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Old 01-14-2010, 09:23 AM
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The Constitutionality of the Individual Mandate for Health Insurance

Posted by NEJM January 13th, 2010

Jack M. Balkin, J.D., Ph.D.

Once President Barack Obama and Democrats in Congress have passed a health care reform bill, conservative groups are likely to challenge parts of it as unconstitutional, arguing that it oversteps Congress's powers. A key target will be the individual mandate, which is designed to coax uninsured persons into purchasing insurance.

The term "individual mandate" is misleading for two reasons. First, the law would not actually require all individuals to purchase insurance. The mandate would not apply to dependents,persons receiving Medicare or Medicaid, military families, persons living overseas, persons with religious objections, or persons who already get health insurance from their employers under a qualified plan.

Second, it is not actually a mandate. It is a tax, which people would not have to pay if they purchased health insurance. The House bill imposes a tax of 2.5% on adjusted gross income if a taxpayer is not part of a qualified health insurance program. The Senate bill imposes what is called an "excise tax," a tax on transactions or events, or a "penalty tax," a tax for failing to do something (e.g., filing your tax return promptly). The tax is levied for each month that an individual fails to pay premiums into a qualified health plan.

Congress has the power to pass legislation that falls within any of its powers enumerated in the Constitution. There are two obvious sources of congressional power. The first, describedin the General Welfare Clause, is the power "to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defence and general welfare of the United States." The second, laid out in the Commerce Clause, is the power "to regulate commerce . . . among the several states."

The individual mandate is a tax. Does it serve the general welfare? The constitutional test is whether Congress could reasonably conclude that its taxing and spending programs promote the general welfare of the country.1 This test is easily satisfied. The new health care reform bill insures more people and prevents them from being denied insurance coverage because of preexisting conditions. Successful reform requires that uninsured persons, most of whom are younger and healthier than average, join the national risk pool; this will help to lower the costs of health insurance premiums nationally.

Taxing uninsured people helps to pay for the costs of the new regulations. The tax gives uninsured people a choice. If they stay out of the risk pool, they effectively raise other people's insurance costs, and Congress taxes them to recoup some of the costs. If they join the risk pool, they do not have to pay the tax. A good analogy would be a tax on polluters who fail toinstall pollution-control equipment: they can pay the tax or install the equipment.

Because the textual argument for Congress's authority under the General Welfare Clause is obvious and powerful, opponents have tried to argue that the tax is unconstitutional because it is a "direct" tax. Under the Constitution, "direct" taxes must be apportioned to state population. That is, if State A has twice as many people as State B, the amount of revenue collectedfrom State A must be twice that collected from State B. Like most federal taxes, the individual mandate is not apportioned to state population.

The classic examples of direct taxes are taxes on real estate and capitation or "head" taxes on the general population, under which people are taxed no matter what they do. In one of theSupreme Court's first cases, Hylton v. United States, Justice William Paterson held that if there is any doubt, taxes should be classified as indirect rather than direct.2

The individual mandate is not a direct tax. The House's version is a tax on income. Under the Sixteenth Amendment, income taxes do not have to be apportioned, regardless of the source of the income. The Senate's version is an excise or penalty tax. It is neither a tax on real estate nor a general tax on individuals. It is a tax on events: individuals who are not exempted aretaxed for each month they do not pay premiums to a qualified plan.

If the individual mandate falls within Congress's power to tax and spend, no other constitutional authority is necessary. However, Congress also has the power to impose the tax under the Commerce Clause. The test in this case is whether Congress could reasonably conclude that the economic activity it regulates has a substantial effect on interstate commerce when all individual instances of the regulated activity are added together. The Supreme Court says that economic activities include buying and selling, borrowing money, agriculture, services, manufacturing, and consumption.

Even if an activity is local and not economic, Congress can regulate it if it reasonably believes that doing so is necessary to make its regulation of commerce effective.3 (Under the Constitution, Congress has the power to make all regulations that are "necessary and proper" for carrying out its enumerated powers.)

