Sunday, July 18, 2010

Constitutionality of the "individual mandate" in the health insurance reform bill

The New York Times notes an interesting twist in the Obama administration's defense of the "individual mandate" aspect of the health insurance reform bill.  This is the provision that requires individuals either to purchase health insurance or pay a civil fine that will be collected by the IRS.  During the debate on the bill, some conservatives criticized this provision—hysterically, in my opinion—as a "dangerous expansion of the IRS's power and reach into the lives of virtually every American."  Some conservatives also argued that the individual mandate was not a proper tax since it taxed people for failing to do something (specifically, failing to buy health insurance).  The argument is that if the federal government can tax people for not doing something, then it can use the taxing power to regulate all aspects of human existence, and therefore the federal government has practically limitless power.  On the political (rather than constitutional) front, conservatives argued that the individual mandate was a breach of Obama's campaign promise not to raise taxes on those making less than $200,000 a year, since everyone was subject to the individual mandate, and the bill's subsidies for buying health insurance dropped off far below $200k.
The Obama administration's main response to all these arguments, at the time, was:  the individual mandate is not a tax, it is a "fee" (or "penalty"), and the federal government's power to enforce it comes not from the power to tax and spend for the general welfare, but rather from Congress's power to regulate interstate commerce.  As proof that it was not actually a tax, the bill's proponents pointed out the odd fact that, although the IRS would be charged with collecting the penalty, the IRS would have no power to actually force people to pay it.

But now that a group of state attorneys general have filed suit alleging that the individual mandate is unconstitutional (on the theory that it is beyond the federal government's power to impose), Obama's Justice Department is done playing games.  It defends the individual mandate not just as a proper regulation of interstate commerce but, primarily, as a "valid exercise" of Congress's power to levy taxes to provide for the general welfare.  In other words, the Obama administration has changed its tune and now admits that the individual mandate is a tax.

Can Obama's statement to George Stephanopoulos that the individual mandate is not a tax be defended?  Possibly, but only in a pretty Clintonian way.  Technically, Obama did not say, "the individual mandate is not a tax."  What he said was that the individual mandate "is absolutely not a tax increase."  Charitbly put, his argument is that the bill will drive down health insurance premiums and provide other benefits that balance out any alleged tax increases.  But you really have to be drinking the kool-aid to buy that argument.

I think that the individual mandates raises some interesting constitutional questions.  It certainly pushes both the commerce clause and the taxing power to their logical limits.  Ultimately, I think the Supreme Court will uphold the bill on at least the taxing power and probably under the commerce clause as well.  There's no way Justice Kennedy is going to sign on to a decision that strikes down this bill.

But perhaps the more interesting question is how this will play out politically.  Will the Republicans be able to brand Obama a liar or flip-flopper?  Will they be able to characterize the individual mandate as a massive tax increase or a massive expansion of the IRS?


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