Neil Siegel (Duke University – School of Law) has posted Free Riding on Benevolence: Collective Action Federalism and the Individual Mandate on SSRN. Here is the abstract:
- Opponents of the minimum coverage provision in the Patient Protection and Affordable Care Act (ACA) argue that this “individual mandate” is beyond the scope of Congress’s commerce power because it regulates the “inactivity” of not purchasing health insurance. Defenders of the mandate argue that it regulates the “activity” of participating in the interstate health care market, including by obtaining health care without paying for it. This Article argues that the distinction between inactivity and activity is irrelevant to the limits of the commerce power.
Drawing from the theory of collective action federalism that he recently articulated with Robert Cooter, the author argues that the Commerce Clause is best understood in light of the collective action problems that the nation faced under the Articles of Confederation, when Congress lacked the power to regulate interstate commerce. One way a collective action problem arises is when people benefit from collective action regardless of whether they contribute to it. To over-come failures to participate in collective action whose effects spill across state borders, Section 8 authorizes Congress to require many kinds of private action.
This authorization includes requiring financially able individuals to obtain health insurance coverage instead of attempting to self-insure or free riding on benevolence by shifting costs to others. To the extent that such free riders are deemed inactive, their inactivity is a problem, not a reason why Congress is powerless to offer a solution. Congress can offer a solution when the states are separately incompetent to solve the problem on their own because of spillover effects. Economic theory and empirical evidence strongly suggest that the states are separately incompetent to solve the free rider problem that the individual mandate aims to address. The free rider problem also illuminates the difficulty of arguing directly that the mandate infringes individual liberty.