The Commerce Clause and Health Care Reform

The signature legislative achievement of President Obama's first term has been the passage of comprehensive health care reform.  The bill has many laudable goals, including allowing adult children still in school to stay on their parents' health insurance for longer, allowing health insurance to be portable so one does not lose it if one loses his or her job, and mandating coverage for people with preexisting conditions.  There is broad bipartisan agreement on these provisions and they are not controversial.  Another laudable goal of the legislation is to provide universal coverage: to make sure every American has health insurance coverage.  The legislation does so by mandating that everyone purchase private health insurance (with an assistance program for those who cannot afford it) or pay a penalty for not having health insurance.  It is this provision that is controversial and has led to challenges of the law in the courts.  After hearing oral arguments two months ago, the U.S. Supreme Court is expected to rule next week on the constitutionality of the health insurance mandate.

There are some good and practical reasons for supporting the health insurance mandate.  First, it does provide coverage to everyone.  No American would ever have to forgo medical treatment due to not having coverage.  Secondly, it is the mandate that allows for the ability to cover patients with preexisting conditions.  Some of the 47 million Americans who lack health insurance lack it because they are unable to afford it.  However, others choose not to buy it.  Those that choose not to buy it are usually either wealthy (and can afford cash payments for health care) or young and reasonably healthy and therefore they are taking the calculated risk that they will not need health insurance in the short term.  The only way health insurance companies could afford to add patients with preexisting conditions for whom it is clear there will be many claims to pay is to have this pool of patients who are unlikely to file claims paying premiums to offset the cost of the others.  The mandate accomplishes this and this represents the crux of the administration's argument in favour of the mandate.  Because choosing not to buy health insurance affects the coverage of others, either the ability to cover those with preexisting conditions or the increased premiums we all pay to defray the cost of treating the uninsured in hospitals and emergency rooms (it is illegal to deny emergency care to anyone regardless of their insurance status), the government has the interests of others to protect and therefore the right to make health insurance compulsory.  The same principle is often argued on the state level to make automobile insurance compulsory (although the comparison is a poor one because auto insurance mandates are state mandates, not federal and one can evade an auto insurance mandate by choosing not to drive).

There are many reasons why an individual health insurance mandate may not be the best way to achieve universal coverage, but such a discussion is beyond the scope of this post (although some of them were very well articulated by the President when he was running for the Democratic nomination).  Assuming, however, that the individual mandate is a good, or perhaps the best, way to achieve universal coverage; just because a policy or piece of legislation is good, practical, effective, and/or just does not make it legal or constitutional.  The powers of federal government are defined and limited and those limits should only be exceeded by constitutional amendment because such expansion of federal authority sets precedent for future acts of government and there may be unintended, negative, consequences of transferring sovereignty from the people to the government.  As the great, progressive, U.S. Supreme Court Justice Louis Brandeis (a Woodrow Wilson appointee) said in his dissenting opinion in Olmstead v. United States (in which he argued the federal government should not have the authority for wiretapping), "Experience should teach us to be most on our guard to protect liberty when the government's purposes are beneficial.  Men born to freedom are naturally alert to repel invasion of their liberty by evil-minded rulers.  The greater dangers to liberty lurk in insidious encroachment by men of zeal, well-meaning but without understanding."  Therefore it is important to ask of any potential legislation not, "will it work? or will it help people?" but rather, "is it constitutional?"  Ideally this question should be asked by legislators before passing legislation, but when Congress passes and the President signs legislation without regard to its constitutionality, the appropriate forum for constitutional review is in the courts.  While some may be using a legal challenge to the President's health care legislation cynically and opportunistically to thwart the President's agenda or prevent others from having access to health care, the fact remains that it is important to always ask whether any expansion of government power is constitutional.  That question has been asked in the courts and soon the Supreme Court will rule.

The constitutionality of the individual mandate boils down to an interpretation of the commerce clause in Article I of the constitution which gives Congress the authority to pass laws regulating economic activity.  According to the text, Congress has the power, "To regulate Commerce with foreign Nations, among the several States, and with the Indian Tribes."  It grants power to regulate interstate commerce only.  However, as the economy of the United States has become progressively more intertwined it has been argued that commerce in one state has an effect on the others and therefore the federal government has assumed broad powers to regulate nearly all commercial activity.  Indeed, since the New Deal, courts have historically upheld this expansive view of the commerce clause.  However, to argue that the individual mandate falls under the commerce clause is to argue that the commerce clause empowers the government to regulate the lack of commerce. Commerce consists of the voluntary exchange of goods or services between buyers and sellers.  There may be laws governing how such exchange is structured and there may be a tax on the transaction, but the action itself consists of voluntary cooperation between buyer and seller.  The health insurance mandate is nominally a tax (there is a fine levied if one does not purchase health insurance), but it does not regulate how health insurance is bought and sold or tax the actual sale.  It does in fact take someone who had chosen NOT to engage in commerce and force them to do so.  This is an absurd reading of the commerce clause.  There may be good reasons for doing it, as discussed above (and it may be perfectly legal for states, such as Massachusetts, to do) but it clearly falls outside the enumerated powers of federal government.  Who knows whether or not such a mandate, if upheld, would ultimately lead to a grosser infringement on individual liberty, but that is the whole point: negative consequences may be unforeseen.  For these reasons, the Supreme Court should strike down the individual mandate and Congress should either amend the constitution to specifically allow the federal government to determine when commerce shall occur (rather than allowing spontaneous commerce) or pass a health insurance bill without a mandate which either allows the purchase of health insurance across state lines (an example of interstate commerce) or provides a public option for the uninsured as candidate Obama articulated.