Payment Where Payment's Due

The Republicans who argue that the Affordable Care Act (ACA) violates the Constitution have based their argument around the idea that the law will result in a remarkable new expansion of federal power that will lead us on a path to total government tyranny. As the brief filed by the Obama administration in defense of the ACA makes clear, however, the mandate to purchase insurance in fact falls squarely within the framework of federal power that the Supreme Court has consistently advanced since the New Deal. It’s a clear explanation of the history and goals of the legislation and the relevant constitutional issues that everyone interested in this important question should read.

Arguments against the ACA center on the assertion that the bill’s requirement that most individuals obtain health insurance or pay a tax penalty goes beyond the power Congress has under Article I Section 8 to regulate “interstate commerce.” According to the bill’s constitutional critics, because the health-insurance mandate regulates “inactivity,” it cannot possibly be a regulation of “commerce.” Accepting the constitutionality of the mandate, therefore, would constitute a major expansion of federal authority. As the Department of Justice brief effectively argues, however, this argument ignores both the specifics of the health-care insurance market and the general purpose of the commerce clause.

The first problem with the argument is the assumption that people without insurance are choosing not to participate in the market for health care. This argument might have some validity if we lived in a libertarian dystopia in which people without health insurance were left to die in the case of a medical emergency. But this is not the case. As the administration brief points out, “For decades, state and federal laws—reflecting deeply rooted societal values—have required emergency rooms to stabilize patients who arrive with an emergency condition, and common-law and ethical duties restrict a physician’s ability to terminate a patient-physician relationship.” The uninsured consumed nearly $120 billion in medical services in the last year for which there is good data (2008). People who go without medical insurance, then, are not choosing to exclude themselves from the health-care market in any meaningful sense; as the Obama administration brief reads, “Individuals without insurance actively participate in the health care market, but they pay only a fraction of the cost of the services they consume.” Not only is this free riding not some kind of constitutionally protected liberty; it represents exactly the kind of collective-action problem that the commerce clause was designed to give the federal government the ability to address.

Another crucial point repeatedly emphasized by the Department of Justice brief is that all sides involved in the litigation concede that the ends being pursued by the government are constitutionally legitimate. Only the most radical libertarians believe that it exceeds constitutional limits for the federal government to regulate health care or provide broader access to health-care services. If the governmental ends are legitimate, Supreme Court precedents extending back two centuries emphasize that the judiciary should be deferential to legislative judgments about how to best pursue these ends, striking down legislation only in cases where the means of achieving the end are irrational. In this case, there is a strong rational connection between the objective of broadening access to health-care insurance by ending discrimination against people with pre-existing conditions and the requirement that Americans meet a minimum insurance requirement. Without the mandate, people could forgo insurance until they became ill, creating insurance pools without healthy individuals and creating an unsustainable spiral in which health coverage becomes more and more expensive for people who need it. There cannot be a serious question than the mandate is rationally related to the legitimate objective being pursued.

The argument that the mandate is an impermissible regulation of “inactivity” was developed in order to get around the obvious constitutionality of the ACA under the Court’s precedents. As the brief argues at several points, the distinction as nonsensical. In general, the “activity/inactivity” distinction has no basis in either the text of the Constitution or in Supreme Court precedent. Even if this distinction were meaningful, it is entirely inapplicable to the medical insurance market. Because common law and statutes require doctors to treat someone in a medical emergency, nobody can choose to be “inactive” in the market for health care; they can only make a choice to shift costs to others. Regulations that inhibit this free riding are regulations of activity, not inactivity.

A final interesting point about the brief is that, in addition to explaining why the ACA is a valid exercise of the federal commerce power, it notes that “Congress’s taxing power provides an independent ground to uphold the minimum coverage provision.” The mandate is a tax provision, and “the only consequences of a failure to maintain minimum coverage are tax consequences.” While it’s true that proponents of the law referred to the tax as a “penalty” for political reasons, this choice of words is not constitutionally material if the mandate is enforced through the tax code.

While I agree with the administration that the mandate provision of the ACA is a valid exercise of the federal taxing power, it is more likely that the Supreme Court will choose to rule on commerce-clause grounds. But this should not affect the outcome. Under existing precedents, the ACA is plainly constitutional, and to rule otherwise would effectively require the resurrection of pre-New Deal arguments that were not required by the text of the Constitution and have been discredited for good reason.

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