Now that the Supreme Court has agreed to hear a case challenging the Affordable Care Act's mandate that all uninsured individuals purchase insurance or pay a fine, we may finally learn whether Congress' constitutional powers under the Commerce Clause have any effective limits.
A recent New York Times article captured the question nicely:
If the federal government can require people to purchase health insurance, what else can it force them to do? More to the point, what can't the government compel citizens to do?
Critics of the mandate - and even judges who have found the mandate constitutional - seem to agree that this is a novel use of Congress' powers under the Commerce Clause. And, as the Times' points out, the Administration has had a tough time articulating what, if any, limits on these powers there might be.
On the left, the response has generally been: So what? This is a slippery slope argument, and there's just no way Congress would ever require Americans to, for instance, eat broccoli three times a day or buy GM cars under its Commerce Clause powers. As Walter Dellinger, former Solicitor General in the Clinton Administration put it to the Times:
"If it is within the scope of regulating commerce to set a minimum wage," he said, "one might argue, then Congress could set the minimum wage at $5,000 an hour." But that would never happen, he said, for practical, political and legal reasons.
Dellingers' point is (mostly) well taken: Congress won't do anything utterly ridiculous, because it is limited (at least sometimes) by the political consequences of its decisions.
But I'm not worried so much by the ridiculous legal implications as the utterly mundane policy implications. Upholding the mandate, and giving Congress a "blank check" on its Commerce Clause powers makes it even easier that it already is for policymakers to enact bad public policies.
The mandate itself is bad policy. Massachusetts enacted an individual insurance mandate in 2006 in the name of controlling costs and expanding coverage. It has managed to modestly expand coverage, but it has utterly failed to control costs.
And, you could argue, this is precisely because the mandate allows the state to continue to ignore the impact of state regulations on insurance prices because it now has a captive market. One of the key elements of good working markets is "exit", i.e., consumers should have the ability to refuse to purchase goods and services that they don't want. If they can't exit - or shop for other effective options - providers lose a powerful incentive to improve their services or operate more efficiently.
And because costs continue to rise at unsustainable rates, Massachusetts has had to impose price controls on insurance companies, and is currently considering global price controls on all providers. Price controls don't and can't work. They throttle innovation on the one hand, and drive rationing on the other hand.
The federal mandate also allows Congress to conveniently ignore the biggest cost drivers in the system: the open-ended tax deduction of employer provided health, and open-ended spending for Medicare and Medicaid. (Yes, they ACA contains some modest cost control provisions, but they boil down to more unsustainable price control schemes.)
If the mandate stands, consumers will be forced to purchase richer benefit packages than they might otherwise choose in a competitive market. The mandate, combined with rapid expansion of federal regulation of health insurance and federal subsidies, is a recipe for fiscal disaster.
One point that I'm sure that even Dellinger would concede is that minimum wages don't have to reach $5,000 per hour to become economically destructive. Economists seem to agree that the current minimum wage structure has at least some negative employment effects at current "low" levels, especially for some lower-income minorities.
The minimum wage law is, in fact, a great example of how the pursuit of bad policies under open-ended government powers is very much like the addition of sand into the gears of the economy: very few of Congress' decisions under the Commerce Clause are ever questioned (let alone overturned), and so while the economy easily shrugs off a few grains of sand (or a few bad regulations) tens of thousands of such "grains" eventually accumulate, causing markets to perform much less efficiently than they otherwise would.
And health care is one of the most extensively regulated (and subsidized) parts of the U.S. economy. Is it really any wonder that it's so dysfunctional?
I happen to agree with the criticism of the mandate that it's an impermissible regulation of "inactivity", i.e., it coerces individuals to purchase a product they might not otherwise purchase, at least under current arrangements. But I'll leave the legal arguments to the lawyers.
I'll just conclude by making the point that overturning the mandate - and imposing what is really a very modest restriction on Congress' Commerce Clause powers - would not restrict other, more constitutional options for health care reform. Congress would still have subtantial power to reform health care through its power to tax and spend for the general welfare. What it would do is force Congress to go back to the drawing board to try and find more incremental ways to expand coverage. From my perspective, that would be a great policy outcome.