Not So Fast on the Health Insurance Mandates

Published on

Are they constitutional? Clinton and Obama need to ask the question.
The following commentary by Consumer Watchdog chairman Jamie Court, and Loyola law professor Karl Manheim, was published on Monday, March 24, 2008 in the Los Angeles Times.

An important element is being overlooked in the healthcare debate between
the Democratic presidential candidates: Namely, whether the plans they
propose are constitutional.

The largest difference between
their healthcare plans is that Sen. Hillary Rodham Clinton would
"mandate" that everyone (with limited exceptions) purchase private
health insurance. Although Sen. Barack Obama’s plan also contains a
mandate, it is much narrower — it is only required for children. Obama
principally relies on subsidies, economies of scale and regulation to
voluntarily achieve his version of universal coverage.

health insurance mandates constitutional? They are certainly
unprecedented. The federal government does not ordinarily require
Americans to purchase particular goods or services from private

The closest we come is when government imposes a
condition on the grant of a discretionary benefit or permit. For
instance, in most states, you must have auto insurance to drive a car,
or you are required to install fire sprinklers when building a new
house. But in such cases, the "mandate" is discretionary — you don’t
have to drive a car or build a house. Nor do you have a constitutional
right to do so.

But Americans do have a constitutional right to
live in the United States. Accordingly, neither federal nor state
governments can require you to purchase health insurance as a
"condition" for residency. The Supreme Court has drawn a distinction
between requirements that are flat-out imposed by government and those
imposed as a condition for discretionary benefits.

The health
insurance mandate proposed by Clinton is similar to the one enacted in
Massachusetts under former Gov. Mitt Romney and the plan proposed by
Gov. Arnold Schwarzenegger for California. These "unfunded mandates"
are unlike any form of government regulation we’ve seen.

making the case for her plan to mandate private health insurance,
Clinton said in a recent Democratic debate that not doing so "would be
as though Franklin Roosevelt said, ‘Let’s make Social Security
voluntary,’ or if President [Lyndon] Johnson said, ‘Let’s make Medicare
voluntary.’ "

In fact, under the law, there’s a big difference
between participation in a government health program funded by taxes
and privatizing such a program, with individuals forced to purchase
private health insurance.

Taxation involves representation,
which is the case when Congress appropriates money and controls a
government program for the general welfare. This describes Social
Security and Medicare. But government cannot simply delegate its taxing
powers to private business.

What representation do we have in
the insurance firms whose products we would be required to buy, at
prices and terms they set? Can we vote out an insurer’s board of
directors for denying claims or paying its CEO a multimillion-dollar
salary? Here too the Supreme Court has drawn a distinction between
taxes imposed by government and mandatory fees set by entities with
private interests.

A health insurance mandate is essentially a
forced contract, in which one party (the insurer) gets to set the
terms. You must buy their policies, even if you prefer to self-insure,
rely on alternative medicine or obtain treatment outside of the system.
In constitutional terms, such mandates may constitute a violation of
due process or a "taking of property."

Requiring Person A to
give money to Person B is a "taking," whether or not something of value
is given in return. Let’s say the state required every resident to buy
milk, on the rationale that milk consumption benefits public health.
That’s either a constitutionally forbidden taking (of money) or a
violation of due process.

These constitutional rights aren’t
absolute. Given a compelling enough reason, government can interfere
with your person and property. It can require, for instance, that your
child be vaccinated before attending public school. But there is
usually an opt-out, such as private or home schooling. We are not aware
of any opt-outs for most people in the mandatory health insurance plans
being discussed.

There are far more sensible and
constitutional ways to provide health coverage. Government-funded
insurance (such as Medicare or single-payer insurance) or regulation
and tax subsidies to encourage voluntary participation (as in Obama’s
plan) are both more efficient in containing costs and avoid the
slippery slope of unconstitutional mandates.

Before the
candidates get too far in their health insurance proposals, it would be
good to consider the constitutional and policy implications of requiring Americans to buy private goods from private companies.
Manheim is a professor of Law at Loyola Law School in Los Angeles.
Jamie Court is chairman of the Santa Monica-based Consumer Watchdog.

Consumer Watchdog
Consumer Watchdog
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