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Sunday, March 25, 2012

Principles vs. expediency

The Supreme Court is going to hear the case challenging the individual mandate next week. This case is perhaps the most important and potentially far reaching Supreme Court case of the past 100 years. While proponents of the health reform bill discounted the significance of constitutional issues from the start, it is basically undeniable that the bill raises questions which are fundamental to the extent of the powers of the Federal government which have not been addressed previously.

The functional importance of the individual mandate to the overall functioning of the health care bill is difficult to argue. Without the individual mandate, the system put in place by the Affordable Care Act becomes basically unworkable. By requiring insurance companies to provide coverage to everyone irregardless of pre-existing conditions is an invitation to game the system. While public appeals to the contrary may forestall gaming behavior at the onset of the program, over time people will find that they can maximize their own welfare by waiting until they actually need medical services before they purchase insurance. Waiting will become the norm and to believe otherwise is simply delusional.

Proponents of the health care law realize this is the case. Kevin Drum wrote in Mother Jones http://motherjones.com/kevin-drum/2012/03/forget-interstate-commerce-its-necessary-and-proper-clause-thats-key-obamacares-f
Properly framed, the broccoli question is not really a hard one to answer. Here's what I think is the basic four-step legal justification for the individual mandate:
  1. The healthcare sector in America is part of interstate commerce. This is beyond dispute.
  2. Congress can regulate the healthcare sector. This follows directly from both the Constitution and many decades of actual practice. This is also beyond dispute.
  3. Broadly speaking, Obamacare is a reasonable effort to regulate the healthcare market. Regardless of whether they personally like the approach Congress took, I don't think it's hard to convince even conservative justices that the overall structure of Obamacare, with its mix of public and private delivery, is a proper exercise of Congress's authority over a large and complex segment of interstate commerce.
  4. The individual mandate is necessary to the proper functioning of Obamacare. Without the mandate, the entire structure of Obamacare fails. This is fairly easy to demonstrate.
The biggest point of contention is #4, and that has nothing to do with the interstate commerce clause. It has to do with the Necessary and Proper clause — and that's a very expansive grant of power. In McCullough v. Maryland, Chief Justice John Marshall wrote: "Let the end be legitimate, let it be within the scope of the constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consist with the letter and spirit of the constitution, are constitutional." The individual mandate may not be the only way to accomplish Congress's goals, but I think the facts of the case provide an extremely strong basis for concluding that it's both "appropriate" and "plainly adapted" to those goals.
So then, what's the limiting rule? Why can't Congress mandate that we all eat broccoli? Answer: because it's not necessary to the proper functioning of any plausibly reasonable healthcare regulatory structure. Congress may have the power to intrude on individual liberty, but it can't exercise that power arbitrarily. It has to be appropriate and plainly adapted to a legitimate broader goal. The individual mandate is. Forcing you to eat your broccoli isn't.
However, that is not necessarily the question which the Supreme Court will address. The Court's decisions are generally not based upon what is likely to work best. Over a century ago, the court in Lochner vs. the State of New York declared that a law limiting baker's hours was unconstitutional. This ruling has become infamous based upon the Court's logic extending beyond powers clearly defined in the constitution, and this decision has become almost the starting point for defining judicial activism and "just making it up." The Supreme Court has since shown its reticent to over extend its reach and will go to great lengths to accommodate the will of legislative bodies and avoid "just making it up.".

However, this law is different. For example, the state law which Lochner contested placed limits on the nature of contracts which could be entered into by various parties.  Subsequently to Lochner, the Court has found that states can regulate contracts, limiting the degrees of freedom of parties when the enter into such agreements. No one forced the parties to fashion private agreements in the first place.They have never ruled on whether the Federal government can force parties to enter into contractual agreements. This is why this law is unique.

While the idea that the state can compel us to purchase broccoli sounds silly (because it is), Drum's argument that it is reasonable for the state to compel us to enter into contractual relationships which we do not desire if it furthers some other broader goal such as health care reform is faulty for two reasons. 

First, virtually any compulsion can be justified as furthering some societal goal. Yes, it would be difficult to find a rationale about broccoli in particular but I could easily see a much broader requirement regarding inclusion of entire types of "healthy" foods based upon the the state's financial interests. It could be argued that the success of health care reform is dependent upon adoption of healthy behaviors of the public. Why not compel people to enter into health club contracts? If it is deemed that the services offered by private companies, such as home health companies, may save someone other than the patient money, can the state compel individuals to purchase services they do not desire?

The second reason Drum's argument ins faulty is upholding the individual mandate basically undermines a basic tenant of contract law.  As pointed out in George Will's weekly column today, much of the law regarding contractual agreements is based in common law. One of the tenants of this common law is that contracts which are entered into under duress or based upon coercion can be challenged by those coerced as being non-binding. If coercion by the state is OK and cannot be used to invalidate contracts, it basically opens the door for the legal enforcement of coerced contracts of all types. All you need to do is to capture a legislative body and create a large enough coalition to force the minority to become contractually beholden to whoever has legislative power. Now that is a scary thought!

The choice is clear. For the expediency to try to make a bad piece of legislation work are we willing to undermine centuries of contract law and the foundations of private exchange, all without any constitutional precedent for the Federal government. I think not.

1 comment:

  1. Validation of the individual mandate will also open the door for Congress to mandate that all future public and private retirement accounts invest at least 10% of assets in Treasury bonds in order to draw down the Federal debt, or incur a penalty.

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