Is a Federal Mandate Constitutional?

By Frank Hagan | Related entries in health care reform

Journalist Ezra Klein has come out in favor of the proposition that a federal health insurance mandate is constitutional, but the question remains a thorny legal problem. If a reform bill is passed with an individual mandate, will it pass constitutional muster? The answer isn’t quite as clear as Klein would have us believe.

PENNumbra, the University of Pennsylvania Law Review’s online effort at “Uniting the Public and Legal Academy”, features a debate between legal scholars on this issue. David Rivkin and Lee Casey hold the position that a mandate to purchase individual health insurance would be found unconstitutional by our current Supreme Court as an over-reach of the Commerce Clause, while Professor Jack Balkin holds that the mandate is simply a tax, without the need for invoking the Commerce Clause.

Some samples, starting with Rivkin and Casey:

Of course, what Congress is contemplating with regard to a health care mandate is even less defensible under a Commerce Clause analysis than what it sought to do in the Gun-Free School Zones Act of 1990 or the Violence Against Women Act of 1994, both of which, after all, purported to regulate non-economic activities that were nevertheless freely engaged in by individuals [Editor's note: both laws were found unconstitutional by the current court]. By contrast, the health care mandate would not regulate any “activity” at all. Rather, it features an affirmative federal command that parties engage in a particular commercial activity—i.e., a purchase of insurance. It is imposed not because an individual engaged in any particular profession or employment, even so much as growing pot in the bathroom. This regulation would apply to every American simply because they exist.

Significantly, even the Congressional Research Service (CRS), an entity that traditionally and institutionally takes the most permissive view of Article I powers, when asked by the Senate Finance Committee to opine on whether the Constitution allows Congress to impose this type of a mandate, came up with the most lukewarm of answers, indicating that “[w]hether such a requirement would be constitutional under the Commerce Clause is perhaps the most challenging question posed by such a proposal, as it is a novel issue whether Congress may use this clause to require an individual to purchase a good or a service.” Cong. Research Serv., Requiring Individuals to Obtain Health Insurance: A Constitutional Analysis 3 (2009), available at http://assets.opencrs.com/rpts/R40725_20090724.pdf. While we have never worked for the CRS, we know from experience in the Executive Branch, both at the Department of Justice (DOJ) and the White House Counsel’s Office, that when the Office of Legal Counsel, a highly respected DOJ component, in response to the question of whether or not a given approach is constitutional, tells you that it is a novel issue, it sure is not a green light.

Professor Jack Balkin holds that the individual mandate is nothing more than a tax, and therefore permissible regardless of the interpretation of the Commerce Clause:

One might object that Congress lacks the power to tax where the tax is not a genuine device for raising revenue but merely an attempt to regulate conduct that Congress is otherwise forbidden from regulating under the Constitution.

This argument fails for two reasons. First, as noted above, the tax on uninsured persons is a genuine revenue-raising device. It helps to pay some of the costs of comprehensive public health reform that includes an expansion of Medicaid, reform of insurance practices, and an employer mandate.

Second, the Supreme Court has made clear that a tax with regulatory purposes will not be held unconstitutional when the tax on its face seeks to raise revenue:

Every tax is in some measure regulatory. To some extent it interposes an economic impediment to the activity taxed as compared with others not taxed. But a tax is not any the less a tax because it has a regulatory effect, and it has long been established that an Act of Congress which on its face purports to be an exercise of the taxing power is not any the less so because the tax is burdensome or tends to restrict or suppress the thing taxed.

Sonzinsky v. United States, 300 U.S. 506, 513 (1937) (citations omitted). The point was made even more forcefully in United States v. Sanchez:

It is beyond serious question that a tax does not cease to be valid merely because it regulates, discourages, or even definitely deters the activities taxed. The principle applies even though the revenue obtained is obviously negligible, or the revenue purpose of the tax may be secondary. Nor does a tax statute necessarily fall because it touches on activities which Congress might not otherwise regulate.

340 U.S. 42, 44 (1950) (citations omitted). Given long-settled legal principles, House Bill 3296 is clearly constitutional.

The PENNumbra debate provides a reasoned, well thought out introduction to the constitutional issues that will be debated. Even though it is geared toward a general audience, it is still a relatively technical article. But it shows that, pundit assurances aside, the constitutionality of the mandate is still in question.

