Back in 2009, when the Affordable Care Act was being written, few doubted that Congress can constitutionally impose a tax penalty on people who refuse to carry adequate insurance. Congress’s power to regulate insurance markets under the Constitution’s commerce clause is settled law. While it seemed clear that Congress has the constitutional power to mandate coverage, some doubted the political wisdom of using that power. Simply forcing people to buy insurance seemed too much like a mean parent saying “eat-your-broccoli, or no dessert.” The mandate, it was feared, would arouse needless opposition. The opposition was needless because most people could be encouraged to buy coverage with positive incentives to enroll, such as direct subsidies, and penalties for refusal to enroll, such as extended denial of access to subsidies and exclusion from insurance market protections.
To the surprise of many, opponents of the Affordable Care Act took the broccoli analogy literally. Not buying insurance is simply inactivity, they argued. If government can prohibit this form of inactivity by forcing people to buy insurance, it can force them to buy anything, even broccoli. If Congress can prohibit such ‘inaction,’ they argued, freedom is in jeopardy. More to the point, the constitution doesn’t allow limits on ‘inactivity.’
The appeal to the broad public of the argument that not buying insurance is inactivity may not have been surprising. But the acceptance of the argument by some federal judges is downright astounding, as the distinction rests on a fundamental ignorance of how insurance markets work.
The use of health care is both predictable and random. It is predictable in the sense that some people are more likely to use health care than others—because of age, chronic illness, or genetic disposition. It is random because the onset of many illnesses is unpredictable and because accidents happen.
One would expect that, on the average, those who voluntarily go without health insurance will be comparatively light users of health care. But one would also expect that some fraction of the uninsured will incur large health costs that they cannot afford to pay. Thus, letting some people decide freely not to buy insurance raises costs in two ways for those who do buy insurance. First, it removes from the insurance pool people with lower-than-average costs, thereby boosting premiums for those who do buy insurance. Second, some of those who do not buy insurance will end up using more medical care than they can pay for. Those unpaid bills will also boost costs for the insured.
Thus, the decision not to buy insurance affects the insurance market, which Congress indisputably has the power to regulate. Furthermore, repeated Supreme Court decisions have established that Congress can regulate actions outside the web of commerce that indirectly affect commerce, such as the decision by a farmer to grow wheat for his own consumption is subject to regulation under the commerce clause.
To be sure, this is the position that the government has advanced in its brief in defense of the Affordable Care Act. But it is also the core of two separate, carefully-crafted decisions by conservative appellate court judges, Laurence Silberman and Jeffrey Sutton. Silberman was widely rumored to be on the short list for a Supreme Court appointment during the administrations of Ronald Reagan and George H.W. Bush. Sutton, a former clerk to Justice Antonin Scalia, was nominated to the sixth circuit in 2001 by president George W. Bush. Resistance to his appointment was so stiff that no vote was scheduled for two years; and when the vote took place, 41 senators voted against confirmation. Indeed, the administration’s brief seems crafted to appeal directly to decisions that Justice Scalia signed and that Silberman and Sutton invoked. In particular, the administration brief stresses a point that was key in Justice Sutton’s decision—that, whatever judges may think of the wisdom of a law, they are bound to affirm the law if it is reasonably related to a power that the Constitution gives Congress.
Of course, no sensible person should ever try to forecast what nine very independent justices will decide, particularly when the stakes are as high as those in the decision about the constitutionality of the Affordable Care Act. So, here is my prediction. By a vote 7 to 2 or 8 to 1, in several different opinions, the Court will declare the mandate to carry insurance to be constitutional. Justice Thomas, continuing a long line of decisions calling for a rollback of federal regulatory authority, will dissent. So, might Justice Alito. But Justice Scalia will back the reasoning of his former clerk, Judge Sutton, that demolished the ‘action/inaction’ distinction. The other justices will agree, although for different reasons.
Jointly, the Supreme Court will put the issue of health reform exactly where it belongs…in the hands of the American people. Next November, the electorate will determine the fate of the Affordable Care Act by determining who will occupy the White House from January 20, 2013 through January 19, 2017. In a democracy, that is where the decision should be made.
Henry J. Aaron is a senior fellow of economic studies at the Brookings Institution. Aaron focuses on the reform of health care financing; public systems such as Medicare and Medicaid; Social Security; and tax and budget policy. This piece originally printed as part of a National Journal forum centered on the legal arguments for and against the Affordable Care Act.