Tuesday, March 27, 2012

Refresher: The Individual Mandate Debate & Clues to the outcome

Today, the Supreme Court is hearing arguments pro and con concerning the constitutionality of the individual mandate in Obamacare.  I thought it would be a good time to review the basic arguments on either side—pro and con.  Here is a summary of the basic arguments on each side as provided by healthaffairs.org.

PRO—Those supporting the individual mandate make the following argument:

  • The decision to purchase or not purchase health insurance has effects on the overall national health care market--in other words, on interstate commerce--and as such constitutes economic activity that Congress may regulate.
  • Virtually everyone will need health care services at some point, including those without health insurance. Thus, everyone participates in the market for health care delivery, and they finance these services by either purchasing an insurance policy or by self-insuring. So rather than constituting "inactivity," the decision not to buy health insurance is actually a proactive decision to self-insure and constitutes "activity." Through the practice of self-insuring, individuals make an assessment of their own risk and the extent to which they must set aside funds or arrange their affairs to compensate for probable future health care needs.
  • Congress had a rational basis for concluding that leaving those individuals who self-insure for the cost of health care outside of federal control would undercut its overlying economic regulatory scheme. Without the minimum coverage provision, other aspects of the law would increase existing incentives for individuals to delay purchasing health insurance until they needed care, making the health insurance market unworkable.
  • The penalty for noncompliance with the individual mandate is a tax.

CON—Those opposing the individual mandate counter with this argument:

  • Congress can regulate economic activity that constitutes or that bears on interstate commerce, but not buying individual health insurance is "inactivity," which cannot be regulated by Congress. Therefore, the act of not buying health insurance is beyond the reach of the commerce clause, and Congress cannot assert that it has power to enact the mandate under this provision of the Constitution.
  • In enacting the mandate, Congress in effect has taken the unconstitutional step of compelling individuals to engage in interstate commerce. If the mandate is upheld, some plaintiffs contend, the federal government would have wide authority to require individuals to engage in activities of its choosing, such as joining a health club or eating only healthy foods.
  • The consequence of not complying with the mandate is a penalty and not a tax, and therefore cannot be justified under Congress's power to tax and spend.


Policymic.com reports two disturbing comments from oral arguments this morning that could signal two of the justices—Scalia and Kennedy--who potentially could side with the four liberal members of the court might instead vote to decide the law was unconstitutional.  Kennedy has frequently been the swing vote in 5 to 4 decisions.  Scalia has sided with a broad interpretation of Congressional power to regulate interstate commerce in the past.  Both indicated in the following questions/statements this morning that they had doubts about the constitutionality of the law.

Scalia reportedly said: “The federal government is not supposed to be a government that has all powers. It’s supposed to be a government of limited powers.” 

Kennedy said the requirement to buy health coverage is telling an individual “that it must act….That changes the relationship of the government to the individual in a fundamental way.”


One of the strangest arguments, related to Kennedy's comment is that both sides agree that a person enters the health care market and thus interstate commerce that Congress can constitutionally regulate as soon as they show up at an emergency room or doctor's office seeking treatment.  Proponents argue that since that is true the issue comes down to one of timing--when you purchase the mandated insurance--an the mandate is simply requiring you to make the purchase before you need it, which, of course, is the only way insurance can work, otherwise no one would ever purchase any insurance until the loss the insurance is supposed to cover actually occurs.  

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