Requiring Individuals to Obtain Health Insurance: A Constitutional Analysis

Jennifer Staman
Legislative Attorney

Cynthia Brougher
Legislative Attorney

Edward C. Liu
Attorney Adviser (General)

Erika K. Lunder
Legislative Attorney

Kenneth R. Thomas
Legislative Attorney

As part of the Patient Protection and Affordable Care Act (PPACA), P.L. 111-148, as amended, Congress enacted a “minimum essential coverage requirement,” a provision compelling certain individuals to have a minimum level of health insurance (i.e., an “individual mandate”). Individuals who fail to do so may be subject to a monetary penalty, administered through the tax code. Although the federal government provides health coverage for individuals through federal programs such as Medicare, it had never before required individuals to purchase health insurance.

This report analyzes certain constitutional issues raised by compelling individuals to purchase health insurance. It addresses the authority of Congress to pass a law of this nature under its taxing power or its power to regulate interstate commerce. With regard to the taxing power, the requirement to purchase health insurance might be construed as a tax and upheld so long as it was found to comply with the constitutional restrictions imposed on direct and indirect taxes. On the other hand, opponents of the minimum essential coverage requirement may argue that since it is imposed conditionally and may be avoided by compliance with regulations set out in the statute, that the requirement may be more accurately described as a penalty. If so, the taxing power alone might not provide Congress the constitutional authority to support this provision.

In evaluating under the minimum essential coverage requirement under the Commerce Clause, a court may rely on Supreme Court precedent and look to several factors to determine whether the minimum essential coverage requirement passes constitutional muster. Among many other things, a court may evaluate whether the requirement is a regulation of economic activity. One could argue that the requirement to purchase health insurance is economic in nature because it regulates how an individual participates in the health care market, through insurance or otherwise. On the other hand, it may be argued that the minimum essential coverage requirement goes beyond the bounds of the clause, because while regulation of the health insurance industry or the health care system is economic activity, regulating a choice to purchase health insurance is not.

It has been questioned whether the requirement to have health insurance might violate certain protections found under the U.S. Constitution. This report discusses how a court might evaluate a challenge to the minimum essential coverage requirement on Fifth Amendment due process, takings clause, or equal protection grounds, as well as under the Tenth Amendment. This report also addresses whether the exceptions to the minimum essential coverage requirement to purchase health insurance satisfy First Amendment freedom of religion protections.

Several lawsuits challenge the minimum essential coverage requirement on constitutional grounds. While some cases are currently pending, two appellate courts’ decisions on the constitutionality of the requirement have reached opposite holdings. In Florida v. HHS, attorneys general and governors in 26 states as well as others brought an action against the Secretaries of Health and Human Services, Treasury, and Labor, seeking relief from certain provisions of PPACA. On August 12, 2011, the Eleventh Circuit held that the minimum essential coverage requirement is unconstitutional. Conversely, the Sixth Circuit in Thomas More Law Center v. Obama upheld the minimum essential coverage requirement as a constitutional exercise of the Commerce Clause. Other courts, such as the Fourth Circuit in Virginia v. Sebelius and Liberty University v. Geithner, dismissed these challenges, not based on the merits of the case, but for procedural reasons. Several petitions for Supreme Court review were filed, and on November 14, 2011, the Supreme Court agreed to hear the appeal in the Florida case. Oral arguments in this case are expected to take place in March 2012.


Date of Report: November 15, 2011
Number of Pages: 36
Order Number: R40725
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Definition of Income in PPACA for Certain Medicaid Provisions and Premium Credits

Janemarie Mulvey, Coordinator
Specialist in Health Care Financing

Evelyne P. Baumrucker
Analyst in Health Care Financing

Bernadette Fernandez
Specialist in Health Care Financing

Christine Scott
Specialist in Social Policy

Under the Patient Protection and Affordable Care Act (PPACA; P.L. 111-148, as amended), the definition of income for eligibility for certain Medicaid populations and premium credits in the exchanges is based on modified adjusted gross income (MAGI). The initial intent of using MAGI was to standardize the definition of income for Medicaid eligibility purposes to reduce some of the variability and complexity that exists under the current program and to provide consistency between Medicaid and the health insurance exchange. The use of MAGI, however, has raised some concerns among Congress and the Obama Administration, as it excludes some types of income either partially or altogether. Of particular interest has been the potential impact of eligibility for Medicaid and premium credits for early retirees (aged 62 through 64) receiving Social Security benefits, as some or all of their Social Security income may be excluded from the MAGI definition of income. By excluding some types of income, individuals and families with a higher percentage of total income relative to the federal poverty level may qualify for Medicaid and premium credits. A recent cost estimate by the Congressional Budget Office finds that changing the MAGI income calculation to include all Social Security benefits would reduce the deficit by $13 billion over the 2012-2021 period.