In 1942, the Supreme Court held that Congress could regulate wheat grown for home consumption as part of a general regulation of farm production.4 People who grew wheat at home substituted it for wheat products they would otherwise purchase in the market; cumulatively, this practice had a substantial effect on interstate farm prices. Similarly, in 2005, in Gonzales v. Raich, the Court held that Congress could regulate marijuana grown for home consumption as part of a general ban on controlled substances, because Congress reasonably concluded that people would substitute homegrown marijuana for other marijuana purchased in black markets.3

The individual mandate taxes people who do not buy health insurance. Critics charge that these people are not engaged in any activity that Congress might regulate; they are simply doing nothing. This is not the case. Such people actually self-insure through various means. When uninsured people get sick, they rely on their families for financial support, go to emergency rooms (often passing costs on to others), or purchase over-the-counter remedies. They substitute these activities for paying premiums to health insurance companies. All these activities are economic, and they have a cumulative effect on interstate commerce. Moreover, like people who substitute homegrown marijuana or wheat for purchased crops, the cumulative effect of uninsured people's behavior undermines Congress's regulation, in this case, its regulation of health insurance markets. Because Congress believes that national health care reform won't succeed unless these people are brought into national risk pools, it can regulate their activities in order to make its general regulation of health insurance effective.

One final argument against the individual mandate is that it violates the Fifth Amendment by allowing the government to take property without just compensation. "Takings" occur when the government seizes property from particular individuals; a familiar example is a local government's taking of land by eminent domain. Ordinary income taxes and excise taxes that are levied on a large population and that regulate people's behavior by taxing their income or consumption choices are not considered takings under the Constitution. The individual mandate is just such a tax, not a taking.

Although opponents will challenge the individual mandate in court, constitutional challenges are unlikely to succeed. The Supreme Court will probably not even consider the issue unless a federal court of appeals strikes the tax down. In that unlikely event, the Supreme Court will almost certainly uphold the tax, at least if it follows existing law. To strike down the individualmandate, it would have to reject decades of precedents. It is very unlikely that there are five votes on the current Court for staging such a constitutional revolution.

Financial and other disclosures provided by the author are available with the full text of this article at NEJM.org.

Source Information
From Yale Law School, New Haven, CT.

This article (10.1056/NEJMp1000087) was published on January 13, 2010, at NEJM.org.

References
1. Helvering v. Davis, 301 U.S. 619 (1937).
2. Hylton v. United States, 3 U.S. 171 (1796).
3. Gonzales v. Raich, 545 U.S. 1 (2005).
4. Wickard v. Filburn, 317 U.S. 111 (1942).

The Constitutionality of the Individual Mandate for Health Insurance | Health Care Reform Center
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Old 01-14-2010, 12:27 PM
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Default Re: The Constitutionality of the Individual Mandate for Health Insurance

does anyone really believe that healthcare reform was going to happen without finding a way to create the resources necessary to pay for it? If you make a decent living, have adequate insurance, and pay taxes, you of course will not want to have a pay a higher tax. The type of tax is perhaps secondary to the basic need to pay a higher amount of taxes to achieve something closer to universal coverage. In Scandinavia, for instance, the tax rates are much higher. Health care is a part of what is purchased. There are other features of their social "safety net" that are covered also. The impact of the current global recession was felt less in these countries than here because of this network.
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Old 01-19-2010, 10:08 PM
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Default Re: The Constitutionality of the Individual Mandate for Health Insurance

The United States Government doesn't uphold the Constitution anymore. We're led by agendas.
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Old 05-20-2010, 07:47 AM
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Default Re: The Constitutionality of the Individual Mandate for Health Insurance

The New York Times (5/20) editorializes, "The number of states jointly suing to overturn the new health care reform law on constitutional grounds swelled to 20 last week. It is the latest example of conservatives' determination to thwart reforms that will do enormous good." The suit, "filed by state attorneys general and governors, all but one a Republican, seeks to overturn two central elements of the law: a mandate that virtually everyone obtain insurance or pay a penalty; and a big expansion of Medicaid." The Times adds, "Congress has long required states to cover specified groups of people up to specified levels of income. Extending those requirements is consistent, and is in no way an 'unprecedented' encroachment on state affairs." The paper concludes, "We believe the reform law has been carefully framed to stay within constitutional bounds."

