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Michael C. Dorf

The Constitutionality of Health Insurance Reform, Part I: The Misguided Libertarian Objection


Wednesday, October 21, 2009

With Congress considering whether to reform the American system of health insurance--and, if so, how--most of the debate has focused on the likely costs and benefits of various approaches. However, a number of politicians and commentators have also challenged a key aspect of the leading reform proposal on grounds of principle. They oppose the so-called "individual mandate" that would require that everyone obtain health insurance or face a financial penalty.

There are two primary objections to the individual mandate: First, that mandating the purchase of insurance is an unfair or even unconstitutional infringement on liberty; and second, that the federal government lacks the authority under the Constitution to impose the mandate or to penalize those who do not comply. If either of these objections were to prove persuasive as a matter of constitutional law, the courts could block health insurance reform. And even if the courts do not invalidate whatever legislation ultimately passes, the objections nonetheless deserve consideration by Congress and the public.

Accordingly, in this first of a two-part series of columns on constitutional objections to the individual mandate, I shall consider the libertarian concern. In my next column, I shall address the federalism objection.

Why the Bill Needs an Individual Mandate

As this column goes to press, the House and the Senate are considering a variety of approaches to health insurance reform, but any plan likely to pass will almost certainly include a provision that forbids insurance companies from limiting or dropping coverage for "pre-existing conditions." That practice is almost universally condemned, even by Republicans who oppose the Democratic bills now pending in Congress. Currently, various state and federal laws restrict the ability of health insurers to limit coverage for pre-existing conditions to some degree, but the proposals now before Congress would go further.

Consider, as one example, the bill that Senator Baucus proposed in the Senate Finance Committee. It would subsidize and regulate a "high-risk pool" for people who have been denied coverage based on a pre-existing condition. When combined with current law and programs, this change would mean that just about everyone who wants health insurance could get it.

Doesn't everyone want health insurance? Not quite. Currently, substantial numbers of healthy, mostly young Americans choose to forego health insurance entirely. Either they decline coverage through their employers or they are ineligible for employer-based coverage. Working in relatively low-wage jobs, they make a judgment that they would rather have more take-home pay for food, housing, and other goods and services than health insurance they think they do not need or cannot afford.

If insurers were to be forbidden from denying coverage for pre-existing conditions, however, the healthy uninsured would have a perverse incentive to remain uninsured--unless and until they became ill. At that point, they could simply buy an insurance policy to cover treatment for the now pre-existing condition. They would have avoided paying premiums when they were healthy, only to collect benefits when they got sick. Such a waiting game would deny insurers the funds needed to cover individuals in the high-risk pool, even with the subsidies proposed in the Baucus bill.

The solution to this "adverse selection" problem is the individual mandate: Everyone is required to have health insurance at all times. That way, everyone--including healthy people--pays premiums that end up covering the health care costs of those who ultimately need care.

There are many different ways one could enforce an individual mandate of the sort that and most of the bills now before Congress contain. For simplicity, I shall focus on the Baucus bill, but the analysis would be essentially the same for the other proposals. The Baucus bill states that by 2013," all U.S. citizens and legal residents would be required to purchase coverage through" the individual market, a public program, an employer plan, or some other way. It then imposes an "excise tax" on people who fail to maintain coverage. For taxpayers who are above the poverty line but whose income is no more than three times the poverty level, the excise tax would be $750 per year per individual (including dependents), capped at $1,500 per taxpayer. For taxpayers earning more than three times the poverty level, the excise tax would be $950 per year per individual, capped at $3,800 per taxpayer.

The Libertarian Objection to the Individual Mandate

Senator Minority Whip John Kyl of Arizona has termed the individual mandate "a stunning assault on liberty." Other Republicans, including Kentucky's Senator Jim Bunning and Iowa's Senator Charles Grassley, have expressed similar views. In the current political climate, these objections have been characterized as conservative, but they are better understood as libertarian.

Given all the ways in which government legitimately limits our freedom--you cannot drive drunk or without a license; you cannot operate a power plant in violation of the emissions standards of the Clean Air Act; you cannot practice law or medicine without a license; etc.--what, exactly, is so stunning about the individual mandate to obtain health insurance?

