The Volokh Conspiracy

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.

Emory law professor Robert Schapiro has an op ed arguing that the federal mandate requiring individuals to purchase health insurance included in the current health care bill is both constitutional and consistent with federalism [HT: Alison Schmauch]. I agree that the mandate would probably be upheld under current Supreme Court precedent. However, like many other defenders of the constitutionality of the individual mandate, Schapiro doesn’t even consider the possibility that that precedent is wrong. For reasons I describe here, the mandate is inconsistent with the text and original meaning of the Constitution. Even if the Supreme Court decides that the mandate is constitutional, members of Congress and the president have an independent duty to assess the constitutionality of the legislation they vote on and sign. They all have taken oaths to uphold the Constitution, not merely what the Supreme Court says the Constitution means. If the courts rule that a particular congressional or executive action is unconstitutional, the other branches of government should obey. Otherwise, the courts would be unable to serve as an effective check on legislative and executive power. But no constitutional principle prevents Congress and the president from interpreting their authority more narrowly than the Supreme Court does.

In fairness to the congressional Democrats who support the health insurance mandate, it must be pointed out that the Republicans didn’t exercise constitutional self-restraint back when they controlled Congress. Republican bills such as the ban on partial birth abortion, the No Child Left Behind Act, and others, also pushed federal power well beyond the limits established by the text of the Constitution. And the Republicans made little or no effort to seriously consider constitutional limits on their power beyond those set by court decisions. For the Democrats to live within constitutional constraints that the Republicans ignored might be seen as a kind of unilateral disarmament. I hope that the two parties would agree on mutual disarmament, but I’m not holding my breath that any such thing is likely to happen. 

Schapiro also argues that the health care mandate is consistent with federalism in ways that go beyond merely respecting constitutional constraints:

Even if current law does permit a mandate, though, one might ask whether it should....

What the critics’ narrow arguments miss is the power of federalism illustrated by the health care reform efforts. Federalism promotes liberty and innovation by fostering a dialogue among local and national bodies, rather than by inviting courts to draw lines between them.

Massachusetts served as a laboratory with its own attempt to offer comprehensive health care, including an individual mandate. The federal government has learned from that experience. Moreover, the states will play an important role in implementing any national health care system.

What then should we make of state constitutional amendments purporting to bar a federal individual mandate? Such amendments show the value of federalism. State legislatures provide vital platforms for dissenting voices. Such amendments cannot block federal law. But the main point of federalism is to inform public debate, not to invite a court to terminate democratic dialogue.

The health care controversy demonstrates the continuing significance of federalism. Contrary to those impugning the constitutionality of mandates, though, it is a federalism of the people, by the people and for the people, not a federalism of the courts.

“Federalism” can mean many different things to different people. In my view, however, there are important beneficial aspects of federalism that go beyond merely “inform[ing] public debate.” Among these are policy diversity and competition between state governments, which enable people to “vote with their feet” for the policies they prefer. Preserving these benefits of diversity and competition requires enforcement of limits on the power of the central government. Otherwise, both will often be stifled through the imposition of one size fits all centralized solutions. If we want “a federalism of the people, by the people and for the people,” we need constitutional limits on the power of the central government.

If, as Schapiro assumes, the only important purposes of federalism are to facilitate “public debate” and promote experimentation, it’s not clear why we need federalism at all. Public debate can and does occur at the national level too. Indeed, the public and the media usually pay much more attention to proposed federal legislation than to state policies. And a unitary central government can still engage in policy experiments, including ones whose geographic scope is limited. For example, it could establish an experimental health care policy that is limited to one part of the country and then impose it on the rest of the nation if the results prove that the experiment “worked.”

UPDATE: I have eliminated a typo and some minor infelicities that were in the original version of this post.

The latest installment of the Federalist Society’s “Originally Speaking” debate series features UC Irvine Dean Erwin Chemerinsky and Baker & Hostetler partner David Rivkin sparring over the constitutionality of an individual mandate.

We’ve had something of a debate over this subject here on the VC as well.  Our prior posts are collected here.

... As Mickey Kaus puts it.  This kind of thing is enough to remind me why, despite the fact that I consider it a beginning point rather than necessarily always the end point, I am fundamentally a libertarian.

