The Right Opinion

Obamacare's Contract Problem

By George Will · Mar. 25, 2012

WASHINGTON – On Monday the Supreme Court begins three days of oral arguments concerning possible – actually, probable and various – constitutional infirmities in Obamacare. The justices have received many amicus briefs, one of which merits special attention because of the elegant scholarship and logic with which it addresses an issue that has not been as central to the debate as it should be.

Hitherto, most attention has been given to whether Congress, under its constitutional power to regulate interstate commerce, may coerce individuals into engaging in commerce by buying health insurance. Now the Institute for Justice, a libertarian public interest law firm, has focused on this fact: The individual mandate is incompatible with centuries of contract law. This is so because a compulsory contract is an oxymoron.

The brief, the primary authors of which are IJ’s Elizabeth Price Foley and Steve Simpson, says Obamacare is the first time Congress has used its power to regulate commerce to produce a law “from which there is no escape.” And “coercing commercial transactions” – compelling individuals to sign contracts with insurance companies – “is antithetical to the foundational principle of mutual assent that permeated the common law of contracts at the time of the founding and continues to do so today.”

In 1799, South Carolina’s highest court held: “So cautiously does the law watch over all contracts, that it will not permit any to be binding but such as are made by persons perfectly free, and at full liberty to make or refuse such contracts. … Contracts to be binding must not be made under any restraint or fear of their persons, otherwise they are void.” Throughout the life of this nation it has been understood that for a contract to be valid, the parties to it must mutually assent to its terms – without duress.

In addition to duress, contracts are voidable for reasons of fraud upon, or the mistake or incapacity of, a party to the contract. This underscores the centrality of the concept of meaningful consent in contract law. To be meaningful, consent must be informed and must not be coerced. Under Obamacare, the government will compel individuals to enter into contractual relations with insurance companies under threat of penalty.

Also, the Supreme Court in Commerce Clause cases has repeatedly recognized, and Congress has never before ignored, the difference between the regulation and the coercion of commerce. And in its 10th Amendment cases (“The powers not delegated to the United States by the Constitution, nor prohibited by it to the states, are reserved to the states respectively, or to the people”) the court has specifically forbidden government to compel contracts.

In 1992, the court held unconstitutional a law compelling states to “take title to” radioactive waste. The court said this would be indistinguishable from “a congressionally compelled subsidy from state governments” to those who produced the radioactive waste. Such commandeering of states is, the court held, incompatible with federalism.

IJ argues: The 10th Amendment forbids Congress from exercising its commerce power to compel states to enter into contractual relations by effectively forcing states to “buy” radioactive waste. Hence “the power to regulate commerce does not include the power to compel a party to take title to goods or services against its will.” And if it is beyond Congress' power to commandeer the states by compelling them to enter into contracts, it must likewise be beyond Congress' power to commandeer individuals by requiring them to purchase insurance. Again, the 10th Amendment declares that any powers not given to the federal government are reserved to the states or to the people.

Furthermore, although the Constitution permits Congress to make laws “necessary and proper” for executing its enumerated powers, such as the power to regulate interstate commerce, it cannot, IJ argues, be proper to exercise that regulatory power in ways that eviscerate “the very essence of legally binding contracts.” Under Obamacare, Congress asserted the improper power to compel commercial contracts. It did so on the spurious ground that this power is necessary to solve a problem Congress created when, by forbidding insurance companies to deny coverage to individuals because of pre-existing conditions, it produced the problem of “adverse selection” – people not buying insurance until they need medical care.

IJ correctly says that if the court were to ratify Congress' disregard for settled contract law, Congress' “power to compel contractual relations would have no logical stopping point.” Which is why this case is the last exit ramp on the road to unlimited government.

© 2012, Washington Post Writers Group

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Mikeecho said:

Our government is in very short supply of logic. If I am not mistaken it was the former Speaker who said of Obamacare, "It needs to be passed so we can find out what's in it." Pure logic.

Sunday, March 25, 2012 at 1:03 AM

Jeremy said:

The Institute for Justice makes a very compelling argument. Yet, does anyone really believe that any constitutional argument---no matter how compelling---will convince any of the 4 liberal Supreme Court justices to vote down any aspect of Obamacare? To those people, it simply does not matter what the Constitution says---they know "better".

Sunday, March 25, 2012 at 1:30 AM

JDB Esq said:

Although I do not practice Contract Law, I enjoyed it in law school. As I recall, George Will is exactly right in what he relates.The essence of contracts is that all sides in a contract be in voluntary accord with one another. Compulsion is antithetical in contracts. If government is allowed to compel, what could happen to the Bill of Rights Fifth Amendment, which states, in part, that a person in a criminal case must not be compelled to be a witness against himself? Good essay George Will.

