PPACA Supreme Court Decision: Just the facts

by Staff Writer

Major Points of interest:

  • PPACA insurance mandate is upheld 5-4
  • Mandate survives as a tax, but not via commerce clause
  • Justice Roberts, a conservative judge, represented the deciding vote
  • Medicaid regulation requirement enforcement deemed not constitutional

Yesterday, the Supreme Court of the United States submitted it’s decision on the challenge to the Patient Protection and Affordable Heath Care Act. Two major parts of the “Obamacare” bill were under scrutiny: an individual mandate (requiring those who can afford it to buy insurance) and a part of the expansion on Medicare that required the States to comply or risk losing their current funding (the loss of funding as a punishment was under review). The mandate was upheld while the medicaid expansion penalty was struck down, both in a 5-4 decision.

Yesterday morning, when the decision was initially released, conflicting reports were being published. In the confusion, CNN reported early that the individual mandate was also defeated. They later retracted their gaffe, but the damage was done. After reading the entire 193 page decision, it’s easy to see how CNN made the early mistake. A majority of the first section of the decision focuses on how the mandate cannot be applied to the commerce clause and is therefore unconstitutional under these powers.

Now, as the dust settles, there seems to still be some confusion about the decision, some of its language, and the consequences of the precedent. And short of reading the entire decision (it’s not light reading), there are few places to get truly unbiased information on it. For that reason, we’ve highlighted some of the key points including some of the more powerful language directly from the decision as well as brief descriptions of the potential implications for the future of the PPACA, political sphere, and the limits of government as a whole.

Conservative Judge Roberts represents affirming vote

The big story of the final decision was a conservative judge, in Justice Roberts, representing the deciding vote for approving the mandate as a tax.  As a result, throughout his decision, there are regular reminders that it is not the job of SCOTUS to pass personal, political, or even practical judgement of the law at hand.

“The peculiar circumstances of the moment may render a measure more or less wise, but cannot render it more or less constitutional.” Chief Justice John Marshall, A Friend of the Constitution No. V, Alexandria Gazette, July5, 1819, in John Marshall’s Defense of McCulloch v. Maryland 190–191 (G. Gunther ed. 1969).

All the way through to the last paragraph of Justice Roberts’ opinion, we’re reminded that regardless of the justices personal or political opinions of the PPACA, their job was only to judge it against the Constitution and the powers enumerated to the federal government.

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.

It’s an important distinction to make. The decision to affirm the mandate by Justice Roberts, while it may have political implications, itself was not political in nature.

Mandate Defeated under commerce clause

CNN wasn’t completely wrong.  The mandate was not upheld under the commerce clause. It was voted down 5-4 (ROBERTS, joint opinion of SCALIA, KENNEDY, THOMAS, and ALITO, JJ., dissenting). In Roberts’ written decision, he admits the commerce clause is a broad power given to congress, though it must have limits:

While Congress’s authority under the Commerce Clause has of course expanded with the growth of the national economy, our cases have “always recognized that the power to regulate commerce, though broad indeed, has limits.” Maryland v. Wirtz, 392 U. S. 183, 196 (1968).

The crux of the problem with the mandate under the commerce clause is that it did not regulate commercial activity, rather inactivity. Allowing this would set a precedent that, according to Roberts, would expand the already broad interpretation of the clause far beyond that of which it was intended.

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. 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 authority.

The resulting opinion strikes down the law as unconstitutional voted out by the 5 conservative judges.

Just as the individual mandate cannot be sustained as a law regulating the substantial effects of the failure to purchase health insurance, neither can it be upheld as a “necessary and proper” component of the insurance reforms. The commerce power thus does not authorize the mandate. Accord, post, at 4–16 (joint opinion of SCALIA, KENNEDY, THOMAS, and ALITO, JJ., dissenting).

In Justice Ginsberg’s written opinion, however, she argued that the mandate, in fact, is appropriate for the commerce clause. She argues, that it is not possible to safely limit the power to regulate commerce in the way suggested by the majority decision:

“Nothing . . . can be more fallacious,” Alexander Hamilton emphasized, “than to infer the extent of any power, proper to be lodged in the national government, from . . . its immediate necessities. There ought to be a CAPACITY to provide for future contingencies[,] as they may happen;and as these are illimitable in their nature, it is impossible safely to limit that capacity.” The Federalist No. 34, pp. 205, 206 (John Harvard Library ed. 2009). See also McCulloch, 4 Wheat., at 415 (The Necessary and Proper Clause is lodged “in a constitution[,] intended to endure for ages to come, and consequently, to be adapted to the various crises of human affairs.”).