Cross-posted to FrankHagan.com


This entry was posted on Tuesday, November 17th, 2009 and is filed under health care reform. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

23 Responses to “Is a Federal Mandate Constitutional?”

  1. frankhagan.com » Is a Federal Mandate Constitutional? Says:

    [...] Cross-posted to Donklephant.com [...]

  2. blackoutyears Says:

    Good stuff, Frank. Thanks.

  3. Simon Says:

    Balkin’s position doesn’t work unless you buy his highly dubious theory that the mandate can be characterized as a tax, and even if it can be, as Rivkin and Casey point out in their response, it falls afoul of the apportionment requirement. I haven’t analyzed the issue in sufficient detail to know if the mandate is constitutional, but Balkin does not make a strong case for his side.

  4. gerryf Says:

    …and this is yet another reason why a national healthcare system financed by taxes is a better solution than the insurance company windfall we are cobbling together as a result of lobbying.

  5. Simon Says:

    Gerry, a “national healthcare system” would be even more Constitutionally problematic, so your comment doesn’t really work.

  6. Frank Hagan Says:

    Simon, I agree with you in my reading of the arguments. Balkin is providing a rebuttal, and that has some disadvantages in the debate format. He must spend some time refuting the opposing argument, and that takes away from time available to develop his own position. But even with that caveat, I find his argument lacking.

    But it is a complex enough issue to be argued in the courts, and its a mistake to assert, as Klein does, that it is “of course” constitutional. I suspect supporters are taking that tact, even if they don’t believe it, in order to get it passed and then deal with the constitutionality issue later. It would save time if we had a EU-style panel that looked at constitutionality first.

    gerryf – I wonder if an increase in payroll tax, with a government-issued voucher for basic health insurance, would be a better system. The payroll tax could be adjusted monthy to meet costs (although the current payroll tax overfunds Social Security and Medicare, it is likely to be insufficient in a few years.)

  7. Simon Says:

    Frank, it does have the serendipity to align with existing views of federalism. As a policy matter, liberals support the various flavors of federal interference in healthcare on offer, up to and including the nationalized system Gerry refers to. That position requires a very broad view of federal power, and as chance would have it, liberals generally have a preexisting commitment to ignoring if not actively repudiating any and all constitutional limits on federal authority. (The only two liberals that I can think of who take federalism at all seriously are professors Ann Althouse and Rick Hills.) Meanwhile, on my side, conservatives oppose all this stuff as a policy matter and generally believe that the Constitution imposes meaningful limits on federal power. So you don’t have a situation where either side has to meaningfully bend their existing views of the Constitution to support their preferred policy outcome.

  8. kranky kritter Says:

    David Rivkin and Lee Casey hold the position that a mandate to purchase individual health insurance would be found unconstitutional by our current Supreme Court as an over-reach of the Commerce Clause…

    Are we supposed to believe that SCOTUS suddenly knows the exact size and shape of trucks that can and cannot be driven through this loophole?

    It’s been how long since McCain-Feingold, and that hasn’t been overturned despite including plain violations of the BoR? My point?Shouldda hapopoened, Didn’t.

    So I can’t see SCOTUS dragged into this. I’d be shocked to see this reform legitimately turn on the rectitude of the thoroughly abused commerce clause. The fed have used this clause to regulate just about whatever they feel like if it nominally involves commerce. This train left the station long, long, ago.

    So I think this is bluster. We may well see a ton on bandwidth expended on serious blather about it, but nothing will come of it. Defining the limits of the commerce clause has been too neglected for too long to stop this train now.

  9. Frank Hagan Says:

    Kranky, you don’t think a constitutional challenge is coming? I suspect the court will decide this issue within a year or two of passage.

  10. Simon Says:

    Frank, KK — those aren’t necessarily contradictory positions. As Frank says, a challenge is coming. Every time a state passes an abortion law, planned parenthood et al are in court the next morning, more-or-less, filing a lawsuit and asking for an injunction. Just so here. A case will be (or should be filed) before the the President’s signature is dry on the page. Nevertheless, that a case is filed does not necessarily set a timetable on its resolution, and even once it is decided below, the Supreme Court may not take the very first case challenging the law. The Constitutionality of a huge piece of federal legislation is doubtless an important question of federal law, but they may prefer to await a circuit split, or at least a case that presents the issue in a compelling way.

