Is the Individual Mandate Unconstitutional?

September 14, 2010

The Washington Post is asking today whether the requirement in the new health reform law that everyone have health insurance or pay a tax penalty beginning in 2014 violates the Constitution. Never before in American history, say critics, has the government forced private citizens to purchase a particular product on the private market.

The Washington Post is asking today whether the requirement in the new health reform law that everyone have health insurance or pay a tax penalty beginning in 2014 violates the Constitution. Never before in American history, say critics, has the government forced private citizens to purchase a particular product on the private market.

True. But is that really what the government is doing? After all, no one will go to jail for failure to have insurance. I've made clear my views on the mandate, as contained in the law. I think it's wrong. But there's nothing new about the government using the federal tax code to coerce people into engaging in, or refraining from, certain kinds of economic activity. One example is the mortgage-interest tax deduction for homeowners. Anyone who owns a home knows that this deduction makes a huge difference in one's tax burden. Yet the deduction could also be described as a tax increase on anyone who rents. Renters pay a larger share of the income tax burden because of the mortgage-interest deduction. (We don't question the wisdom of this deduction -- even in the wake of a real estate bubble whose inflation was partially fueled by it, and whose bursting was the basic cause of the economic crisis we're still in. And even though the deduction is good on homes valued up to $1 million, meaning taxpayers of all incomes are helping to foot the bill for McMansion purchases. Even with all that, you don't touch mortgage interest deduction. But I digress.)

So is the mortgage-interest deduction a mandate to buy a house? Was the "cash for clunkers" a car-buying mandate? I have not heard anyone make that argument. The individual mandate to buy health insurance is not a real mandate, either. It's a tax increase on every American, coupled with an equally sized tax cut for those Americans who have health insurance. Or, put another way: It's a tax on the uninsured. That's not how the administration puts it, for obvious reasons. 

But that's what it is. That's what the administration's lawyers will argue in court. And that is why the indvidual mandate is not unconstitutional.