessary and Proper Clause.”
Lastly, consider the requirement that a regulation be proper as well as necessary. Here too, Chief Justice Marshall set the standard in McCulloch. A regulation is “proper” if it does not violate established rights and is consistent “with the letter and spirit of the constitution.” Judge Vinson had no trouble applying Marshall’s guidepost: “The individual mandate … cannot be reconciled with a limited government of enumerated powers. By definition, it cannot be ‘proper.’ ”
Joseph Story expressed the same sentiment in his 1833 Commentaries: The Constitution must be interpreted in a manner “most consonant with [its] objects and intent.” Extending that test to PPACA, no one could plausibly argue that the Commerce Power is so elastic as to compel the purchase by every American of an unwanted, government‐designed product from a private company.