Just a quick rundown of the opinion today in National Federation of Independent Businesses v. Sebelius, the healthcare law ruling by the Supreme Court that everyone's been waiting for. (Although, several people in my office had no idea it was in the news at all, so ... maybe just law/politics junkies were waiting for it?) In the next post I'll put down a few of my takeaways. Stick with me through the summary first ... it was a complicated case!
The Patient Protection and Affordable Care Act (which doesn't protect patients and will in short order bankrupt us, but I digress) was challenged in this case on the individual mandate, the requirement to buy health insurance or pay a penalty; and on the expansion of Medicaid by the states, which involved a requirement for the states to expand their Medicaid funding/services or else be subject to losing all Medicaid funding, not just new funding. I will just focus on the first issue. The challengers said that the individual mandate was not authorized by the Constitution's grant of powers to Congress. The government said it was either authorized under 1) the Commerce Clause, 2) the Necessary and Proper Clause, or 3) almost as an afterthought, the Taxing and Spending Clause.
No lower courts really addressed the tax issue because the PPACA never uses the word "tax" in connection with the mandate - it says buy health insurance or pay a "penalty". So pretty much everyone thought the mandate would stand or fall based on the Commerce Clause. The Commerce Clause, which gives Congress the right to regulate interstate commerce, has been read so expansively since the 1930s that there is almost no limit to what counts as interstate commerce -- almost anything can be said to affect interstate commerce in the aggregate. Even growing wheat for your own family, and not selling it to anyone in state or out of state, can be "commerce" under the famous Wickard v. Fillburn case from the 30s. But even as broad as this grant of authority has been read, the Court had never found that inactivity could be regulated the same as activity, so theoretically there was some limit to federal government power. In this case, I would say that not buying health insurance is not an "activity" because you haven't actually done anything. Some lower courts found Wickard and the line of cases following it were broad enough to make this inactivity count as commerce, though, and some didn't. So, this should have been the big issue at the Supreme Court. If it were upheld under the Commerce Clause, that would be huge, and imply there is no limit to what Congress can do (this is where the infamous, "the government can force you to eat broccoli" argument comes from). On the other hand, if the individual mandate were struck down under the Commerce Clause, that would be a big step to restraining congressional power. Since it was so key to the PPACA overall -- since if not everyone was forced to buy health insurance, the whole program would be uneconomical -- the next question would have been whether the whole law had to fall or whether it could be "severed" and the rest stand. The four dissenting justices would have struck down the whole law once they found the mandate was unconstitutional.
Surprising pretty much everyone, the Court did hold 5-4 that the individual mandate was not authorized by the Commerce Clause ... but then Chief Justice Roberts switched his vote to the join the four Court liberals in holding that it was authorized by taxing power. And since the mandate was upheld, the Court didn't reach the severability question, and the whole Act was upheld.
Why did he do this? Here's one thing to note: no one I'm aware of ever argued that the PPACA would have been unconstitutional as an exercise of the taxing power. If Congress levied a general tax on everyone, then gave credits to people who bought health insurance and/or spent the tax funds on its own healthcare programs, I readily concede that would be constitutional. What the Chief Justice did was to follow a general principle of interpretation that if there is any "fairly possible" reading of a law that would make it constitutional, even if that's not the most natural or obvious reading, then a court should go with that "fairly possible" reading and uphold the law. He said that in this case, because the IRS collects the penalty, the penalty amount is somewhat tied to income, and one can opt either to buy insurance or pay the penalty, then the penalty could fairly be said to be acting like a tax, and thus it could be a tax. The law does not use the word tax, and it says people "shall" buy health insurance or pay a penalty, so yes, the most natural reading is that it's a mandate and a penalty ... but it COULD be the case that it is merely imposing a tax for not having health insurance. Since that is a fairly possible reading that would allow the provision to be upheld as constitutional, he believed he was compelled to read it that way. Therefore, the mandate was upheld under the taxing power.
As I said, this result surprised pretty much everyone, and there are a lot of conflicting views on how to read the results. I'll put some of my thoughts in the next post.
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