Tuesday, November 03, 2009

The Federalism Objection to the Individual Mandate

By Mike Dorf

Over on FindLaw, I have now posted my second column in my two-part series on objections to the individual mandate.  In this one, I tackle the question of whether there is affirmative power in Congress.  My conclusion: Yes, under either the commerce clause or the taxation power.  I also say that members of Congress should satisfy themselves that this is the sort of thing that is properly within their purview.

I don't have anything to add here about the federalism point, but I do want to say one more thing about the libertarian objection, which I addressed in my prior column and two blog posts (here and here).  There is a version of the libertarian objection that I do share: Namely, that the government should not be dictating healthy behavior.  Suppose, for example, that Congress included as part of its health reform legislation a provision requiring all Americans to see a doctor and then to exercise according to a customized age/height/weight chart.

The requirement to see a doctor would come close, in my view, to violating the common law right--assumed to be a constitutional right in the Cruzan case--to refuse medical treatment.  To be sure, a visit to a doctor is not quite the same thing as an operation, but the core idea of the right to refuse medical integrity is a kind of inviolability of the body.  Medical exams are intrusive and so we might at least think that the government needs a good reason to require a competent adult to submit to one.  In the litigation context, for example, Federal Rule of Civil Procedure 35 requires that parties seek a court order for a medical exam of another party; that flips the default under the Federal Rules of permitting discovery of relevant material unless a protective order is sought.  Rule 35 does not create or recognize an inviolable right against a medical exam but it does, in my view, reflect the notion that such exams are prima facie intrusive.


All that said, it is still worth noting how much more intrusive these hypothetical examples are than the actual individual mandate.  Indeed, we could well imagine something like the individual mandate coming with strong incentives--though not compulsion--to exercise.  Suppose that the overall health insurance system allows insurers to "experience rate."  Smokers would pay higher premiums, fit people would pay lower premiums, and so on.  To be clear I'm NOT proposing this.  What I am saying is that a truly private health insurance market would almost certainly go this way, and in an important sense that would be better for society: People would be forced to internalize the health care costs of their behavior.  That's not to say that all manner of experience rating would be defensible: E.g., screening people out for genetic predispositions over which they have no control would strike most people as unfair.  (It certainly strikes me that way.)  And even with respect to costly behaviors like smoking, unhealthy diet, and couch-potato-ism, there is something cruel about increasing the health insurance premiums for people who engage in these behaviors.  But perhaps that just goes to show that I'm not that much of a libertarian.


Richard said...

Stimulating economic activity is quite different from requiring it. Cash for Clunkers was a program to stimulate auto purchases, which I think everyone can recognize is not the same as requiring everyone to buy a new car. Filburn does not make the case that mandates are constitutional.

Congress has only limited powers to tax. They can only use direct taxes when apportioned, and also can tax all forms of income. I am not sure how you can read the legislation as exempting people with insurance. It clearly penalizes the state of being uninsured, making it a direct tax that is not on any source of income, and therefore without grounding in the Constitution.

"(a) TAX IMPOSED.—In the case of any individual who does not meet the requirements of subsection (d) at any time during the taxable year, there is hereby imposed a tax..." (note that (d) is the Acceptable Coverage Requirement)

egarber said...

I see mandates a little more narrowly. Since federal and state law require that hospitals treat the uninsured, people are by-default market participants at the outset -- because the cost of your ER treatment (if you fail to carry insurance) is passed on to those who are covered. In other words, it's not that mandates merely stimulate the market; they force market players (not having insurance is an economic activity) to act responsibly.

The corollary is that if such laws were repealed, it would be easier to argue that the uninsured are more fully outside of the market. Not that any of this matters in terms of SCOTUS precedent (I think it's highly unlikely mandates would be thrown out). But it is helpful (imo) in addressing the slippery slope argument -- i.e., if the government can mandate insurance, what's substantively different there compared to say, computer purchase mandates?

As an aside, I think Hamilton specifically cited the encouragement of economic activity (vs. mere rulemaking) as a valid use of the commerce clause in arguing for the bank.

Michael C. Dorf said...

Two points in response to Richard:

1) On the core issue, you are simply asserting that stimulating economic activity is constitutionally different from requiring it. I agree that it is conceptually different but you need an argument why that should make a difference, given the historic deference to Congress in choosing its means of regulating intertate commerce.

2) On the tax issue, I deliberately qualified my point by referring to a "properly-worded" tax. Given that the tax is means-tested, a good tax lawyer can convert this to an income tax through a combination of taxation, credits, and deductions.

Richard said...

1) Forced action (a mandate) is inherently removing liberty, which is constitutionally protected. It is self-evident why forced action makes a difference. At the core, such a law is wrong because it makes the newborn baby guilty until action is taken. It places the burden of proof on the individual, reversing the normal "innocent until proven guilty" that our entire legal system is based upon. There are so many reasons a mandate can be attacked where stimulation cannot.

2) I only wish Congress would reword the tax relating to the mandate. If they did, many individuals could support the legislation that currently do not. If the mandate were a credit instead of a tax, I would personally support it. I have no problem with the government encouraging good behavior, but I have a major problem with the government requiring it. Requirements accidentally catch innocent people, like a parolee kidnapped from his home would be guilty of not staying in his home, although would be innocent of choosing to leave his home. (using an example from your prior article)

Bob Hockett said...

A question for Richard from another angle:

The interstate highway system is a federal creation and remains, I take it, federally funded and administered in significant measure. It is therefore presumably permissible for Congress to require those who drive on the interstates to purchase automobile liability insurance, right?

