Health-Care Reform May Be Up to Justice Kennedy

As of now, Supreme Court Justice Anthony Kennedy is the most pivotal health-care-policy thinker in America. Following district court Judge Roger Vinson's Jan. 31 ruling that declared President Obama's health-care-reform law unconstitutional, the plan has a solid 2–2 record in the federal courts: two district judges have ruled for it and two against. The odds are very good that it will eventually wind up in the Supreme Court. And once it gets there, odds are the bill's fate will come down to one person: Justice Kennedy.

None of that is certain, of course. Perhaps the issue will be resolved at the circuit-court level. Perhaps Chief Justice John Roberts will side with the administration and Kennedy won't be the swing vote. Or perhaps an asteroid will hit the earth, rendering tweaks to the U.S. health-care system moot.

But probably not. Health-care reform is likely to come down to Kennedy—in particular, his views on the so-called individual mandate, which requires all those who can afford it to purchase health insurance. And here's the irony of the whole thing: the individual mandate was a policy that Democrats adopted precisely in order to attract moderate Republicans like, well, Anthony Kennedy. If it gets rejected, what's likely to come next is going to be a whole lot less congenial to conservatives.

"Health care is unlike other commodities," Walter Dellinger, who served as solicitor general to Bill Clinton, told the Senate Judiciary Committee last week. "There is nothing else in our economy where an individual who has made no preparation can go in and get $1 million of goods and services passed on to them at taxpayer expense." That means it struggles with free riders: people who would have society pay for their care, rather than pay for it themselves.

One solution is single-payer health care, in which everyone pays taxes and everyone gets government-provided health-care insurance. But conservatives aren't big fans of replacing private industries with government monopolies. So in 1991, a group of conservative academics proposed an alternative: the individual mandate, which says that everyone who can afford health-care insurance has to buy it. That means no free riders, no healthy people waiting until they get sick to buy insurance or stick the rest of us with the costs of their care. "We did it because we were concerned about the specter of single-payer insurance, which isn't market-oriented, and we didn't think was a good idea," says Wharton economist Mark Pauly, one of the idea's authors.

For the next 18 years or so, that's the role the individual mandate played. It was what Republicans proposed as a smaller-government alternative to the health-care plans favored by liberals. In November 1993, Sen. John Chafee, a Republican from Rhode Island, proposed the Health Equity and Access Reform Today Act. The legislation became the GOP's semiofficial response to President Bill Clinton's health-care bill, and it was eventually co-sponsored by such influential Republicans as Bob Dole, Richard Lugar, Chuck Grassley, and Orrin Hatch. The other major Republican alternative, the Consumer Choice Health Security Act, included Jesse Helms and Trent Lott as cosponsors, and also included an individual mandate.

Neither bill went anywhere, but they cemented the individual mandate as a central feature of Republican health-care thinking. In Massachusetts, Mitt Romney's 2005 health-care plan used an individual mandate. In the Senate, Utah Republican Bob Bennett joined with Oregon Democrat Ron Wyden to offer the Healthy Americans Act, which included an individual mandate and attracted more bipartisan support than any other universal-coverage bill in history. In the 2008 Democratic presidential campaign, Barack Obama actually opposed the individual mandate—though he reversed himself after the election, once his policy advisers had convinced him of the policy's worth. As recently as June 2009, Grassley was telling Fox News that there was a "bipartisan consensus" in favor of the individual mandate. "That's individual responsibility," he said, "and even Republicans believe in individual responsibility."

But when Republicans failed to stop Obama's health-care law in Congress, they decided to try convincing the courts that the individual mandate represented something new and unprecedented: a regulation of economic inactivity. The Constitution's Commerce Clause gives Congress authority to regulate your actions when you're engaged in commerce, argue these conservatives, but not when you're not engaged in commerce—like when you're choosing not to buy something. Someone deciding not to buy something is, almost by definition, not engaged in commerce, the argument goes.

That strikes many health-care policy experts as an oddly narrow understanding of what the individual mandate does in the context of the free-rider dilemma. As 38 of them—including a few Nobel Prize winners—wrote in a brief to the court, "There is no such thing as 'inactivity' or non-participation in the health care market." Eventually, we all end up as participants in the health-care system, whether we want to or not. The question is simply whether we participate responsibly or irresponsibly—whether we pay for ourselves or have others pay for us.

It will likely fall to Kennedy to resolve this dispute. But some court watchers say his swing vote could produce a dramatic result—regardless of which way he votes. As Jeff Toobin, author of The Nine: Inside the Secret World of the Supreme Court, told me, "He swings for the fences." The bill is likely to be totally fine—or Kennedy is likely to push back broadly against the theory of federal power underlying it.

Oddly enough, Kennedy, the presumed moderate on the court, could usher in an age of immoderation. The individual mandate in the Democrats' health-care law is an example of policy convergence in a period of intense polarization: despite the vitriol, the two parties are closer together on policy questions than they've been in the past. Democrats now often attempt to achieve through market mechanisms what they used to seek through government takeovers. Their adoption of a health-care idea that conservatives supported during most of the last 20 years is only the latest example.

But now that's exactly what's getting them into trouble. And if Kennedy moves to broadly strike down the approach, the health-care debate will turn back to the big-government solutions that conservatives spent so long trying to persuade Democrats to give up.

As Harvard law professor Charles Fried, who served as Reagan's solicitor general, told the Senate Judiciary Committee, no one could have argued that a government-run, single-payer system would be unconstitutional. Medicare proved that. (Fried, by the way, believes the individual mandate is "clearly constitutional.") So that's one point in big government's favor.

The other reason is that expanding public programs, unlike regulating private actors, can be passed through the "reconciliation process"—which means it can't be filibustered. After watching the GOP turn against policy ideas so many of its members had previously supported, Democrats are pretty clear about the fact that bipartisanship on big issues like health care is impossible in our polarized political system. So they'll stick to policies that they can get done with 51 votes, as opposed to policies that need 60. The age of immoderation will have begun.