Individual Mandate Backgrounder

The Patient Protection and Affordable Care Act, (“PPACA”), contains a minimum health coverage requirement known as the “individual mandate.” The individual mandate requires that all non-exempt individuals maintain basic health insurance, or else pay a penalty. See 26 U.S.C. 5000A (2010). The PPACA states that Medicare, Medicaid, and CHIP are qualifying insurance programs. Proponents support the provision because it extends healthcare to currently uninsured individuals. In contrast, opponents argue that upholding the provision will enable the federal government to coerce individuals into buying goods and services unrelated to healthcare.

Supporters of the PPACA argue that the expansion of insurance coverage necessitates an individual mandate. Proponents contend that, at some point in life, an individual will need health services. See Anthony G. Brown, Op-Ed, Health reform foes’ dismal vision, Politico, Dec. 15, 2011. According to this theory, the longer an individual waits to address a health issue, the worse the possible health condition will become and the greater the cost to cure. See id. In an amicus brief, the American Nurses Association, et al., (“Nurses”) describes adverse selection as a probable consequence from striking down the individual mandate.  See Brief of Amicus Curiae American Nurses Association in Support of Petitioner at 12. The Nurses argue that uninsured individuals who wait for a health emergency to strike before purchasing insurance unfairly benefit from health services, at the cost of the insured, who then face higher insurance premiums to cover this expanded risk. See id. at 12–13. According to the Nurses, because the PPACA prohibits insurance companies from denying coverage to individuals with pre-existing conditions, the insurance market is vulnerable to a “death spiral”―a market collapse, in which insured individuals drop their insurance policies because they lack an incentive to pay the costs of the uninsured. See id. and see also [LF2] Peter Siegelman, Adverse Selection in Insurance Markets: An Exaggerated Threat, 113 Yale L.J. 1223, 1224 (2004). Proponents of the PPACA warn that a decision to strike down the individual mandate could bankrupt the health insurance industry. See Jeremy Leaming, Op-Ed, Why the Minimum Coverage Provision is Integral to the Affordable Care Act, ACSblog, Sept. 6, 2011.

However benign the intentions motivating the PPACA, opponents emphasize that the individual mandate removes an individual’s right to refuse health insurance. Opponents describe the mandate as invading the homes of ordinary Americans, coercing individuals into purchasing insurance policies. See James Vicini, Obama lawyers defend healthcare law in Supreme Court, Reuters, Jan. 1, 2012.  A recurring comparison is to a parent requiring a reluctant child to finish a plate full of broccoli. See id. According to the Heritage Foundation, the individual mandate will not only be too costly to enforce, but it will also lead to skyrocketing health insurance premiums. See Robert Moffit, Op-Ed, Obamacare and the Individual Mandate: Violating Personal Liberty and Federalism, Heritage Foundation, Jan. 18, 2011. The Heritage Foundation contends that, because a tax penalty is likely lower than an insurance premium, the individual mandate will encourage individuals to pay the penalty, which will, in turn, increase insurance premiums and encourage more individuals to opt out of coverage. See id. Opponents of the PPACA argue that upholding the minimum coverage provision will eviscerate health care, and grant the federal government an unprecedented power to control private, everyday decisions. See David B. Rivkin & Lee A. Casey, Op-Ed, Obamacare and the Limits of Government, Wall Street Journal, Nov. 15, 2011.

The Case Before the U.S. Supreme Court

On March 27, 2012, the U.S. Supreme Court will hear oral arguments regarding the constitutional validity of the individual mandate. The United States Court of Appeals for the Eleventh Circuit struck down the provision, holding that it is not within Congress’ power under the Commerce Clause[LF3]  and the taxing power in Article I of the U.S. Constitution. See Florida v. Department of Health and Human Services, 648 F.3d 1235, 1282, 1313–14 (11th Cir. 2011). Distinguishing the mandate from permissible federal regulations of labor, liquor, and lottery tickets, the Eleventh Circuit reasoned that the validity of the provision precariously rests on whether the Commerce Clause permits Congress to supersede an individual’s decision to buy or save for healthcare. See id. at 1286–88. According to the Eleventh Circuit, upholding the individual mandate would unconstitutionally expand the power of the federal government at the expense of individuals and states. See id. at 1311.

Petitioning for the reversal of Eleventh Circuit’s decision, the Obama Administration argues that the Commerce Clause and, alternatively, the taxing power provide ample authority for the individual mandate. See Brief for Petitioner, Department of Health and Human Services, et al. In contrast, opponents of the PPACA argue that the U.S. Supreme Court should uphold the decision of the Eleventh Circuit, because the individual mandate exceeds the constitutional limits on Congressional power.

Impact on Constitutional Law

This decision may affect future legislation and jurisprudence pertaining to the Commerce Clause and the taxing power. For example, prior U.S. Supreme Court decisions have rejected the characterization of domestic violence and gun possession in school zones as economic activities that may be regulated under the Commerce Clause. See United States v. Morrison, 529 U.S. 598, 601–03 (2000) and United States v. Lopez , 514 U.S. 549, 551, 561 (1995). Upholding the individual mandate under the Commerce Clause may set a precedent for treating an individual’s refusal to purchase services as an economic decision that may be regulated, if those services operate in an interstate market. If the U.S. Supreme Court reaches the question as to whether the taxing power offers alternative authority for the individual mandate, the decision may affect whether penalties may be considered taxes, even if they are not named as such in a Congressional act.

Additional Resources

•            Kaiser Health Tracking Poll, Kaiser Family Foundation, Jan. 2012.

•            Matthew Buettgens, et al., Why the Individual Mandate Matters, Urban Institute, Dec. 20, 2010.

•            Times Topic, Health Care Reform, The New York Times, last updated Dec. 21, 2011.

Prepared by Charlotte Davis.