Editorial - Health Care Reform and the Courts - NYTimes.com
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Old 06-01-2010, 01:54 PM
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Default Re: The Constitutionality of the Individual Mandate for Health Insurance

Quote:
Originally Posted by Michael Scally MD View Post
The New York Times (5/20) editorializes, "The number of states jointly suing to overturn the new health care reform law on constitutional grounds swelled to 20 last week. It is the latest example of conservatives' determination to thwart reforms that will do enormous good" The suit, "filed by state attorneys general and governors, all but one a Republican, seeks to overturn two central elements of the law: a mandate that virtually everyone obtain insurance or pay a penalty; and a big expansion of Medicaid." The Times adds, "Congress has long required states to cover specified groups of people up to specified levels of income. Extending those requirements is consistent, and is in no way an 'unprecedented' encroachment on state affairs." The paper concludes, "We believe the reform law has been carefully framed to stay within constitutional bounds."

Editorial - Health Care Reform and the Courts - NYTimes.com
You can always count on the New York Times for great bullshit.
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Old 06-28-2010, 02:35 PM
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Default Re: The Constitutionality of the Individual Mandate for Health Insurance

i'm very glad to see that the 2nd Amendment got Incorporated to the States today, but it really should have been done via the Privileges and Immunities clause...a part of the 14th Amendment that was hideously mangled by the SCOTUS in the Slaughterhouse cases a century+ ago.

a reinvigorated P&I-based Incorporation of the 2nd would not only have established stronger protections against unconstitutional gun infringements, but it would also have energized human rights in the USA in general, including "The Constitutionality of the Individual Mandate for Health Insurance"...THAT is why many conservatives fought against that approach, including the NRA.
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Old 09-28-2010, 12:23 PM
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Old 09-28-2010, 01:12 PM
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Default Re: The Constitutionality of the Individual Mandate for Health Insurance

Health Insurance Politics in Federal Court
Health Insurance Politics in Federal Court | Health Policy and Reform

NEJM | August 25, 2010 | Topics: Health Law, Insurance Coverage
Wendy K. Mariner, J.D., M.P.H., and George J. Annas, J.D., M.P.H.

Having been outmaneuvered in Congress with the passage of the Patient Protection and Affordable Care Act (“Affordable Care Act,” or ACA), Republicans have taken their case to federal court, arguing that the law’s key provision, the individual mandate to purchase health insurance, is unconstitutional. This argument has been made most prominently by attorneys general from 20 states in a Florida federal court and by the Commonwealth of Virginia in a Virginia federal court. In early August, federal district court judge Henry Hudson decided that the Virginia challenge deserves a hearing,1 thereby giving the constitutional argument an aura of respectability and ensuring that we’ll hear more about the meaning of states’ rights in the context of the Constitution’s Commerce Clause (which grants Congress the authority to regulate interstate commerce), both in court and on the campaign trail.

Although, as Judge Hudson noted, the case “has a distinctive political undercurrent,”1 the controversy will be argued in the courts in constitutional terms, and Hudson finds the constitutional questions “novel.” Virginia claims that Congress does not have authority under the Commerce Clause to require individuals to obtain health insurance coverage, does not have the power under the Taxing and Spending Clause (which gives the federal government the power of taxation) to impose a tax or penalty on individuals who fail to obtain coverage, and consequently violates Virginia’s sovereign power, protected by the Tenth Amendment, to enact a state law prohibiting Virginia residents from being required to obtain health insurance (a law that Virginia adopted primarily to gain standing to challenge the ACA).

Hudson uses imagery that is strikingly uncomplimentary toward federal power to frame the core issue: “The Commonwealth defies the Secretary [of health and human services] to point to any Commerce Clause jurisprudence extending its tentacles to an individual’s decision not to engage in economic activity.” The federal government has broad power to regulate economic activities affecting interstate commerce,2 but no court has explicitly ruled that the federal government can regulate what Virginia suggests is an absence of activity, such as not purchasing health insurance.

The federal government argues that the individual mandate is necessary to support “the financial foundation” of the health care system. The ACA aims to make affordable health insurance available to everyone, regardless of health status. It requires insurers to sell policies covering virtually all health conditions, including preexisting ones, to everyone who wants them. However, such coverage would be prohibitively expensive if people waited until they were sick to buy a policy and would “drive that market into extinction.” Unless everyone buys into the market, with or without a government subsidy, unaffordable health insurance will render health care out of reach.

