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Health Freedom Watch
December 2009


Why the Personal Mandate to Buy Health Insurance Is Unprecedented and Unconstitutional

By Randy Barnett, Nathaniel Stewart and Todd F. Gaziano

The following executive summary was published by the Heritage Foundation on December 9, 2009:

As the Congressional Budget Office explained: “A mandate requiring all individuals to purchase health insurance would be an unprecedented form of federal action. The government has never required people to buy any good or service as a condition of lawful residence in the United States.” Yet, all of the House and Senate health-care bills being debated require Americans to either obtain or purchase expensive health insurance, estimated to cost up to $15,000 per year for a typical family, or pay substantial tax penalties for not doing so.

The purpose of this compulsory contract, coupled with the arbitrary price ratios and controls, is to require some people to buy artificially high-priced policies as a way of subsidizing coverage for others and an industry saddled with the costs of other government regulations. Rather than appropriate funds for higher federal health-care spending, the sponsors of the current bills are attempting, through the personal mandate, to keep the forced wealth transfers entirely off budget.

This takes congressional power and control to a strikingly new level. An individual mandate to enter into a contract with or buy a particular product from a private party is literally unprecedented, not just in scope but in kind, and unconstitutional either as a matter of first principles or under any reasonable reading of judicial precedents.

The Commerce Clause. Advocates of the individual mandate have claimed that the Supreme Court’s Commerce Clause jurisprudence leaves “no doubt” that the insurance requirement is a constitutional exercise of that power. They are wrong.

Although the Supreme Court has upheld some far-reaching regulations of economic activity, most notably in Wickard v. Filburn and Gonzales v. Raich, neither case supports the individual health insurance mandate. In these cases, the Court held that Congress’s power to regulate the interstate commerce in a fungible good--for example, wheat or marijuana--as part of a comprehensive regulatory scheme included the power to regulate or prohibit the intrastate possession and production of this good. In both cases, Congress was allowed to reach intrastate economic activity as a means to the regulation of interstate commerce in goods.

Yet, the mandate to purchase health insurance is not proposed as a means to the regulation of interstate commerce; nor does it regulate or prohibit activity in either the health insurance or health care industry. Indeed, the health care mandate does not purport to regulate or prohibit activity of any kind, whether economic or noneconomic. By its own plain terms, the individual mandate provision regulates no action. To the contrary, it purports to “regulate” inactivity by converting the inactivity of not buying insurance into commercial activity. Proponents of the individual mandate are contending that, under its power to “regulate commerce...among the several states,” Congress may reach the doing of nothing at all!

In recent years, the Court invalidated two congressional statutes that attempted to regulate non-economic activities. In United States v. Lopez (1995), it struck down the Gun-Free School Zones Act, which attempted to reach the activity of possessing a gun within a thousand feet of a school. In United States v. Morrison (2000), it invalidated part of the Violence Against Women Act, which regulated gender-motivated violence. Because the Court found the regulated activity in each case to be noneconomic, it was outside the reach of Congress’s Commerce power, regardless of its effect on interstate commerce.

To uphold the insurance purchase mandate, the Supreme Court would have to concede that the Commerce Clause has no limits, a proposition that it has never affirmed, that it rejected in Lopez and Morrison, and from which it did not retreat in Raich. Although Congress may possibly regulate the operations of health care or health insurance companies directly, given that they are economic activities with a substantial effect on interstate commerce, it may not regulate the individual’s decision not to purchase a service or enter into a contract.

If Congress can mandate this, then it can mandate anything. Congress could require every American to buy a new Chevy Impala every year, or a pay a “tax” equivalent to its blue book value, because such purchases would stimulate commerce and help repay government loans. Congress could also require all Americans to buy a certain amount of wheat bread annually to subsidize farmers.

Even during wartime, when war production is vital to national survival, Congress has never claimed such a power, nor could it. No farmer was ever forced to grow food for the troops; no worker was forced to build tanks. And what Congress cannot do during wartime, with national survival at stake, it cannot do in peacetime simply to avoid the political cost of raising taxes to pay for desired government programs.

Other Constitutional Problems. Senators and Representatives should also know that:

  • There are four constitutionally relevant differences between a universal federal mandate to obtain health insurance and the state requirements that automobile drivers carry liability insurance for their injuries to others on public roads;
  • A review of the tax provisions in the House and Senate bills raises serious questions about the constitutionality of using the taxing power in this manner; and
  • Since there literally is no legal precedent for this decidedly unprecedented assertion of federal power, it is highly unlikely that the Supreme Court would break new constitutional ground to save an unpopular personal mandate.

Members of Congress have a responsibility, pursuant to their oath, to determine the constitutionality of legislation independently of how the Supreme Court has ruled or may rule in the future. But Senators and Representatives also should know that, despite what they have been told, the health insurance mandate is highly vulnerable to challenge because it is, in truth, unconstitutional. And all other considerations aside, the highest obligation of each Member of Congress is fidelity to the Constitution.

Randy Barnett is the Carmack Waterhouse Professor of Legal Theory at the Georgetown University Law Center. Nathaniel Stewart is a lawyer at the firm of White & Case, LLP. Todd Gaziano is the Director of the Center for Legal and Judicial Studies at the Heritage Foundation.

Note: This is an exectuive summary of a 16-page legal memorandum (#49) titled “Why the Personal Mandate to Buy Health Insurance Is Unprecedented and Unconstitutional,” published by the Heritage Foundation on December 9, 2009:

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Health-Reform Bills: Would Restrictions on Cost-Sharing for Preventive Services Outlaw Private Payment?

Regardless of whether you agree or disagree with the U.S. Preventive Services Task Force’s recommended changes for mammograms, its recent proposal raises important questions for all Americans:  Do you want government panels making preventive health-care decisions for you?  And do you want government to outlaw private payment for preventive care?  Government could end up with both powers under the health-reform bills being considered.

Dr. Delia Chiaramonte, a family physician who also practices integrative medicine in Baltimore, Maryland, recently warned in the Baltimore Health Examiner that under the Senate bill, “[H]ealth insurers must pay for preventive services that the U.S. Preventive Services Task Force (USPSTF) recommends…. [A]s the health reform proposal is written it is the recommendation of this group that would determine insurance coverage for preventive care such as breast cancer screening. It is worth noting that the USPSTF is a government agency….”  This means that the USPSTF would be empowered to make preventive coverage decisions for nearly everyone!

What’s more, it appears the House version could prevent Americans from paying privately for covered preventive care.  That’s because H.R. 3962 states that there shall be no cost-sharing for covered preventive services.  (The Senate bill includes a similar provision.)  The definition of cost-sharing appears to include out-of-pocket spending.  Thus without further clarification, this provision could be interpreted to prevent anyone from paying out of pocket for covered preventive care.

If this were to become law, what would happen if a physician doesn’t accept insurance payments? Would he or she be legally free to bill patients directly for covered preventive services? And would patients be legally free to pay out of pocket?  If the answer to both of these questions is no, then physicians who currently do not accept insurance will either have to begin doing so or stop offering preventive services.

It appears the following provisions in the House bill would infringe on both patients’ and physicians’ freedom to contract privately for preventive health-care services:

  • “Sec.100. Purpose; Table of Contents of Division; General Definitions….(c) General Definitions.—Except as otherwise provided, in this division…(4) Cost-Sharing.—The term ‘cost-sharing’ includes deductibles, coinsurance, copayments, and similar charges, but does not include premiums, balance billing amounts for non-network providers, or spending for non-covered services” (pp. 3, 9; emphasis added).
  • “Sec. 222. Essential Benefits Package Defined….(c) Requirements Relating to Cost-Sharing and Minimum Actuarial Value.—(1) No Cost-Sharing for Preventive Services.—There shall be no cost-sharing under the essential benefits package for—(A) preventive items and services recommended with a grade of A or B by the Task Force on Clinical Preventive Services and those vaccines recommended for use by the Director of the Centers for Disease Control and Prevention…” (pp. 104, 107).

Concerned citizens should contact their members of Congress and insist that no law be enacted that infringes on Americans’ freedom to pay privately for health care.

  • House main number: (202) 225-3121
  • Senate main number: (202) 224-3121


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CMS Chief Actuary Says House Bill Will Raise Health-Care Costs

CBO Offers “Uncertain” Projections on Senate Bill’s Impact

The Centers for Medicare & Medicaid Services’ (CMS) chief actuary says health-care costs will grow more if the House bill passes than if it doesn’t. Without the bill, national health-care spending would grow from $2.63 trillion in 2010 to $4.67 trillion by 2019.  But the cost would increase to $4.73 trillion if H.R. 3962 passes. 

In a November 13 memorandum, Richard Foster concluded: “With the exception of the proposed reductions in Medicare payment updates for institutional providers, the provisions of H.R. 3962 would not have a significant impact on future health care cost growth rates.  In addition, the longer-term viability of the Medicare update reductions is doubtful.” (Emphasis added.)

Foster also noted: “The increase in total NHE [national health expenditures] is estimated to occur primarily as a net result of the substantial expansions in coverage under H.R. 3962, together with the expenditure reductions for Medicare.  Numerous studies have demonstrated that individuals and families with health insurance use more health services than otherwise-similar persons without insurance…. The availability of coverage would typically result in a fairly substantial increase in the utilization of health care services, with a corresponding impact on total health expenditures.  These higher costs would be partially offset by the sizable discounts imposed on providers by State Medicaid payment rules, together with the significant discounts negotiated by private and public health insurance plans. We estimate that the net effect of the utilization increases and price reductions arising from the coverage provisions of H.R. 3962 would increase NHE in 2019 by about 3.4 percent.” 

It’s important to note that the estimates do not include the impact on federal administrative expenses.

What’s more, Foster projects that the percentage of insured would increase to 93.1 percent in 2019 (up from 84.4 percent today or 83 percent in 2019 without the bill).  An estimated 23 million persons would remain uninsured by 2019 under H.R. 3962 (compared to an estimated 57 million uninsured in 2019 under existing law).

The chief actuary projects that by 2019 national health-care spending would increase to 20.8 percent of GDP without the House bill and 21.1 percent with it. 

CBO Offers “Uncertain” Projections for Health-Insurance Costs

Meanwhile, the Congressional Budget Office (CBO) estimated how health-insurance premiums might be affected by the Senate’s Patient Protection and Affordable Care Act.  The CBO memo (dated November 30) projects that premiums would rise 10-13 percent on average in the individual market.  At the same time, some 57 percent of persons in the individual market would receive government subsidies and their costs would be reduced 56-59 percent.  Premium changes in the small-group market (50 or fewer employees) would range between an increase of 1 percent to a decrease of 2 percent (but those receiving government subsidies would see their premiums decrease 8-11 percent.).  Finally, premiums in the large-group market (more than 50 employees) would see premiums either stay flat or decrease by 3 percent.

In summary, it appears that individuals who don’t qualify for government assistance would face the highest increases in insurance premiums, while those working for large employers could see a slight decrease.

However, the CBO stressed there is “...considerable uncertainty that surrounds any estimate of the impact of any proposal that would make substantial changes in the health insurance or health care sectors, given the size and the complexity of those sectors.  That uncertainty applies to the estimated effects of proposals on the federal budget and insurance coverage rates, as well as to their impact on premiums.” 

So what’s the true cost of the proposed changes?  We’ll all pay the price in lost liberty and privacy!  But, as the Institute for Health Freedom has warned, current health-care “reform” bills won’t reduce spending and will leave a substantial number of persons uninsured.


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Health Freedom Watch is published by the Insitute for Health Freedom. Editor: Sue Blevins; Assistant Editor: Deborah Grady. Copyright 2009 Institute for Health Freedom.