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June 28, 2012

Supreme Court Upholds Affordable Care Act

by Doug Mataconis

As Quincy notes below, the Supreme Court upheld the Constitutionality of the Affordable Care Act today by relying upon an argument that most people had not been paying attention to:

WASHINGTON — The Supreme Court on Thursday left standing the basic provisions of the health care overhaul, ruling that the government may use its taxation powers to push people to buy health insurance.

The narrowly delineated decision was a victory for President Obama and Congressional Democrats, with a 5-to-4 majority, including the conservative chief justice, John G. Roberts Jr., affirming the central legislative pillar of Mr. Obama’s presidency.

Chief Justice Roberts, the author of the majority opinion, surprised observers by joining the court’s four more liberal members in the key finding and becoming the swing vote. Justices Anthony Kennedy, frequently the swing vote, joined three more conservative members in a dissent and read a statement in court that the minority viewed the law as “invalid in its entirety.”

The decision did significantly restrict one major portion of the law: the expansion of Medicaid, the government health-insurance program for low-income and sick people, giving states more flexibility.

The case is seen as the most significant before the court since Bush v. Gore ruling, which decided the 2000 presidential election.

In addition to its political reverberations, the decision allows sweeping policy changes affecting one of the largest and fastest-growing sectors of the economy, touching nearly everyone from the cradle to the grave.

The political fight over health care remains far from over, with Republicans campaigning on a promise to repeal the law, which they see as an unaffordable infringement on the rights of individuals. The presumptive Republican presidential nominee, Mitt Romney, has promised to undo it if elected.

Chief Justice Roberts wrote that the decision offers no endorsement of the law’s wisdom, and that letting it survive reflects “a general reticence to invalidate the acts of the nation’s elected leaders.”

“It is not our job to protect the people from the consequences of their political choices,” he wrote.

The court’s ruling is a crucial milestone for the law, allowing almost all of its far-reaching changes to roll forward. Several of its notable provisions have already taken hold in the past two years, and more are imminent. Ultimately, it is intended to end the United States’ status as the only rich country with large numbers of uninsured people, by expanding both the private market and Medicaid.

The key provision that 26 states opposing the law had challenged – popularly known as the individual mandate – requires virtually all citizens to buy health insurance meeting minimum federal standards, or to pay a penalty if they refuse.

Many conservatives considered the mandate unconstitutional under the commerce clause, arguing that if the federal government could compel people to buy health insurance, it could compel them to buy almost anything — even broccoli, the archetypal example debated during the oral arguments three months ago.

In a complex decision, the court found that Congress’ powers to regulate commerce did not justify the mandate. But it reasoned that the penalty, to be collected by the Internal Revenue Service starting in 2015, is a tax and is not unconstitutional.

Chief Justice Roberts, in the majority, said that the mandate was unconstitutional under the Constitution’s commerce clause. But that did not matter if the penalty that enforces it was constitutional on other grounds.

The court’s four liberals made it clear that they disagreed with the Chief Justice’s view of the commerce clause, but joined him because the effect of his ruling was to let the law stand.

The Obama administration had said in court in 2010 that the mandate could be upheld under the taxation powers, which they called even more sweeping than the federal power to regulate interstate commerce.

The outcome, I think, is striking many people as a surprise for two reasons.

First of all, if there was any Justice on the Court who seemed likely to be the fifth vote along with the Court’s four liberal members to uphold the ACA, it would be Justice Kennedy. Indeed, after the end of three days of oral argument in March it had seemed as though Roberts was largely in line with Justices Scalia and Alito (and Thomas) in being skeptical of the mandate’s Constitutionality while Justice Kennedy was the one who seemed to be trying to find way to uphold the mandate. One thing this teaches us is that most predictions you hear about the Supreme Court are usually just wild guesses, and that you can’t always determine how a case is going to turn out based on the oral arguments. In the end, rather than Kennedy being the deciding vote in this case, it was Chief Justice Roberts who sided with the Justices Ginsburg, Breyer, Sotomayor, and Kagan to uphold the signature domestic legislation of a Democratic President who has, in the past been critical of many of the Court’s rulings under Roberts.

