It’s Not An Health Insurance Mandate, It’s A Tax !

In Court filings the Obama Administration is arguing that the health insurance mandate is a tax, and if they're right the legal challenges to ObamaCare are dead.

While most of the discussion about the legal challenges to the new health care reform law have focused on the Commerce Clause and the Tenth Amendment, the Obama Administration is taking a position in Court that probably sounds unusual to most Americans who’ve been following this debate:

WASHINGTON — When Congress required most Americans to obtain health insurance or pay a penalty, Democrats denied that they were creating a new tax. But in court, the Obama administration and its allies now defend the requirement as an exercise of the government’s “power to lay and collect taxes.”

And that power, they say, is even more sweeping than the federal power to regulate interstate commerce.

Administration officials say the tax argument is a linchpin of their legal case in defense of the health care overhaul and its individual mandate, now being challenged in court by more than 20 states and several private organizations.

Under the legislation signed by President Obama in March, most Americans will have to maintain “minimum essential coverage” starting in 2014. Many people will be eligible for federal subsidies to help them pay premiums.

In a brief defending the law, the Justice Department says the requirement for people to carry insurance or pay the penalty is “a valid exercise” of Congress’s power to impose taxes.

Congress can use its taxing power “even for purposes that would exceed its powers under other provisions” of the Constitution, the department said. For more than a century, it added, the Supreme Court has held that Congress can tax activities that it could not reach by using its power to regulate commerce.

This argument is essentially the same one that law professor Jack Balkin was advancing in March while other bloggers were concentrating on Commerce Clause issues:

The individual mandate, which amends the Internal Revenue Code, is not actually a mandate at all. It is a tax. It gives people a choice: they can buy health insurance or they can pay a tax roughly equal to the cost of health insurance, which is used to subsidize the government’s health care program and families who wish to purchase health insurance.

People are exempt from the tax if they get health insurance through their employer or through Medicare, are poor, are dependents, are in the military, live overseas, or have a religious objection.

The new law keeps insurance companies from denying coverage because of preexisting conditions or from imposing lifetime caps on coverage. The individual mandate makes these popular aspects of health care reform possible.


The Constitution gives Congress the power to tax and spend money for the general welfare. This tax promotes the general welfare because it makes health care more widely available and affordable. Under existing law, therefore, the tax is clearly constitutional.

It’s worth noting in this regard that the provisions regarding the health insurance mandate and related penalties are now parts of the Internal Revenue Code, which in and of itself could be a powerful argument to the Court in favor of the mandate being a tax. Most importantly, though, if the Courts do accept the government’s argument that the mandate is actually a tax the legal challenges to health care reform are doomed, because the Courts have given Congress very broad authority under the General Welfare Clause.

Of course, President Obama has potentially opened himself up to a political problem by advancing this argument:

While Congress was working on the health care legislation, Mr. Obama refused to accept the argument that a mandate to buy insurance, enforced by financial penalties, was equivalent to a tax.

“For us to say that you’ve got to take a responsibility to get health insurance is absolutely not a tax increase,” the president said last September, in a spirited exchange with George Stephanopoulos on the ABC News program “This Week.”

When Mr. Stephanopoulos said the penalty appeared to fit the dictionary definition of a tax, Mr. Obama replied, “I absolutely reject that notion.”

Defending a proposed bill politically is different from defending it in Court, but, as Bruce McQuain notes, there’s potentially some hypocrisy here:

One has to assume they just plan on overwhelming the Court with as many “viable alternatives” as it takes to get their way.

Well, yea, but that’s sort of the definition of litigating. You put forward as many viable arguments as you can because you never know which one is going to persuade the Court to rule in your favor. Is the President really going to pay a political price for what the Dept. of Justice argues in a legal brief ? Personally, I don’t see it happening.

Personally, I find the idea of stretching the General Welfare Clause this far to be absurd and I think the Supreme Court has been far too deferential to Congressional assertions of power like this one. However, the fact of the matter is that Supreme Court precedent stretching back to the New Deal Era clearly justifies it. Unless the Court is willing to overrule about a century worth of precedent, the tax argument is a very strong one for the government.

