'Illegal health reform'? Not quite.

By Ruth Marcus
Wednesday, November 25, 2009

Is Congress going through the ordeal of trying to enact health-carereform only to have one of the main pillars -- requiring individuals toobtain insurance -- declared unconstitutional? An interesting debatefor a constitutional law seminar. In the real world, not a big worry.

"This issue is not serious," says Walter Dellinger, acting solicitor general during the Clinton administration.

But it's being taken seriously in some quarters, so it's worthexplaining where the Constitution grants Congress the authority toimpose an individual mandate. There are two short answers: the power toregulate interstate commerce and the power to tax.

First, the commerce clause. Spending on health care consumes 16percent -- and growing -- of the gross domestic product. There ishardly an individual activity with greater effect on commerce than theconsumption of health care.

If you arrive uninsured at an emergency room, that has rippleeffects through the national economy -- driving up costs and premiumsfor everyone. If you go without insurance, that limits the size of thepool of insured individuals and -- assuming you are young and healthy-- drives up premium costs.

The clause empowers Congress "to regulate commerce . . . among theseveral states," which may not sound terribly far-reaching. But sincethe New Deal, the Supreme Court has interpreted this authority to coverlocal activities with national implications.

In the 1942 case of Wickard v. Filburn, the justices ruledthat even though an activity may "be local and though it may not beregarded as commerce, it may still, whatever its nature, be reached byCongress if it exerts a substantial economic effect on interstatecommerce."

Thus, the court said, Congress was entitled to tell Roscoe Filburnhow much wheat he could grow to feed his own chickens. Surely, then,Congress could require Filburn's grandson to buy health insurance.

The court has narrowed the reach of the commerce clause in recent years -- but also reaffirmed Wickard.The times it has found that Congress overstepped involved situationswhere the connection to interstate commerce was strained: carrying gunsnear schools or engaging in gender-based violence.

In United States v. Lopez, the court found that the Gun-FreeSchool Zones Act "is not an essential part of a larger regulation ofeconomic activity, in which the regulatory scheme could be undercutunless the intrastate activity were regulated."

The individual mandate is "the mirror image of Lopez as a commerceclause case," says Harvard Law School professor Laurence Tribe.

Granted, there is a difference between regulating an activity thatan individual chooses to engage in and requiring an individual topurchase a good or service. Granted, too, there is a difference betweenmaking automobile insurance compulsory, as a condition of the privilegeto drive a car, and making health insurance compulsory, whether anindividual wants it or not.

But the individual mandate is central to the larger effort to reformthe insurance market. Congress may not be empowered to order everyoneto go shopping to boost the economy. Yet health insurance is so centralto health care, and the individual mandate so entwined with the effortto reform the system, that this seems like a different, perhaps unique,case.

Congress clearly has authority to, in effect, require employees topurchase health insurance for their old age by imposing a payroll taxto fund Medicare. It's odd for the same conservatives bemoaning agovernment takeover of health care to complain about requiring thatpeople turn to the private marketplace.

Which brings us to the alternative source of congressionalauthority, the "Power to lay and collect Taxes, Duties, Imposts andExcises."

The individual mandate is to be administered through the tax code:On their forms, taxpayers will have to submit evidence of adequateinsurance or, unless they qualify for a hardship exemption, pay apenalty.

Yale Law School professor Jack Balkin likens this to Congressraising money for environmental programs by taxing polluters. "Congressis entitled to raise revenues from persons whose actions specificallycontribute to a social problem that Congress seeks to remedy throughnew government programs," he concludes.

Balkin cites a 1950 Supreme Court caseupholding a tax on marijuana distributors. "It is beyond seriousquestion that a tax does not cease to be valid merely because itregulates, discourages, or even definitely deters the activitiestaxed," the court said. "The principle applies even though the revenueobtained is obviously negligible, or the revenue purpose of the tax maybe secondary."

Sounds like the individual mandate to me.