Would ObamaCare Be Better Without the Individual Mandate?

The constitutionality of the Affordable Care Act, the subject of three days of oral argument before the Supreme Court beginning Monday, could well turn on whether the Court concludes that Congress can compel a citizen to buy a commercial product, in this case health insurance.

At the heart of the Act is the "individual mandate" which President Obama campaigned against as a candidate, and then turned around and supported as president. The mandate was part of a deal with the health insurance industry, which stopped ferociously opposing the Administration's bill once it became a source of additional business.

The Administration and its supporters contend that requiring people to purchase health insurance is a natural extension of the Constitution's Commerce Clause. If government can regulate health insurance at all, they say, it can legitimately use a mandate as a policy instrument.

The Administration brief contends that the mandate and the prohibition of discrimination by insurers against people with pre-existing conditions are so logically connected that if the Court finds the mandate unconstitutional it must strike down other key aspects of the act. Otherwise, large numbers of young and healthy people would "free ride" and wait to buy insurance until they got sick, making the whole law financially unviable.

Opponents argue that the mandate represents a new, dangerous, and unconstitutional infringement on liberty. The decision will be treated by commentators as either a huge victory or momentous defeat for President Obama, and either another dangerous over-reach by a right-wing court, or a prudent retreat by the court's conservatives.

But this may be a complete misreading of the logic and the stakes.

The individual mandate may or may not be unconstitutional, but it's dubious policy. And it would not be a fatal setback if the Court did find that it violated the Constitution.

The Administration, in my view anyway, has made both a tactical and a Constitutional error in arguing that if the mandate is unconstitutional, so are other key provisions of the act. If the Court were to strike down the mandate but not the rest of the Act, the insurance industry would be all over Congress to find another way to solve the free-rider problem. As my colleague Paul Starr has demonstrated, that would not be difficult.

Instead of being required to purchase private insurance, people without employer-provided insurance or access to Medicaid could be given a choice -- either buy affordable insurance through the exchanges, or deliberately opt-out of coverage. But if they opted out, they would be precluded from getting insurance through the exchanges for five years. This use of incentives would be constitutional, and would be sufficient to induce most people to get insurance, but less coercively than a mandate. Starr also proposes that people could pay an annual fee to preserve their right to buy insurance after a waiting period of only a year.

The point is that if the best we can do politically is a mixed system such as the Affordable Care Act, there are perfectly good alternatives to a mandate should the mandate be struck down.

There is also a delicious irony here. If conservatives on the Court were to decide that a federal mandate requiring citizens to purchase commercial products has no basis in the Constitution, it would usefully doom another favorite conservative project -- privatization of Social Security. Obviously, if Congress cannot require citizens to buy private health insurance, neither can Congress use tax dollars to require citizens to purchase commercial pension offerings.

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