Sunday, March 25, 2012 at 1:40 AM

Oathkeeper Scott in Texas said:

The progressives want to blur the difference between 'contracts' and 'chains'. If successful: imagine!

Sunday, March 25, 2012 at 4:27 AM

Fed Up said:

"White House claims Supreme Court will uphold Obamacare individual mandate." (David Plouffe). Fox News. If they do, I hope they are prepared for a rebellion by millions of Constitutional minded Americans.We should be preparing in groups throughout the country in case our country crosses the threshold from individual freedom and liberty into Marxism, since there is no other way to classify this authoritarian governments forceful mandate. This will be the straw that breaks the proverbial camels back!

Sunday, March 25, 2012 at 11:02 AM

Tex Horn said:

If the individual mandate is upheld by the Supreme Court, welcome to the American dictatorship, one of Obama's goals from the beginning. This is the "change" he had in mind all emulate his hero, Hugo Chavez. Next, the government will demand that every household buy a Chevy Volt. And the New Black Panther Party will be his enforcement thugs. Okay, maybe this is fantasy, or is it?

Sunday, March 25, 2012 at 12:30 PM

Holmes Simons said:

The IJ has made a courageous and accurate argument, and it makes one wonder what kind of mind-numbing substances all of the Republican lawyers in Congress have been snorting. Maybe constantly perjuring oneself and failing to abide by one's "solemn oath" to protect American citizens from domestic enemies, like an Obama, makes one senile. Pretending Obama is the President to disguise the truth of one's complicity in fraud certainly makes one a yellow-bellied coward. I'll bet the Chrysler bondholders are glad to see this argument. Obama is just so smart, Harvard waived Contract Law from his cirriculum so he and his communist professors could concentrate on anti-American theories to be implemented in destroying this great country.Whenever Court is in session, Ginsburg, Kagan, and Sotomayor carry a lock of Barry's kinky hair in their panties, and even logic may fail to sway their liberal hearts into believing the truth. What a pathetic bunch of political whores.

Sunday, March 25, 2012 at 4:27 PM

B. Johnson said:

Thanks for the good news concerning Obamacare versus contract law Mr. Will.And despite the media circus questioning the constitutionality of Obamacare, note that the USSC has previously clarified in case opinions that the states have never delegated to Congress via the Constitution the specific power to address healthcare issues. Note the terms "health laws" and "medical practice" in the following excerpts from SC case opinions. "State inspection laws, health laws, and laws for regulating the internal commerce of a State, and those which respect turnpike roads, ferries, &c. are not within the power granted to Congress." --Justice John Marshall, Gibbons v. Ogden, 1824. Note that Justice Barbour referenced the above excerpt in New York v. Miln, expanding it as follows. "Inspection laws, quarantine laws, health laws of every description, as well as laws for regulating the internal commerce of a state and those which respect turnpike roads, ferries, &c., are component parts of this mass." --Justice Barbour, New York v. Miln, 1837. And before Constitution-ignoring socialist FDR nuked the Supreme Court with activist justices, Constitution-respecting justices had reflected on the excerpts above by clarifying in Linder v. United States that the states have never granted Congress the constitutional authority to stick its big nose into intrastate medical practice. “Direct control of medical practice in the states is obviously beyond the power of Congress.” –Linder v. United States, 1925.The bottom line concerning constitutionally indefensible federal Obamacare is this. Congress wrongly ignored Article V of the Constitution which requires Congress to first successfully petition the states to ratify a proposed amendment to the Constitution which would have granted Congress specific new power, the power to regulate public healthcare in this case, before establishing Obamacare. And Congress has been wrongly ignoring Article V for 60+ years.

Sunday, March 25, 2012 at 6:24 PM

Common Sense GPS said:

Compelling essay Mr.Will.....BUT I have a bad feeling about this! Logic doesn't follow Supreme Court rulings anymore. All you have to do is look at the Kelso ruling invovling seizing private property.

