Commerce Games and the Individual Mandate
59 Pages Posted: 16 Sep 2011 Last revised: 26 Mar 2012
Date Written: September 16, 2011
While the Supreme Court declined an early invitation to resolve challenges to the Patient Protection and Affordable Care Act (ACA or the Act), a split between the United States Courts of Appeals for the Sixth Circuit (sustaining the ACA’s “individual mandate”) and the Eleventh Circuit (striking it down) ultimately compelled the Court to grant certiorari in a series of cases challenging the constitutional validity of the new federal health care law. In addition to deciding the fate of this centerpiece of the Obama Administration’s regulatory agenda, the Court’s decision will likely affect Commerce Clause doctrine—and related doctrines—for years or even decades to come.
Litigants, judges, and academic commentators have focused on whether the Court’s “economic activity” test, as set forth in United States v. Lopez, permits the individual mandate. This Article approaches the constitutionality of that provision from a novel perspective, one that proves essential in applying past Commerce Clause decisions, including Lopez, to the ACA and in appreciating the real stakes involved in upending the individual mandate. By analyzing the Court’s Commerce Clause jurisprudence through the lens of game theory, we expose common features of games that have resulted in limiting state powers on the dormant side of Commerce Clause doctrine, and in sustaining and restricting congressional powers on the affirmative side. Applying such games as “the prisoners’ dilemma,” “the driving game,” and “the battle of the sexes” yields critical insights about the nature and limits of state and federal regulatory powers.
Our game-theoretical analysis shows that although debates have centered on the role of the individual mandate in solving a micro-level separating game among low-risk individuals who do not purchase insurance and high-risk individuals who cannot afford it, a more compelling account focuses on the Act’s role in solving a macro-level separating game played among the states. By comparing the ACA to several important historical policy splits among states—public accommodations laws, abortion funding, the death penalty, civil remedies for violent crimes against women, and same-sex marriage—we demonstrate that the Act, including the individual mandate, fits well within those cases for which congressional commerce power is justified to avoid the risk that competing state policies will force other states into a problematic separating game, thereby undermining the selected regulatory policy. Our analysis reconciles congressional power to implement the ACA with the post-New Deal expansions and recent retrenchments of Congress’s Commerce Clause powers, and compellingly reconciles the dormant and affirmative sides of the Supreme Court’s Commerce Clause jurisprudence.
Keywords: commerce clause, individual mandate, health reform, PPACA, game theory
JEL Classification: B41, C7
Suggested Citation: Suggested Citation