How the Supreme Court Doomed the ACA to Failure the Roberts "Tax" Ruling Undermines the New Health Care Law

By Lambert, Thomas A. | Regulation, Winter 2012 | Go to article overview

How the Supreme Court Doomed the ACA to Failure the Roberts "Tax" Ruling Undermines the New Health Care Law


Lambert, Thomas A., Regulation


Pundits, policy wonks, and law professors (including this author) were surprised by the U.S. Supreme Court's June 28, 2012 ruling on the constitutionality of the Patient Protection and Affordable Care Act (ACA). Most observers expected either a 5-4 vote striking down the ACA's so-called "individual mandate" as an overbroad attempt to regulate interstate commerce, or a 5-4 or 6-3 vote upholding the mandate as a valid exercise of Commerce Clause power. Instead, five justices, including Chief Justice John Roberts, agreed that a mandate to purchase health insurance from a private company would exceed Congress's authority under the Commerce Clause, but a different five-justice majority, again including the Chief Justice, read the statute not to impose a strict mandate to purchase health insurance, but instead to levy a constitutionally valid tax for failure to do so.

The Court also surprised observers by ruling 7-2 that the ACA unconstitutionally coerces the states by threatening to deny all federal Medicaid funding-not just expansion funding-to states that do not expand their Medicaid rolls as the statute prescribes. While prior Supreme Court precedents had recognized the theoretical possibility that Spending Clause legislation could unconstitutionally commandeer recipient states, no spending legislation had actually been struck down on coercion grounds. Few observers expected the state challengers to succeed on their coercion argument, particularly by a 7-2 vote.

Now that the dust has settled somewhat, we may assess the likely consequences of the decision in National Federation of Independent Business v. Sebelius. This article briefly summarizes the reasoning underlying the decision's individual mandate ruling. It then considers what lies ahead for health insurance and medical care in the United States if the ACA, as modified by NFIB, is not repealed. Be warned: the picture isn't pretty.

The Roberts Court's Decision

As both Justice Roberts' opinion for the Court and the joint dissent of Justices Antonin Scalia, Anthony Kennedy, Clarence Thomas, and Samuel Alito emphasized, our federal government is one of limited powers. The Bill of Rights precludes the government from imposing rules and taking actions that violate certain fundamental rights like the freedoms of speech, association, and religion. In addition, Article I of the Constitution limits congressional power by exhaustively cataloging the things Congress is authorized to do; congressional action that is not authorized is forbidden. Accordingly, for an act of Congress to pass constitutional muster, it must be both authorized by the empowering provisions of Article I and not forbidden by the constraints in the Bill of Rights.

The primary issue in NFIB was whether the so-called individual mandate-the provision of the ACA requiring most individuals to purchase health insurance or pay a penalty to the government--was authorized by Article I. The government contended that the mandate was authorized by Congress's express power under the article's Section 8, Clause 3 to "regulate Commerce ... among the several States." The state challengers, by contrast, maintained that individuals who had elected not to purchase health insurance had not thereby engaged in commerce, so forcing them to do something commercial--to enter commerce--was not itself a regulation of commerce. Five members of the Court (Chief Justice Roberts and Justices Scalia, Kennedy, Thomas, and Alito) agreed and held that the Commerce Clause does not authorize Congress to order individuals to purchase insurance from a private company. They further agreed that the mandate was not authorized by the Article I provision empowering Congress to "make all Laws which shall be necessary and proper" for carrying out its Commerce Clause authority. The mandate was not "proper," the five justices concluded, because it would compel-not regulate--commerce, and any power conferred by the Necessary and Proper Clause must be incidental to, not greater than, the expressly enumerated powers. …

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