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.