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In our first installment (Blog 1) of this 8 part series examining the constitutionality of the health care mandate, we defined the term "individual mandate on health insurance." In our second (Blog 2), we saw the need to adhere to a strict textual reading of the Constitution when crafting legislation. Now we must determine which section of the Constitution--if any--the federal government can use to defend its command that nearly every United States citizen obtain acceptable health insurance as defined by the government or be subject to a financial penalty.
Section 3: What clause grants Congress the authority to mandate health insurance?
Now that we have seen the necessity of abiding by the founders’ original wording, we must apply the question raised by Justice Thomas to the proposed mandate on health insurance. By what authority does Congress plan to force Americans to purchase insurance? As we have seen, such authority must be grounded in the Constitution. Of the powers that the founding document vests in Congress, there are two that Congress could reasonably argue grant it the ability to mandate the purchase of insurance. They are the power to “lay and collect taxes, duties, imposts and excises, to… provide for the… general welfare of the United States,” and the power to “regulate commerce… among the several States.”
Let's examine each individually to see if the federal government does possess the authority to enforce its mandate.
The Power to Lay and Collect Taxes:
In a paper entitled The Constitutionality of Mandates to Purchase Health Insurance, Mark Hall, a law professor at Wake Forest, argues that the Constitution grants Congress the power to “impose a tax on people who do not have health insurance.” Such a tax would be a means by which Congress could enforce its mandate. Punishing those who do not buy insurance with an added tax burden would cause a majority of Americans to acquire coverage.
Such a tax may seem like a legitimate way to discourage individuals from living without insurance but the federal government does not possess such broad taxation powers. Like every other power vested in Congress, the Constitution holds limitations on lawmakers’ ability to collect taxes. Article I, Section 8 of the Constitution grants Congress the power to collect excise and capitation taxes. The 16th Amendment created a national income tax. But an extra tax burden placed on individuals who choose not to purchase health insurance does not fall under any of these three categories. In a 2009 op-ed written for Politico, Ken Klukowski, a fellow and senior legal analyst with the American Civil Rights Union, writes:
It can’t be an excise tax because that’s a surcharge on a purchase, and here people are not buying anything. It can’t be a capitation (or “direct”) tax because that is a tax on every person in a state and must be equal for every person in the state; this would be a levy that some people would pay and others would not. And it can’t be an income tax because that must be based on personal income, not purchase decisions.
Furthermore, an additional problem arises out of this attempt to manipulate the tax code to serve as a means of mandating insurance. Past legislation has been struck down by the Supreme Court for having:
...[the] effect of suppressing an activity or where it is coupled with regulations that clearly have no possible relation to the collection of the tax.
The Court has held that Congress cannot use the tax code merely as a means of penalizing individuals or businesses. In order for Congress to impose a tax, their intention must first be to raise revenue. Take the case of Bailey V. Drexel Furniture Company (1922) in which a furniture company argued that Congress did not possess the authority to use burdensome taxes as a means of punishing companies that employed the use of child labor. In the opinion of the court, Justice Taft writes:
Grant the validity of this law, and all that Congress would need to do, hereafter, in seeking to take over to its control anyone of the great number of subjects of public interest… would be to enact a detailed measure of complete regulation of the subject and enforce it by a so-called tax upon departures from it. To give such magic to the word "tax" would be to break down all constitutional limitation of the powers of Congress and completely wipe out the sovereignty of the States.
Justice Taft goes on to explain that although the differences between a tax and a penalty may be difficult to define, the fact that Congress is granted both the power to tax and the power to regulate means that the two must remain separate and distinct powers. Congress cannot use its ability to lay taxes to enforce regulations that would otherwise be unconstitutional.
It might be argued that the decisions of the Court in Bailey and similar cases have since been overturned. Examining cases such as Magnano Co. v. Hamilton (1934), it is easy to fall victim to such an ill-conceived notion. For instance, in the case of United States v. Sanchez (1950), the court looked to the Magnano ruling and declared:
It is beyond serious question that a tax does not cease to be valid merely because it regulates, discourages, or even definitely deters the activities taxed... The principle applies even though the revenue obtained is obviously negligible... or the revenue purpose of the tax may be secondary... Nor does a tax statute necessarily fall because it touches on activities which Congress might not otherwise regulate. As was pointed out in Magnano Co. v. Hamilton, 292 U.S. 40, 47 (1934): ‘From the beginning of our government, the courts have sustained taxes although imposed with the collateral intent of effecting ulterior ends which, considered apart, were beyond the constitutional power of the lawmakers to realize by legislation directly addressed to their accomplishments.'
But in cases such as Magnano, the tax imposed was imposed unconditionally. No other purpose—specifically no regulatory purpose—appears on the surface of the legislation. In such cases:
...the Court has refused to inquire into the motives of the lawmakers and has sustained the tax despite its prohibitive proportions (See McCray v. United States).
However, when the tax imposed conditionally and individuals can avoid paying it by complying with certain regulations the validity of the tax is determined by whether or not Congress has the authority to regulate such activities:
If the regulations are within the competence of Congress, apart from its power to tax, the exaction is sustained as an appropriate sanction for making them effective; otherwise it is invalid (See Sunshine Coal Co. v. Adkins).
A tax that applies only to those who do not purchase health insurance is a conditional tax. An individual can avoid paying it by acquiring insurance. Thus, Congress does not have the constitutional authority to enforce an individual mandate by placing harsh taxes upon citizens who choose not to follow it. If it is going to mandate the purchase of health insurance, then it must be able to prove that such a mandate is grounded in the text of Constitution. In order to do so, the federal government will likely assert that such authority can be found in the “Commerce Clause.”
The Commerce Clause
Article I of the Constitution lists the power vested in Congress. Historically, one such power has been interpreted far more loosely than others. No clause has been used to expand limitations held on congressional authority further than the Commerce Clause. In its name, the federal government has claimed the power to regulate the intrastate navigation of ferry services, the production of wheat grown solely for personal use, the mere possession of a fire arm within a certain distance of public schools, and even the cultivation of cannabis solely for personal use. But if Congress is to use legitimate authority, then it must remain within the confines prescribed to it by the Constitution. What authorities did the framers of the Constitution believe the Commerce Clause provides?
According to Randy Barnett's Restoring the Lost Constitution:
“Commerce” means the trade or exchange of goods including the means of transporting them; “among the several states” means between persons of one state and another; and the term “to regulate,” when applied to domestic commerce, means “to make regular”—that is, to specify how a rightful activity may be transacted—and the power to prohibit wrongful acts.
In order to test the validity of this claim, we must examine how both the writers of the Constitution understood the Commerce Clause and also how the Clause was interpreted by the general public. To do so, we will define for ourselves what was meant and understood by the terms “commerce,” “to regulate,” and “among the several states.”
In our next installment of this series of 8 blogs, we will examine the word "Commerce." We will look at how it was used and understood by our founders and the general public at the time of the ratification of the United States Constitution.