Is the Individual Mandate “Unprecedented” Because It Is More Statist Than Previous Laws, or Because It Is More Market-Oriented?

One of the common claims made by opponents of the individual mandate is that it is “unprecedented” — and therefore constitutionally suspect — for Congress to use the Commerce Clause power to mandate the purchase of a product.  Never in United States history has Congress interfered so much with personal freedom so as to mandate the purchase of a product. If Congress can do this, the thinking runs, then individual freedom is lost because there are no limits on what other statist things the federal government can do. As a result, approving the mandate would enable unprecedented statism: If the federal government can cross this line, it can cross any line.

That’s the narrative. At the risk of ticking off my fellow libertarians even more than I have already, however, I wonder if this narrative is somewhat backwards.

Here’s my thinking. The basic goal of the Affordable Care Act is to make sure everyone has health care insurance. In the 1960s, Great Society era, that goal would have been satisfied by establishing a government monopoly that forced government insurance on everyone. Consider the Medicare program, which was first established in 1965. Under Medicare, the federal government automatically provides health insurance to those 65 or older. The program is paid for with taxes paid by the country’s employees, most of whom are under 65, who must pay a 2.9% payroll tax.

The 1960s Great-Society way to establish health care for everyone would have been to extend Medicare so that it applies to everyone. The payroll tax would have been increased, and insurance would have been provided to everyone under a uniform plan run by the federal Government. Throughout the debate over health care, first in the Clinton years and later with the Obama administration, the 1960s Great Society model was in play at times under the rubric of the “single-payer model.” That’s what those on the left wanted in the current health care debate.

Pretty much everyone agrees that a single-payer government monopoly paid for out of payroll taxes would be constitutional. It’s the old big-government way of doing things, and is certainly not “unprecedented.” It’s old news. So if the Affordable Care Act had been based on that model, there would be no challenge to its constitutionality.

Now enter the individual mandate. In the health care debates, an individual mandate was considered a more market-oriented alternative to the single-payer model. As far back as 1992, the idea was pitched by the Heritage Foundation as the Heritage Consumer Choice Health Plan. It was then enacted in Massachusetts in 2006 under Republican Governor Mitt Romney. The basic idea is to reject a one-size-fits-all method of government control and to instead continue to allow private companies to offer health care plans, with the catch that everyone who can afford health care must buy it.

The end result is similar to that in a mandatory benefit program, in that everyone ends up with health care insurance. But under a individual mandate health care plan, private companies are allowed to compete amongst each other for customers. Instead of forcing the same benefit on everyone and using the tax system to force people to pay for it in payroll taxes, it maintains the basic dynamic of a purchased good and thereby retains some aspects of a market system based on competition among providers. Of course, it’s not a free market by any stretch. Those who can afford it are required to purchase a good from one of the approved insurance companies, which libertarians will abhor. But on a scale from a total free market to total government control, the option is more market-oriented than the Great Society approach — which would require the benefit to be provided and paid for without even the pretense of a market purchase.

Let’s return to the title of the post, the question of why the mandate is “unprecented.” If I understand the way in which mandate challengers use that term, the mandate isn’t unprecedented because the government has never been this statist. To the contrary, it is “unprecedented” because it is the first time that a major federal government benefit program rejected the 1960s Great Society model and instead tried to adopt a more market-oriented approach to benefits. That is, the mandate is unprecedented because it tries to create a federal government benefit program while maintaining the basic market dynamic of goods being bought and sold instead of a government monopoly dynamic of paying for benefits through taxes. As far as I know, it’s the first time a federal government program has tried to use that kind of hybrid government-market model.

Why does this matter? I think it matters in part because it suggests that the arguments of the mandate challengers are libertarian only in the short run. In the short run, we know as between a 1960s Great Society model and an individual mandate model, that the individual mandate model was more politically popular — and that even it barely squeaked through Congress. As a result, if you can get the individual mandate struck down, then the effect is likely to keep away either kind of health care system as long as the current political picture stays roughly steady. That’s why the argument looks libertarian today, and presumably why so many libertarians embrace it: For the foreseeable future, it would have the libertarian result of leading to neither a government monopoly nor an individual mandate model of health care. The former would be ruled out by public opinion, and the latter by the courts.

In the long term, however, the argument of the mandate opponents doesn’t strike me as a particularly libertarian. If the courts conclude that the mandate approach is unconstitutional, then the more market-oriented approach to benefits would be ruled out. Congress would have a choice: Don’t mandate benefits, or else mandate using a 1960s Great Society government monopoly model. Depending on what kinds of policies are popular in the future, the result may be to push future Congresses to embrace the government monopoly model more. If Congress had the determination to pass a benefits program but the more market-oriented approach were ruled out, then it would presumably proceed with a government monopoly program instead. Perhaps the Constitution requires that. But it doesn’t strike me as a libertarian result.