    (I do think that KK is needlessly pessimistic, however, about the chances of reviving meaningful enumerated powers limits on Congress, even after Raich.)

  11. Nick Benjamin Says:

    From anti-health reform dude:

    Congress, in other words, cannot regulate simply because it sees a problem to be fixed

    From US Constitution:

    The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;

    Their argument about the commerce clause is similarly non-convincing.Health Insurance is a financial product. In other words the Congress, to provide for the general welfare of the United States, is requiring all of it’s legal residents buy health insurance or pay a penalty. The penalty is uniform throughout the United States.

    @Frank
    There will doubtless be a legal challenge. Just as there were several legal challenges regarding Obama’s birthplace. These challenges probably won’t be dismissed so quickly, but they won’t succeed either.

    You might get some symbolic victory. For example have the penalty renamed a tax, or forcing Congress to exempt mountain men who never cross the state line. But I doubt it. Maybe in the bad old days of the 20s, but not in 2009.

    Heck one of the precedents the anti-Refrom guys cite has already been overturned.

    @Simon:
    What are you talking about?

    There is no apportionment requirement for a tax on individual income.

    Hasn’t been since 1913

  12. kranky kritter Says:

    If Raich can’t bring on pessimism in your mind, Simon, what could?

  13. Simon Says:

    Nick:

    @Simon: What are you talking about? There is no apportionment requirement for a tax on individual income.

    Try reading the article that Frank linked to (and on which I was commenting). Therein, you’ll find the answer to your question addressed explicitly and directly, so your reply is revealing. Read Rivkin & Casey’s comment on Balkin’s reply.

    KK, I suspect that I would have been catatonic before National League of Cities v. Usery, glum after Garcia v. San Antonio Metro, and outright despondent after Union Gas. God bless William Rehnquist, however — who would be well on his way to being patron saint of federalists were it not for the pesky lutheranism ;) — because things started to look up in the 1990s, and I truly believe that between what Rehnquist did and what the Federalist Society has done, there is good reason to believe that real, meaningful limits on Congress may ultimately return. To be sure, those limits will probably not be as constricting as I would like; they will certainly not be as constricting as Richard Epstein and Ron Paul would like, but that isn’t the point. And even if Raich is retrenchment, it is not nearly as troubling vis-a-vis Lopez et al as the truly aberrational decision in Katz is vis-a-vis Seminole Tribe et al. Personally, I think there is a case to be made for Raich‘s correctness, and Justice Scalia made it well in his concurrence, although I’m still on the fence. Nevertheless, while I may sometimes feel glum about the future of subsidiarity as a paradigm, federalism as a doctrine, and judicial enforcement of either, I have always in mind that there are far darker days for all three barely twenty years behind us.

  14. Simon Says:

    I guess my larger point about Raich is that even those of us who believe in a limited, restricted federal government have to acknowledge that the sweeping clause is part of the Constitution, too. There is a reason why it gave the antifederalists conniptions in 1788: the original understanding was clear as a ringing bell that the sweeping clause expanded Congress’ authority beyond the strict confines of its enumerated powers, and for my part, I have no beef with M’Culloch v. Maryland. Congress has a great deal of slack under the Constitution; what I object to isn’t the slack, it’s the untethering of the rope from the bollard by the post-New Deal court. Slack is one thing; adrift is quite another. My points are that the limits on federal activity are real and should be enforced, even if they aren’t as tight as some would prefer, and no less importantly, that the federal government should refrain as a matter of subsidiarity from doing some things that as a matter of constitutional federalism it may be authorized to do.

  15. John Burke Says:

    It would be interesting to know whether there has ever been a tax in the US levied on some people for what they have chosen not to do. Anyone have an example?

  16. Nick Benjamin Says:

    @Simon:

    Try reading the article that Frank linked to (and on which I was commenting). Therein, you’ll find the answer to your question addressed explicitly and directly, so your reply is revealing. Read Rivkin & Casey’s comment on Balkin’s reply.

    Read the 16th Amendment:

    The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.

  17. Simon Says:

    Nick, you’re an idiot. READ THE ARTICLE TO WHICH FRANK LINKED. Blithely reciting the Sixteenth Amendment is only deepening your embarrassment: it applies only to direct taxes on income. It does not rescind the proportionality requirement on direct taxes generally, “authoriz[ing] only a particular character of direct tax without apportionment,” Brushaber v. Union Pacific, 240 U.S. 1, 11 (1916). You’d know all this if you had bothered to read the material under discussion, something usually thought a prerequisite for intelligent contribution, not to say common courtesy.

