Broccoli-Bungling Defense Hurts Health Care
What’s the difference between broccoli and health insurance?
The fate of President Barack Obama’s health-care plan rests on this question, which Supreme Court Justice Antonin Scalia pressed on Solicitor General Don Verrilli. There is a good answer. Unfortunately, in oral arguments before the court Tuesday, Verrilli faltered in giving it.
The argument goes like this: If the government can require individuals to buy health insurance because there is a market for health care, what is to stop the government from requiring people to purchase broccoli on the ground that there is also a market in food?
Verrilli insisted that health care is different because the need for it is unpredictable and involuntary. Scalia was openly scornful, suggesting that this was a distinction without a difference.
Verrilli’s failure to offer a sharp distinction could be disastrous for the government’s case. Scalia’s vote was probably lost already. But Justice Anthony Kennedy was listening intently, and a similar question was bothering him.
Traditionally, Kennedy pointed out, the common law does not penalize inaction. But here, he said, the government was asserting the ability “to tell the individual citizen” that he “must act, and that is different from what we have in previous cases and that changes the relationship of the federal government to the individual in the very fundamental way.”
Liberty and Dignity
Kennedy was expressing the worry that penalizing someone for failing to do something infringes on liberty in a different way from putting conditions on the things a citizen does. Individual liberty, along with dignity, is one of Kennedy’s constitutional touchstones. If he believes that the health-care law is a new kind of infringement on individual liberty, Kennedy will not uphold it.
In fact, Kennedy asked Verrilli, “When you are changing the relation of the individual to the government … do you not have a heavy burden of justification to show authorization under the Constitution?” This query was especially chilling for proponents of the law. Kennedy was rehearsing a route he could use to strike it down. He might say that a new kind of infringement on liberty must be justified by a compelling government reason -- one that Verrilli clearly did not provide.
What, Kennedy wanted to know, is the limiting principle on the government’s ability to regulate? There is a good, sharp answer to this wholly reasonable question. And although Verrilli did not quite manage to make it, he may be able to do so on Wednesday, when the court discusses whether the mandatory coverage provision can be severed from the rest of the law if, indeed, the court wants to strike the mandate down.
The answer is that health care insurance is different because if the healthy people fail to get themselves coverage, it becomes extremely difficult -- under some conditions, impossible -- for the insurance market to operate. That is, as the healthiest people leave the pool, the market for health insurance starts to unravel, as people who would buy it at a price where the insurance companies would be willing to provide it will be unable to do so.
In other words, when it comes to the strange and unusual case of health insurance, inaction causes the whole market to break down. By not buying health insurance, the healthiest person is depriving everyone of a public good. By sitting on their hands -- and acting rationally -- people who do not purchase insurance are unintentionally causing the market to fail.
The limiting principle that Kennedy was seeking is therefore readily at hand. The government can penalize inaction only when that inaction deprives everyone else of a public good. That happens very rarely in the real world. There must be an asymmetry of information about the relevant facts governing insurance -- like the difference between my knowledge of how healthy I am and the insurance company’s ability to suss it out. And the market must be one in which that information asymmetry leads to adverse selection.
Kennedy was therefore correct when he said, in his last comment, “In the insurance and health-care world … the young person who is uninsured is uniquely proximately very close to affecting the rates of insurance and the costs of providing medical care in a way that is not true in other industries.”
Broccoli, by contrast, presents no problems of adverse selection. Scalia’s intuition is that the federal government may not go around ordering people to buy things that they do not wish to buy. That intuition is plausible. The Constitution gives Congress the power to regulate interstate commerce, which has been held to extend to essentially all economic activity. Inaction is ordinarily not economic activity -- not unless perfectly reasonable inaction throws an entire market into dysfunction.
During the argument, Justice Samuel Alito asked whether the government could require people to buy burial insurance. Justice Stephen Breyer boldly suggested that the answer was yes: after all, he seemed to think, everyone dies, and burial is an economic activity. If the government provided its own burial insurance, and wanted to “rationalize” the market, it could mandate burial insurance.
Breyer may be right to dismiss the difference between action and inaction when inaction imposes costs on others. But as a limiting principle, this would be a pretty thin reed. After all, all kinds of inaction impose spillover costs on third parties. If I and others boycott broccoli, our inaction is intended to affect demand, and so to change the practices of, for example, the broccoli growers. To accept Breyer’s position is to allow the slippage in individual liberty that Kennedy seems to fear.
But inaction is different in the health insurance context. If I choose not to buy broccoli, others can still buy it at a market price. If I choose not to buy health insurance, universal coverage becomes impossible. That is a fundamental difference. The solicitor general should say so. If he does, Justice Kennedy should listen.
(Noah Feldman, a law professor at Harvard University and the author of “Scorpions: The Battles and Triumphs of FDR’s Great Supreme Court Justices,” is a Bloomberg View columnist. The opinions expressed are his own.)
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