Can State Laws Protect Against a Federal Insurance Mandate?

Peter Suderman asks whether the Freedom of Choice in Health Care Act–state laws meant to give people protection against having to buy insurance, either by state or federal action–is constitutional. The answer: we don’t know.

I asked a couple of legal and constitutional scholars what they thought, and the consensus seems to be that though state laws barring mandatory insurance shouldn’t be unconstitutional, it’s likely that if health reform were passed and they were challenged, the Supreme Court would rule that they are. However, we don’t actually know for sure, and there is legal precedent for the Supreme Court to side with a state in a federal/state dispute.

Curiously, a right-to-die case from Oregon may be the best bet for people seeking protection against federal mandates.

Virginia Law “Could Foil Obama Proposal”–Boston Globe

The Boston Globe’s headline–excerpted above–says a lot about the prospects of the Freedom of Choice in Health Care Act, which it says could undermine “the foundation of Obama’s effort” to dramatically reshape health care, with a vigorous role for the national government.

The article focuses on the individual mandate, capturing the objections raised to it: “opponents insist an insurance mandate is not legal because there is nothing in the Constitution that gives the federal government the right to penalize citizens for failing to purchase something. That is different, proponents says, from specifically enumerated federal powers such as taxation, raising an army, or regulating commerce.”

The Individual Mandate is a Tax–Obama’s Advisers

Candidate Barack Obama, in an obvious soak-the-rich theme, promised that people who earn over $250,000 a year would be taxed more, but people who earned under that amount would not. Yet the requirement to purchase insurance, present in both the Senate and House versions of health “reform,” would require everyone to buy insurance.

Is that requirement a tax? Consider the words of the following economists:

1. “The individual mandate . . . is in many respects analogous to a tax. It requires people to make payments for something whether they want it or not.”
2. “Essentially, mandated benefits are like public programs financed by benefit taxes.”
3. “Suppose . . . the government mandated that everyone buy full insurance at the average price. . . . This would not be a very attractive plan to careful consumers . . . who could view themselves as essentially being taxed in order to support this market, by paying higher premiums than they should based on their risk.”
4. “[Just because] the fiscal flows triggered by [the] mandate would not flow directly through the public budgets does not detract from the measure’s status of a bona fide tax.”

These descriptions, all from 2008 or earlier, are from four distinguished academics:  Sherry Glied (Columbia University), Larry Summers (Harvard University), Jonathan Gruber (MIT) and Uwe Reinhardt (Princeton University).

Summers is now the chairman of the National Economic Council, making him a key economic adviser to the president. President Obama appointed Sherry Glied to the position of assistant secretary of planning and evaluation at the Department of Health and Human Services.

I found these quotations in a fairly new policy analysis from Michael F. Cannon and the Cato Instituted, titled Obama’s Prescription for Low-Wage Workers.

An Unconstitutional Mandate

A key part of any massive scheme to use government to reshape health care and health insurance is the individual mandate. Derek Murdoch provides a quick reminder of why that’s an unconstitutional measure.

Virginia Senate Says “No” to Mandatory Insurance

I love this lead paragraph from today’s Washington Post:

Virginia’s Democratic-controlled state Senate passed measures Monday that would make it illegal to require individuals to purchase health insurance, a direct challenge to the party’s efforts in Washington to reform health care.

An insurance mandate–a tax on breathing–is noxious. It isn’t the only bad thing about health “reform” being schemed in Washington, DC, but it’s perhaps the most visible. (OK, aside from “death panels,” that is.)

At least some elected officials are not on a political suicide mission: “five Democrats who represent swing areas of the state joined all 18 Republicans in the chamber in backing the legislation.” One of the give said of the requirement, “It’s un-American. And it might be unconstitutional.”

What are the broader implications? “But the action in Virginia, a state that backed Obama in 2008, could indicate that the president is failing to reassure members of his own party that current reform efforts remain worthwhile.” Reform efforts are good. The current reforms efforts? Not so much.