President Obama included in his deficit reduction proposal changing the definition of income for these programs. There have also been a number of legislative proposals introduced and passed in both chambers of Congress to change the definition of income to include the non-taxable portion of Social Security benefits in the definition of MAGI. Most notably, H.R. 674 was passed by the House on October 27, 2011, and amended by the Senate and passed on November 10, 2011. The bill now must go back to the House for consideration. In evaluating these proposals, a number of issues might be considered. First, an alternative definition may add complexity compared with the use of MAGI. Specifically, because adjusted gross income (on which MAGI is based) can be computed largely from information on an individual’s federal tax return, verification of income is streamlined. If an alternative definition is used that is not based on tax return information, the administrative complexity of verifying nontaxable income from different sources comes into play. Second, the definition was developed to ensure coordination between Medicaid and premium credits in the health insurance exchange. A change in the definition of income for Medicaid should then also apply to premium credits to ensure consistency between Medicaid and the premium credit offered to selected individuals who purchase private health insurance through the exchanges. Finally, many of the current legislative proposals have focused largely on the inclusion of Social Security benefits in income definitions for eligibility purposes. However, most other low-income programs include other types of income (e.g., nontaxable pensions) and asset holdings that are also excluded from MAGI.


Date of Report: November 10, 2011
Number of Pages: 24
Order Number: R41997
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Illicit Drug Policy: A Compendium

This collection of five in-depth Congressional Research Service studies opens with a discussion of issues relating to the reauthorization of the Office of National Drug Control Policy. It examines the disparities in federal cocaine sentencing, looks at the issue of fines and terms of imprisonment for drug offenses, addresses warrantless seizures in forfeiture cases, and discusses legal issues relating to the disposal of dispensed controlled substances.

Policy makers have sustained interest in various aspects of illicit drug control. The Obama Administration has indicated that a comprehensive National Drug Control Strategy should include a range of prevention, treatment, and law enforcement elements. One issue of concern to Congress involves the federal government’s role in quelling drug trafficking and related violence. The debate may involve how much aid to provide to state and local law enforcement to combat drug-related crimes, how to combat criminal organizations that are involved in the large-scale trafficking of illicit substances, and how to measure the success of federal drug control efforts.

Over the past 25 years, Congress subjected more criminal acts to mandatory minimum penalties. Nowhere is this more apparent than with federal drug laws. Parallel to the federalization of more crimes, Congress led the way in reforming the way in which the United States punishes law violators. With a de-emphasis on rehabilitation and an emphasis on just desert, in 1984, Congress passed legislation that abolished parole and created presumptive sentencing guidelines. Mandatory minimum penalties and presumptive sentencing guidelines were seen as mechanisms to eliminate judicial discretion and disparities in sentencing, while bringing transparency to the process. They appear, however, to have produced unintended consequences, including increased racial and ethnic disparities in federal prisons and increased incarceration of non-violent, drug offenders.

Reforming the federal sentencing system has been particularly contentious with regards to statutory mandatory minimums imposed for certain drug offenses, including the drug quantity ratio disparity between crack and powder cocaine. The 111th Congress acted to reduce the previously existing 100-1 disparity in crack/powder cocaine quantities that trigger mandatory minimum penalties for specified crimes. The Fair Sentencing Act of 2010 (P.L. 111-220) reduced the statutory ratio to 18:1, by increasing the threshold amount of crack cocaine to 28 grams (for the five-year sentence) and 280 grams (for the 10-year sentence) and eliminating the five-year mandatory minimum for simple possession of crack cocaine.

Date of Compendium: October 20, 2011
Number of Pages: 84
Order Number: IS20284
Price: $29.95. Subscribers to Congressional Research Report pay $14.97

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Requiring Individuals to Obtain Health Insurance: A Constitutional Analysis

Jennifer Staman
Legislative Attorney

Cynthia Brougher
Legislative Attorney

Edward C. Liu
Legislative Attorney

Erika K. Lunder
Legislative Attorney

Kenneth R. Thomas
Legislative Attorney

As part of the Patient Protection and Affordable Care Act (PPACA), P.L. 111-148, as amended, Congress enacted a “minimum essential coverage requirement,” a provision compelling certain individuals to have a minimum level of health insurance (i.e., an “individual mandate”). Individuals who fail to do so may be subject to a monetary penalty, administered through the tax code. Although the federal government provides health coverage for individuals through federal programs such as Medicare, it had never before required individuals to purchase health insurance.

This report analyzes certain constitutional issues raised by compelling individuals to purchase health insurance. It addresses the authority of Congress to pass a law of this nature under its taxing power or its power to regulate interstate commerce. With regard to the taxing power, the requirement to purchase health insurance might be construed as a tax and upheld so long as it was found to comply with the constitutional restrictions imposed on direct and indirect taxes. On the other hand, opponents of the minimum essential coverage requirement may argue that since it is imposed conditionally and may be avoided by compliance with regulations set out in the statute, that the requirement may be more accurately described as a penalty. If so, the taxing power alone might not provide Congress the constitutional authority to support this provision.

