Right Decision, Wrong Argument
With Chief Justice John Roberts authoring the opinion, one in which he joined with the Supreme Court’s four “liberal” justices for the first time, the Court has upheld the constitutionality of the Affordable Care Act. In doing so, Roberts rejected the administration’s argument that the law’s “mandate” compelling all Americans to buy health insurance or pay a fine was well within Congress’s powers to regulate interstate commerce or was a “necessary and proper” means to carry out a larger regulatory scheme under Congress’s enumerated powers. Instead, the Court ruled that the mandate was constitutional on traditional, well-understood, and largely unobjectionable ground: Congress’s power to tax.
What makes this odd is that nobody actually thought it was a tax. When the ACA was passed and signed into law, both Congress and President Barack Obama said explicitly that it was not a tax and no lower court sustained the act on that basis. So what happened?
How the Court justified its decision surprised a good many people. Those who thought that the act should be struck down had argued that Congress had no power to compel people to purchase something they did not want, in this case health insurance. If the government could force you to buy health insurance, could it also force you to buy broccoli, Justice Antonin Scalia asked during oral arguments. If the ACA was upheld, this argument went, there would be nothing Congress could not regulate. Why couldn’t it require the purchase of vegetables in order to make all Americans healthier (assuming that they would actually eat them)?
Roberts’s dismissal of the Commerce Clause argument has created much speculation that the ruling, although a victory for the administration, lays the groundwork for restricting the reach of federal regulation in the future. This prospect clearly alarmed Justice Ruth Bader Ginsburg, who agreed with the final ruling but described the chief justice’s “essay” dismissing the Commerce Clause argument as “puzzling.” She asked why Roberts should “strive so mightily to hem in Congress’s capacity to meet the new problems arising constantly in our ever-developing modern economy? I find no satisfying response to that question in his opinion.”
One possible explanation is that after joining the liberal wing and upholding the ACA, Roberts may have felt it was important to mollify the conservatives on the Court and beyond by laying out a framework for limiting the expansion of congressional powers. “The individual mandate,” he wrote, “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. Construing the Commerce Clause to permit Congress to regulate individuals precisely because they are doing nothing would open a new and potentially vast domain to congressional activity.”
Of course, the liberal justices disagreed vigorously. “Congress had a rational basis for concluding that the uninsured, as a class, substantially affect interstate commerce. Those without insurance consume billions of dollars of health-care products and services each year.... Given those far-reaching effects on interstate commerce, the decision to forgo insurance is hardly inconsequential or equivalent to doing nothing; it is instead an economic decision Congress has the authority to address under the Commerce Clause,” they wrote.
There is a familiar principle of Supreme Court jurisprudence that acts of Congress should be struck down only if the lack of constitutionality is clearly demonstrated. If there is any ground for sustaining the law, the Court must do so as long as that ground is based on an interpretation of the statute that is “fairly possible.” “Every reasonable construction must be resorted to, in order to save a statute from unconstitutionality,” Roberts wrote, citing the 1895 Supreme Court decision in Hooper v. California.
Although the administration argued forcefully that the ACA was a legitimate exercise of the federal government’s regulatory powers under the Commerce Clause, it also argued that the individual mandate could alternatively be seen as a tax and that the law could be sustained on that ground alone. Essentially, Roberts accepted that line of argument, even though the ACA does not call the mandate or fine a tax. In this case such labels did not matter, wrote the chief justice. At the same time, Roberts noted that if the payment were really a penalty it would necessarily be outside of Congress’s taxing power. In what ways wasn’t it really a penalty? The majority opinion offered the following explanations. First, the amount of the payment was small and could never exceed the cost of minimal health insurance. Second, the act contained no “scienter” (intent to commit a crime) requirement, as penalties usually do. Third, the payment was collected by the Internal Revenue Service through the normal means of taxation (albeit with some limitations).
The hardest constitutional problem for Roberts and the majority was whether the payment was intended as a punishment for illegal conduct or as a revenue-raising measure. The Supreme Court has ruled in the past that “if the concept of penalty means anything, it means punishment for an unlawful act or omission.” Here, the question was whether the payment was meant to punish those who did not purchase health insurance. Roberts’s answer was Jesuitical: “While the individual mandate clearly aims to induce the purchase of health insurance, it need not be read to declare that failing to do so is unlawful. Neither the act nor any other law attaches negative legal consequences to not buying health insurance, beyond requiring a payment to the IRS.... [The payment] merely imposes a tax citizens may lawfully choose to pay in lieu of buying health insurance.”
A similar argument could be made about parking tickets. Even though the law requires you to put money in the meter when you park, there are no negative consequences to failing to do so beyond the ticket. You can simply choose to pay one way or the other. Of course, the parking ticket will cost you more than the meter but the analysis seems to be the same nevertheless.
If Congress’s power to tax was such an obvious basis for upholding the ACA, why was it so hard to see? Were the lower courts’ eyes wide shut? In fact, the basis was not quite as obvious as Roberts tried to make it appear. Neither Congress nor the president called it a tax (it would have been politically foolish to do so), and the conservative dissenting justices thought that ruled out the idea of upholding the law under the government’s taxing authority. They further argued that the Court had never held that penalties imposed for violating a law could be regarded as a tax, especially when the statute explicitly called the payment a penalty.
