Most discussions about the constitutionality of an individual mandate in health care reform proposals have focused on whether such a mandate could be justified under the federal government’s enumerated powers in Article I, section 8. (See, e.g., these VC posts.) Some (including me) have opined that, under existing case law, an individual mandate would probably pass muster. For example, under existing precedent I think it likely the Court would see an individual mandate as a necessary and proper incident of comprehensive regulation of health care markets, as a mandate is necesary to prevent other aspects of health care reform (such as a ban on refusing to cover preexisting conditions) from driving up health care markets. (Of course, were the Court to apply the original public meaning of the relevant provisions, an individual mandate would be out of bounds.) But in focusing on Article I, Section 8, I wonder whether we’ve ignored another potential constitutional problem with provisions of Article I, section 9.
As I understand the current proposals, the individual mandate would operate as follows: A tax would be imposed on all individuals, and the tax would be offset by a credit for those who purchase or are otherwise covered by qualifying plans. The constitutional problem would arise if this tax is considered a “direct tax.” Why? Because Article I, section 9 provides: “No capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.” “So if mandate is imposed through the tax code, and the provision operates as a “capitation” or “other Direct tax,” it would have to be apportioned.
Do the respective individual mandate provisions constitute direct taxes? I’m not sure. “Indirect” or so-called event taxes are not subject to apportionment under Article I, section 9, and income taxes were exempted from the apportionment requirement under the 16th Amendment. So the question would be whether any tax imposed on those who fail to purchase qualifying health plans would constitute a “direct” tax, or whether they could be properly characterized as indirect or income taxes. From what I understand, the tax in the House bill is, at least for some individuals, based upon income up to a set threshold. This might be enough to avoid the Article I, section 9 problem. I have not yet had a chance to look at how the mandate provisions are written in the Senate bill. I would be curious to read what others think about whether an individual mandate imposed through the tax code could run afoul of Article I, section 9.
David Welker says:
As long as it is a tax on income, it is exempt from the requirements of Article I, Section 9 by the 16th Amendment. As long as the tax is imposed on income (i.e. those who have income less than the tax do not pay it) there are no Constitutional problems.
Quote
November 19, 2009, 9:59 amRichard Aubrey says:
Unconstitutional?
Are you serious?
Quote
November 19, 2009, 10:14 amSilent Cal says:
It’s not a tax on income, it’s a tax assessed only on those who make a certain amount. The difference, as I see it, is that income determines whether you have to pay the tax, but it does not determine the level of taxation. Indeed, it’s more of a capitation tax (or poll tax) on being uninsured and rich than an income tax at all. I had been considering this to be a problem with a carbon tax, too, if it were levied against individual tax payers.
Quote
November 19, 2009, 10:41 amDavid Welker says:
Silent Cal,
It seems to me that if it is a tax that comes out of income and that you only need to pay if you earn income, then it is an income tax. Isn’t the payroll tax for FICA a type of income tax? I think it would have to be, otherwise I don’t see how it would get around Article I, Section 9. That tax also ends up being flat after a certain income. Bill Gates and Warren Buffet pay the same amount in FICA taxes, even though they earn very different amounts of income. But, I still think FICA is a type of income tax.
Maybe someone who knows more about tax can chime in?
Quote
November 19, 2009, 11:37 amUgh says:
I don’t think SCOTUS has held that any tax is a “direct” tax since at least Pollock v. Farmers’ Loan & Trust Co. in 1894 (and most people these days think that case was wrongly decided). So, I wouldn’t count on them doing so now.
Quote
November 19, 2009, 1:48 pmPersonFromPorlock says:
JA, surely you understand by now that the government can do anything it can’t be shamed into not doing? And they have a pill for shame.
Quote
November 19, 2009, 1:58 pmThales says:
It would be pretty easy to structure as an income tax. And if not, Congress may define and punish offenses against the United States, so it could just make failure to buy insurance an offense punishable by the fine (with a hardship exemption for income below a certain level).
