The Individual Mandate and a Precarious Balancing Act


    On March 23, 2010, Congress passed The Patient Protection and Affordable Care Act, commonly referred to as “Obamacare.” Two years later, the Obama administration is sweating out the Supreme Court’s consideration of the law. While some thought the Supreme Court may kick the can down the road by ruling on a technicality based on the 1867 Anti-Injunction Act, it seems based on the three days of oral arguments that the justices plan to issue a substantive ruling.

    The biggest thorn of constitutionality comes from the, “individual mandate,” provision which requires all individuals to obtain minimal essential health insurance coverage or pay a ,“penalty,” unless exempted by religious beliefs or financial hardship. This provision is important in controlling costs as the theory of insurance relies on large numbers or pools of people to spread the risk and costs. What better way to increase the pool than making it a legal obligation? One of the reason single-payer public health insurance is advantageous is it would put all Americans in one risk pool instead of the costly fragmented numerous insurance pools dominating the country now.

    So then how should the Supreme Court rule on the individual mandate? Both the plantiffs and the government have good arguments for the constitutionality of the mandate. The plantiffs argue that while Congress has the power to regulate interstate commerce under Article I, Section 8 of the Constitution, the statutory individual mandate requires consumers to enter the private market and purchase a private good, more a regulation of individual behavior than interstate commerce.

    Furthermore, state regulations and inability of interstate insurance competition forces individuals to purchase insurance from a few, large, in-state insurance providers. This reality reinforces the idea that Congress is not regulating interstate commerce in this instance since consumers can’t purchase insurance across state lines. A dangerous precedent of government mandates into individual behavior could take root if this provision is found constitutional.

    However, the government gave its two-cents as well. Solicitor General Verrilli argued that health insurance and health care are two inseparable and indistinguishable markets. All citizens consume health care at some point and those without health insurance tend to make expensive hospital visits. Those hospital visit costs are passed along to insurance holders through higher premiums.

    There is also the normative argument that health insurance is a good consistent with the theory of government correction of market imperfections and should therefore be removed as a private commodity. While health insurance may not be a pure public good in that it’s non-rival and excludable, goods tend to be publically provided if private market provision leads to excessive inefficiency. It can be reasonably argued that private health insurance creates a significant market imperfection through its external marginal costs of waste, subsequent deadweight loss of uninsured individuals, and wasteful healthcare spending. If the justices assume this position, then it becomes more acceptable to allow Congress to force individuals to purchase or consume a public good over a private good.

    But, the reality of the health insurance market is it is a private commodity for some and a public good for others and therefore it becomes difficult to rely on an argument of this nature.

    So which argument is more salient? I believe both arguments have their merits and I’m truly unsure which one is stronger. I personally believe in health insurance as a publically provided good and thus have a hard time rejecting the government’s argument but also I accept the plaintiff’s argument too on Constitutional limits.

    The Supreme Court should take this opportunity to clean up the mess of 14th Amendment and Commerce Clause precedents. In the 1870s, the Court ruled that the 14th Amendment does not apply to private businesses (agents of the states). Thus, in the 1960s, Congress and the Court used the Commerce Clause to enforce civil rights legislation instead of the 14th Amendment. By reversing the precedents of the 1870s over the 14th Amendment, the Court could return the Commerce Clause to its proper use without perverting civil rights. A new precedent of the 14th Amendment would allow for an individual mandate to stand on firm Constitutional ground and provide the benefits of expanded coverage to society.

    Given the history of haphazard jurisprudence emanating from the Supreme Court, this outcome is very unlikely and the fate of the individual mandate hangs in the balance.