Congressional Report Casts Doubt on Constitutionality of Obamacare's Individual Mandate

Matt Cover | October 26, 2010 | 8:23am EDT
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Rep. Sheila Jackson Lee, D-Texas, rests her arm on an autographed copy of the Democrats’ health care bill after it passed the House on Sunday, March 21, 2010. (AP Photo/Alex Brandon)

( – A report from the Congressional Research Service (CRS) casts doubt on the two main arguments used by the Obama administration to defend the individual insurance mandate that is the central component of the controversial health “reform” law.

Published on October 15, the CRS report examines the arguments both for and against the constitutionality of the individual mandate, which requires every American to purchase government-approved health insurance or else pay a fine. (Read the report here:  Requiring Individuals to Obtain Health Insurance - A Constitutional Analysis.pdf)

The mandate, to be enforced by the Internal Revenue Service, has been challenged as an unconstitutional overreach of federal authority in a lawsuit filed by Virginia Attorney General Ken Cuccinelli.

The CRS report finds that the two primary defenses of the mandate – that it is a tax and that Congress can impose it under the Commerce Clause – to be problematic.

“In analyzing the constitutionality of [the health care law’s] requirement to obtain health insurance, the first question is the congressional authority for this requirement based on Congress’s enumerated powers. While there is no specific enumerated power to regulate health care or establish an individual responsibility requirement, one can look to Congress’s other broad enumerated powers which have been used to justify social programs in the past,” the report states.

The first defense the CRS report analyzes is the taxation defense, which has become the Obama administration’s fallback argument after the Commerce Clause defense came under heavy public criticism while the reform bill languished in Congress.

CRS notes that the taxation defense is perhaps the more complicated of the two, because the Supreme Court has offered little precedent in limiting Congress’ taxation authority.

“The power to tax and spend for the general welfare is one of the broadest powers in the Constitution and affords the basis of government health programs in the Social Security Act, including Medicare, Medicaid, and the State Children’s Health Insurance Program.

“Because Congress’s power to tax is extremely broad, a court might look to it as a legitimate source of power for Congress to impose the individual responsibility requirement,” the CRS report says.

However, this would be a novel argument where the individual mandate is concerned because, unlike taxes that are either based on someone’s income or on some other economic activity a person engages in – such as selling stock for a capital gain or owning real estate – the individual mandate levies a tax penalty for failing to have government-approved health insurance.

This fact, CRS pointed out, may prove problematic for the individual mandate.

“As the tax is imposed conditionally and may be avoided by compliance with regulations set out in the statute, some might argue that it may also be accurately described as a penalty and, therefore, the taxing power alone might not provide Congress the constitutional authority to impose the requirement.”

As CRS explains, under the new health care law, the “tax” will be levied for not having health insurance and not for any other reason -- making it appear to be more of a penalty than a tax, and therefore something Congress may not have the authority to enact.

If the mandate is held to serve no other purpose than to force people to buy insurance, Congress’ taxation authority would not be enough to justify it.

“In other words, the constitutionality of the individual responsibility requirement, if determined to be a penalty, would depend upon whether Congress has the authority under a power other than the taxing power to impose a financial burden on individuals that lack health insurance,” the report says.

CRS also examined the Obama administration’s original defense of the individual mandate: that it is justified under the Commerce Clause. That defense rests on the argument that Congress can require individuals to buy insurance because not buying insurance affects interstate commerce.

CRS notes that despite the Supreme Court’s history of interpreting the Commerce Clause broadly, using it to defend the individual mandate would be problematic because Congress has never before required anyone to purchase anything.

“Despite the breadth of powers that have been exercised under the Commerce Clause, whether the individual responsibility requirement would be constitutional under the clause is a challenging question, as it is a novel issue whether Congress may use the clause to require an individual to purchase a good or a service.”

While the federal government argues that not buying insurance is an economic decision – and therefore within the bounds of its Commerce Clause authority – CRS notes that may not be the case.

“One could argue that while regulation of the health insurance industry or the health care system could be considered economic activity, regulating a choice to purchase health insurance is not. It may also be questioned whether a requirement to purchase health insurance is really a regulation of an economic activity or enterprise, if individuals who would be required to purchase health insurance are not, but for this regulation, a part of the health insurance market.

“This is a novel issue: whether Congress can use its Commerce Clause authority to require a person to buy a good or a service and whether this type of required participation can be considered economic activity.”

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