Sunday, March 25, 2012 at 7:03 PM

Merry in Cave Creek, AZ said:

As the case is stated by IJ, it's a win. No ifs, ands, or buts. NO ONE can refute the basics of contracts and laws that govern them. After well over twenty years in real estate, in four states, my head has been crammed with "Contract Law" aka Real Estate 101. (I needed to be "re-schooled" whenever I moved.) When I became a broker, I also "needed" more "schooling". It doesn't take a Supreme Court Justice to figure this out!I believe that Americans with a clue have just patiently waited for this to be heard by SCOTUS, anticipating that BO/Pelousy and Co. could never shove this down our throats. Those who are not sheeple will be up in arms if this gets by them. No kidding, this IS the exit ramp!

Monday, March 26, 2012 at 12:05 AM

Dioneikes in Colorado said:

this could be the match that lights the powder keg if the Leftist aren't careful. Obummer and Co. HAVE NO LEGAL RIGHT to tell American citizens that they have to purchase health care. Health care is not a right, despite what Nancy Blowhardski says - it's for people who have worked to earn money to afford that privilege. Here's a thought, you want to lower the cost of health insurance? Pass TORT REFORM! Get rid of all the ambulance chasing lawyers and adhere to the 5 and 6th Amendments of the Bill of Rights. Stop frivolous lawsuits, and make people take personal accountability for their actions.

Monday, March 26, 2012 at 10:29 AM

Mindblown in Flyover USA said:

Son of Liberty -- you are spot on re Tort Reform. Why was Obamacare 2700 pages? Because it's written in legalese. Why didn't congress people read it? Because it was written by lawyers/aides -- not by congress. Which congressman was it who said it would take him 2 days and 3 lawyers to read & understand what was in the bill? Why was it written with so many "as the HHS Sec'y MAY..." or "the Sec'y SHALL..."? Allowing the Secy of HHS this much power and authority is an absolute abdication of congress' responsibility. So they could deny their own culpability -- "I didn't vote for that." This doesn't apply just to Obamacare. We need congress to work on passing laws that are in clear, understandable English; show which section of the Constitution authorizes the law; no more than 50 pages long; and has no extraneous amendments added.BTW -- Just a stray thought here... If the current HHS Secy has all this power/authority to create all the new rules, buracracies, wouldn't a new HHS Secy appointed by a new prez (hopefully ABO)be able to undo all the crapola that's been done? Or is the plan to have Sebelious around forever?

Monday, March 26, 2012 at 10:59 AM

Dioneikes in Colorado said:

Once more into the breach! Madison states what we should do in this attempt at usurpation by Obamao!"Because it is proper to take alarm at the first experiment on our liberties. We hold this prudent jealousy to be the first duty of Citizens, and one of the noblest characteristics of the late Revolution. The free men of America did not wait till usurped power had strengthened itself by exercise, and entangled the question in precedents. They saw all the consequences in the principle, and they avoided the consequences by denying the principle. We revere this lesson too much soon to forget it." - Memorials and Remonstrance Against Religious Assessments, James Madison, 1785

Monday, March 26, 2012 at 1:21 PM

Holmes Simons said:

@Son of Liberty: If one has health problems or knows someone with health problems, they understand why they need health insurance. Oboohoo sold his plan as helping the average American avoid bankruptcy for medical bills. Avoiding bankruptcy, in addition to being able to get access to good physicians and hospitals, is the only reason I ever paid for health insurance premiums. Fear..the great motivator. That's also why I work hard to be able to afford health care premiums. Fear of uninsured ER care.When my premiums increased to $1300 /month, I changed coverage to a high deductible of $10,000, and the monthy nut was reduced to less than $300. Do I like having to pay? Of course not. But once I had an accident and the medical care cost ran over $800,000. My out of pocket...$250. I have empathy for poorer people, but if one works and is too poor to afford some level of health coverage, bankruptcy is unlikely to affect his standard of living adversely. Operative phrase, if one works. For everything else there's Mastercard.

Monday, March 26, 2012 at 1:37 PM

COS911 said:

Interesting summary, and I agree that this is one very good reason why Obamacare should be struck down. But I don't think it will. The USSC has been gradually stretching the Commerce Clause beyond any rational reading since the New Deal. To read and apply the Constitution from the bench of the USSC requires integrity, ethics, and intelectual honesty--all characteristics that the record shows unequivocally absent from five of the members and arguably absent from two more at times. So I suspect this law will be upheld; and at that point the Constitution will no longer exist. The federal government will then have unlimited power, for if the government can compel a contract or other economic activit then there is nothing that they can not do. And I suspect that was why there was a rush to get Obamacare passed, for it has been obvious from the start that the Obama, Pelosi, Reid triumvirate's primary objective has always been the destruction of the Constitution and the assumption of unlimited federal power.

Monday, March 26, 2012 at 2:37 PM