Of course, even if the tax argument fails, there’s always the Commerce Clause, and a five year old opinion from Justice Scalia that seems to put a nail in any effort to challenge the law under that provision:

Reporting from Washington – Lawsuits from 14 states challenging the constitutionality of the new national healthcare law face an uphill battle, largely due to a far-reaching Supreme Court ruling in 2005 that upheld federal restrictions on home-grown marijuana in California.

At issue in that case — just like in the upcoming challenges to the healthcare overhaul — was the reach of the federal government’s power.

Conservative Justices Antonin Scalia and Anthony M. Kennedy joined a 6-3 ruling that said Congress could regulate marijuana that was neither bought nor sold on the market but rather grown at home legally for sick patients.

They said the Constitution gave Congress nearly unlimited power to regulate the marketplace as part of its authority “to regulate commerce.”

Even “noneconomic local activity” can come under federal regulation if it is “a necessary part of a more general regulation of interstate commerce,” Scalia wrote.

The decision throws up a significant hurdle for the lawsuit filed last week in federal court by 13 state attorneys — all but one a Republican.

Here’s the relevant section from Scalia’s concurrence in Raich:

The regulation of an intrastate activity may be essential to a comprehensive regulation of interstate commerce even though the intrastate activity does not itself “substantially affect” interstate commerce. Moreover, as the passage from Lopez quoted above suggests, Congress may regulate even noneconomic local activity if that regulation is a necessary part of a more general regulation of interstate commerce. See Lopez, supra, at 561. The relevant question is simply whether the means chosen are “reasonably adapted” to the attainment of a legitimate end under the commerce power. See Darby, supra, at 121.

The analysis is longer than this, obviously, but the principle that Scalia states still stands and, if that principle is applied in the challenges to the health care law, the Attorneys General and are Plaintiffs are going to be in a very tight spot to say the least, because its not hard at all to see what the arguments on the other side will be:

In the healthcare legislation, signed by the president Tuesday, Congress required virtually all Americans to have health insurance beginning in 2014. Those who fail to do so could be assessed a tax penalty of up to $750 per year.

Legislators argued that the “individual mandate” was necessary because it would undercut the insurance market if individuals could just opt out of having health insurance. Freeloaders could wait until they were hurt in an accident or contracted a disease and then demand insurance coverage for their “preexisting condition.”

The court’s ruling in the 2005 case, Gonzales vs. Raich, “is an enormous problem” for those who contend that the healthcare mandate is unconstitutional, said Simon Lazarus, a lawyer for the Washington, D.C.-based National Senior Citizens Law Center.

“It clearly says Congress has vast regulatory authority over interstate commerce,” he said.

Indeed, and they have a conservative Justice to thank for it.

FILED UNDER: Law and the Courts, Taxes, US Politics, , , , , , , , , , , , , , ,
Doug Mataconis
About Doug Mataconis
Doug Mataconis held a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010 and contributed a staggering 16,483 posts before his retirement in January 2020. He passed far too young in July 2021.


  1. Zelsdorf Ragshaft III says:

    Here is the deal Doug. If the government can force you to buy something from a private or public seller, of a product, and failing to do so, they levy a tax against you. You are no longer free. You have become not a citizen but a subject. The framers never intended for the federal government to have the kiind of power it wields today. The consititution does not need interpretation. It was written in language citizens can and do understand. The purpose of the court was to make sure legislation fit within the framework of that document.

  2. Zels,

    And if you can convince the Supreme Court to overturn about 100 years of precedent, you’ll be able to get them to reach that conclusion.

    I don’t think the mandate should be Constitutional. Hell, I don’t think a lot of what Congress does is Constitutional, but I’m not on the Supreme Court and neither are you.

    Unfortunately, the odds against ObamaCare being overturned by the Courts are very, very high

  3. James Joyner says:


    There are two ways to look at this, which are the same from an ends standpoint but different from a means standpoint:

    – ObamaCare included a hidden tax on all Americans to fund health insurance, which is automatically rebated — indeed, totally transparent to the end user — for those who have already bought health insurance.

