Examining the U.S. Supreme Court Decision Upholding PPACA

The Role of Federalism
In keeping with the enormity of the decision, the majority opinion, written by Chief Justice John Roberts, began by examining the fundamental role of government, and included an examination of federalism and the separation of powers. By shielding the opinion with a federalist argument, Chief Justice Roberts made the case that the Court’s duty was to observe the tradition of the founding fathers and the role of the Supreme Court in general. In his opinion, the Chief Justice states, “We do not consider whether the Act embodies sound policies. That judgment is entrusted to the Nation’s elected leaders. We ask only whether Congress has the power under the Constitution to enact the challenged provisions.”

In granting the federal government specific enumerated powers, the founding fathers ensured that no one branch of government had complete control over the populace, giving them boundless power and influence. Chief Justice Roberts reaffirmed this separation of powers by saying, “In this case, we must again determine whether the Constitution grants Congress powers it now asserts, but which many States and individuals believe it does not possess. Resolving this controversy requires us to examine both the limits of the Government’s power, and our own limited role in policing those boundaries.”

The opinion examines two powers granted to the federal government, the power to regulate commerce and the power to lay and collect taxes. In exercising these powers, the federal government’s reach can be expanded under the Necessary and Proper clause of the Constitution. The Chief Justice quotes the famous case of McCulloch v. Maryland, “Let the end be legitimate, let it be within the scope of the constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consist with the letter and spirit of the constitution, are constitutional.”

Anti-Injunction Act
In light of these principles, Chief Justice Roberts then begins his opinion. After an examination of the various holdings of lower courts, the Chief Justice examines the applicability of the 1867 Anti-Injunction Act. The Anti-Injunction Act dictates that litigation cannot be pursued until after a tax has come into effect because litigants are suing for a refund of the tax. In a bit of complex legal maneuvering, the Chief Justice then writes that the Anti-Injunction Act is inapplicable here because Congress did not describe the penalty as a ‘tax’. He writes, “There is no immediate reason to think that a statute applying to ‘any tax’ would apply to a ‘penalty.’” For background on the oral arguments regarding the Anti-Injunction Act, click here.

Individual Mandate
Although the Court held that the Individual Mandate is not a tax for the purposes of the Anti-Injunction Act, Chief Justice Roberts then writes that the Individual Mandate is constitutional as a valid use of Congress’ taxing power. For background on the oral arguments regarding the Individual Mandate, click here.

The federal government proposed two legal theories in support of the constitutionality of PPACA – first, that the Commerce Clause grants Congress the authority to order individuals to buy insurance because it is a part of interstate commerce. Secondly, the government argued that, “even if Congress lacks the power to direct individuals to buy insurance, the only effect of the Individual Mandate is to raise taxes on those who do not do so, and thus the law may be upheld as a tax.”

The Commerce Clause
Health care, according to the government’s argument, is a necessity for every individual. The fact that every person, at some point in their lives, will enter into the health care system has posed a significant cost-shifting problem that substantially impacts interstate commerce. The Commerce Clause, which gives Congress the authority to regulate commerce, appears to be a logical argument in support of the government’s argument.

Chief Justice Roberts rejects this argument saying, “The power to ‘regulate’ commerce presupposes the existence of commercial activity to be regulated. If the power to ‘regulate’ something included the power to create it, many of the provisions of the Constitution would be superfluous.” The argument continues, “The individual mandate, however, does not regulate existing commercial activity. It instead compels individuals to become active in commerce by purchasing a product on the ground that their failure to do so affects interstate commerce.” The logic behind the government’s argument, according to Chief Justice Roberts, would “justify a mandatory purchase to solve any problem,” including forcing individuals to buy appropriate food to have a balanced diet. To conclude, the Chief Justice returned to a federalist argument saying, “Congress already enjoys vast power to regulate much of what we do. Accepting the Government’s theory would give Congress the same license to regulate what we do not do, fundamentally changing the relation between the citizen and the federal government.”

The Chief Justice then examines the effect of the Necessary and Proper clause on the Individual Mandate. The government had argued that the Individual Mandate is an “integral part of a comprehensive scheme of economic regulation.” In other words, the government argued, “it is not necessary to consider the effect that an individual’s inactivity may have on interstate commerce; it is enough that Congress regulate commercial activity in a way that requires regulation of inactivity to be effective.” In rejecting this argument, Chief Justice Roberts writes, “Even if the individual mandate is ‘necessary’ to the Act’s insurance reforms, such an expansion of federal power is not a ‘proper’ means for making those reforms effective.”

Although the majority did not believe that the Individual Mandate could survive under the Commerce Clause, Justice Ruth Bader Ginsburg centered her opinion on that argument, writing that the majority opinion’s view of the Commerce Clause “makes scant sense and is stunningly retrogressive.” Justice Ginsburg adopted much of the government’s argument that health care is a unique good, one that every person needs at some point and that contains massive costs. In sum, Justice Ginsburg says, “Whatever one thinks of the policy decision Congress made, it was Congress’ prerogative to make it.”

The Taxing Power
Although the Court found that the Individual Mandate was not a tax for the purposes of rendering the case premature, the Court does find that the mandate is a valid exercise of Congress’ power to levy and collect taxes.