Quote
November 19, 2009, 2:33 pmPubliusFL says:
Then you run into the Commerce Clause problem raised in the other threads addressing the constitutionality of the individual mandate. The easiest response to the question of whether the Commerce Clause authorizes Congress to mandate that individuals buy health insurance is to say “the mandate doesn’t rely on the authority of the Commerce Clause, it’s really an exercise of Congress’ power to tax.” Some commenters thought that the Commerce Clause case law would permit an individual mandate anyways, but clearly it’s not possible to use the taxation power to avoid the Commerce Clause issue, AND use the Commerce Clause to avoid the taxation power issue.
Quote
November 19, 2009, 3:25 pmfwb says:
But in any case, the fifth requires that the “taxed” be given just compensation for the tax/mandate/requirement. This leaves us trying to determine what just compensation is given by the government to each and every individual as the fifth requires.
Quote
November 19, 2009, 4:15 pmfwb says:
The editing system appears not to work. please correct “by” to “be”, place “” around taxed, and replace goven with given.
Quote
November 19, 2009, 4:22 pmSteven says:
“As I understand the current proposals, the individual mandate would operate as follows: A tax would be imposed on all individuals, and the tax would be offset by a credit for those who purchase or are otherwise covered by qualifying plans.”
This does not appear to be correct. From section 501 of H.R. 3962:
“In the case of any individual who does not meet the requirements of subsection (d) at any time during the taxable year, there is hereby imposed a tax equal to 2.5 percent of the excess of — (1) the taxpayer’s modified adjusted gross income for the taxable year, over (2) the amount of gross income specified in section 6012(a)(1) with respect to the taxpayer.”
From section 1501 of Reid’s bill:
“If an applicable individual fails to meet the requirement of subsection (a) for 1 or more months during any calendar year beginning after 2013, then, except as provided in subsection (d), there is hereby imposed a penalty with respect to the individual in the amount determined under subsection (c).”
Nowhere in any of the bills is there a tax on all individuals, rebated to those who was have health insurance.
Quote
November 19, 2009, 5:17 pmThales says:
PubliusFL: Why would using the enumerated definition of crimes power run into a commerce clause objection? Though in any case I take it back because that power refers only to the high seas and international law (the rest of the federal criminal code relies on the commerce power or the postal power).
In any case, no serious person believes that after the collapse of Lopez in Raich there is a viable [as in of interest outside academia and the pipe dream replacement of four more Justices with clones of Thomas] constitutional objection to creating a national health care system. And if there were, Medicare and Medicaid have been unconstitutional for 30 years. It’s sort of time to give all that up and consider health care reform ideas on their policy merits.
Quote
November 19, 2009, 6:08 pmbfw says:
I don’t see how anyone could think this.
Quote
November 20, 2009, 12:22 amJoe says:
As Steven quotes, this sounds like an income tax.
Though in any case I take it back because that power refers only to the high seas and international law (the rest of the federal criminal code relies on the commerce power or the postal power
“To provide for the Punishment of counterfeiting the Securities and current Coin of the United States” is but one additional source. Another are laws against interference with federal elections. Or, to protect federal officials. Or, the 13A. Or ..
Quote
November 20, 2009, 10:18 amA Week-Ending Chop Suey says:
[...] Volokh Conspiracy saw an interesting article exploring the idea that a federal law making health care mandatory might be unconstitutional not [...]
juris imprudent says:
but clearly it’s not possible to use the taxation power to avoid the Commerce Clause issue, AND use the Commerce Clause to avoid the taxation power issue.
I’m sure there are 5 Supreme Court justices who might say that isn’t an impediment. I don’t know how they could justify that, but I don’t doubt that some would make the attempt.
And JHA, if you are reasonably convinced that Section 8 does not present a problem, why would you think that Section 9 does?
Quote
November 20, 2009, 11:46 pmreadery says:
It would seem incredibly easy to structure this, if there is any issue, as an income tax on individuals and corporations with a credit if they buy other insurance, or simply as an income tax on those who don’t buy other insurance.
The tax-and-spend power is quite broad, broader than the commerce power, and the whole thing strikes me as fitting within it. As long as Congress does nothing more than tax and spend, it can do it. Obviously it can regulate how it spends its own money. And there’s no need even to regulate how private insurance companies operate or what kind of insurance individuals can purchase. Congress need merely set conditions on who is exempt from or gets a credit against the tax, and who gets some of the money spent. All within the taxing and spending clause.
Quote
November 21, 2009, 7:56 pm