Healthcare Reform: Constitutionality

Stephen Kershnar
The Constitutionality of Health Care Reform
Dunkirk-Fredonia Observer
December 28, 2009

The recent health care reform proposal requires that every American buy federally regulated health insurance or pay a $750 fine. A debate has broken out over whether the proposal is constitutional. Senators John Ensign (R-NV), Jim DeMint (R-SC), and the attorney generals for seven states (Alabama, Colorado, Michigan, North Dakota, South Carolina, Texas, and Washington) have raised the issue of whether its various provisions are constitutional. In 1994, the Congressional Budget Office pointed out that this type of mandate would be the first time that the federal government required people to buy a good or service as a condition to lawfully live in the United States. As a result, it stretches the Constitution near its breaking point.

The Constitution permits the federal government to regulate or prohibit an activity only if it one of the powers listed in Article I Section 8 of the Constitution. One such power is set out in the Commerce Clause and it grants the federal government the power to regulate interstate commerce. The bill’s proponents state that this clause permits the mandate.

The Commerce Clause states that Congress has the power to “regulate Commerce with foreign Nations, and among the several States, and with the Indian tribes.” The power to regulate interstate commerce was intended to prevent states from passing tariffs and other protectionist measures against products made or sold by people in other states. However, in 1942 the Supreme Court in Wickard v. Filburn, 317 U.S. 111 (1942) in effect rewrote this clause. The Court held that it applied to any activity that is part of a larger group of activities that substantially affect interstate commerce. In Wickard, for example, the Supreme Court looked at whether the federal government could set a quota on wheat that a farmer grew and consumed on his own property. The farmer claimed that these activities were not interstate commerce. The Roosevelt-era court held that the federal government could enforce the quota because wheat growing and consumption in general affected interstate commerce, regardless of whether the individual farmer’s wheat did so.

In a recent case, Gonzales v. Raich, 545 U.S. 1 (2005), the Supreme Court considered whether the federal government could prohibit the cultivation and possession of marijuana that was authorized by California state law, used for medical purposes, and neither bought nor sold. The Supreme Court said the Commerce Clause allowed the federal government to do so because marijuana production in general substantially affects the interstate commerce in marijuana.

The issue is in part whether omitting to buy insurance is similar enough to growing and consuming wheat or marijuana. Erwin Chemerinsky, dean of the University of California Irvine School of Law, argues that it is. He notes that the national economy is more closely connected to healthcare coverage than to wheat or marijuana production. For example, in 2007 health care expenditures were $2.2 trillion, $7,421 per person, and 16.2% of the economy (gross domestic product). Chemerinsky argues that the reasoning in the Wickard and Gonzales was not limited to commercial activity and hence it does not matter whether the refusal to buy healthcare insurance is a commercial activity. He points out that the marijuana growing in Gonzales was done for personal medicinal use. Chemerinsky then concludes that because the people who do not buy health insurance affect interstate commerce, the Constitution permits them to be punished or otherwise sanctioned.

Georgetown University law professor Randy Barnett and others argue that under this reasoning, every act or omission would fall under the Commerce Clause because every act or omission in general substantially affects interstate commerce. On this reasoning, for example, the government could punish people who don’t brush their teeth because dental expenditures in general affect interstate commerce. Barnett and company argue that in recent Tenth Amendment cases, U.S. v. Lopez, 514 U.S. 549 (1995) and U.S. v. Morrison, 529 U.S. 198 (2000), the Supreme Court made it clear that the Commerce Clause does not permit federal interference in local non-economic activity. In particular, the Court held that the Commerce Clause did not provide the federal government with a general police power, which is the authority to make laws for public health and safety. Because the healthcare-insurance mandate is an exercise of a general police power, Barnett and company argue that it is unconstitutional. Barnett’s interpretation is more faithful to the Constitution’s language and the founders’ original intent.

President Obama makes a different argument than Chemerinsky, although his argument probably should also be interpreted as a Commerce Clause argument. When asked whether it was constitutional to mandate that every American buy health insurance or get punished, Obama responded that is appropriate in the same way that states may mandate that people buy auto insurance. Writing in the Washington Examiner, Ken Klukowski points out that this shows a disturbing lack of understanding of the Constitution. Auto-insurance mandates occur when states exercise their general police powers, that is, their authority to regulate for public health and safety. Because nothing in the Constitution or Supreme Court decisions grant the federal government an analogous power, Obama’s argument fails. Also, Klukowski points out, everyone is not required to buy auto insurance. They only have to do so if they exercise the privilege of driving on public roads.

Obama and the Democrats might try to avoid the Commerce Clause morass and instead argue that this is an instance of the federal power to tax. One problem with this is that dressing up a fine as a tax will not fool anyone. Even if it did, the argument would fail because of the political compromises that have gone into it. As Cato scholars Robert Levy and Michael Cannon point out, such a tax would not be an income tax and thus the mandate couldn’t rest on the Sixteenth Amendment. Nor, they argue, is it an excise tax because it is not based on the value of an insurance policy. It is instead a tax per person (capitation tax) and Article I Section 8 makes it clear that these taxes have to be uniformly applied among the states, which has been interpreted to mean in accordance with their population. The mandate exempts numerous groups (poor and low-income people, religious objectors, incarcerated people, etc.). Because they are not uniformly distributed across the states, this mandate is not uniformly applied and is therefore unconstitutional.

The two best arguments for the constitutionality of the healthcare bill rest on the Commerce Clause and the federal government’s authority to tax. The Commerce Clause issue is a morass because the Supreme Court’s interpretation of the clause has left it unclear whether it applies to all activities that affect interstate commerce or whether it is limited to economic activities that do so. The broader interpretation (all activities) runs head on into Tenth Amendment cases that deny that the federal government may regulate or prohibit local non-economic activity. The taxation argument is a loser because it masquerades a fine as a tax and because as a tax it would still lack required features. How the Supreme Court will treat this mandate is unclear, how it should treat it is clear.