04/06/2012 04:12 pm ET Updated Jun 06, 2012

The Democratization of Health Care: The Mandate

To mandate or not to mandate is not the question. The Obamacare requirement that each individual purchase health insurance has ignited a political and legal firestorm. Much of the reporting by liberal, conservative, and nonpartisan media cloaks the fact that while there may be a political controversy about this mandate, there is no legal (meaning constitutional) dispute that the federal government has the right to impose a healthcare mandate.

Twenty-six states and the National Federation of Independent Business, a small-business association, filed suit in federal court against the mandate, charging that the requirement was unconstitutional. The case came before the Supreme Court last week. The oral argument of Paul Clement, the attorney for the state of Florida, summarizes the plaintiffs' position: "We say, consistent with 220 years of this court's jurisprudence, that if you regulate the point of sale, you regulate commerce, that's within Congress's commerce power." Translation: The complaining states concede that the federal government has the right under the Constitution to require everyone to purchase insurance; they contest the point at which the government may exercise that right.

Obamacare resolves uncertainty about when an individual might need medical care by presuming that all Americans are in the market all the time, and government's authority to insist that they be insured emanates from that fact. The law also presumes that the costs of caring for the uninsured when they require medical care raise premium prices for the insured. Opponents of the law counter that people only enter the market when they literally shop for medical care. It is at that "point of sale" -- presumably meaning arrival at a doctor's office, a pharmacy, an emergency room, an Internet site, or any other place where medical products and services that are covered by health insurance are sold--that the Constitution's Commerce Clause kicks in. They assert that it is not until people formally enter the health care market that the federal government is empowered by the Constitution to regulate behavior -- to require the purchase of insurance to complete the transaction.

From the oral argument before the Supreme Court, it is not entirely clear that the opposition has thought this through. For example, is it to be understood that if a person enters the market once, that person is forever in the market and all of that person's subsequent activities are subject to the Commerce Clause? If that is the case, an interaction with the medical market during birth or early childhood would place a person in the market thereafter, justifying a requirement to purchase health insurance. It is quite clear, however, that opponents do not think that Americans are required by birth to purchase health insurance.

If a person is never a permanent consumer, but only in the market when shopping for medical care, the mandate can only be imposed within a defined period: at the point of sale. Once the consumer leaves the market, he or she is free to drop the policy, and the government can only mandate a renewal of the policy when the consumer reenters the market. The most likely result: A cost-conscious consumer would only buy insurance for the period during which he or she actually needs medical care. There is no way to make a market out of that goulash.

Limiting the mandate to the point of sale would eviscerate the federal government's ability to regulate consumer activity in interstate commerce, with uncertain consequences. During oral argument, for example, Justice Stephen Breyer presented the scenario of a terrible epidemic sweeping the country and asked Michael Carvin, the attorney for the National Federation of Independent Business, if under the Commerce Clause the federal government could require everyone to be inoculated. Limiting the government's right to the point of sale, Carvin replied, "My answer is no, they couldn't do it."

The opinion of the justices will be instructive. If they determine that the Obamacare requirement is unconstitutional, it would be helpful if they would also offer clear guidance as to when the federal government can regulate consumer behavior in the interstate market. If the court does not delineate the government's right carefully, it could establish a precedent that satisfies the specific concern of those who oppose the mandate, but that unleashes consequences that do not promote the general welfare.

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