Supreme Court Upholds Affordable Care Act

A sharply divided Supreme Court today upheld key provisions in the Affordable Care Act (the "ACA," or Obamacare).  The upshot is that five Justices (Chief Justice Roberts and Justices Ginsburg, Breyer, Sotomayor, and Kagan) held that universal coverage (or the individual mandate) is upheld, and that a three-Justice plurality (Chief Justice Roberts and Justices Breyer and Kagan) held Medicaid expansion is upheld in a somewhat weaker form.  A different five Justices (Chief Justice Roberts and Justices Scalia, Kennedy, Thomas, and Alito) held that the commerce clause did not support universal coverage (but for different reasons).

The ruling means that universal coverage stands, and Medicaid expansion stands, although in a somewhat weaker form.

Our analyses of oral arguments are here, here, and here.  We'll have more analysis of the opinion; here's just a breakdown of the holding.

Chief Justice Roberts wrote for the majority; by issue:

Taxing Clause.  A five-Justice majority held that Congress could enact the universal coverage provision (also called the individual mandate) under the taxing authority.  Chief Justice Roberts, joined by Justices Ginsburg, Breyer, Sotomayor, and Kagan, wrote that the tax penalty for failing to purchase health insurance was a valid tax.  

First, for most Americans the amount due will be far less than the price of insurance, and, by statute, it can never be more.  It may often be a reasonable financial decision to make the payment rather than purchase insurance, unlike the "prohibitory" financial punishment in Drexel Furniture.  Second, the individual mandate contains no scienter requirement.  Third, the payment is collected solely by the IRS through the normal means of taxation--except that the Service is not allowed to use those means most suggestive of a punitive sanction, such as criminal prosecution.

Op. at 35-36.  The majority was untroubled that the tax penalty could be a "tax" for taxing authority purposes, but a non-"tax" for Anti-Injunction Act purposes: Chief Justice Roberts wrote that Congress itself enacted the AIA and could therefore itself draft around it (which it did here); but Congress's taxing authority may support congressional action whether or not Congress calls its action a "tax."

Justices Scalia, Kennedy, Thomas, and Alito dissented, arguing that universal coverage exceeded the taxing power.

Commerce Clause.  A five-Justice majority concluded that the Commerce Clause did not support congressional authority to enact universal coverage, but for two different reasons.  Chief Justice Roberts, writing for himself alone, wrote that universal coverage amounted to regulating before entrance into the market for health services--i.e., regulating someone who's "inactive."  (And Chief Justice Roberts didn't buy the government's claim that the maarket for health insurance was integrally connected to the market for health care.)  Chief Justice Roberts wrote that universal coverage was unprecedented and unsupported by the Court's cases.  (Chief Justice Roberts justified reaching the issue--even though the case could be (and was) decided on the taxing power alone--because, he said, the government designed universal coverage first as a regulation and only secondly (or alternatively) as a tax.)

Justices Scalia, Kennedy, Thomas, and Alito took a harder line, arguing that Congress here went too far, because it first sought to create commerce, and then to regulate it.

Medicaid Expansion.  Chief Justice Roberts wrote for himself and Justices Breyer and Kagan that Medicaid expansion as-is under the ACA--in which a state declining to participate in Medicaid expansion would stand to lose its entire pot of federal Medicaid money--was unduly coercive.  But the same plurality held that Medicaid expansion could be saved by simply reading the statute to mean that a declining state could lose only the additional federal money that would have come with the expansion.

Justices Ginsburg and Sotomayor wrote separately to argue that Medicaid expansion as-is under the ACA did not violate the Constitution.

Justices Scalia, Kennedy, Thomas, and Alito dissented, writing that Medicaid expansion was flatly unconstitutional.

SDS