    I eagerly await your next move, which I am sure will be the argument that the Sixteenth Amendment has broad sweep because any tax on anything can be characterized an income tax if it is paid out of incomes. Please consider that proposition laughed at and move on to the next ill-considered argument.

  18. Justin Gardner Says:

    Simon,

    What do you think you’re doing? You know the rules. That was completely uncalled for and Nick didn’t do anything to provoke it. His commentary was thoughtful enough for you to respond in kind.

    Next time don’t be so quick to anger.

  19. Simon Says:

    Justin,
    It was provoked, and his comments were not thoughtful at all. I noted that even if Balkin’s treatment of the mandate as a tax will survive scrutiny, “as Rivkin and Casey point out in their response, it falls afoul of the apportionment requirement. Nick responded: “What are you talking about? There is no apportionment requirement for a tax on individual income.” That would be silly enough by itself, because it fails to recognize that income taxes are a merely subset of direct taxes: the former are the concern of the Sixteenth Amendment, the latter are the subject to the apportionment clause. It is all the worse, however, because Rivkin and Casey explicitly dispatch such an invocation in the article we’re discussing:

    This scheme, however, runs afoul … of the Constitution, which bars the imposition of direct taxes by the federal government unless apportioned among the States. It bears emphasizing that the Supreme Court has consistently taken a broad view of what constitutes “direct taxes,” holding that they encompass many different types of levies. For example, in Pollock v. Farmers’ Loan & Trust Co., the Court struck down an unapportioned federal income tax as a direct tax. In the 1934 case Helvering v. Independent Life Insurance Co., the Court indicated that a tax on the value of real estate is properly classifiable as a direct tax and, hence, is unconstitutional. While these are admittedly old cases, there are no superseding judicial doctrines that would cast doubt on their continued validity. Indeed, it took the passage of the Sixteenth Amendment to cure this problem, but that amendment only allows the federal government to levy unapportioned direct taxes on income.

    (Emphasis in original; citations omitted.) So the issue is not merely that Nick’s criticism missed the mark—which would have been fine, and would have merited more cordial response—but its demonstration that he didn’t bother to read the material we’re talking about. That leaves him in no position to criticize my comments. Not only does he not know what he’s talking about, he doesn’t know what I’m talking about, either!

    Now, all of that is foolish, but not necessarily idiotic. When his error was pointed out to him, however, instead of conceding fault and actually reading the article Frank linked to, which would be sensible, Nick gets himself all puffed up. “How dare you catch me in the act! I shall repeat the same inapt point, only louder, and with a quote from the inapt text!” That is the sum and substance of his 9:03 comment, and it is idiotic.

  20. Nick Benjamin Says:

    Simon,

    The penalty’s a 2.5% tax on income that’s capped at $750. That’s why some Republicans are arguing it’s a tax increase.

    And if you didn’t know that you probably didn’t read the rebuttal by the other guy.

  21. Simon Says:

    Keep reading, Nick.

  22. kranky kritter Says:

    It’s pretty clear to me that calling such a thing an income tax is at best a sloppy, ill-conceived end around, since it’s not triggered by your level of income so much as by a certain behavior. It’s not really an income tax. You don’t pay it because your taxable income is a certain amount, you pay it because a certain behavior triggers a punitive tax surcharge.

    This is astonishingly obvious to me. I agree with Simon that its idiotic. I just don’t agree with Simon that congress will run afoul of the constitution. For example, Nick seems in general to be a pretty smart guy, and he’s talked himself into the idea that its fine. We’ve had so many loopholes and end-arounds via the commerce clause and others that the notion of what is and isn’t Ok for congress to do relates most strongly to all the other stuff they’ve been allowed to do. Healthcare? Interstate commerce. End of story.

    Not enough folks have watched the constitutional store over the years. Every time congress wanted to do something, they went about it in an “ends justifies the means” way, viewing the constitution as an obstacle, and working around it. And now, we’re stuck with that.

  23. Donklephant » Blog Archive » Healthcare Reconciliation Says:

    […] option, size and reach of new federal taxes, scope of the employer mandate, penalties for the constitutionally-questionable individual mandate, Medicare expansion, and taxpayer funding for abortion. More detail on the […]

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