The government’s second argument asked the Court “to read the mandate not as ordering individuals to buy insurance, but rather as imposing a tax on those who do not buy that product.” The majority ultimately sides with this decision, saying that the only consequence of failing to purchase insurance is an increased amount paid in taxes. This tax hike, the majority reasons, is within Congress’ power to tax.

Chief Justice Roberts does make a distinction between labeling the mandate as a tax in addressing both the applicability of the Anti-Injunction Act and the constitutionality of the provision. He writes that while labeling the Individual Mandate as a penalty was fatal as to the applicability of the Anti-Injunction Act, “It is up to Congress whether to apply the Anti-Injunction Act to any particular statute, so it makes sense to be guided by Congress’s choice of label on that question. That choice does not, however, control whether an exaction is within Congress’s constitutional power to tax.”

Medicaid Expansion
The one provision of PPACA that was overturned in part concerned the Medicaid expansion provisions. The 26 states challenging the law had argued that the provision was overly coercive in that it allowed the federal government to withhold all of a state’s Medicaid grants unless that state agreed to various conditions. For background on the oral arguments regarding the Medicaid legal issue, click here.

The Court ruled that Congress does have the power to attach appropriate conditions to the receipt of federal funds; what Congress cannot do is make those conditions overly coercive so that they “pass the point at which ‘pressure turns into compulsion.’”

The federal government had argued that the provision was a proper modification of an existing program, and that the states had agreed that Congress could change the terms of the funding provisions when they signed up for the program. In rejecting this argument, the Court states, “The Medicaid expansion, however, accomplishes a shift in kind, not merely degree…It is no longer a program to care for the neediest among us, but rather an element of a comprehensive national plan to provide universal health insurance coverage.” The Chief Justice continued, “A State could hardly anticipate that Congress’s reservation of the right to ‘alter’ or ‘amend’ the Medicaid program included the power to transform it so dramatically.”

Even though the opinion states that the conditions the federal government has imposed are, in fact, coercive, the opinion does allow for the government to re-draft the conditions. Chief Justice Roberts writes, “Nothing in our opinion precludes Congress from offering funds under the Affordable Care Act to expand the availability of health care, and requiring that States accepting such funds comply with the conditions on their use. What Congress is not free to do is to penalize States that choose not to participate in that new program by taking away their existing Medicaid funding.”

Completing the circle of logic, the Chief Justice concludes his opinion by returning to the founding fathers. He writes, “The Framers created a federal government of limited powers, and assigned to this

Court the duty of enforcing those limits. The Court does so today. But the Court does not express any opinion on the wisdom of the Affordable Care Act. Under the Constitution, that judgment is reserved to the people.”

Severability Clause
On a related note regarding the Court’s ruling, the arguments over the impact of the missing Severability Clause became irrelevant, and were not addressed in the majority opinion. Severability Clauses generally allow part of a statute to be declared illegal or otherwise invalidated while the balance of the law remains in force. The missing Severability Clause would have only applied if another provision in the Act were declared unconstitutional. For more information on the oral arguments on the Severability Clause, click here.

The Dissent
The dissenting opinion, held by Justice Samuel Alito, Justice Antonin Scalia, Justice Clarence Thomas and Justice Anthony Kennedy, argues that the entirety of PPACA should have been struck down. The crux of the dissent is as follows, “The Act before us here exceeds federal power both in mandating the purchase of health insurance and in denying non-consenting States all Medicaid funding. These parts of the Act are central to its design and operation, and all the Act’s other provisions would not have been enacted without them. In our view, it must follow that the entire statute is inoperative.”

While the dissenting justices share Chief Justice Roberts’ view that the Individual Mandate must fail under the Commerce clause, they believe it also should have failed under the taxing power. Whereas the majority opinion argued that the Individual Mandate could be viewed as a penalty or a tax, the dissent argues that there is a clear line between a tax and a penalty, and that the Individual Mandate serves as an unlawful penalty. Additionally, the dissent strongly criticizes the majority’s decision to categorize the mandate as a tax for one purpose, and not a tax for another purpose, “What the Government would have us believe in these cases is that the very same textual indications that show this is not a tax under the Anti-Injunction Act show that it is a tax under the Constitution. That carries verbal wizardry too far, deep into the forbidden land of the sophists.”

The dissent does agree with the majority interpretation of the Medicaid expansion provision as overly coercive. To support their view, the dissent points out the impracticality of a state actually choosing to withdraw from participating in Medicaid. “When a heavy federal tax is levied to support a federal program that offers large grants to the States, States may, as a practical matter, be unable to refuse to participate in the federal program and to substitute a state alternative.” Medicaid, as the dissent points out, is the most heavily relied upon program by states, with most states receiving more than $1 billion in federal funding.

Unlike the majority opinion, the dissent does address the missing Severability Clause. Although the version of PPACA that passed through the U.S. House of Representatives had such a provision, the version ultimately signed into law did not. The dissent argues that because both the Individual Mandate and the Medicaid expansion are unconstitutional, due to the lack of a Severability Clause the entire Act must fall.