July | August 2017

Constitutionality of Federal Health Care Reform

On June 28, 2012, the U.S. Supreme Court ruled the Patient Protection and Affordable Care Act—and the controversial individual mandate—to be constitutional. More than half the states challenged the law’s requirement that individuals be required to carry health insurance or face a penalty. Here, two constitutional scholars share their views on the ruling.


Calling Mandate a Tax Undid Good Call on Commerce Clause

The Supreme Court’s 5-4 decision upholding the individual health insurance mandate gets many things right, but makes one serious error. Chief Justice John Roberts’ opinion rejects the federal government’s most important arguments for the mandate—that it is authorized by the Commerce Clause and the Necessary and Proper Clause.
These parts of Roberts’ reasoning, which are supported by four other justices, could have important implications for future cases. Yet Roberts then partially undid all his good work by ruling that the mandate is constitutional because it is a tax.
The chief justice begins by addressing the Commerce Clause, which gives Congress the power to regulate “Commerce … among the several states.” As Roberts puts it, “the power to regulate commerce presupposes the existence of commercial activity to be regulated.” Yet the mandate “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.”
If Congress can “regulate individuals precisely because they are doing nothing,” it could impose pretty much any mandate of any kind. It could force people to purchase broccoli, cars or any other product. For similar reasons, Roberts also rejected the government’s argument that the mandate is authorized by the Necessary and Proper Clause. As Roberts explains, “(e)ven if the individual mandate is ‘necessary’ to the Act’s insurance reforms, such an expansion of federal power is not a ‘proper’ means for making those reforms effective.” The Constitution, he holds, does not “bring countless decisions an individual could potentially make within the scope of federal regulation, and … empower Congress to make those decisions for him.”
Unfortunately, the chief justice ultimately empowered Congress to do exactly what he said it could not by ruling that the individual mandate is constitutional because it is a tax. He thus endorsed the federal government’s weakest argument for the mandate, one that had been rejected by every lower court to have considered it, including several liberal judges who upheld the law on other grounds.
Roberts contends that the mandate is a tax because it imposes only a monetary fine on those who fail to comply, the fine does not apply to people too poor to pay income taxes, the size of the fine is not too great and that fine is collected by the IRS. By that standard, pretty much any mandate can be converted into a tax simply by structuring it in the same way—including a broccoli or car purchase mandate.
Even Roberts admits that interpreting the mandate as a tax is not “the most natural” reading of the law, which repeatedly calls the mandate a penalty. In fact, the mandate actually is a penalty, which the Supreme Court has defined as “an exaction imposed by statute as punishment for an unlawful act” or omission. The health insurance mandate fits that definition almost perfectly. It imposes a fine as punishment for unlawful refusal to purchase government-mandated health insurance.
This expansion of Congress’ tax power is a dangerous development. Yet the Court’s strong endorsement of limits on the Commerce and Necessary and Proper Clauses is an important step in the right direction. The Court’s decision offers something to both sides. Since the Court remains deeply divided on these issues, it is unlikely to be the last word on constitutional limits to federal power.
Ilya Somin is an associate professor of law and editor, Supreme Court Economic Review, at George Mason University School of Law in Washington, D.C. He wrote an amicus brief before the Supreme Court related to the Affordable Care Act.

Unique Nature of Mandate Doesn’t Create Boundless Taxing Power

Since the U.S. Supreme Court announced its historic decision to uphold the vast majority of the Affordable Care Act, American life has gone on: The Obama administration is now focused on the law’s implementation; opponents have turned back to the political system to voice their objections; and, according to a recent poll by the Kaiser Family Foundation, most of us are ready for naysayers to move on to other national problems.
But we should pause and consider the arguments underlying the final judgment.
Strands of the Court’s logic will almost certainly be used to challenge the scope of federal power in years ahead. The justices’ opinions reflect and guide our nation’s longstanding debate about the proper allocation of power between the U.S. government, the states and individual citizens.
The Court invoked two constitutional arguments with regard to the individual mandate.
The Commerce Clause: In two separate opinions, five justices agreed that Congress’ power to regulate interstate commerce could not justify the requirement that everyone obtain health insurance—the controversial individual mandate. Both decisions rest on an alleged distinction between Congress’ broad authority to regulate existing economic activity versus its inability to create commerce by forcing inactive participants—like the uninsured—into the marketplace.
This activity/inactivity theory places a bizarre restriction on congressional power, one that—as I have argued in the past—has no support in previous case law. Moreover, virtually all of us require medical attention at some point, so it defies common sense to maintain that any of us are truly outside the market for seeking and providing care.
Nonetheless, in the coming years, challengers will attempt to stretch this theory to invalidate additional federal regulations—likely, without much success. After all, no one Commerce Clause analysis gained majority support and these arguments were superfluous to the Court’s ultimate judgment.
Accordingly, lower courts are not formally bound by this part of the decision and ultimately may not be persuaded by these positions. More importantly, the mandate is unprecedented in many respects, so it is hard to imagine other laws that are vulnerable to this attack. Indeed, well-known exercises of the commerce power—such as fair wage and hour laws, anti-discrimination laws and laws prohibiting possession of illegal drugs—all plainly regulate existing commercial activity.
The Taxing Power: Chief Justice John Roberts—joined by four other justices—wrote the majority opinion to uphold the individual mandate as a valid exercise of Congress’ taxing power. He explained that, although the act’s statutory language prescribes a penalty for failing to obtain insurance, that penalty functions as a typical tax—individuals must either obtain insurance or pay a moderate fee to the Internal Revenue Service.
While the Court’s common-sense approach fits comfortably with its past decisions, the mandate’s unique nature—and universal application—has prompted some to warn of a boundless taxing power.
But the Court made clear that a tax cannot be so large as to constitute a prohibitory financial punishment—or any other punishment, for that matter. Individuals must have a reasonable choice to pay the tax rather than do whatever it is that the government is pushing.
This choice limits federal power and protects individual autonomy.
Mimi Murray Digby Marziani is counsel for the Democracy Program at the Brennan Center for Justice at New York University School of Law. She wrote an amicus brief related to the Affordable Care Act.

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