The Entrepreneurial View                                                                        

The Constitution and the Individual Mandate

by Raymond J. Keating

A mandate that individuals must have or purchase health insurance features prominently in the current drive for expanding government's role in health care.

What happens if an individual does not get insurance under legislation being considered by Congress? The bill that passed the Senate would impose a fine of either $750 or 2 percent of income, whichever is greater. In the House version, an income tax of 2.5 percent would be imposed. Either way, many individuals, including the self-employed, would face a hefty burden.

Beyond the cost issue, however, an interesting question has been raised. Is such a mandate constitutional?

In a 1994 memorandum, the Congressional Budget Office raised the following issues:

"A mandate requiring all individuals to purchase health insurance would be an unprecedented form of federal action. The government has never required people to buy any good or service as a condition of lawful residence in the United States. An individual mandate would have two features that, in combination, would make it unique. First, it would impose a duty on individuals as members of society. Second, it would require people to purchase a specific service that would be heavily regulated by the federal government."

This indeed is new and dangerous ground being tread upon by President Obama and Congress.

And in a Senate floor speech last month, U.S. Senator Orrin Hatch gets to the motivation - i.e., power - and the fact that the Constitution exists to protect us from such governmental power grabs:

"I can understand why this mandate is so attractive to those who believe in an all-powerful federal government. After all, raising the percentage of those with health insurance is easy by simply ordering those without insurance to buy it. But while government may choose the ends, the Constitution determines the permissible means. That is why one of the basic principles is that Congress must identify at least one of our powers enumerated in the Constitution as the basis for any legislation we pass... The key word in the Commerce Clause is the word regulate and the key word in every Supreme Court case about the Commerce Clause is the word activity. Regulating an activity in which individuals choose to engage is one thing, requiring that they engage in that activity is another."

In a January 2 Wall Street Journal op-ed that Hatch co-authored with Kenneth Blackwell and Kenneth Klukowski, the following also was noted:

"In fact, the Supreme Court in United States v. Lopez (1995) rejected a version of the commerce power so expansive that it would leave virtually no activities by individuals that Congress could not regulate. By requiring Americans to use their own money to purchase a particular good or service, Congress would be doing exactly what the court said it could not do. Some have argued that Congress may pass any legislation that it believes will serve the ‘general welfare.' Those words appear in Article I of the Constitution, but they do not create a free-floating power for Congress simply to go forth and legislate well. Rather, the general welfare clause identifies the purpose for which Congress may spend money. The individual mandate tells Americans how they must spend the money Congress has not taken from them and has nothing to do with congressional spending."

For good measure, towards the end of December, SBE Council President and CEO Karen Kerrigan was one of the signatures to an open letter arguing that the individual mandate was unconstitutional, and spelling out some key points, including the following:

• "The individual mandate is not authorized under the General Welfare Clause. The Supreme Court made clear in United States v. Butler (1936) and Helvering v. Davis (1937) that the General Welfare Clause only applies to congressional spending. It applies to money going out from the government; it does not confer or concern any government power to take in money, such as would happen with the individual mandate. Therefore the mandate is outside the scope of the General Welfare Clause."

• "The individual mandate is not authorized under the Taxing and Spending Clause or Income Tax. The Constitution only allows certain types of taxation from the federal government. The Article I Taxing and Spending Clause permits duties, imposts, excises and capitation taxes -- duties, imposts and excises are taxes on purchases. A capitation tax is a tax that every person must pay, and the Constitution's apportionment rule requires that every person in each state must pay exactly the same amount. The Obamacare mandate is imposed on people who are making no purchase, and is a tax that some people in a state would pay, but others do not. The Sixteenth Amendment allows an income tax. An income tax is imposed only on earnings, but people would have to pay this tax even if they had no income. Therefore it cannot be any of these constitutionally-permitted taxes."

• "President Obama said in a Nov. 9 interview on ABC television that requiring people to buy health insurance and penalizing those that do not buy is acceptable because people are required to buy car insurance. That statement is untrue. Only state governments can require people to get car insurance. While the federal government is limited to the powers enumerated in the Constitution, the states have a general police power. The police power enables state governments to pass laws for public safety and public health. The federal government has no general police power, and therefore could not require car insurance. States do not require people to purchase car insurance. Driving a car is a privilege, not a right. States require people to get insurance only as a condition for those people who voluntarily choose to drive on the public roads."

This entire big government health care effort rates as a brazen grab for power and control by the federal government. The costs promise to be severe, including higher health insurance premiums, reduced choices, shifting decision-making from patients and their doctors to government, and increased taxes. But the costs also include a trampling of the Constitution. The Constitution spells out and limits the power of government. If this kind of health care legislation is passed and signed into law, the courts will either have to strike down the individual mandate, or abandon the Constitution and completely unleash a power-hungry federal government subject to no limits - which is exactly what the Founders did not want.

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Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.