What’s at stake?

The ability of all Americans to access affordable healthcare.

Issues:

Whether the Anti-Injunction Act permits a pre-enforcement challenge to the constitutionality of the Affordable Care Act’s individual mandate; whether Congress exceeded its power in enacting the individual mandate; whether the individual mandate can be severed from the rest of the Affordable Care Act; and whether the Affordable Care Act’s expansion of Medicaid coverage for the poor and disabled violates states’ rights.

Decision date:

June 28, 2012

Outcome:

5-4 in favor of the federal government. Chief Justice Roberts wrote for himself (with no other justices joining) and wrote the opinion of the Court, in which Justices Ginsburg, Breyer, Sotomayor, and Kagan joined. Justices Scalia, Kennedy, Thomas, and Alito filed a joint dissenting opinion. Justice Thomas also filed a separate dissenting opinion.

What the Court held:

In 2010, Congress passed the Patient Protection and Affordable Care Act (“Affordable Care Act”), a major overhaul of the nation’s health insurance system.

The Affordable Care Act provides that, beginning in 2014, private insurance companies cannot deny health insurance coverage based on most pre-existing conditions, nor charge more for coverage to individuals with pre-existing conditions. Because these two provisions would theoretically cause premiums for healthy individuals to rise, Congress also included a minimum coverage provision, more commonly called the individual mandate. This provision, which also takes effect in 2014, requires that most individuals purchase private health insurance, or else be subject to a penalty assessed by the IRS – with exceptions for individuals who are already covered through Medicare or Medicaid, have religious objections, or are suffering financial hardship. Congress included the individual mandate to ensure that healthy individuals do not leave the insurance pool, which would cause a further increase in premiums. The constitutionality of the individual mandate lies at the heart of the cases before the Supreme Court.

By a vote of 5-4, the Supreme Court upheld the individual mandate and the remainder of the ACA, but narrowed the Medicaid provision of the Act. Chief Justice Roberts began his opinion by deciding the threshold question that the individual mandate does not constitute a tax for the purposes of the Tax Anti-Injunction Act and thus it was not premature for the Court to decide the case. The Anti-Injunction Act, passed in 1867, provides that a person cannot sue to challenge a tax prior to paying the tax. Under the individual mandate provision, the penalty for not purchasing health insurance is to be assessed by the IRS in conjunction with income tax collection. Nonetheless, the Chief Justice concluded that Congress has defined the financial penalty for not purchasing insurance as a penalty rather than as a tax, and thus that interpretation holds for the purposes of the Anti-Injunction Act.

Next, the Chief Justice, still writing for only himself, concluded that the individual mandate was invalid as an exercise of Congress’ power to regulate interstate commerce, based on a distinction between economic “activity” and “inactivity” – a distinction that had never before been made by the Supreme Court. Article 1, Section 8 of the Constitution states that “The Congress shall have Power…[t]o regulate Commerce…among the several States” and “To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers.”  The challengers argued that those powers do not authorize the individual mandate because the mandate orders those not participating in the health insurance market to participate in the market by buying insurance. The United States rejected the activity/non-activity distinction, arguing that the health care system is clearly commerce “among the several States,” and that the individual mandate is a reasonable way to ensure that all Americans have access to affordable, quality health care.

Nonetheless, the Chief Justice then concluded, now joined by Justices Ginsburg, Breyer, Sotomayor, and Kagan, that the individual mandate was a valid exercise of Congress’ power to “tax and spend.” That is the primary holding of a confusing and multi-part decision. Justice Ginsburg wrote a separate opinion, joined by Justices Breyer, Sotomayor, and Kagan, to indicate her belief that the individual mandate was also a valid exercise of Congress’ power under the Commerce Clause. As Justice Ginsburg wrote, “[t]he Chief Justice’s crabbed reading of the Commerce Clause harks back to the era in which the Court routinely thwarted Congress’ efforts to regulate the national economy in the interest of those who labor to sustain it.” She added “[i]t is a reading that should not have staying power.”

Because a majority of the Court upheld the individual mandate, the Court did not reach the issue of “severability” – or whether the balance of the Affordable Care Act could remain in force if the individual mandate were struck down as unconstitutional.

In dissent, Justices Scalia, Kennedy, Thomas, and Alito accused the majority of “vast judicial overreaching” and of re-writing the statute by considering the mandate as a tax. The dissenters would have struck down not only the mandate but the entire Affordable Care Act as unconstitutional under the Commerce Clause.

The only partial defeat for the government was the Court’s holding that the Medicaid provision – which conditioned federal funds on states’ acceptance of expanding Medicaid coverage to families with incomes up to 133% of the federal poverty level – must be interpreted narrowly such that states that refuse to expand their Medicaid programs lose federal funding only for the expansion, but not for the current, unexpanded versions of their programs.

By upholding the Affordable Care Act, the Supreme Court has ensured that millions of Americans will now have access to affordable health care. Nonetheless, it is clear from the various opinions that there are five justices on the Supreme Court who favor a more restricted interpretation of the Commerce Clause, with potentially broad implications for the federal government’s ability to act in the future.