An Individual Mandate to Purchase Health Care Insurance <i>Is</i> Constitutional

Some experts say that the federal government does not have the power to require people to buy an insurance policy. But the proposals in the current legislation actually fall well within the demands of our Constitution.
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In recent months, several commentators have suggested that a major element of the health care legislation before Congress is unconstitutional. Under the House and Senate bills, access to health care would be increased by imposing a mandate on individuals to purchase health care coverage. But, say some experts, the federal government does not have the power to require people to buy an insurance policy.

While there may be a germ of truth to this argument, there are no constitutional barriers to the kind of insurance mandate contemplated by Congress. To be sure, if Congress passed a law whose only provision entailed a mandate for individuals to purchase a product, and violators of the law were automatically subject to incarceration, constitutional concerns would arise. Imagine a criminal law that required people to buy an American-made automobile to bolster the domestic car industry. But that is not the kind of mandate Congress is contemplating. Rather, the House and Senate approach will readily fall within their taxing and commerce clause authority.

Critics of a mandate correctly observe that the federal government is a government of limited powers. While state governments have broad powers to regulate on behalf of the general welfare, the federal government can only act under a power enumerated in the Constitution. Thus, even though states can require people to purchase automobile insurance, it is not necessarily the case that Congress can require people to purchase health care insurance.

Nevertheless, a mandate to purchase insurance can be justified by the Constitution's grant to Congress of a taxing power and a commerce clause power. The taxing power is a well-established basis for enacting an individual mandate. Indeed, this country has had a tax-based mandate to purchase health care insurance for nearly 45 years. The Medicare program imposes a payroll tax on Americans as a way to fund coverage of their hospital costs once they reach age 65. People cannot opt out of Medicare; it is an obligatory system of health care insurance for one's senior years. Similarly, Congress can use a payroll tax to implement a mandate for individuals to purchase health insurance before they reach age 65. Under the House bill, for example, people will pay a 2.5 percent tax on their income unless they have health care coverage.

At one time, the Supreme Court restricted the ability of Congress to use its taxing power to regulate people's activities. In the early part of the 20th Century, the Court drew a distinction between taxes designed to raise revenue, which were permissible, and taxes designed to regulate behavior, which might not be permissible. But this distinction was jettisoned by 1937, and the taxing power is now recognized as a broad congressional power.

But even if the Supreme Court recognized a distinction between a revenue-raising tax and a regulatory tax, Congress still could impose a tax on those without health care coverage. Congress has always been able to impose a regulatory tax on an activity if it possesses the power to regulate the activity directly. And Congress may regulate health care insurance directly under its commerce clause power.

Under the commerce clause, Congress has the power to regulate interstate commerce, and the health care insurance industry clearly falls within the Supreme Court's understanding of interstate commerce.

Further, the health care legislation before Congress constitutes an important effort to regulate the health care insurance industry. Key elements of the legislation are the provisions that prohibit insurers from denying coverage or raising prices because of a person's "preexisting" medical conditions. Under current industry practices, many people cannot obtain health care coverage because they have heart disease or other medical problems that cause insurers to refuse coverage or charge higher premiums. The House and Senate bills would prohibit these denials and higher charges so everyone can purchase affordable coverage.

But insurers cannot be asked to eliminate the higher charges unless everyone is required to have insurance. Otherwise, many people would wait until they became sick before buying coverage. In short, the individual mandate is a necessary component of the effort by Congress to protect people from unaffordable health insurance premiums. And under the Constitution, Congress is entitled to "make all laws which shall be necessary" for carrying out its commerce clause and other enumerated powers.

Critics of an individual mandate cite recent Supreme Court cases in which the Court has limited the commerce clause power. But those cases (Lopez and Morrison) involved regulation of non-economic activity. The individual mandate regulates the relationship between sellers and buyers of health care insurance. Moreover, the Court was concerned in Lopez and Morrison with efforts by Congress to intrude into areas that are properly regulated by state governments and thereby to upset the balance of power between the federal and state governments. In contrast, congressional regulation of the health care industry does not violate state prerogatives. To be sure, much regulation of insurance occurs at the state level. But that's because Congress has chosen by statute to defer to state regulation. The Constitution does not prevent Congress from revoking its statutory grants to state governments.

It is important to consider constitutional limitations on the federal government's power when Congress considers major legislation. But an individual mandate to purchase health care insurance falls comfortably within the demands of our Constitution.

The American Constitution Society is an organization of progressive lawyers, law students and concerned citizens who believe that the law can and should be a force for improving the lives of all people. Our members make their voices heard on debates at the intersection of lawand public policy.

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