The Mandate Double-Bind
Several commenters, led by the indefatigable Boonton, continue to insist that the mandate is best understood as a penalty that can be paid to opt out the Affordable Care Act’s health insurance requirement. I don’t think this makes sense. The rationale behind forcing everyone to purchase insurance, as I understand it, is that if healthy people are allowed opt-out, they’ll flee insurance companies en masse, leaving only sick people on the rolls and collapsing the industry. I get the economic logic of this approach, but consider how the mandate is structured: If it really is only a minor penalty, healthy people will pay the fine and forgo insurance. At the very least, this should severely compromise the ACA’s effectiveness. If, on the other hand, the tax penalty is structured in such a way that makes it prohibitively expensive for healthy people to opt out, it’s effectively a mandate, regardless of your preferred terminology.
In the 1920s, when Congress wanted to prohibit activity that was then deemed to be solely within the police power of states, it tried to penalize the activity using its tax power. In Bailey v. Drexel Furniture (1922) the Supreme Court struck down such a penalty saying, “there comes a time in the extension of the penalizing features of the so-called tax when it loses its character as such and becomes a mere penalty with the characteristics of regulation and punishment.”
The fact that the Affordable Card Act includes a mandate (or the functional equivalent of a mandate) doesn’t automatically render it unconstitutional, but I don’t buy the argument that the mechanism the ACA relies on is just a minor penalty.