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The "Individual Mandate" and the Constitution -- Purely a Matter of Timing.

09/23/2011 08:22 am ET | Updated Nov 23, 2011

"No axiom is more clearly established in law or in reason than...wherever a general power to do a thing is given, every particular power for doing it is included."--James Madison, The Federalist Papers

As challenges to the constitutionality of the Affordable HealthCare Act ("AHCA") have moved through the court system, there has been a lot of smoke and noise about each District and Appellate Court's decisions.

One questions whether they should have been decided at all, because of the lack of "standing" and "ripeness", two of the preliminary criteria courts weigh before they even consider the substance. No one had been harmed, and no one knows how the individual mandate will be administered until 2014.

Because, however, the 2012 elections will propel the merits of the cases to the forefront of our political dialogue for at least the next 14 months, it is worth removing the smoke and noise from the constitutional argument so that everyone can clearly identify the issue.

Believe it or not, it boils down to a matter of timing. The complaining parties (e.g., States' Attorneys-General) have admitted it. In official filings with the courts.

It has nothing to do with broccoli or motorcycle helmets or tyranny or takeovers or all the other overblown political rhetoric flung on the wall to see what sticks. [It never had anything to do with grandma because, for now at least, until Republicans dismantle it, she is covered by Medicare].

Bear with me for a few sentences on the 'commerce clause', and it will become clear how all the gobbledygook and legal jargon just boils down to a matter of timing.

The Constitution grants Congress the power to

regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes"

.... and

To make all Laws which shall be necessary and proper for carrying into Execution the foregoing powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.

The first of these powers is generally referred to as "the commerce clause", the second as the "necessary and proper" clause. Each power is specifically granted to Congress in Article I, Section 8 of the Constitution.

When the country was first formed, much commerce was within a single state and had no impact on the other states and thus was not "interstate". As the country has grown, as mobility has increased, as the economy became more and more intertwined, the sphere of the economy that affected only a single state narrowed.

Controversies over what part of commerce remained purely within a state, and thus outside of Congress's power to regulate, came to a head in Wickard v Filburn. Briefly, Filburn was a wheat farmer, complaining about government mandates to limit the amount he grew, even if the excess were to be used in his own household. The Supreme Court held unanimously that, because interstate commerce (in this case the price of wheat) would be affected by the accumulation of many small acts like Filburn's, the "commerce clause" and the "necessary and proper clause" gave Congress the power to regulate it, even if it meant compelling Filburn to burn his excess wheat or pay a fine.

That is, the Court said, commerce is now basically all interstate, not because the Constitution has been changed, but because the economy has changed.

How does the individual mandate in the AHCA figure into the commerce clause? The first question that has to be addressed is whether health care is part of interstate commerce. If old-age pensions (i.e., Social Security) are part of interstate commerce, if health care for the elderly (Medicare) and indigent (Medicaid) is part of interstate commerce, then it would be difficult to assert that health care generally is not.

Indeed, opponents of the individual mandate have stipulated in court filings that when a person enters the health care system--let us say, he is in a car accident--he is part of interstate commerce, and thus that it would be well within the constitutional powers of Congress to mandate that he purchase healthcare insurance at that time.

So, as soon as a passing motorist in our car accident example dials 911 and triggers the emergency services to send an ambulance, even the opponents of the individual mandate agree that the federal government can impose the duty to purchase healthcare insurance at that point.

It would be hard to sustain any other position. For example, if that car accident victim has no insurance and cannot pay for his care, then the hospital and physicians lose money, and they make it up by charging everyone else more. That is, they shift costs. And, whether it is sophisticated imaging equipment, medications, band-aids or just tissues at the bedside, all of these costs are part of interstate commerce.

Nonetheless, opponents argue, it is not known when, or if, anyone will be in the healthcare system, and thus it is not within Congress's power to mandate he purchase insurance before he gets into that accident.

More formally, their argument is that the healthcare insurance and healthcare delivery markets are separate and not sufficiently related to one another to be tied together.

