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The Law Behind Health Reform

Understanding the Individual Mandate & Constitutional Authority
October 15, 2010 |
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With legal challenges to the health care reform law moving forward, a brief from the New America Foundation's Health Policy Program, The Law Behind Health Reform, explores the legal and Constitutional dimensions of the legislation, with a focus on the individual mandate and penalty for not buying "minimum essential coverage." This brief clarifies the legal arguments and judicial history and concludes that the Obama administration has the law on its side.

In March 2010, President Barack Obama signed The Patient Protection and Affordable Care Act, or ACA, into law. No component of the far-reaching law is more contentious than the requirement that all citizens obtain health insurance. The Obama Administration’s view is that this minimum coverage provision is essential to the vast expansion of insurance coverage.

Under the new law, health insurance providers cannot deny coverage due to pre-existing conditions. The minimum coverage provision not only ensures that millions more Americans will be covered, it simultaneously prevents individuals from waiting to obtain coverage until they need it. With pre-existing conditions no longer a barrier to coverage, individuals who choose to go “coverage free” until they become sick drive up the costs for all those who maintain coverage. The “individual mandate” as it is commonly known, is consequently the lynchpin in the law. Without it, health insurance costs would increase.

Much of the controversy about the individual mandate revolves around whether it is constitutional. Congress must have the power to require that all citizens obtain health insurance, otherwise, the individual mandate will run afoul the Constitution. The authority for the individual mandate comes from two sections of the Constitution: (1) the Commerce Clause and (2) the General Welfare Clause.

Legal history on the aforementioned constitutional powers can be split into two eras: the Lochner Era and post-Lochner era. The Lochner era, between roughly 1890 and ending in 1937, represents a very conservative and free market approach to judicial decision-making. In the landmark case Lochner v. New York, the Supreme Court struck down a worker safety law limiting the hours a person could work in a bakery on the basis that the regulation interfered with an individual’s right to contract. The Court continued to strike down regulations that interfered with an individual’s economic due process rights under the 14th Amendment. The era ended in 1937, with the case West Coast Hotel v. Parrish, where the Court upheld the constitutionality of a minimum wage law.

This brief provides an explanation of the constitutional challenges to the individual mandate. It explores Congressional power under the Commerce Clause and General Welfare Clause and the legal history supporting each power. It also applies both powers to the Affordable Care Act and provides an analysis of the constitutional concerns within that context.

Read the full brief here.

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