The Health Insurance Mandate: If It Must Be, Let It Be a Tax

Starting in 2014, the recently enacted Patient Protection and Affordable Care Act (PPACA, P.L. 111-148) will require most U.S. residents to purchase health insurance or pay a financial "penalty" to the government.1 This provision, popularly called the individual mandate, is the linchpin of some of the PPACA's most significant reforms. Many commentators have argued that without the mandate, the PPACA's regime of community rating and guaranteed issue is unsustainable. That has caused reform supporters some anxiety as the mandate's constitutionality has been called into question.

Requiring residents to purchase a private good or service under the threat of a monetary penalty is an unprecedented form of federal action and has already prompted legal challenges.2 Twenty-one state governments, various private organizations, and several individuals have filed lawsuits challenging the mandate.3 Those lawsuits contend, among other things, that the mandate lies beyond the constitutional powers of the federal government and therefore infringes on the powers reserved to the states by the 10th Amendment to the U.S. Constitution. In response to those allegations, the government claims that the mandate is justified under its authority to regulate interstate commerce or its authority to tax for the general welfare.4

Whether the mandate will be invalidated by the Supreme Court or the lower federal courts has been discussed at great length. Some have argued that the Supreme Court does not possess the political capital--or the desire, for that matter--to invalidate portions of landmark legislation.5 Many critics counter that upholding the mandate would grant the federal government an extraordinary authority over individuals that abolishes the principle of limited government.

This article argues that those choices present a false dichotomy. After reviewing Supreme Court precedent, I conclude that the mandate could be upheld as either a tax or a regulation of commerce. I argue, however, that if the mandate does survive constitutional review, the appropriate basis is the taxing power because it possesses natural limitations that can restrain federal authority in a manner more consistent with the Constitution's structural limits. I also discuss the possibility that the mandate's unprecedented use of federal power breaks with constitutional norms and therefore cannot be validated under the Court's traditional tax and commerce analyses.

Preliminarily, however, I discuss the statutory scheme, ripeness issues, and individual rights that may be implicated by the mandate . . . .

The full text is available here as an Adobe Acrobat PDF.

Ryan Lirette is a research associate at AEI.

Photo credit: Bigstock/devon

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