Thoughts on the Post-Mandate Landscape

by Reihan Salam

Michael Greve of AEI has written a tart, illuminating post on the constitutional arguments surrounding the individual mandate:

The government’s entire defense was in shreds with the Court’s first question, from Justice Kennedy: “Can you create commerce in order to regulate it?” (Tr. at 4). The answer to that question is “no,” and it comes directly from the Constitution: the power to regulate is not the power to create or compel. If you answer “yes” or “that’s not what’s going on here,” you had better come up with some other principled limit to the commerce power; otherwise, in the Chief Justice’s words, “pretty much all bets are off” (Tr. at 43). Despite persistent prompting from the justices, General Verrilli could not identify such a line, because it cannot be done.

Go to the other side: the difference between proscription and prescription, between prohibition and compulsion, is fundamental. It is, as Justice Kennedy noted (Tr. at 31), fundamental to tort law. It is, as the Institute for Justice noted in a fine amicus brief, fundamental to contract law. It is fundamental to any liberal legal order, including the order established by the United States Constitution. It is the difference between preempting states, which is specifically authorized by the Supremacy Clause, and commandeering them, which is verboten, see Printz v. U.S. It is the difference between the commerce power, which Congress possesses, and the police power, which it lacks.

Put differently: unlike Wickard and Raich, this case isn’t about the substance of what constitutes “commerce” (of course health insurance and care are commerce, and of course the regulation thereof can encompass things that aren’t themselves commerce). It is about the form in which government exercises its powers. You can say that the commerce power to regulate doesn’t encompass the power to compel; or you can say (as Justice Scalia would probably prefer, Tr. at 27) that a prescriptive exercise of the commerce power isn’t “proper.” It’s the same line either way.

What might happen in a post-mandate world? We’ve discussed alternatives to the individual mandate before (here and here, for example). Avik Roy offers constructive thoughts on an approach that might be embraced by Republicans: 

Democrats could seek to pair a stronger cap on the employer tax exclusion—something along the lines of Obamacare’s “Cadillac tax”—with a subsidy of, say, $4,000 for every individual to purchase health insurance in the private market. Individuals could purchase a cheap plan with catastrophic coverage and put the remainder of the $4,000 in a health-savings account.

Instead of an individual mandate, such a plan could be paired with auto-enrollment and an opt-out: in other words, someone who is uninsured who didn’t sign up for an insurance plan would be automatically enrolled in one that costs as much as the tax credit; that individual could then opt out of the plan and forego insurance or choose another plan if he wanted.

A number of other commentators, including Josh Barro, have argued that a defeat for the individual mandate could lead to renewed pressure for a single-payer Medicare-for-all system. While conservatives are (understandably) allergic to single-payer, it is on much firmer constitutional ground than the individual mandate and it has the great virtue of being far more transparent than the regulate-mandate-subsidize model. I would much prefer Avik’s alternative, but a debate over single-payer would have the virtue of clarity: the explicit public price tag would presumably be higher than under the regulate-mandate-subsidize model, which conceals the cost of coverage expansion by compelling large numbers of people to purchase coverage that they wouldn’t otherwise purchase in the absence of a civil penalty. So we could have a genuine, robust debate over how much we think it is appropriate for taxpayers to spend to secure universal coverage, or rather to secure a certain kind of universal coverage.

In a related vein, I recommend Josh’s discussion of rising health care costs and the role of the public sector. The following is a brief preview of his argument: 

In fact, the size of government ought to change as the economy changes. Some goods and services, like housing and food, ought to be bought mostly with private dollars. Others, like education and health care, should have a significant public expenditure component. As the public-heavy sectors grow relative to the private-heavy ones, government spending should grow, and vice-versa.

But while a growing health sector means that public expenditure should grow as a share of the economy, it also means that public expenditure on health care should shrink as a share of total expenditure on health care. Think about it this way. Imagine that economic trends pushed education and health care to be nearly 100 percent of GDP, and that we thought the bulk of expenditure in these areas should be public. To finance that, we would need taxes near 100 percent of GDP, which is untenable.

This strikes me as a good way to think about the lay of the land. Those who don’t think that public expenditure should grow as a share of the economy must convincingly argue that public expenditures on health care and education as a share of total expenditures can and should shrink dramatically, not just slightly. This is why it the regulatory system is so important. While we tend to focus on (visible) taxes, it is (largely invisible) regulation that tends to stymie business model innovation.