Are mandates constitutional?

We have reviewed other materials from the Robert Wood Johnson Foundation in regards to . This current review discusses the important legal basis for and potential arguments against the institution of either an employer or individual mandate to obtain health insurance. Were this practice to be declared unconstitutional, the current efforts for health reform – which depend on such mandates – would falter.

Source: DonkeyHotey (Flickr/CC)

Source: DonkeyHotey (Flickr/CC)

States inherently have the right to require their citizens to purchase health insurance. The legal basis for the federal government to require the purchase of health insurance stems from the commerce clause of the U.S. Constitution. In a 1945 Supreme Court decision, insurance was declared a form of interstate commerce  subject to federal regulation. In response, Congress passed the McCarren-Ferguson act which limited the federal role over insurance regulation to explicitly stated laws. Thus, Congress need only exercise its authority to directly create an insurance mandate.

A second method by which Congress might mandate health insurance would be indirectly through the imposition either a tax penalty to people without insurance or the provision of a tax credit to people with insurance. This strategy would be within Congress’ powers to levy taxes for the purpose of the general welfare. Currently, the federal government uses this strategy to achieve other policy goals. The Supreme Court has upheld laws that withheld highway funds to states that refused to raise the legal drinking age to 21. Similarly, Congress could withhold Medicaid funding to states that failed to impose an insurance mandate on its citizens.

The legal arguments against insurance mandates begin with the First Amendment and the Religious Freedom Restoration Act of 1993. Certain religious objections against a health insurance mandate might be honored by the courts. In most of the reform bills currently under consideration, religious exemptions from mandates are important components.

Another argument would derive from the Fifth Amendment which prohibits the deprivation of life, liberty, or property without due process of law. Some might argue that a requirement to spend money on health insurance would constitute the government taking property from an individual. A court case Williamson vs. Lee Optical was based on the due process argument. In this case, the Court upheld the right of the state to mandate that a new vision prescription was necessary for replacing eyeglasses or duplicating lenses. According to the court, the opticians who fought against this law were not denied due process.

Another case, Eastern Enterprises vs. Apfel, regards an employer mandate for retiree health insurance which was ultimately struck down by a closely divided Court.

A final argument might prevent an employer mandate from affecting state employees. Because states retain their sovereignty under the Tenth Amendment in all cases except those enumerated to the federal government, one might argue that an employer mandate can not apply to employers that are state governments. However, states must still pay their employees according to federal minimum wage laws. Thus, this argument is unlikely to succeed.

Commentary

The legality of enacting an individual or employer mandate is likely to be questioned if health reform passes Congress. Although not fool-proof, it appears that Congress does have the authority to mandate insurance. The best way to do this is through the tax code by providing credits or imposing penalties. Alternatively, Congress could delegate the responsibility to States to create mandates by linking such rules to Medicaid funds. Regardless, a risk pool devoid of adverse selection and with all Americans involved will likely require some form of individual mandate.

Legal solutions in health reform: The constitutionality of mandates to purchase health insurance. Available at http://www.rwjf.org/pr/product.jsp?id=38108

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Cedric K. Dark, MD, MPH

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