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Integral to the Affordable Care Act's (ACA’s) conceptual design is the individual purchase mandate, which requires most individuals to pay an annual tax penalty if they do not have health insurance by 2014. Despite the vociferous opposition, the mandate is the most “market-friendly” financing device because it relies on the private sector. Ironically, less market-oriented reforms such as a single-payer system clearly would have been constitutional.

It is common sense for everyone to purchase health insurance and thus gain security against the potentially catastrophic costs of treating a serious illness or injury. However, Congress’ method of ensuring that everyone has health insurance is actually novel. It appears that Congress has never before mandated that individuals enter into a contract with a private company. Although some scholars have pointed to precedents—such as the requirement that everyone pay into the Medicare system—these appear distinguishable—in the case of Medicare, for example, it is a public program, albeit with private aspects.

The very idea that Congress could exercise this unprecedented power has provoked mostly (but not only) conservatives to recite a parade of horribles, ranging from mandatory purchase of things that are good for individuals (buy broccoli, a fitness club membership) or good for society (buy electric cars to stimulate environmentally friendly industry sales). Fundamentally, critics believe that individuals have the right to be left alone—to opt out of commerce (buy no insurance) and self-insure or simply accept the consequences if they fall ill.


O'Neill Institute Briefing Paper