Following the chain of citations in the politicians' speeches, one comes to a recent hard-hitting paper by Michael Cannon of the libertarian Cato Institute. Most of Cannon's complaints address matters of policy, rather than principle. For example, he believes that the individual mandate in Massachusetts has not worked, that in operation the individual mandate would put the federal government in effective control of nearly all health insurance decisions, and that it would operate as a regressive tax. These are important objections that deserve careful scrutiny, as do the alternatives proposed by Cannon and others. For current purposes, however, I shall put them aside, as they do not raise fundamental questions about the very nature of the individual mandate--which is my topic here. After all, in deciding whether to support any legislation, Congress must weigh costs and benefits.

The libertarian objection that is rooted in principle, not policy, is different. Presenting his version of that objection, Cannon quotes a 1994 Congressional Budget Office (CBO) memorandum, which states:

"A mandate requiring all individuals to purchase health insurance would be an unprecedented form of federal action. The government has never required people to buy any good or service as a condition of lawful residence in the United States. An individual mandate would have two features that, in combination, would make it unique. First, it would impose a duty on individuals as members of society. Second, it would require people to purchase a specific service that would be heavily regulated by the federal government."

That brings us to the core question: Do these features of the individual mandate render it objectionable on libertarian grounds?

The Individual Mandate is Different Neither in Kind nor in Degree from Other Government Mandates

The CBO memo claims, then, that an individual mandate would be unique because it would impose an affirmative obligation on persons. Most laws either forbid some form of conduct (say, bank robbery) or impose restrictions as conditions on activities that the government could forbid altogether (say, by requiring that companies that are engaged in various lines of business comply with environmental laws, or that professionals pass licensing examinations). As the CBO memo states: "Federal mandates that apply to individuals as members of society are extremely rare." The only one that the CBO staff could think of was the requirement that draft-age men register with the Selective Service System.

Of course, even that one example belies the CBO's assertion that a federal mandate to obtain health insurance would be "unprecedented." But more importantly, upon examination, the individual health insurance mandate turns out to have important precedents.

To begin, the CBO memo's authors apparently forgot about jury duty. A federal statute that was already in effect in 1994 provides that "all citizens shall have . . . an obligation to serve as jurors when summoned for that purpose." To be sure, the mechanisms used to assemble a pool of prospective jurors enable some people to slip through the cracks, but then, that surely would also be true of the individual mandate to obtain health insurance. No law can be perfectly enforced. The important point here is that jury duty, like draft registration, serves as a precedent for the imposition by the federal government of an affirmative duty on citizens.

Moreover, if we are concerned with the libertarian objection--rather than the federalism objection, which I shall consider in my next column--there is no reason to limit the relevant precedents to federal laws. Looking to state laws, we see further precedents for freestanding affirmative mandates.

Consider that every state imposes an affirmative obligation on parents to educate their children--whether in public school, private school, or via home schooling. Surely this obligation cannot be said to be a mere condition on the privilege of raising children, for the state has no authority to prevent people from becoming parents.

Or consider that states may impose an affirmative obligation of vaccination on residents. Even in an era when the Supreme Court was otherwise vigorously enforcing libertarian constitutional principles, in 1905, in Jacobson v. Massachusetts, the Court rejected a constitutional challenge to mandatory vaccination.If the government interest in public health is sufficient to overcome libertarian objections to injections into the very bodies of citizens, then surely the public health interest--which is, at bottom, what is at stake in the health insurance reform bills--should suffice to require Americans to buy health insurance or else pay a tax.

Indeed, the Cannon paper gives away the libertarian argument entirely when it argues (in bold letters, no less) that "compulsory health insurance is itself a tax." That it is, but of course the power of government to impose taxes is extraordinarily well established.

Finally, even if we were to assume that the individual mandate were in some way unprecedented, so what? Every new proposal is in some way unprecedented before it is tried. And most fundamentally of all, the libertarians are simply wrong in suggesting that placing an affirmative duty on persons is, by its very nature, a greater infringement on liberty than placing a negative duty, or a conditional one, upon them. Yet an affirmative obligation on everyone to pay a one-nickel head tax would impose a trivial burden relative to, say, a blanket prohibition on driving, or a requirement that drivers pay $10,000 annually for their licenses. The relevant question is not the form of the obligation, but how burdensome it is.

To be clear, there remain entirely legitimate grounds for questioning the current proposals to reform health insurance. Whatever law that emerges from the legislative process will likely be flawed in a variety of ways. However, the libertarian objection does not identify one of those flaws. And it certainly does not give rise to any genuine doubts about the constitutionality of an individual mandate.

Michael C. Dorf, a FindLaw columnist is the Robert S. Stevens Professor of Law at Cornell University. He is the author of No Litmus Test: Law Versus Politics in the Twenty-First Century and he blogs at

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