If ObamaCare is Unconstitutional, Why Aren’t Medicare and Medicaid?

Now that a federal judge in Virginia has ruled that an individual health insurance mandate is unconstitutional, here is a natural follow-up question: How can Medicare and Medicaid be constitutional?

Legally, the difference is that the latter two programs are government operations, whereas the individual mandate would have compelled people to buy a private product.  Helvering v. Davis (1937) was the famous (or infamous) case wherein the U.S. Supreme Court found that the Social Security Act was constitutional. As Robert A. Levy and William Mellor explain in their excellent book, The Dirty Dozen: How Twelve Supreme Court Cases Radically Expanded Government and Eroded Freedom, the Administration cleverly argued that the Social Security payroll tax and Social Security checks completely independent operations. The first lies within Congress’ taxing power, and the second lies within its power to spend for the “general welfare.” Because Medicare was an amendment to the Social Security Act, it is also constitutional, according to this reasoning.

People are often shocked to learn that Social Security and Medicare are not “entitlements” at all.  Congress could pass a law stopping all Social Security and Medicare payments tomorrow, and no citizen would have a legal claim against the government based on how much payroll tax he or she had paid into the so-called “Trust Fund.”  Because Medicaid is financed by general tax revenue, its constitutionality under the general-welfare clause is even more secure, according to current legal reasoning.

For a non-lawyer, the distinction is silly. The stated goals of all three programs: Medicaid, Medicare, and ObamaCare, are to lay paving stones on the path to “universal” coverage. The Founding Fathers had no notion of government-run health care, so they would surely find it absurd that 20th and 21st century jurisprudence allows Congress to tax Jack to pay for Jill’s health insurance, and tax Jill to pay for Jack’s health insurance, but cannot tax Jack to pay for Jack’s health insurance.

In a sane world, this matter would have to be resolved in one direction or the other.  As an advocate of individual choice, I hope the Virginia ruling stands up and that its shock-wave crashes up against Medicare and Medicaid. Yet I am not very confident.

All the while, single-payer health care crowd may find a lot to like in this ruling. They may even be high-fiving each other right now: “The individual mandate is unconstitutional! Time to move on to Medicare-for-all — Ted Kennedy’s dream!”.

ObamaCare can be mortally wounded in federal court, but it can only be slain in the court of public opinion.

Comments (13)

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  1. Larry C. says:

    For sure, the founding fathers would not have thought Social Security and Medicare were Constitutional.

  2. Jeff says:

    Sounds like Social Security was found to be constitutional only by pretending that it is not a government run retirement plan.

  3. Bruce says:

    Where in the constitution does it say that it’s OK for the federal government to rob Peter to pay Paul? Case closed.

  4. Devon Herrick says:

    Many experts believe the individual mandate is unconstitutional due to the requirement that individuals must purchase what is essentially a commercial product. I too find this provision of the ACA problematic. However, it is worrisome that mandating private coverage could be found unconstitutional while mandating public coverage somehow is constitutional.

  5. Joe Barnett says:

    People are concerned about alleged “cuts” in entitlement benefits: but is there anyone who can say how much (or what) exactly they are entitled to?
    There are projections of per capita (average) Medicare spending and the SSA estimates future individual SS benefits (based on asumptions about one’s future earnings history, inflation etc.) but no can say in advance how much they will get. To me, that doesn’t sound like an entitlement.

  6. Kylie says:

    Social Security is a government run insurance program. We pay into it, and our employers match what we pay in. The purpose is, we can receive money if we become disabled or when we are too old to work any longer. The program does not receive additional grants from the federal government – therefore, it is not an “entitlement” program. However, the government does give itself permission to “borrow” billions from Social Security to fund wars, or whatever else they deem “worthy”. Why is it sooo important to cut Social Security and Medicare – programs that benefit the American people – but not important to reinstate Glass-Steagall (so we can reclaim billions from the banker bailouts) or to end our involvement in bankrupting foreign wars?