There was another hurdle Roberts had to leap in order to uphold the law under the government’s taxing authority. An old and somewhat obscure federal statute, the Anti-Injunction Act, prohibits any lawsuit “for the purpose of restraining the assessment or collection of any tax.” In other words, if you wish to challenge the lawfulness of a tax, ordinarily you must pay it first and then sue. Roberts got around this by saying that by not calling the mandate’s fine a “tax,” Congress signaled that it did not want the ACA to be covered by the Anti-Injunction Act. At the same time, Roberts nevertheless asserted that the Court itself was free to determine “whether the payment may be viewed as an exercise of Congress’s tax power.” Sleight of hand? The conservative dissenters thought so, calling Roberts’s reasoning a journey to the “forbidding land of the sophists.”
Given the forcefulness of the joint dissent on both the taxing power and Anti-Injunction points, it would seem easy for Roberts to join his conservative colleagues in overturning the law. The fact that he did not suggests that something else was going on. His failure to do so will undoubtedly be debated by scholars and politicians for decades. But perhaps Roberts, once a distinguished advocate before the Supreme Court himself, was simply living up to the commitment that he made in his 2005 confirmation hearing when he disavowed any political agenda and vowed to keep an open mind as a judge. “I will remember that it’s my job to call balls and strikes and not to pitch or bat,” he said. “If I am confirmed, I will be vigilant to protect the independence and the integrity of the Supreme Court.”
Whatever the reason for Roberts’s vote, it preserved the very heart of “Obamacare.” The purpose of the law is to reduce the number of uninsured—said to be more than 50 million—and thereby to reduce the costs of health insurance for all Americans. Equally important, the law forbids insurance companies from denying coverage to people with pre-existing conditions or from discontinuing coverage once people get sick. Although there might have been other ways to accomplish those goals, the insurance companies convinced the administration and Congress that coverage could not be expanded without the individual mandate. The healthy have to buy insurance if the unhealthy are to be covered.
In its deliberations, Congress looked at eight states that tried to enact comprehensive health-care coverage in the 1990s. Seven of the states did so without requiring universal acquisition of health insurance. The experiment failed in all seven states. In Kentucky all the insurance companies but one left the state; the only one that remained was state-owned. Only one state, Massachusetts, had a reasonably successful comprehensive health-care program. Why? Because under Governor Mitt Romney it put in place an individual mandate. Will this approach work on the national level? No one really knows, but at least we will now have a chance to find out. No knowledgeable observer denies the fact that there is a health-care crisis in this country or that fixing it should be a national priority.
One other part of the Court’s decision received far less attention but in the long run may be the most significant and troublesome. An important part of the ACA entails the expansion of Medicaid, the federal program that already requires all participating states (today, all fifty) to cover health-care costs for certain discrete populations such as those with disabilities, the elderly, the blind, and needy families. The ACA will now require states to expand those categories to cover all individuals under age sixty-five whose income is below 133 percent of the federal poverty line, or just under $15,000. All those covered will be given a basic health-care package. The federal government will pay 100 percent of the costs until 2016. Eventually, the states will have to pick up 10 percent of the costs. Under the ACA, states that refuse to comply risk losing all of their Medicaid funding, not just the funding that will pay for broadening access to the program.
There is a concept in constitutional jurisprudence know as “commandeering.” Basically, it means that the federal government may not “commandeer” a state’s legislative or administrative apparatus for federal purposes. However, under the Spending Clause of the Constitution, Congress has the power to “pay the Debts and provide for the...general Welfare.” Under that power, Congress may grant federal funds to the states and in so doing it can make the states take “certain actions that Congress could not [otherwise] require them to take.” Today there are hundreds of such programs in addition to Medicaid.
If a state refuses to join the Medicaid expansion in the ACA, Congress has threatened to withhold not just the new funds, but all Medicaid funding. The only purpose of such a provision, the states argued, was to force them to accept the Medicaid expansion. On this question, Roberts, along with liberal Justices Elena Kagan and Stephen Breyer, switched sides and voted with the conservative justices. The financial inducement offered by Congress to expand Medicaid was so coercive, Roberts wrote, that it passed the point where coercion turned into compulsion. He called it "a gun to the head."
In dissent, Justices Ruth Bader Ginsburg and Sonia Sotomayor pointed out that Congress had not actually withdrawn funds from any state but had only threatened to do so. The five conservative justices found that the threat, which the secretary of Health and Human Services was empowered to carry out, is “well beyond the line, wherever the line may be.”
So far so good. But here is where the opinion gets interesting and troublesome. Roberts and the conservative justices held that although it would be unconstitutional for the HHS secretary to withhold all Medicaid funds from a state, she could legitimately withhold the new funds authorized by the ACA. In other words, the Court rewrote the Affordable Care Act to include a provision that Congress never authorized or approved. The power that the Supreme Court has arrogated could be very significant. It might permit the Court to rewrite spending legislation in ways that Congress never imagined and might permit the creation of new “laws” that Congress never enacted. It remains to be seen whether this is a one-time accommodation to permit the Court to get through a highly visible constitutional challenge or whether it signals novel things to come. Has Chief Justice Roberts given the conservatives a surprise present after all?
About the Author
Paul C. Saunders is Of Counsel in the Litigation Department of Cravath, Swaine & Moore LLP, and a Distinguished Visitor from Practice at Georgetown Law School.