Although the decision of any single individual to forgo buying health insurance would not bring down the system, the aggregation of many such individuals would have that effect — just as the aggregation of many wheat farmers growing wheat for their own consumption and state-authorized medical marijuana users growing their own marijuana would affect the wheat and marijuana markets.2 Therefore, since Congress can regulate the insurance industry under the Commerce Clause, it can regulate participation in the health insurance market under the Necessary and Proper Clause (which gives it power to make all laws that are necessary and proper for executing its enumerated powers) in order to carry out the overall regulatory scheme. As the Supreme Court said in the medical marijuana case Gonzales v. Raich, “When Congress decides that the `total incidence’ of a practice poses a threat to a national market, it may regulate the entire class.”3

Virginia argues that the wheat and marijuana cases both involve “a voluntary decision to perform an act” (growing a crop), whereas the ACA’s individual mandate “requires a person to perform an involuntary act.”1 Hudson summarizes Virginia’s “economic inactivity” argument as follows: “A decision not to purchase a product . . . is not an economic activity. It is a virtual state of repose — or idleness — the converse of activity. At best, [it] regulates future activity in anticipation of need.”1

If, as the late Chief Justice William Rehnquist put it, the key to the federal government’s authority under the Commerce Clause is defining “an economic activity that might, through repetition elsewhere, substantially affect any sort of interstate commerce,” then the activity of deciding whether to purchase health insurance could well qualify.4 Economists accept, for example, that some forms of “inactivity” affect economic health as much as activity does: for example, our economy remains flat because Americans refuse to consume, and our economic bubble burst partially because Americans failed to save. Similarly, not buying health insurance seems to qualify as an economic activity; it entails making decisions about whether to buy coverage and about how to pay (or not pay) for health care when it is needed. Indeed, one could argue that individuals who do not buy health coverage but use their own resources to get medical care are like farmers and medical marijuana patients who do not buy wheat or marijuana in the regular markets but instead grow their own. Economists easily conclude that not buying health insurance is economic conduct.5 But this controversy will be decided not by how economists view economic activity but by how judges view the reach of the Commerce Clause.

The states have inherent (police) powers authorizing them to regulate residents’ inactivity — to require residents, for example, to get vaccinations and even to purchase health insurance, as Massachusetts does. The federal government’s powers are limited to those listed in the Constitution, but the reach of the Commerce Clause has necessarily expanded with the national economy. Virginia argues that if Congress can regulate inactivity that affects interstate commerce like insurance and health care, then there is no practical limit to federal regulation and Congress will usurp the state’s police powers.

The fundamental legal problem is whether, if the federal government can penalize individuals for refusing to purchase health insurance, there is any principle that would limit the power of the federal government to penalize the failure to purchase other products, such as a daily newspaper to save the newspaper business from extinction. The federal government’s answer is that people simply cannot choose “to avoid participation in the health care market.”1 Rather, “it is inevitable . . . that every person — today or in the future — healthy or otherwise — will require medical care,” and the ACA provides a dependable, affordable mechanism to pay for such care.1

This answer may offer a limiting principle that distinguishes the ACA from a hypothetical penalty for not buying newspapers. There are few nondiscretionary national markets in which virtually all Americans inevitably participate. Congress could not require all Americans to buy cars from Detroit in order to shore up the automobile industry; not everyone needs a car. On the other hand, perhaps the federal government could justify penalizing individuals for not buying an apple a day or for not buying a gym membership or multivitamins, at least if these purchases are seen as integral parts of containing costs in a national health insurance market, because people who don’t make these purchases increase health care costs for all of us.

We think that the federal government has the more realistic view of how the national economy functions and how the Constitution should function today. Nonetheless, the outcome in the federal courts is far from certain and will ultimately be decided by a Supreme Court that is just as ideologically fractured as the Congress that passed this law. Other clearly constitutional approaches were available, including Medicare for All, or simply raising the income or payroll tax to pay for health benefits, but these would have been even more objectionable to those who are raising Commerce Clause problems with the ACA.

Judge Hudson’s next decision, this fall, will be on the merits of the case, and as he recognizes, his decision will be appealed no matter how he rules. But health care politics will not be put on hold while we await judicial resolution, which could take years. Without mentioning the Commerce Clause or health care, many politicians will campaign on the argument that the federal government is too big, is too intrusive into our individual lives, and spends too much money. In this debate, the ACA will be exhibit number one.

Source Information

From the Department of Health Law, Bioethics, and Human Rights, Boston University School of Public Health, Boston.