In evaluating under the minimum essential coverage requirement under the Commerce Clause, a court may rely on Supreme Court precedent and look to several factors to determine whether the minimum essential coverage requirement passes constitutional muster. Among many other things, a court may evaluate whether the requirement is a regulation of economic activity. One could argue that the requirement to purchase health insurance is economic in nature because it regulates how an individual participates in the health care market, through insurance or otherwise. On the other hand, it may be argued that the minimum essential coverage requirement goes beyond the bounds of the clause, because while regulation of the health insurance industry or the health care system is economic activity, regulating a choice to purchase health insurance is not.

It has been questioned whether the requirement to have health insurance might violate certain protections found under the U.S. Constitution. This report discusses how a court might evaluate a challenge to the minimum essential coverage requirement on Fifth Amendment due process, takings clause, or equal protection grounds, as well as under the Tenth Amendment. This report also addresses whether the exceptions to the minimum essential coverage requirement to purchase health insurance satisfy First Amendment freedom of religion protections.

Several lawsuits challenge the minimum essential coverage requirement on constitutional grounds. While some cases are currently pending, two appellate courts’ decisions on the constitutionality of the requirement have reached opposite holdings. In Florida v. HHS, attorneys general and governors in 26 states as well as others brought an action against the Secretaries of Health and Human Services, Treasury, and Labor, seeking relief from certain provisions of PPACA. On August 12, 2011, the Eleventh Circuit held that the minimum essential coverage requirement is unconstitutional. Conversely, the Sixth Circuit in Thomas More Law Center v. Obama upheld the minimum essential coverage requirement as a constitutional exercise of the Commerce Clause. Other courts, such as the Fourth Circuit in Virginia v. Sebelius and Liberty University v. Geithner, dismissed these challenges, not based on the merits of the case, but for procedural reasons. Currently, several petitions for Supreme Court review of the cases are pending, and commentators expect that the Court will hear one or more of these cases during its 2011-2012 term.


Date of Report: November 4, 2011
Number of Pages: 36
Order Number: R40725
Price: $29.95

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Health Care: Constitutional Rights and Legislative Powers

Kathleen S. Swendiman
Legislative Attorney

The health care reform debate raises many complex issues including those of coverage, accessibility, cost, accountability, and quality of health care. Underlying these policy considerations are issues regarding the status of health care as a constitutional or legal right. This report analyzes constitutional and legal issues pertaining to a right to health care, as well as the power of Congress to enact and fund health care programs. Following the passage of the Patient Protection and Affordable Care Act, P.L. 111-148, legal issues have been raised regarding the power of Congress to mandate that individuals purchase health insurance, and the ability of states to “nullify” or “opt out” of such a requirement. These issues are also discussed.

The U.S. Constitution does not set forth an explicit right to health care. While the Supreme Court would likely find that the Constitution provides a right to obtain health care services at one’s own expense from willing providers, the Supreme Court has never interpreted the Constitution as guaranteeing a right to health care services from the government for those who cannot afford it. The Supreme Court has, however, held that the government has an obligation to provide medical care in certain limited circumstances, such as for prisoners.

While the U.S. Constitution and Supreme Court interpretations do not identify a constitutional right to health care for those who cannot afford it, Congress has enacted numerous statutes, such as Medicare, Medicaid, and the Children’s Health Insurance Program, that establish and define specific statutory rights of individuals to receive health care services from the government. As a major component of many health care entitlement statutes, Congress has provided funding to pay for the health services provided under law. Most of these statutes have been enacted pursuant to Congress’s authority to “make all Laws which shall be necessary and proper” to carry out its mandate “to … provide for the … general Welfare.” The power to spend for the general welfare is one of the broadest grants of authority to Congress in the U.S. Constitution. The Supreme Court accords considerable deference to a legislative decision by Congress that a particular health care spending program provides for the general welfare.

Recently, Congress enacted comprehensive health care reform legislation, P.L. 111-148, which includes a requirement, effective in 2014, that individuals purchase health insurance, and which significantly expands the Medicaid program. A number of lawsuits have been filed challenging various provisions of this legislation, including the power of Congress to enact an individual mandate to purchase health insurance under the Commerce Clause or other provisions of the U.S. Constitution. These lawsuits are in various stages of litigation. Significantly, there is now a split in the circuit courts, with the 11th Circuit Court of Appeals invalidating the individual health insurance mandate, the Sixth Circuit Court of Appeals upholding the same provision, and the Fourth Circuit Court of Appeals dismissing two cases for lack of standing. All four cases have been appealed to the Supreme Court for review, thus making it likely that the High Court will accept and rule on one or more of the constitutional issues presented to it. In addition, several states have passed laws, or amended their state constitutions, to attempt to “nullify” or “opt out” of the federal individual health insurance mandate. Direct conflicts between federal laws and state nullification statutes or state constitutional amendments would raise constitutional issues which are likely to be resolved in favor of federal law under the Supremacy Clause of the U.S. Constitution. A number of state constitutions contain provisions relating to health and the provision of health care services. State constitutions may provide constitutional rights that are more expansive than those found under the federal Constitution since federal rights set the minimum standards for the states.


Date of Report: November 3, 2011
Number of Pages: 21
Order Number: R40846
Price: $29.95

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