Implications:

Practically, this does nothing in terms of affecting the PPACA and its implementation as the mandate was ultimately allowed. (See below) The greater ramifications of this decision, however, sets to limit the powers of congress to regulate commerce. That is: According to SCOTUS, the commerce clause does not give Congress the power to compel or force citizens into economic activity.

Mandate allowed as a tax

Where Justice Roberts differed in opinion from the other 4 conservative judges, was in the application of the mandate as a tax. Because the mandate portion of the PPACA is implemented through taxation in the hands of the IRS, SCOTUS considered this as a potential application of this portion of the bill’s constitutionality.

That is not the end of the matter. Because the Commerce Clause does not support the individual mandate, it is necessary to turn to the Government’s second argument: that the mandate may be upheld as within Congress’s enumerated power to “lay and collect Taxes.”

Justice Roberts, again, reaffirms the goal of SCOTUS when scrutinizing a bill or a specific portion of a bill that is being challenged.

Justice Holmes made this point 80 years ago: “[T]he rule is settled that as between two possible interpretations of a statute, by one of which it would be unconstitutional and by the other valid, our plain duty is to adopt that which will save the Act.” Blodgett v. Holden, 275 U. S. 142, 148 (1927) (concurring opinion).

And, because the bill describes the mandate enforcement as a penalty and not a tax, such challenges are not subject to the Anti-Injunction Act, which says taxes may not be challenged until they have been paid and or charged. However, that labeling, on the other hand, does not preclude it from being considered as such to determine the bill’s constitutional validity.

It is of course true that the Act describes the payment as a “penalty,” not a “tax.” But while that label is fatal to the application of the Anti-Injunction Act, supra, at 12–13, it does not determine whether the payment may be viewed as an exercise of Congress’s taxing power.

Meanwhile, the dissenters disagree to that end:

The joint dissenters argue that we cannot uphold§5000A as a tax because Congress did not “frame” it as such. …[The] conclusion should not change simply because Congress used the word “penalty” to describe the payment.

Defined as a tax, despite the very clear intent of the mandate enforcement (to induce the purchase of health insurance), the only legal consequence of defying that intent is a charge from the IRS.

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.

Ultimately, Justice Roberts was compelled to allow the mandate in PPACA:

The Affordable Care Act’s requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a tax. Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness.

Implications:

This decision is what keeps PPACA’s insurance mandate alive. It’s a remarkable decision given the majority by a traditionally conservative judge.

From a political standpoint, it’s a decision that keeps Obama’s signature piece of legislation alive. However, that may not be the end of the story. It may also serve to be an integral talking point leading up to the upcoming presidential elections. Obama has repeatedly stated that the mandate is not a tax, as the stigma of such is politically charging for his opposition. Now that SCOTUS has “officially” classified the mandate as a tax, the decision may help frame the debate for Romney who has pledged to overturn the bill, on his first day, if elected President.

Medicaid Expansion, Regulations & Spending Clause

As a part of the Medicaid Expansion of PPACA, States are compelled to follow new regulations or risk losing their current Medicaid funding. This part of the bill was also under the constitutional microscope. The result was a 5-4 overturning of this part of the bill. Here is the crux of the issue:

Congress may use its spending power to create incentives for States to act in accordance with federal policies. But when “pressure turns into compulsion,” ibid., the legislation runs contrary to our system of federalism.

More specifically, the decision came down to the accountability of our democratic system:

…when the State has no choice, the Federal Government can achieve its objectives without accountability…

“[W]here the Federal Government directs the States to regulate, it may be state officials who will bear the brunt of public disapproval, while the federal officials who devised the regulatory program may remain insulated from the electoral ramifications of their decision.” Id., at 169.

Had non-compliance only risked loss of the medicaid expansion funding, it may have survived constitutionality in this regard:

…Spending Clause programs do not pose this danger when a State has a legitimate choice whether to accept the federal conditions in exchange for federal funds.

Implications:

For practical purposes, the threat of losing current medicaid funding will not be permitted to induce compliance to the new regulations. The decision, also, sets a strict precedent limiting the power of the federal to govern the states.

Comments

Share This...

Previous post:

Next post: