Is the individual mandate constitutional? Part 5, Addendum

This is an addendum to my previous blog post in this series, which largely concerned Lopez’s test that, according to Justice Scalia’s interpretation, allows Congress to regulate intrastate, noneconomic activity when such regulation is an essential part of an interstate regulatory scheme. There, I argued that it would be unreasonable to hold that requiring individuals to purchase insurance was an essential part of a scheme to regulate the price of insurance premiums.

However, I came across a stronger argument in the federal government’s brief in Commonwealth of Virginia v. Sebelius. Pages 19-20 of the brief summarize the Commerce Clause arguments in its favor, making several arguments I’ve already addressed. But the brief also argues on page 19 that the individual mandate “prevents individuals from relying on the Act’s reforms (such as the ban on denying coverage for people with pre-existing conditions) to delay the purchase of health insurance until illness strikes. In short, . . . the provision at issue . . . forms an essential part of a comprehensive, intricately interrelated regulatory scheme.”

As I’ve noted previously, the ban on denying coverage for individuals with preexisting conditions is concededly constitutional. And it is true that, in light of this ban, and without an individual mandate, people may wait to be covered until they get sick or hurt, and then buy insurance. Consequently, the ban could result in skyrocketing premiums, with people not paying into the system until they were withdrawing more than they paid in. The mandate purports to avoid this problem by requiring people to buy insurance at the outset instead of waiting until they need it.

This is a powerful argument. Since the preexisting conditions ban would only arise in the insurance context, and the individual mandate is tailored to deal with an adverse side effect that could otherwise emerge out of the ban, accepting the mandate’s constitutionality would not automatically allow Congress to require citizens to purchase any good or service whose price it regulated. Thus, by making this argument, the government has discovered a narrow holding that the courts could hand down that would not confer vast new powers on Congress. Indeed, because of the “essential part” test, the Court’s precedents appear to allow for this regulation already, even when noneconomic, intrastate activity is being regulated.

As I see it, the best argument that the challengers could make in response would center on the lack of enforcement methods for failure to comply with the mandate. The monetary penalty for such failure is collectible by the IRS, but the law appears to deprive the IRS of any ability to collect it if it is not paid, by disallowing criminal penalties or the ability to impose a lien or levy. One caveat: the bill’s wording may allow for other methods of enforcement, as I’m not familiar with all of the methods that appear in Subchapter B of Chapter 68 (to which the bill refers, as quoted at the previous link). But the methods of enforcement that the bill disclaims are the only ways I’m aware of to enforce an unpaid tax or fine (and the articles and comments I’ve read on the subject from various segments of the political spectrum agree).

In light of this, the challengers could argue that, because one wouldn’t expect compliance with an “essential” regulation to be voluntary, Congress must not think that the individual mandate is essential. And, as previously noted, if the regulation of an intrastate, noneconomic activity is not essential to an interstate regulatory scheme, Congress lacks the power to regulate it under current precedent.

This reasoning could be attacked because it creates a somewhat aberrant result, in which Congress has the power to enact an enforceable mandate, but lacks the power to enact an unenforceable mandate. Even if the “essential part” test might lead to this result if applied logically, a court might not apply it in this way because of its strange practical effect, which would grant Congress a greater power but withhold from it a lesser power. All in all, because of the novelty of the individual mandate provision, and because Lopez’s “essential part” test itself is relatively new, it’s hard to say how the test’s application will play out.

In any event, if the case for the mandate ends up being a close call, the validity of the government’s “essential part” argument arising out of the preexisting conditions provision may well become the key question. It’s the strongest argument in favor of the federal government under current precedent.

Of course, the wild card in all of this is that, if the case goes to the Supreme Court (as I expect it will), the Court won’t necessarily follow its precedents to the letter, and may simply craft a new analysis that could be more permissive, or more restrictive, of congressional power. I’ll discuss my own take on what the Commerce Clause should be interpreted to mean in my next post.

6/3/10 UPDATE: The more in-depth analysis in this post and in Part 5 should be read to supersede the analysis in the third and fourth paragraphs of Part 3. However, I'm not going to strike those paragraphs out of Part 3 for two reasons. First, and more prosaically, this blog doesn't have a text strikethrough option. Second, analysis in the fifth paragraph of Part 3 refers back to the analysis in the supserseded paragraphs but is itself still correct.