That's it. If it were one market, even the opponents of the individual mandate agree that the federal government has the power to insist that everyone purchases insurance or pays a fine. If it were separate markets, so they say, then interstate commerce only "begins" when a person actually consumes healthcare products or services.

Ah, but you say, there is another difference. The AHCA does not tax people directly, but rather mandates that they purchase insurance from a private insurer or pay a fine if they do not.

The argument is absurd on its face. The fine has all the indicia of a tax. To avoid it, an array of choices is provided, far less coercive than a single tax would be. Mr Filburn (see above) was told he had to burn his excess wheat or pay a fine, and that was unanimously decided to be within Congress's power to mandate. [Note, also, that the opponents would have to argue that a single tax was less coercive than providing freedom-of-choice among private insurers to escape a fine--I would like to hear them argue that one!].

Additionally, under the AHCA, states can create their own public options or single-payers and not subject their citizens to the fine or the mandate to purchase insurance from a private carrier. Vermont is already doing it. That is, the states have remedies built-in to the act to avoid the choices the States' Attorneys-General find so onerous.

Finally, because the individual mandate does not kick in until 2014, there is no way to know how the provision will be interpreted and administered. Hence, it is several years premature to determine whether its implementation violates the constitution. If it does, and it is difficult to see how it would, whatever feature of that implementation that is beyond the authority of the federal government can be adjudicated at that time.

So, the Constitutional issue boils down to timing: how long before a person is consuming healthcare services or products, and thus is by everyone's admission affecting interstate commerce, can someone be mandated to purchase insurance or pay a fine? An hour? A day? A year? Anytime?

A properly-informed Supreme Court would note that any separation between the markets for healthcare insurance and consuming healthcare products and services is artificial at best, and more likely just simply dishonest.

How can we know that?

Perhaps this is too obvious even to write, but healthcare insurance would not exist if there were not healthcare services. If there were no illness, or no doctors or hospitals or drugs or mechanical aids or surgical procedures, there would be nothing to insure against.

Second, just as it is uncertain whether any particular individual at any particular time will "enter" interstate commerce by consuming some healthcare product or service, it is certain that a portion of the population will do so every day, every week and every year. It is just the same as social security and medicare--one has no idea whether he will live to 65 and thus enjoy the retirement or medical coverage for which one has been paying, but we know that a certain portion of the population will.

Indeed, this is the whole basis for insurance. It is a population, statistically-based, concept. One does not purchase healthcare insurance as one is hoisted into an ambulance anymore than one can purchase life insurance just before one's last breath. If one does not have healthcare insurance, one either pays himself or imposes his costs on the rest of us, and there is undisputed data on how much that additional cost adds to others' health insurance premiums.

Moreover, the very existence of a considerable fraction of uninsured potential patients ALREADY impacts healthcare costs because hospitals, nursing homes, and other providers increase their charges to insurance companies in anticipation of having a percentage of unpaid bills.

The entire premise, therefore, that uninsured citizens who are not currently purchasing healthcare services are not affecting commerce is demonstrably wrong.

Third, Congress deserves great deference when it makes conclusions about facts, and Congress has determined that it is one market. Congress has also determined that the uninsured impose costs on the rest of us. The US Supreme Court does not operate like German Constitutional Court that conducts its own hearings and fact-finding inquiries.

In my personal opinion, the Justices should overrule all prior decisions, declare that the case is not ripe for consideration, and that the plaintiffs have no standing to sue. That is, at this time, the most legally honest result.

One doubts that will occur. Instead, the decision will be political, results-oriented, adorned in language of high legal principle.

But, it is really just a question of timing. And, the argument that the federal government has the power to compel purchase of insurance when one is already injured or ill, as the plaintiffs admit, but not a nanosecond before, is not only rather absurd, it ignores that the healthcare delivery market is, today, being impacted by cost-shifting based upon estimates of non-payment by the uninsured.

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