    Contrary to what the author of this article claims, ObamaCare, is not another example of a helpful program (like Medicare or Social Security) at all. It would force individuals to purchase private insurance, effectively forcing the American people to bail out the health insurance companies (the same companies that jeopardized their financial solvency by playing (and losing) in the derivatives market during the bubble). Glass-Steagall’s restoration would solve this problem as well (Insurance companies speculating? It was illegal under Glass-Steagall, until 1999). Furthermore, the program would set up an appointed board, similar to NICE in the UK, which would approve treatments for various age-groups enrolled in the program. This means unelected persons, who we cannot fire, will decide which treatments are the right combination of effective and cost-effective enough to be offered to citizens. One of the results of NICE’s decisions in the UK has been a spike in the number of UK deaths due to prostate cancer.

    Should health care be for-profit? It wasn’t allowed to be for many years and we had better service and lower overhead in those days. The health care corporations are now too easy for Wall Street to manipulate, since the heads of these companies are far more concerned with their “valuation” on the market than they are with quality of care. Read Wendell Potter’s new book “Deadly Spin” for a more complete inside look.

  7. Brian Williams. says:

    The Commerce Clause of the Constitution is often cited as the justification for Congress to create these types of entitlement programs.

    Perhaps James Madison miscalculated when he said, “The regulations of commerce, it is true, is a new power; but that seems to be an addition which few people oppose, and from which no apprehensions are entertained.” Maybe Madison just didnt’ understand the Constitution…

  8. Linda Gorman says:

    The requirement that people join Medicare Part A or lose their Social Security benefits is being challenged in a lawsuit, Hall v. Sebelius. It contends that in 1993 the Social Security Administration conjured the requirement out of thin air and that the regulation has no basis in federal law.

  9. Don Levit says:

    Excellent article.
    You nailed it regarding the constitutionality of being able to tax on the one hand and being able to appropriate benefits on the other hand, and the 2 are not directly related.
    When people understand this, they are naturally dumbfounded, and simply go into the first stage of grieving, denial.

    The FASAB is the accounting advisor for the federal government, similar to the FASB for private employers and the GASB for states and localities.
    In its paper paper “Accounting for Social Insurance, Revised,” it states:
    Page 85 “Social insurance is not an employee benefit. The accounting methods for employee retirement benefits reflect the fact that employees voluntarily exchange lower wages during their working years to receive certain future benefits. Such an exchange does not occur with social insurance benefits.”
    Page 87 “A nonexchange transaction arises when one party receives value without directly giving or promising value in return. In regards to social insurance benefits the federal government gives value to beneficiaries WITHOUT RECEIVING VALUE IN RETURN. THE FACT THAT BENEFITS PAID ARE NOT BASED ON THE AMOUNT OF TAXES PAID CONFIRMS THE NONEXCHANGE NATURE OF SOCIAL INSURANCE.”
    Click on Exposure Drafts and Documents for Comment.
    Don Levit

  10. Virginia says:

    My theory: No one challenged these programs because at the time they were created, it wasn’t a big part of the budget, and most people didn’t care.

    We care now because it might (probably will) materially impact us.

    I personally think that Medicare-for-All is coming. Too many people inside the medical community (and society in general) are too willing to hand the reins over if it means more money. (Once again, a cynical view, but a view nonetheless.)

  11. Dan says:

    People are not shocked that SS is not a entitlement, most citizens know it is an insurance program for old age or disability.

    What is shocking is the lies that SS needs to be cut because the national debt is too high and SS is adding to the debt. This is a complete lie by the people who want to roll back all of the new deal provisions to make life bearable for elderly people and disabled. How many of you want to go back to the days of poorhouses and workhouses for the elderly poor and the disabled? Look what life was like for those people before the advent of SS and Medicare. The suicide rate for the elderly dropped greatlty after they had some security and a safety net.

    SS has a surplus which has been invested in Treasury Bills. conservatives want us to believe that SS is broke and adding to the deficit but that is a lie. SS has $2.7 trillion surplus and it is invested in the same way as retirement funds, sovereign wealth funds, Chinese government, Japanese government and banks inest. Are they saying that SS should not be paid back? That we should renege on our T-bills? Then should we not also renege on all the T-bill and bonds sold? Why would SS trust fund be any different? Following that course would destroy the economic system of the world. Have at it!

    Do you want to go back to those days of the robber barons and the gilded age where there were only two classes- the ultra rich and the poor. I will tell you this, if your efforts are successful then the republic will be torn apart by class division and strife.

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