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Can the Government Really Force You to Buy Health Insurance?

President Obama was in Pennsylvania on Monday, trying to sell his health care plan to America at a town hall meeting. As Congress continues to debate how to move forward with health care reform its members should take this time to revisit the “purchase requirement” included in both the House and Senate versions of the bill. Each bill penalizes Americans for not purchasing “acceptable” health insurance, which is arguably unconstitutional.

Never before has our federal government required us to purchase anything deemed in our “best interest,” or face monetary penalties. If our federal government is permitted to penalize Americans in this manner, for simply doing nothing – in this case, not purchasing health insurance – then there will be absolutely no substantive constitutional restraints on the federal government's power over Americans.

Both versions of the health care reform bills currently under consideration use the Constitution’s “Commerce Clause” as one of their legal crutches to justify the federal government’s authority to either tax or penalize individuals who choose not to purchase insurance. Under this clause, Congress has the authority to regulate the use of the channels of interstate commerce; the instrumentalities of interstate commerce, or persons or things in interstate commerce; and those activities having a substantial relation to interstate commerce. Although those three areas are broad in scope, the taxing or penalizing of an individual taxpayer for not purchasing insurance simply does not fall under any of them. If it were to come close to any area, it would be the third, but Supreme Court precedent shows even that would be a stretch of the constitutional imagination of legal scholars.

The Senate bill uses a “penalty” and defends the federal government’s power to assess one under the legal precedent of the Supreme Court case of “United States v. South-Eastern Underwriters Association.” That ruling allowed for the federal regulation of the business of insurance under the Commerce Clause, and focused on nationwide insurance businesses engaged in interstate commerce. In no way are individual Americans in the “business” of insurance and, therefore, the Commerce Clause does not apply. In other words, the mere failure to purchase a policy of health insurance is not an activity affecting interstate commerce. The right to purchase insurance is personal, and should rightfully be reserved to the American people.

The best example of how the Supreme Court may actually strike down the Senate bill’s penalty (or the House version for that matter) is by looking at a case in which the lack of an interstate “activity” denied the application of the Commerce Clause. In “The United States v. Lopez,” the court struck down the Gun Free School Zones Act of 1990 by ruling that merely “possessing a firearm” within a school zone was in no sense an economic activity “substantially” affecting interstate commerce, and therefore was outside of Congress’s authority.

In the House bill, a “tax” is used against an individual who chooses not to purchase “acceptable” health care. Although cloaked as a tax, it is in reality an unconstitutional penalty disguised as a tax. Under the Constitution, Congress cannot regulate through its general power to tax that which it cannot regulate directly, unless such is truly “incidental” to the real motive, which is to raise revenue for the general welfare of the federal government. The mysterious extractions imposed in both bills are clearly not intended to raise significant revenue for the general welfare of the federal government.

The Constitution simply does not envision the type of tax the House bill includes and there is no Supreme Court precedent entertaining such. Left unchecked, if Congress is permitted to use the magical word “tax” to regulate taxpayers who merely fail to purchase acceptable health insurance, it will completely eviscerate any remaining restrictions on the federal government’s enumerated powers. It is one thing for Congress to have comprehensive taxation authority for the general welfare of the citizens of the United States, but forcing mandatory compliance of a person not participating in any activity (privileged or otherwise) or receiving any federal benefit goes far beyond even the Supreme Court regulatory tax cases involving activities reserved exclusively to the states. Congress cannot coerce non-consenting taxpayers into participating in a universal health insurance scheme by forcing them to enter into insurance contracts or else pay a penalty disguised as a tax.

To be clear, Congress cannot regulate our right to purchase what we want, when we want, and if we want. The Constitution and years of Supreme Court precedent simply doesn’t allow it. If Congress manages to pass either health care reform bill, or any compromise version that contains a purchase requirement, the Supreme Court most likely will declare it unconstitutional.

Rodney P. Mock and Jeffrey Tolin are professors at the Orfalea College of Business of California Polytechnic State University and authors of “Purchase or Else: The Health Insurance “Tax,” published in the January 11 edition of “Tax Notes.”

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