The bill is expected to be approved by the House of Delegates, the lower house in the state legislature.

Avoiding Massachusetts and the Insurance Mandate

Scott Brown, soon to be the newest member of the U.S. Senate, has said he would vote against ObamaCare. That’s good. But he has supported RomneyCare, the Massachusetts reforms that bear some resemblance to ObamaCare.

The Cato Institute, like many organizations, has studied the effects of the Massachusetts reforms. The title? “The Massachusetts Health Plan: Much Pain, Little Gain. In a pre-release blog post on Cato-at-Liberty, Michael F. Cannon, one of the two authors of the report, offered a few highlights:

• Official estimates overstate the coverage gains under the Massachusetts law by roughly 50 percent.
• The actual coverage gains may be lower still, because uninsured Massachusetts residents appear to be concealing their lack of insurance rather than admit to breaking the law.
• Public programs crowded out private insurance among low-income children and adults.
• Self-reported health improved for some, but fell for others.
• Young adults appear to be avoiding Massachusetts as a result of the law.
• Leading estimates understate the cost of the Massachusetts law by at least one third.

It pays to pay for care

Before Canadians could legally pay for private medical care, they were stuck on waiting lists until their condition became dire. Americans on Medicare, in contrast, used their income to pay for specialist visits when they felt a need.

That is not the conclusion of a paper in the January 2010 International Journal of Health Services, a publication more driven by political beliefs than by facts, or of a prominent progressive in North Carolina, but it is a logical conclusion from the findings.

The study used data from a 2002-2003 health survey. Canada’s Supreme Court did not strike down provincial government-run health insurance monopolies until 2005. So Canadians age 65 and older had to go on a waiting list instead of seeing a specialist. As Sally Pipes explained, her mother died in Canada because it took too long to get the care she needed for her colon cancer.

That is why North Carolina should follow the lead of Arizona and protect our freedom of health care choice.

Crossposted at johnlocke.org

The “Living Tax,” Pro and Con

Does a law requiring every person to purchase health insurance pass constitutional muster? Joseph Henchman, a lawyer and project manager with the Tax Foundation, says “My guess is that most scholars think that the courts are so deferential that they’ll sign off on any legislative scheme cloaked in interstate commerce justifications. I don’t think that’s the case.”

He mentions that conclusion in a short commentary about a recent symposium on the question on National Public Radio.

Henchman quotes Randy Barnett, of Georgetown University: “Never in the history of the United States has the federal government ever required someone to engage in an economic activity with a private party. It’s never been done, and anything that’s never been done before has no precedent for it.”

From Progressive Income Tax to the Insurance Tax

Ronald L. Trowbridge, who served as a chief of staff to Chief Justice Warren Burger, reviews the arguments for and against the constitutionality of the House and Senate health care bills, in a brief commentary for the Texas Public Policy Foundation.

While “it could be a close constitutional call,” he concludes that “forcing Americans to buy a certain private-sector product is an overdose of big government that may be toxic to the plain meaning and intent of the Constitution.”

He mentions arguments based on the Interstate Commerce Clause and the Takings Clause of the Fifth Amendment, among others. But what I found most interesting is the comment that the progressive income tax might, in the eyes of the Supreme Court, be precedent for singling out people who don’t purchase a government-designed insurance policy.

“Such a tax would be discriminatory against individuals without health insurance, but defenders would counter that a graduated, discriminatory income tax schedule has been in effect since 1913, with those in higher-income tax brackets paying more taxes at a higher percentage rate. Hence, the 14th Amendment’s Equal Protection Clause may or may not be applicable to the individual mandate.”

Don’t Nationalize Me, Bro

“The notion that the IRS should be able to seize your assets if you don’t arrange your health care to the approval of the federal government represents the de facto nationalization of your body, which is about as primal an assault on individual liberty as one could devise.” — Mark Steyn