That Horse? It Left the Stable Long Ago. We Called Him Seabiscuit

David Rivkin and Lee Casey take to the pages of the Wall Street Journal to claim that any individual insurance mandate would “likely” fail to pass Constitutional muster under even a modern understanding of Constitutional law and the commerce clause.  Whatever my thoughts on the value of an individual mandate, this is a shoddy piece of legal commentary that is transparently intended to provide legal cover for the claim that Obamacare is somehow unconstitutional in a way that Social Security and Medicare are not.

Let me start by saying this: if you want to go with a more or less purely originalist interpretation of the Constitution and 10th Amendment, I think you’ve got a strong claim that the mandate is unconstitutional.  Unfortunately, this interpretation of the Constitution hasn’t held sway for a good 75 years. 

What is so strange about the Rivkin and Casey piece is that they don’t even try to go this route, and instead try to make their argument by accepting the state of commerce clause jurisprudence.  They even approvingly quote the infamous recent case Gonzales v. Raich (the medical marijuana case) for its language that the commerce clause can be used to regulate an activity so long as there is a “rational basis to believe that such ‘activities, taken in the aggregate, substantially affect interstate commerce.'”  The implication is that the failure to purchase health insurance does not, in the aggregate, substantially affect interstate commerce.

These arguments are bizarre on multiple counts.  First, they ignore the entire rationale for individual insurance mandates, which is specifically that individuals who are uninsured have a huge effect, in aggregate, on interstate commerce.  Frankly, so far as it goes, this rationale is even undeniably true given even the most rudimentary understanding of the health care debate.  So, unlike a lot of legislation such as that in Raich that uses effects on interstate commerce as a post-hoc rationalization for federal regulation of an inherently local activity, in this case the effect on interstate commerce is the entire reason why the legislation is viewed as necessary in the first place.

Perhaps what Rivkin and Casey are trying to claim, instead, is that the individual mandate must be characterized not as an attempt to regulate the interstate insurance market, but as an attempt to force people who are doing nothing in interstate commerce to enter interstate commerce.  This would be a plausible argument were it not for the obvious existence of other programs where individual participation is in effect mandated, most obviously Social Security and Medicare Part A. 

Rivkin and Casey also fail to distinguish between inherently economic and non-economic activity, which is an important distinction when discussing the applicability of the interstate commerce clause.  They try to get around this by citing Lopez for the proposition that the commerce clause can only be satisfied if Congress either regulates an economic activity or limits its regulations to things that either have or likely will have a connection to interstate activity.  According to Rivkin and Casey, this condition is not met because a health insurance mandate doesn’t regulate any “activity” at all – it is triggered merely by being an American. 

The problem here is that I am not aware of any precedent that suggests an economic activity must be the “trigger” for regulation – only that the regulation must pertain to an inherently economic activity.  The purchase of health insurance is quite clearly an inherently economic activity.  Moreover, as a practical matter, every uninsured American is still a consumer of health care who is certain to engage in the clearly economic activity of obtaining health care.

There is also an even more fundamental flaw here – the interstate commerce clause doesn’t even apply to the extent that the mandate is accurately characterized as a “tax.”  Article I, Section 8 of the Constitution provides Congress with the authority to “lay and collect taxes…. and provide for the common defense and general welfare of the United States.”  Rivkin and Casey attempt to get around this obvious problem by making the blanket statement that

 “Taxation can favor one industry or course of action over another, but a “tax” that falls exclusively on anyone who is uninsured is a penalty beyond Congress’s authority. If the rule were otherwise, Congress could evade all constitutional limits by “taxing” anyone who doesn’t follow an order of any kind—whether to obtain health-care insurance, or to join a health club, or exercise regularly, or even eat your vegetables.”

Perhaps not surprisingly, they offer no authority whatsoever for the proposition that a “‘tax’ that falls exclusively on anyone who is uninsured is a penalty beyond Congress’s authority.”  It appears that their basis for this claim is from Bailey v. Drexel Furniture Co. (The Child Labor Tax Case), a 1922 case that prohibited Congress from imposing a tax of 10 percent on all profits earned by any company that employed child labor during the course of a year.  The problem is that subsequent precedent severely restricted the value of this case, holding that taxes that although Congress may not use the taxation power purely to penalize activities that it otherwise could not regulate, “unless there are provisions extraneous to any tax need, courts are without authority to limit the exercise of the taxing power.” US v. Kahriger (1953).

It is difficult to see how an individual health insurance mandate in the form of a tax would be “extraneous to any tax need.” Indeed, it is justified at least in part due to a need to require the uninsured to pay for the services they actually use.  It is also neither intended nor expected that the tax will eliminate the existence of the uninsured – we are not, for instance, talking about a tax of tens of thousands of dollars per year of being uninsured.  To be sure, the goal is universal coverage, but no one expects that an individual mandate enforced by a tax of a thousand or so dollars a year will remotely achieve that goal.

Finally, even if the individual mandate were deemed to have a purely punitive purpose with no revenue generating purpose, it’s still difficult to see how this could be deemed the sort of transparent end run around states’ rights that would make it unconstitutional even under the aforementioned Child Labor Tax Cases.  In those cases, the entire purpose of the legislation at issue was to put an end to child labor, which the Court had previously held was purely an issue for state regulation.  But in the case of the individual mandate, the mandate is only one integral part of an overall health care reform, the overarching purpose of which is undeniably within Congress’s Constitutional authority under existing law.  To the extent that an individual mandate forms an integral part of executing health care reform that Congress is Constitutionally authorized to implement, it would seem to be transparently “necessary and proper” to that reform. 

In sum, Rivkin and Casey’s claim that an individual mandate would be unconstitutional even under existing constitional law is specious at best.  It pretends that the refusal to purchase health insurance has no meaningful effect on interstate commerce, even in the aggregate, while the decision of a medical marijuana user to grow some pot in their backyard somehow does.  It pretends that the uninsured don’t use the health care system at all.  It pretends that the mandate can be divorced from the overall purpose of federal health insurance regulation and reform.  Finally, it pretends that the mandate has no legitimate revenue-raising function. 

Anyone with even a passing familiarity with the health care debate would understand that you cannot pretend any of these things are true.  It is also difficult to conceive that Rivkin and Casey are unaware of what the cases upon which they relied actually held.