    – ObamaCare is a tax on Americans who don’t buy health insurance.

    The former strikes me as obviously Constitutional in a post-16th Amendment world. The second — which is effectively the same thing! — doesn’t.

    But, yes, either way it’s a tax.

  4. john personna says:

    I don’t think this is surprising to anyone who was paying attention. In fact, I thought past discussions at OTB covered the idea that while a “mandate” with criminal penalties would be unconstitutional, this “tax” would not.

    This thing is still not optimal. No where near it. But this is not a surprise.

  5. anjin-san says:

    Apparently Zells definition of “free” is that he is free to not have medical insurance and free to send the bill to me if he gets sick…

  6. Trumwill says:

    Anjin, I’m not exactly a defender of Zell and his worldview, but I do think it worth nothing that in that worldview, you do not send the bill to someone else if you cannot afford healthcare. You die on the street. The fact that they get the care and the bill gets passed on is the product of the other side of the aisle. Personally, I wouldn’t have it any other way as (broadly) I do not want people dying on the hospital doorsteps for inability to pay (there are limits to this by necessity, of course). I’m not particularly opposed to a mandate (agreeing with John, though, that this is not optimal), but I don’t think support for a mandate means support for passing the bill on to others.

  7. wr says:

    Trumwill — It’s kind of you to attempt to explain Zels’ worldview, and I believe you have it mostly right. But you’re missing a piece. You see, ZR has admitted he’s living on unemployment insurance. He’s taking the government money he screams about other people — darker people? — taking. So while his stated philosophy is that everyone without insurance should die in the street, the one he actually lives by is that EVERYONE BUT HIM without insurance should die in the street, while he should be taken care of at our expense. Which is a pretty typical right-wing attitude.

  8. Trumwill says:

    Even that has a layer of nuance, though, WR. If I don’t believe that we should have Government Program X but I have been paying for GPX for most of my working career through taxes, then I am going to take advantage of GPX if I ever have need to. I don’t oppose unemployment insurance at all (and support lengthening it), but I don’t think I would have a problem collecting it even if I did. After all, it’s something my employer has to pay into whether I believe it or not which in turn makes it harder for me to negotiate a higher salary. Or another way to look at it is with mail-in rebates.

    If I had my druthers, those scams would be outlawed or absent that no business would play that particular game. I avoid them as I can. Sometimes, though, they come with something I’ve purchased. Would it be hypocritical for me to send in my receipt? I don’t think it would be, because the ability to do so was built in to the terms of the purchase. Likewise, the services our government provides is built into the social contract. Whether we like that contract or not.

    There are a couple of decent counterarguments. First is that we’re not actually paying in taxes what we’re spending. So there’s an argument that we’re not actually and fairly paying for the services we’re getting. However, the ledger is different for each individual. Zel himself may be or may not be. Or he may not have yet but over his lifetime will (a lot of doctors have children while residents and collect welfare because they know that they will be paying for it in spades further down the line). In the aggregate, though, we’re not paying for our services and thus we should make due with less for our country’s sake. That doesn’t directly apply to UEI since theoretically it’s paid for by employers, but right now that program is running a deficit and so normal tax arguments apply.

    Again, I am not particularly sympathetic to Zel’s and it’s kinda killing me here that I am taking up for him twice in the same thread. I guess I have a bee in my bonnet on this particular subject. I just don’t think that utilizing a government service automatically means support for it.

  9. anjin-san says:

    I just don’t think that utilizing a government service automatically means support for it.

    Of course not. But personally, I am pretty tired of the far right shrieking about how anyone besides themselves that accepts a government service is a communist leach who hates freedom.

    I am too busy today to go into depth on this, but I appreciate your thoughtful comments.

  10. Drew says:

    “…potentially some hypocrisy here..” Potentially!? As JP pointed out, this is a well discussed, and no doubt well planned bait and switch.