We have ways of making you stress-free: Someone should write the fictionalized dystopian nightmare of mandatory “wellness” programs foreshadowed in Sen. Ensign’s business backed plan to let insurers penalize even those who seek non–employer-based health coverage if they don’t participate in healthy life regimens.”  Like THX 1138, but with brownies. ... Nineteen-Eighty-Fat! ... Ensign says his plan “would guarantee that the incentive is strong enough for Americans to want to participate.” ... Next: Marital fidelity incentives!

Wendy Williams and her husband liked their health insurance plan.  The premium and annual deductibles made sense for them, and a more “gold-plated” plan was not worth the money.  Yet Massachusetts’ health care regulators disagreed, and forced the Williams to pay a $1,000 fine if they wished to keep their insurance plan — a plan they prefer to a comparable state-approved alternative.

It wasn’t always this way.  When the Massachusetts mandate was first adopted, their plan was just fine.  But then the rules changed.  The state no longer accepts their insurance plan, even though they are fully insured and are not imposing their health care costs on other taxpayers.

If the federal government adopts an individual mandate, Ms. Williams fears her experience could soon replay itself nationwide.  She’s right to fear.  Once there is an individual mandate, interest groups will flock to Washington seeking to have their preferred treatment or service incorporated into the requirements for acceptable health care plans.  Over time, the requirements will grow, and the cost of health care plans for many Americans will increase as a result.  Consequently, many individuals who have health care plans that fully meet their needs will suddenly find themselves “underinsured” — and taxed fined as a result.

Kimberly Strassel’s column in today’s WSJ details several provisions of the Baucus health care reform bill outline that give special treatment to certain states to reduce the impact of health care reform.

A central feature of the Baucus bill is the vast expansion of state Medicaid programs. This is necessary, we are told, to cover more of the nation’s uninsured. The provision has angered governors, since the federal government will cover only part of the expansion and stick fiscally strapped states with an additional $37 billion in costs. The “states, with our financial challenges right now, are not in a position to accept additional Medicaid responsibilities,” griped Democratic Ohio Gov. Ted Strickland.

Poor Mr. Strickland. If only he lived in . . . Nevada! Senate Majority Leader Harry Reid, who is worried about losing his seat next year, worked out a deal by which the federal government will pay all of his home state’s additional Medicaid expenses for the next five years. Under the majority leader’s very special formula, only three other states—Oregon, Rhode Island and Michigan—qualify for this perk, on the grounds, as Mr. Reid put it recently on the Senate floor, that they “are suffering more than most.” . . . .

As an Ohio resident, this is one more reason to be concerned about the bill.  But wait, there’s more, including a differential threshold for the 40 percent tax on “luxury” health care plans.

Special treatment of politically important interests is nothing new.  It’s business as usual in Washington, D.C.  Nonetheless, these provisions are worth watching.  If health care reform forces states to assume $30-billion-plus in additional Medicaid expenses, it could exacerbate tensions between the states and Washington, D.C., and could even produce some interesting constitutional litigation.

The federal government cannot force states, as states, to participate in federal programs.  It can, however, make them offers they can’t refuse, by offering substantial financial support and then imposing various requirements on the receipt of federal funds.  At some point, however, the cost isn’t worth the candle, and a state may be tempted to walk away.  Given the fiscal mess so many states are in already, this sort of reform could push one or more states over the edge, prompting a decision to forgo relevant federal funding and abandon federal Medicaid responsibilities.  This is an unlikely scenario — I would expect some sort of “fix” to emerge in Washington, D.C. before it reached this point — but it looks increasingly possible.  Query: Were a state to walk away from Medicaid, how would the federal government respond? And would litigation ensue?

Another, less extreme and therefore more likely, scenario would be for a state to challenge the conditions that are imposed upon the states in either the health care reform bill or subsequent implementing regulations.  Under South Dakota v. Dole, any conditions imposed upon the receipt of fedeal funding must be clear and unambiguous.  The federal government may not impose additional conditions after the fact, nor may federal agencies interpret amgbiguous statutory language so as to alter or increase recipient state obligations.

There are at least two reasons why litigation in this area seems possible, if not likely.  First, this has been the limitation on conditional spending federal courts have been most willing to enforce.  (See, e.g., Pontiac City School District v. Spellings (6th Cir., 2008), a challenge to requirements under the No Child Left Behind Act reheard en banc last December.)  Second, given the amount of money at stake, states may be particularly sensitive to federal alteration of Medicaid program requirements during the implementation of any reforms.

The bottom line is that it will be worth watching how health care reform legislation affects the states.  This will have political consequences, to be sure, but it could also set the stage for some interesting legal conflicts.