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Limiting principles for the ACA

I feel a little less ignorant after reading some things about the idea of a limiting principle for the ACA and individual mandate in particular. It didn't make sense to me months back . Here's Matt Yglesias with a specific example as to why I was confused that this would be an issue:

I'm not a lawyer, but I have to say that I found the entire "limiting principle" discussion at the Supreme Court somewhat confusing. After all, if the government can charge you a 20 percent marginal tax rate what's to stop them from going to 39.4 percent or 99.7 percent? Nothing, it seems to me, and yet life goes on.

But Congress could, if it wanted to, completely vitiate economic freedom purely through the tax code. You would impose a statutory rate of 100 percent and then create deductions for the stuff Congress wants you to buy—houses, health insurance, broccoli, whatever. I don't think anyone would reasonably conclude from the fact that Congress could do that stuff that we do not in fact live in a free society in which individuals have a wide scope of choice over what to do with their selves, their time, and their money.

I think there was a stronger argument for a limiting principle for a broad power like a tax than there is against the more specific thing being asked for in the ACA. Anyway, for you ACA supporters perhaps there is some hope. Here are a few possible limiting principles that could be adopted. And here's the one I think mirrors what I've been arguing for:

1. The Moral Hazard/Adverse Selection Principle. Congress can regulate activities that substantially affect commerce. Under the necesary and proper clause, Congress can require people to engage in commerce when necessary to prevent problems of moral hazard or adverse selection created by its regulation of commerce. But if there is no problem of moral hazard or adverse selection, Congress cannot compel commerce. Courts can choose different standards of review to decide how much they want to defer to Congress's conclusion. Even under the strictest standard of review the individual mandate passes muster.

Explanation: The guaranteed issue and community rating rules prevent insurers from discriminating against uninsured people because of preexisting conditions. These rules create a moral hazard: people will wait until they get sick to buy insurance. (this might be better described as an adverse selection problem) Congress can require them to buy insurance early to prevent gaming the system. (Actually, it exacerbates an already existing problem in all health insurance, because insureds know more about their health condition than insurers).

Why not broccoli? There is no moral hazard or adverse selection problem created when people refuse to buy broccoli. It's true that buying and eating broccoli might make you healthier, but people don't wait until they are sick to buy broccoli. That's because broccoli is not going to do them much good at that point. In this sense, broccoli doesn't work like health insurance.

Why not cars? Under this principle, Congress can't make everyone buy a car in order to help the auto industry. There is no moral hazard or adverse selection problem that Congress is responding to that is caused by people strategically waiting to buy cars. Note, by the way, that if fewer people buy cars, the price of cars might go down, not up, as Justice Scalia thought.

Closest analogy: In United States v. Comstock, the Supreme Court held that Congress could create a civil commitment system for mentally ill prisoners following their criminal sentences when no state wanted to take them. Congress had created a situation in which after long prison terms connections to states were attenuated, and no state wanted to risk being stuck with the costs of civil commitment. As a result, Congress could create its own system.

Seems pretty straightforward to me. What this whole debate over what congress can and can't regulate pertaining to interstate commerce is about is just a difference of degree because it's as plain as can be that congress can regulate commerce. For you originalists, it's right there in the text of the constitution. And I don't hear anyone making the argument that health insurance isn't interstate commerce. Once you frame the debate in that way I think you do a lot of the legwork needed to justify the constitutional merits of the bill.