    “Apparently Zells definition of “free” is that he is free to not have medical insurance and free to send the bill to me if he gets sick…”

    Heh. Thanks for your support of a less progressive tax system, anjin-whoops.

    “But personally, I am pretty tired of the far right shrieking about how anyone besides themselves that accepts a government service is a communist leach who hates freedom.”

    You’re hallucinating now, anjin.

  11. sam says:


    ObamaCare is a tax on Americans who don’t buy health insurance.

    The former strikes me as obviously Constitutional in a post-16th Amendment world. The second — which is effectively the same thing! — doesn’t.

    Well, James, consider this: Two individuals with identical incomes. One buys a house and pays a mortgage of $1200/month. The second rents a house for $1200/month. The first takes the mortgage interest deduction, the second cannot. Is not the second being taxed, relative to the first, insofar as he does not buy a house How would you differentiate this from the healthcare situation?

  12. wr says:

    Trumwill — That’s the great game, isn’t it? Government services are an abomination, but it’s okay to take them if you need them. It’s just everyone else who uses them who are commies and leaches and socialists. It’s exactly like the great leaders of the Christian right who say that homosexuality should be criminalized, except for the specific acts that they perform with their rent boys. Yes, you can make the argument that “well, as long as it’s still legal there’s no reason for them not to do it,” but when they are busy condemning other people for doing exactly what they keep hidden it tends to undercut the seriousness of their argument.

    And this really is the core of the Tea Party message: “I’m the only one who counts.” What’s really hilarious is that so many of these people call themselves Christians.

  13. Dave Schuler says:

    Doug, this appears to be the counter-argument, from Randy Barnett:

    Now there are cases that say (1) when Congress does not invoke a specific power for a claim of power, the Supreme Court will look for a basis on which to sustain the measure; (2) when Congress does invoke its Tax power, such a claim is not defeated by showing the measure would be outside its commerce power if enacted as a regulation (though there are some older, never-reversed precedents pointing the other way), and (3) the Courts will not look behind a claim by Congress that a measure is a tax with a revenue raising purpose.

    But I have so far seen no case that says (4) when a measure is expressly justified in the statute itself as a regulation of commerce (as the NYT accurately reports), the courts will look look behind that characterization during litigation to ask if it could have been justified as a tax, or (5) when Congress fails to include a penalty among all the “revenue producing” measures in a bill, the Court will nevertheless impute a revenue purpose to the measure.

    Of course, Stevens may have been right. The law is whatever you can persuade five justices to vote for.

  14. Juneau: says:

    It still (for some strange reason) surprises me that the liberals here just blow right past each incident that shows a two-faced administration. Including this one where this approach makes a liar out of Obama, yet one more time.

    The ends justifies the means for you folks every time doesn’t it.

    You know, you may want to keep in mind that all of the toys only work as long as the states continue to agree to play. It will be interesting to see the reaction when the first state legislature says. ” We don’t care what anyone, including the Supreme Court, says, we are not participating.” I suspect Texas would be a good candidate to make the first stand.

  15. James Joyner says:


    ObamaCare directly taxes those who don’t do something, whereas the interest deduction provides a rebate on taxes to those who do something. (Or, at least, appears to: Many homeowners actually don’t itemize.)

    My argument all along is that, if the courts rule the provision unconstitutional under the Commerce Clause, all Congress has to do is reverse the process: raising taxes on everyone to pay for health care and then providing a credit to those with their own or employer-provided insurance. Same outcome, different process.

  16. sam says:

    “ObamaCare directly taxes those who don’t do something, whereas the interest deduction provides a rebate on taxes to those who do something.”

    Tomato, Tomahto, James.

  17. James Joyner says:

    Tomato, Tomahto, James.

    Maybe. I agree — and have said multiple times in this thread — that they’re effectively the same thing. But the procedure may matter.

    It’s illegal, for example, to impose a surcharge for using a credit card but not to give a “cash discount.”

  18. wr says:

    Juneau — Your contempt for the rule of law is not surprising.

  19. Juneau: says:

    Juneau — Your contempt for the rule of law is not surprising

    Pot, meet kettle…

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