I was cruising around town at lunchtime, running errands, and listening to Vik Amar and Ilya Somin debating the Obamacare mandate on Patt Morrison's radio show. I've met both Amar and Somin. I like them both and respect them both as scholars. But Amar's position on this issue scares the crap out of me.
As I understand Amar's pro-mandate argument, Congress has the power to mandate the purchase of health insurance because it is dealing with a free rider problem associated with a national economic marketplace.
Amar contends that the free rider problem arises because when somebody needs health care, they can go to emergency rooms and hospitals have to treat them. The hospitals then pass the costs on to everybody else.
I find that argument unpersuasive. First, as I understand the law, hospitals only need to provide emergency care. They don't have to provide, free of charge, the kind of comprehensive health care a good insurance policy gets you. Hence, as a response to the alleged problem, the mandate is over broad.
Second, there is really is no free rider problem here. In welfare economics, free riding occurs when some individuals consume a public good without contributing to the cost of producing it. Because everybody has a temptation to free ride, insufficient contributions will be raised, and the market will fail to produce a sufficient supply of that good. The trouble with Amar's argument, of course, is that health care is not a public good. A public good exists where two conditions are satisfied: First, consumption of the good is non-rivalrous; i.e., your consumption of the good does not reduce my ability to consume it. Second, the good must be non-excludable; i.e., it is not possible to preclude someone from having access to the good.
In a free market, health care obviously is not a public good. Doctors and hospitals could exclude people from consuming health care without paying, simply by refusing to provide services. Likewise, consumption of health care is rivalrous. If a doctor spends time and scarce resources treating me, he has less time and so on to treat you.
The so-called "free rider" problem in health care thus is the product not of market failure but of government regulation. Should Congress be able to impose such a sweeping mandate as that contemplated by Obamacare to fix a problem created not by free choice in a free market but by prior government regulation?
Third, notice how Amar and other pro-mandate folks conflate two distinct markets. They point to the so-called "free rider" problem in health care, and then use it to justify regulating health insurance. If congress can get away with that sleight of hand here, it will be able to regulate any problem-free market having any tenuous connection to some other market in which there is an alleged problem (even one created by government action rather than market failure).
Finally, and most importantly, I don't see any limiting principle in Amar's approach to the mandate. Indeed, I do not think I've ever heard a convincing description of a limiting principle from any pro-mandate commentators. And this is where the scary part comes in.
In effect, as I see it, the understanding of the Constitution advanced by pro-mandate commentators would permit an elective economic dictatorship at the federal level in which politics provides the only restraint on the power of the government to regulate any activity that falls within the amazingly capacious post-Wickard v. Filburn definition of commerce.
In effect, as I see it, Amar's argument would impose no Constitutional barriers preventing Congress from adopting Soviet-style central planning and state ownership of the means of economic production. Oh, I suppose he'd say that the Takings Clause would require compensation of those whose productive assets were taken by the state. Big whoop. And, by the way, check with Susette Kelo before trying to tell me that the Takings Clause protects anything.
Maybe Amar and the rest of the Obamacare mandate supporters are right about the Constitution. But I hope not. I would not want to live in a country in which the only thing standing between economic freedom and economic regimentation is our dysfunctional political system.
Update: I subsequently ran across Somin's recent op-ed on the issue, which raises some of the same concerns I posted here:
If Congress could use that clause to regulate mere failure to buy a product on the grounds that such inaction has an economic effect, there would be no structural limits to its power. Any decision to do anything is necessarily a decision not to do something else that might have an economic effect. If I spend an hour sleeping, I thereby choose not to spend it working or shopping. As the lower court decision in this case explained, the government's position "amounts to an argument that the mere fact of an individual's existence substantially affects interstate commerce, and therefore Congress may regulate them at every point of their life." ...
Defenders of the insurance mandate claim that health care is a special case because everyone eventually uses it. But this argument relies on shifting the focus from health insurance to health care. A similar rhetorical ploy can justify any other mandate, including even the "broccoli purchase mandate." Not everyone eats broccoli. But everyone participates in the market for food. Similarly, a mandate requiring all Americans to purchase a car can be justified because virtually everyone participates in the transportation market.
The government also claims that health care is different because producers are sometimes required to give free emergency services to the uninsured. But why is this fact constitutionally relevant? The answer seems to be that failure to buy insurance thereby has adverse economic effects on producers. Put that way, failure to buy health insurance turns out to be no different from failure to buy any other product. Any time someone fails to purchase any product, producer profits are lower than they would be otherwise.
Prof. Amar later sent along this reply:
I'm travelling this week and thus probably lack the time to write up a formal response/reaction, but I should make clear that I do not take the position that any federal mandate of any activity that affects a national market is permissible under the Tenth Amendment, just as I would not take the position that Congress can PROHIBIT any activity simply because it might have some effect on a national market. For example, I don't think Congress can prohibit possession of whatever it wants, even though possession is activity, simply because possession might affect some interstate market in that particular good. I buy the distinction used by the Court in Raich to differentiate Lopez, namely that comprehensive regulation of a national marketplace carries with it the power to regulate (or require) things that may be local and even in some respects noneconomic, provided the regulation (or requirement) of these things is proximately related to the comprehensive regulatory scheme. For me, in all instances, the relevant questions focus on the attenuation between what Congress is regulating (or requiring), and the core economic policies driving the regulatory scheme overall. And the distinction between "activity" and "inactivity" is unhelpful in answering those questions.
I am not troubled by Steve's suggestion that this reasoning in the Obamacare context allows Congress to bootstrap; the fact that some (undeniably permissible) regulation by Congress might make other laws permissible even though those other laws lack independent Article I foundation is, I think, a consequence of the "Necessary and Proper" power that is explicitly recognized in Article I, section 8 (and that might be recognized even absent that specific text, as CJ Marshall suggests in McCulloch), and is also confirmed by the majority opinion for the Court just a few years ago in Comstock.
As to the suggestion that the mandate provision is not well-calibrated to deal with the economic incentive problems (I'll avoid the "free rider" term here out of deference to Steve) that are created by the requirement that healthcare providers render emergency service and, equally importantly, the prohibition on insurance company discrimination against persons with pre-existing conditions -- and Ilya's related point that there might have been other ways besides the mandate for Congress to solve these incentive problems -- the fit needn't be remotely perfect; it's generally up to Congress in this economic realm to decide which solutions are sensible, once we agree there is an economic problem (even one of Congress' own creation, as Steve would describe it) to be fixed.
As to your hypo, I hate to be a law prof (or maybe just a lawyer), but much of my response would probably depend on the specifics. Putting aside the takings issue (that was, I should point out, raised by Justice Douglas, I believe, in the Steel Seizure case), I would have to see precisely what the scheme looked like. I should say, though, that whatever misgivings you (understandably) have about such massive governmental involvement in (or ownership and operation of) the national economy, the activity/inactivity line being advanced in these challenges doesn't help solve the problem, since owning and operating the means of production is activity.
Might you also make clear that by "pro-mandate folks," you mean people (like me) who think the mandate is constitutional, but not necessarily a wise idea.
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