The second reason this is a surprise is the fact that it was the tax argument that ended up being the basis upon which the law was upheld. For the past two years, nearly all the discussion about the legal merits of the ACA have centered around the question of whether it could stand as a proper application of Congress’s power under the Interstate Commerce Clause. There was a side argument being advanced on behalf of the government in the ensuing litigation that argued that the mandate could also be upheld under the taxing power, but it generally didn’t get much attention from the media or those who were actively engaged in the fight against the law. More importantly, none of the Federal Courts that heard the challenges to the law before it got to the Supreme Court adopted the tax argument as a reason for sustaining the law. Some of those Courts explicitly rejected the argument, while others simply stated that they did not need to rule on the arguments because they found the mandate constitutional under the Commerce Clause. Additionally, at the Supreme Court arguments in March, the lawyers and Justices spent far more time talking about the Commerce Clause arguments than the tax argument. To a large degree, that argument had been filed away and largely forgotten. But, as we see today, not completely forgotten.

It was Law Professor Jack Balkin who first advanced the  argument that the mandate was Constitutional precisely because it was a tax:

he individual mandate, which amends the Internal Revenue Code, is not actually a mandate at all. It is a tax. It gives people a choice: they can buy health insurance or they can pay a tax roughly equal to the cost of health insurance, which is used to subsidize the government’s health care program and families who wish to purchase health insurance.

(…)

The Constitution gives Congress the power to tax and spend money for the general welfare. This tax promotes the general welfare because it makes health care more widely available and affordable. Under existing law, therefore, the tax is clearly constitutional.

The mandate is also not a “direct” tax which must be apportioned among the states by population. Direct taxes are taxes on land or “head” taxes on the general population. The individual mandate does not tax land. It is not assessed on the population generally but only on people who don’t buy insurance and aren’t otherwise exempt. It is a tax on behavior, like a tax on businesses that don’t install anti-pollution equipment.

Many important and popular government programs are based Congress’s ability to give incentives through taxation and redistribute tax revenues for public purposes. To strike down the individual mandate the Supreme Court would have to undermine many years of precedents justifying these programs that stretch back to the New Deal (and in the case of the rules for direct taxes, to the very founding of the country).

Many dismissed Balkin’s argument but it was clear even when he wrote that back in March 2010, shortly after the law had been passed by Congress, that if the Court accepted it then the entire argument against the mandate specifically and the law in general would crumble into dust. And, that is exactly what has happened today.

We’ll be spending much time arguing the political ramifications of this decision, but it’s fair to see that this is now what most people were expecting. For the past two weeks or so, and indeed ever since the arguments in March, the left has seemingly been preparing itself for the likelihood that they would lose the mandate, if not the entire law. I didn’t see very much of this on the right, but now they’ll have to deal with the fact that they legal arguments they had been rallying around for two years have been rejected, and that if the ACA is going to be repealed it will have to be done by Congress. Given the fact that it’s very unlikely that Republicans will get 60 votes in the Senate any time soon, it strikes me that this is quite unlikely to happen.

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  • MingoV

    Congress, President Obama, and the attorneys taking the government side of the ObamaCare issue repeatedly had stated (in writing, speeches, and oral arguments) that the individual mandate penalty was NOT a tax. That’s why Balkin’s argument was dismissed by most legal experts. But, the Supreme Court once again changed the meaning of words. In the 2005 Kelo eminent domain case, the Supreme Court ruled that “public use” means “any use that the local government believes will be good.” In today’s decision, the Supreme Court decided that a penalty for not buying insurance is the same as a tax, and that it is constitutional to assess such a tax. This is as bad as ruling that the individual mandate was legal under the commerce clause.

    In the past, Congress could create tax deductions or tax credits to promote a desired activity but could not penalize those who avoided the activity. This decision hands Congress the ability to financially penalize anyone for not engaging in any activity that Congress deems appropriate. I see no end to the mischief Congress can create with this.

  • http://www.outsidethebeltway.com Doug Mataconis

    MingoV,

    The tax argument was part of the arguments the Solicitor General made in favor of the mandate from the beginning.

  • procopius

    Doug: funny how astute and interpretive you seem to be when analyzing procedural SCOTUS decisions, and at the same time so bereft, and even antithetical, when it comes to nuance regarding broader philosophical implication, a la 2008.

    What use are you again?

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