03 Feb 2010 Health Care: Is a Health Insurance “Individual Mandate” Constitutional? by Matt Patterson

The Left Says:

“An insurance mandate would be enforced through income tax laws, so even if a simple mandate were not a valid ‘regulation,’ it still could fall easily within Congress’s plenary power to tax or not tax income.”

Source: Mark Hall, “Is it Unconstitutional to Mandate Health Insurance?” Health Reform Watch, August 25, 2009, downloaded from http://www.healthreformwatch.com/2009/08/25/is-it-unconstitutional-to-mandate-health-insurance/ on February 2, 2010.

What Conservatives Think:

Conservative legal scholars disagree with Mark Hall’s contention that Congress has the authority to enforce mandatory ownership of health insurance through its power to tax income granted by the 16th Amendment to the Constitution.¹  Instead, they argue that the individual mandate would qualify as a direct, or capitation, tax and would therefore be unconstitutional² in the context of the proposed legislation.

Both the House and Senate versions of ObamaCare contain provisions to punish Americans who do not have government-accepted health insurance, the so-called “individual mandate.”³  The House bill explains in Sec. 59B, titled “Tax On Individuals Without Acceptable Health Care Coverage”:

In the case of any individual who does not meet the requirements of subsection (d) at any time during the taxable year, there is hereby imposed a tax equal to 2.5 percent of the excess of— ”(1) the taxpayer’s modified adjusted gross income for the taxable year, over ”(2) the amount of gross income specified in section 6012(a)(1) with respect to the taxpayer.⁴

The Senate bill in Sec. 500A, titled “Requirement To Maintain Minimum Essential Coverage,”⁵ warns that failure to comply with government regulations to obtain health insurance will result in the imposition of a phased in “penalty tax” eventually amounting to $750 or 2 percent of income, adjusted for inflation.⁶

But Article I, Sec. 9, Clause 4 of the U.S.  Constitution reads, “No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.”⁷  A direct, or capitation, tax is a tax on existence, as opposed to a tax on activity, such as excise or income taxes.  Conservative legal scholars argue that the individual mandate would operate in precisely this manner.⁸  Indeed, the House version explicitly states that the penalty tax would be a “tax on individuals.”⁹  Far from being only a possible constitutional limitation to the individual mandate, Article I, Sec. 9, Clause 4 places strict restrictions on such taxes, restrictions reaffirmed by the Supreme Court in Eisner v. Macomber¹⁰ and elsewhere.

Specifically, states must pay such a tax in proportion to its population as determined by the census.¹¹  For example, in 2008 New York State had an estimated 19.5 million people out of a total U.S. population of 304 million,¹² or some 6.4 percent of the total.  Therefore, New York would have to pay 6.4 percent of any direct tax, regardless of the relative wealth of New Yorkers compared with citizens of other states.¹³

In light of this explicit constitutional injunction, exemptions for some individuals built into the language of the ObamaCare penalty tax as proposed by the Senate could seriously compromise its constitutionality.  As Randy Barnett of the Georgetown University Law Center has written:

In order to be constitutional, the health care mandate tax must be assessed evenly based upon population, and not vary based upon factors such as the financial condition of the state’s residents… This requirement will be impossible to meet based upon the variety of exceptions provided for in the mandate. For example, the mandate exempts individuals who are not lawfully present in the United States… The mandate also excludes taxpayers with income under 100 percent of the poverty line, individuals for whom the required contribution would exceed 8 percent of their income, religious objectors, incarcerated individuals, and anyone determined to have suffered a hardship regarding their capability to obtain coverage, as determined in the discretion of the Secretary of Health and Human Services.¹⁴

Despite what Mark Hall and others argue, the income taxation powers of Congress do not give it the authority to compel Americans to own health insurance – or anything else.

Issue Date: March 1, 2010
Author: Matt Patterson is a policy analyst for the National Center For Public Policy Research.  His email is [email protected].

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