Suppose now that the federal role in building and funding hospitals and the services they provide also is large. Suppose also that much of this funding goes to compensate hospitals for providing emergency services to people who turn out not to be insured. Is it permissible then to require those who avail themselves of hospital emergency room services, and can afford to purchase health insurance, to purchase it?

I anticipate that the analogy might be challenged by pointing out that a federal drivers' liability insurance mandate would only be enforced, and a fine perhaps imposed, after a driver had actually undertaken to drive on the interstate, as perhaps would be learned only after an accident had occured. In consequence, the argument would run, in effect the mandate would be practically as well as theoretically conditional. The emergency room case, by contrast, might be argued to be practically and theoretically unconditional, at least if the mandate were imposed and enforced ex ante as current proposals contemplate.

Another disanalogy that might be asserted would be that the drivers' case more clearly involves externalities -- to wit, the harm done by some uninsured drivers to others in automotive accidents -- than does the health insurance case.

It's not clear to me, however, that any such disanalogies would actually obtain, or be decisive if they did.

There is no doubt, first, that uninsured folk disproportionately make use of emergency room services, that these services are disporoportionately expensive, and that they are externalized upon the rest of us.

As for the matter of conditionality, for one thing a mandate might be enforced ex post in the health case just as in the highway case. For another thing it's not clear that the empirical implausibility of any complainant's possible claim that she never would go to an emergency room even in an emergency wouldn't suffice to supply Congress with sufficient basis to assess the insurance fee that is the tax penalty in advance. After all, people also have claimed that they do not need or want the homeland-protective services provided by the military, but that mandate's constitutionality is not in serious doubt, is it?

What think you?

egarber said...
This comment has been removed by the author.
egarber said...


Not really. "Guilt" has specific legal meaning. The burden is always on the state to prove it. Being "born" into a rules framework -- which is misleading in this case anyway, given that only adults would face mandates -- doesn't assign "guilt", any more than requiring vaccinations ( the state / federal distinction doesn't matter here) means you're always inherently "guilty" of something. Being obligated and guilty are two very different things.

Richard said...

Trying to draw equalities between military and health care won't work. The military is specifically made constitutional by the power to raise an army. Just as jury duty is constitutional as a necessary step to ensure the constitutional right to a jury of your peers. There is no constitutional right to health care, but if there was, any reasonable step to securing that right for all citizens would be found constitutional as a necessary step.

I am not sure about whether the federal government could constitutionally implement a mandate to carry auto insurance, nor am I sure they could not. I have done no research on that question, nor am I aware of any legislation proposing such.

Vaccination is required by states because it is not a power granted to the federal government. The case law I am familiar with on the issue deals with free vaccinations, not compelled purchases. I don't know what implications it would have to compel the purchase, although I suspect the possibility someone would be found guilty that has no means to comply would severely restrict the scope of such a law.

Crispian said...

You gave a compelling rebuttal to me on the libertarian argument. I have given much thought to your arguments and respectfully offer my response.

I still think there is a substantive difference between state and federal mandates when discussing the libertarian argument because state mandates can be avoided without legal penalty by moving to another state. In this sense, state mandates are not a burden on existence, but rather a cost of availing oneself of the privileges given by the particular state.

The avoidance of the burden is made possible by the exercise of a fundamental right to freedom of movement. Conversely, no exercise of fundamental rights can help one escape a federal mandate. A federal mandate becomes a burden in exchange for availing oneself of what are supposed to be fundamental rights.

One may also argue that health insurance primarily concerns the person insured - unlike educating children or protecting against diseases which are inherently communicable. Going into debt isn't inherently harmful to others. But if this argument loses once (or fifty times), that shouldn't mean the libertarian argument loses forever in principle.

As you've noted, the only federal personal mandates are imposed by the Constitution. The paucity of personal mandates at the federal level may signify just as much for the libertarian argument as for the federalism argument.

I know all of this touches upon federalism but I think it is unavoidable. I don't think the federalism argument can adequately address these points.

Commerce Clause Authorization

You end your discussion of a Commerce Clause grounding for the personal mandate with the quote from McCulloch: "Let the end be legitimate, let it be within the scope of the constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consist with the letter and spirit of the constitution, are constitutional."

You would lead the reader to believe that half of this quote answers the other half. One must independently determine whether a personal mandate is "within the scope of the constitution" and "consist with the letter and spirit of the constitution."

You state that purchasing a service is "quintessentially economic." And I unsurprisingly agree. You also state general propositions which are generally true, such as the fact that laws are used to discourage or encourage conduct. These reality does not constitute constitutional authorization, however.

The problem with a personal mandate is not that it is the "most direct means of encouraging market activity" as Casey, Rivkin, and others might lead one to believe, but that the personal mandate is so grossly indirect a means of carrying out Commerce Clause powers that it is outside the scope, letter, and spirit of the Constitution. At least Filburn was engaged in the activity being regulated. By your argument, Filburn could be required to grow wheat - if it weren't for the 13th Amendment. But it shouldn't take the intervention of the constitutional prohibition of slavery to inform one's understanding of the scope, letter, and spirit of the Constitution when it comes to the Commerce Clause.

The Taxation Power

To justify the personal mandate on taxation grounds, one must first identify what is being taxed. This is crucial for determining whether it is a direct or indirect tax and thus subject to the limitations imposed by Section 9 of Article I, which you did not discuss at all. Between classifying the personal mandate tax as either a capitation or a tax on activity, I think you'd have an extremely difficult time making your case.

You assert that the 16th Amendment authorized income taxes, but this is not accurate. The Amendment exempted income taxes and only income taxes from the apportionment requirement. If there was a way to apportion income tax, it would be constitutional, even without the 16th Amendment.

Without first dealing with what is being taxed, the secondary issue of regulatory objectives is moot.

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