References

1. Virginia v. Sebelius, 2010 U.S. Dist. LEXIS 77678 (Aug. 2, 2010).

2. Annas GJ. Jumping frogs, endangered toads, and California’s medical-marijuana law. N Engl J Med 2005;353:2291-2296

3. Gonzales v. Raich, 545 U.S. 1 (2005).

4. United States v. Lopez, 514 U.S. 549 (1995).

5. Rosenbaum S, Gruber J. Buying health care, the individual mandate, and the Constitution. N Engl J Med2010;363:401-403
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Old 09-29-2010, 12:10 PM
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Originally Posted by HeadDoc View Post
does anyone really believe that healthcare reform was going to happen without finding a way to create the resources necessary to pay for it? If you make a decent living, have adequate insurance, and pay taxes, you of course will not want to have a pay a higher tax. The type of tax is perhaps secondary to the basic need to pay a higher amount of taxes to achieve something closer to universal coverage. In Scandinavia, for instance, the tax rates are much higher. Health care is a part of what is purchased. There are other features of their social "safety net" that are covered also. The impact of the current global recession was felt less in these countries than here because of this network.
Four words: Greece, Spain, Portugal, Iceland. More words: austerity packages. Another word: riots. These programs are unsustainable. The EU chief warned that democracy may disappear in some of these countries: EU chief warns ‘democracy could disappear’ in Greece, Spain and Portugal | Wolves of Liberty

Thomas Jefferson once stated the obvious - that the more power government has the less liberty you have. In Greece, Spain, and Portugal the riots are occurring because if you suck on the government teat long enough you become dependent on it. Socialism is a recipe for long-term fiscal disaster. The U.S. is suffering from the recession more because we started it. It was Fannie and Freddie along with predatory lending practices forced upon unwitting banks by the likes of ACORN that kicked off and then burst the housing bubble. Look at the history. It is far more complicated that it appears and the answer is not more government involvement but less. You thing TRT is hard now, wait until a huge bureaucracy sits between you and your doctor. Have you seen the chart yet? If not, get ready: GOP Charts Healthcare Bureaucracy

Nope, this is going to make things a lot worse for many people - including those on TRT.

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Old 10-07-2010, 08:22 PM
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Judge Rejects Challenge To Health Care Law
Judge Rejects Challenge To Health Care Law : NPR

THE ASSOCIATED PRESS
October 7, 2010

A federal judge on Thursday rejected an attempt to stop some key provisions of the new national health care law, saying Congress has the authority to require people to get insurance by 2014.

The ruling — the first in a challenge to the Obama administration's health care overhaul — came in a lawsuit filed in Michigan by a Christian legal group, the Thomas More Law Center, and four people who claimed lawmakers exceeded their power under the Constitution's commerce clause.

But U.S. District Judge George Caram Steeh in Detroit said the insurance mandate, and the financial penalty if someone skips coverage, are not illegal. He said Congress was trying to lower the overall cost of insurance by requiring participation.

"Without the minimum coverage provision, there would be an incentive for some individuals to wait to purchase health insurance until they needed care, knowing that insurance would be available at all times," the judge said.

"As a result, the most costly individuals would be in the insurance system and the least costly would be outside it," Steeh said. "In turn, this would aggravate current problems with cost-shifting and lead to even higher premiums."

U.S. Justice Department spokeswoman Tracy Schmaler noted the ruling "marks the first time a court has considered the merits of any challenge to this law."

"The court found that the minimum coverage provision of the statute was a reasonable means for Congress to take in reforming our health care system," Schmaler said. "The department will continue to vigorously defend this law in ongoing litigation."

Robert Muise of the Thomas More Law Center in Ann Arbor, Mich., said he would take the case to a federal appeals court in Cincinnati.

The four individual plaintiffs said they do not have private insurance and object to being compelled to buy it. They also fear that any financial penalty paid to the government if they don't get insurance by 2014 would be used to pay for abortions.

In Florida, a federal judge is overseeing a lawsuit filed by 20 states. They, too, say the law is unconstitutional and claim it would force states to absorb higher Medicaid costs. A decision on whether to dismiss the case is expected by Oct. 14, though the judge said last month that he likely would dismiss only parts while letting others go to trial.

There is also a lawsuit pending in Virginia.
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