The recent court decision to allow a constitutional challenge to the health reform bill is far more significant that a refusal by the court to dismiss the case. I spent some time reading the court’s ruling (skipping over only the Medicare section) and largely being convinced by it. Based on this ruling, it will be hard for the mandatory coverage provision to survive the court challenge.
The focus of the case, subsequent to the ruling, is a question of whether Congress has the power to assess a penalty for failure to purchase a commercial product. The court ruled that the penalty for not carrying health insurance for oneself or one’s employees subsequent to 2014 is a penalty, and not a tax, as the law itself states. The most compelling part of this argument is that some earlier drafts of the bill described the penalty as a tax, but the word tax was taken out and the word penalty substituted in the bill that was ultimately passed. As Judge Roger Vincent wrote in his ruling, it is not within the prerogative of the courts to “conclude that Congress really meant to say one thing when it expressly said something else.”
This ruling is a setback for the White House, as it subsequently will have to persuade the court, and ultimately the Supreme Court, that the Commerce Clause of the U.S. Constitution gives Congress the power to direct everyone to buy a specific commercial product, the details of which are determined by private companies. Nothing like this has ever been legislated before. The court ruling quotes a 1994 Congressional Budget Office report: “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.” In economic terms, the health coverage mandate is a tax, and the fact that it may be paid to a private company merely means that the government has granted those companies quasi-governmental powers. In legal terms, though, it is not a tax, though this brings up the troubling question of what it actually is.
It now falls to the lawyers of the Justice Department to persuade the court that the Commerce Clause permits Congress to order everyone in the country to participate in a particular style of commerce. This will not be easily done. The Commerce Clause gives Congress the authority “To regulate Commerce,” but it is quite a stretch to show that this includes the authority to order everyone to participate while granting so much discretion and monopoly power to, and exercising so little control over, the companies they are required to patronize.
Ultimately, I believe the individual coverage requirement will be overturned, but the employer coverage mandate may not be. It may take all the time between now and 2014 for the courts to come to this decision. If the courts do strike down the individual coverage mandate, it doesn’t mean the rest of the health care bill will be overturned. Courts do overturn whole laws at times, but the mandatory coverage requirement is so easily separated from the rest of the law that it will be hard for the court to find a reason to strike down any other part of it.
This will, of course, undercut the careful compromise that Congress had worked out with the health care industry, but it won’t ruin it. No one ever imagined that the health care reform would provide coverage for everyone, and if it turns out that only 65 percent of people are covered, instead of 70 percent, that is just an incremental difference in what is fundamentally a messy situation.
Economically speaking, adding the individual health care mandate while enhancing the monopoly powers of the insurance companies makes no sense. We end up covering 70 percent of the country, or only 65 percent, at a cost significantly greater than the cost of covering 100 percent of the people. We transfer government powers, powers that ought to be kept within a system of formal accountability, to private companies that have no obligation to act in the public interest. The employer health care mandate is, in some ways, worse, as it gives employers a strong incentive to minimize the number of people they employ within the country. With all these problems and countless others I have not mentioned here, having the individual mandate overturned in court will not add significantly to the health care mess that Congress, to date, has mostly failed to address.
