The Continuous Coverage Penalties Are Totally Constitutional

Brian and I have been jousting on Twitter about the constitutionality of the continuous coverage penalties in the House and Senate repeal-and-replace bills. We thought we’d joust here instead. (This is the friendly sort of jousting. Though it doesn’t involve any horses — except for the mostly dead horse that is McConnellCare, which still deserves another beating.)

Let’s start with what the continuous coverage penalties would actually do. The version in the House bill requires insurers to charge 30% extra for a year to individuals who re-enter the insurance market after a break in coverage of 63 days or more. The Senate version requires insurers to impose a 6-month waiting period on individuals who re-enter the market after a 63-day break. Both provisions, like the individual mandate in Affordable Care Act, are designed to deter healthy individuals from dropping out of insurance markets and then re-entering only upon falling ill.

Brian says that both provisions are unconstitutional. He seizes on language in Chief Justice Roberts’s opinion in NFIB v. Sebelius, in which the Court held that the Affordable Care Act individual mandate was outside Congress’s commerce power (though ultimately within its taxing power). According to the Chief Justice, “[t]he individual mandate’s regulation of the uninsured” was “divorced from any link to any existing commercial activity.” And while the Obama administration argued that the uninsured were likely to seek health care in the future, the Chief Justice said that “we have never permitted Congress to anticipate [economic] activity itself in order to regulate individuals not currently engaged in commerce.”

Brian says that the penalties for the uninsured in the House and Senate bills are analogous to the Affordable Care Act individual mandate — except that unlike the individual mandate, the continuous coverage penalties cannot be justified under the tax power. I disagree — except on the last point. Because the House provision would require higher payments to private-sector insurers rather than to the federal government, and because the Senate provision would require higher payments to no one, neither can be characterized as a “tax.” But neither the House nor the Senate version would need to rely on Congress’s tax power, because both provisions lie squarely within Congress’s Commerce Clause authority.

The provisions in both bills kick in when — and only when — an individual seeks to re-enter the insurance market. The House bill establishes a minimum price for health insurance that applies under certain circumstances, which is surely something Congress can do. (The federal minimum wage is, after all, a minimum price for labor that applies under certain circumstances, and the constitutionality of the federal minimum wage law is well settled.) The Senate bill prohibits re-entrants from obtaining insurance benefits for a limited period — a classic regulation of who can and can’t participate in interstate commerce. Under neither bill would Congress “anticipate [economic] activity . . . in order to regulate individuals not currently engaged in commerce.” Rather, it would regulate individuals currently engaged (or seeking to engage) in commerce based on previous periods of inactivity.

Brian’s response is that the House and Senate bills nonetheless penalize inactivity, which NFIB does not allow under the commerce power. That’s not how I read NFIB, nor do I think it’s a reading to which NFIB is amenable. NFIB says that Congress can’t, under its commerce power, penalize you for doing nothing while you’re doing nothing. NFIB does not prevent Congress from penalizing you, once you try to do something, for the fact that you previously did nothing.

There is nothing inconsistent about House and Senate Republicans supporting the continuous coverage penalties while insisting that the individual mandate exceeded Congress’s commerce power. Other (relatively minor) elements of the House and Senate bills might be unconstitutional, but not these. The central problem with the House and Senate bills is not that the Republicans in both chambers had a change of heart on the commerce power; the problem is that both bills are entirely heartless. If there is a constraint on Congress enacting either version of the bill, it is political (and procedural) rather than constitutional.