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Understanding health care reform: The individual mandate

By Kurt Manwaring, KSL.com Contributor | Posted - Aug. 7, 2011 at 7:17 p.m.



This archived news story is available only for your personal, non-commercial use. Information in the story may be outdated or superseded by additional information. Reading or replaying the story in its archived form does not constitute a republication of the story.

The individual mandate is the single most critical and controversial aspect of the Affordable Care Act. The mandate requires individuals without insurance to either purchase it or pay a fine.

The notion of the government requiring individuals to purchase insurance doesn’t sit well with Republicans and others who feel that the government is already too entrenched in the lives of its citizens.

Why, then, would Democrats insist so adamantly on including something that sparked so much controversy?

In reality, Democrats did more than merely include the individual mandate in the Affordable Care Act. They made it the key ingredient, (although President Barack Obama was ironically opposed to the idea at first).

And they got the idea from Republicans.

In fact, while Utah Sen. Orrin Hatch was the first senator to challenge the constitutionality of the individual mandate, he was also the co-sponsor of legislation in 1993 that would have included a mandate similar to that in the Affordable Care Act.

Why the change? Hatch says that he didn’t pay much attention to the issue in 1993, but has since studied it and determined that it is unconstitutional.

Before examining arguments of constitutionality, it would be helpful to look at the rationale behind the individual mandate.

Health care reform was designed in part to make health insurance more universally available. That included providing insurance to individuals with pre-existing conditions and those without insurance who often seek treatment in high-cost emergency rooms. In order to get insurance companies on board, members of Congress needed to find an incentive that would convince them to cover a very large and unprofitable demographic.

The solution they devised was the individual mandate. The lowest-risk — and also most profitable — demographic for health insurance comprises what are referred to as “young immortals.” These are individuals in their 20s who are relatively very healthy. Many of the young immortals don’t purchase insurance because they don’t think they will need it (i.e., they think they are “immortal” and will never get sick). Those who do are generally very inexpensive to cover. Health insurance companies will do almost anything to get their hands on this profitable group.

And so the government offered up the young immortals in exchange for the cooperation of the health insurance industry. By requiring everybody to purchase insurance, young immortals are automatically swept into the current along with everybody else. And if they refuse, they are required to pay fines that are used to offset the costs of health care reform.

In theory, this is supposed to lower the overall cost of health insurance, thereby providing health insurance companies with the necessary incentive to cover individuals without insurance — even those who have pre- existing conditions.

In other words, the individual mandate is what makes the health care reform clock tick. By spreading the risk between the very healthy (the young immortals) and the very sick (those with serious health problems who are already insured), more individuals can access health care at lower costs.

But the idea doesn’t sit well with Republicans — and some federal courts.

At issue is Article 1, Section 7, Clause 3 of the United States Constitution, often referred to as the “Commerce Among the States” clause.

This clause delegates to Congress the authority to regulate commerce among the states and is used as legal justification for the individual mandate.


"In theory, this is supposed to lower the overall cost of health insurance, thereby providing health insurance companies with the necessary incentive to cover individuals without insurance — even those who have pre- existing conditions."

The interpretations of this clause have ebbed, flowed, been ignored and debated ad nauseam for nearly 200 years. Yet amidst the confusion and contention, one thing is generally agreed upon. David Forte, senior editor of The Heritage Guide to the Constitution, said, “No clause in the 1787 Constitution has been more disputed, and it has generated more cases than any other.”

The individual mandate of the Affordable Care Act certainly does nothing to reverse that trend. Utah Sen. Mike Lee is adamant that the mandate is not constitutional and fearful of what could come next if the government is allowed to force Americans to purchase insurance.

In a Senate hearing on the constitutionality of the health care reform legislation, Lee raised a hypothetical question. He asked, “If (the individual mandate) is within Congress’ power, wouldn’t it also be within Congress’ power to tell every American … that we must eat four servings of leafy green vegetables each day?” And what if Congress were to mandate that Americans purchase those leafy green vegetables, thereby engaging in commerce?

Lee raises at once both a thought-provoking and controversial question. If Congress can dictate that Americans purchase certain products or services, what limits are there to its power?

For more than a hypothetical question, it is currently the subject of no fewer than 26 federal lawsuits. So far, only two of the 26 original cases have held that the individual mandate or the Affordable Care Act in its entirety is unconstitutional. Nonetheless, it will ultimately take only one ruling to decide the case — that of the Supreme Court.

While numerous verdicts are going through the the appeals process, the final decision will ultimately rest with the Supreme Court. The history of rulings on the Commerce Clause could be likened to a snowball that gets bigger as it rolls down the hill. When the Supreme Court makes its decision, it will either deal a severe blow to the size of the snowball (i.e., the Commerce Clause) or give it additional momentum.

Whatever the result, the consequences of the decision will be monumental. Either the Congress will secure more power under a progressive interpretation of the Commerce Clause or its power will be curtailed.

And with a ruling that the individual mandate is unconstitutional, the entirety of the health care reform legislation falls apart. If the individual mandate is not a part of the legislation, young immortals don’t have to purchase insurance. And if young immortals don’t have to purchase insurance, the insurance industry will refuse to cooperate.

This underlies the central thesis of how the Affordable Care Act actually works. By using young immortals to spread the risk, insurance companies fulfill two of the objectives of health care reform, namely to provide low cost insurance and to make it more accessible.

The way in which individuals gain access to that insurance is also another critical aspect of how the legislation actually functions. The next article in this series will address how this will take place.

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This is the fourth in a series of nine articles addressing the topic of health care reform.

Kurt Manwaring is pursuing a graduate degree in public administration at the University of Utah. He is the owner of Manwaring Research & Consulting and maintains a personal blog at www.kurtsperspective.blogspot.com.

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