U.S. Supreme Court

Solicitor General’s Third Backup Argument Is a Winner in Health Law Case

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Chief Justice John G. Roberts Jr. surprised many court watchers on Thursday when he joined with the court’s more liberal justices to uphold the Obama administration’s health care law and its insurance mandate.

Roberts wrote (PDF) that Congress had the authority to adopt the mandate—which requires most Americans to purchase insurance or pay a penalty—under its taxing power, but not under its commerce clause authority.

Solicitor General Donald Verrilli cited the taxing power in the administration’s third backup argument, according to Lyle Denniston of SCOTUSblog. The first was that the law could be enacted under the commerce clause, and the second was that it was authorized under the necessary and proper clause.

Roberts wrote in his opinion that Congress did not call the penalty a “tax,” but the label does not determine whether the payment can be viewed as an exercise of Congress’ taxing power. The taxation section of his opinion was joined by Justices Ruth Bader Ginsburg, Sonia Sotomayor, Stephen G. Breyer and Elena Kagan.

Roberts cited several factors supporting the view that the payment is a tax, including the fact that the Internal Revenue Service will collect it. He also said that for most Americans the amount due will be far less than the price of insurance.

Congress’ use of the taxing clause to encourage buying something is not new, Roberts wrote. Tax incentives already promote, for example, home purchases and professional educations, he said.

“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,” he wrote. “Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness.”

Roberts wrote for himself when he rejected the commerce clause argument, but his view prevailed because of four dissenting justices who would have struck down the law in its entirety.

Roberts said that, rather than regulating existing commercial activity, the insurance requirement compels individuals to become active in 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,” Roberts said.

A joint dissent by Justices Antonin Scalia, Anthony M. Kennedy, Clarence Thomas and Samuel A. Alito Jr. deemed the mandate unconstitutional under the “structural limits upon federal power.” They said said the much-cited case about the regulation of wheat, Wickard v. Filburn, concerned the growing of the crop. “To go beyond that, and to say the failure to grow wheat (which is not an economic activity, or any activity at all) nonetheless affects commerce and therefore can be federally regulated, is to make mere breathing in and out the basis for federal prescription and to extend federal power to virtually all human activity,” the dissenters wrote.

The basis for the court’s holding provoked a debate at SCOTUSblog on the impact of the decision.

The rejection of the administration’s first and second arguments “should be understood as a major blow to Congress’ authority to pass social welfare laws,” Denniston wrote. “Using the tax code—especially in the current political environment—to promote social welfare is going to be a very chancy proposition.”

SCOTUSblog founder Tom Goldstein—who correctly predicted that the law would be upheld—said he disagrees that the opinion is a major blow to social welfare legislation. “I think that piece of the decision will be read pretty narrowly,” Goldstein wrote.

The court dealt with two other issues in its lengthy decision. A threshold issue was whether the Anti-Injunction Act prevented the court from deciding the case. The act says suits can’t be filed to challenge taxes until after they are paid. Roberts noted that Congress described the payment required by those who forgo health insurance as a “penalty” rather than a “tax” and said the Anti-Injunction Act doesn’t apply. Both the health law and the Anti-Injunction Act “are creatures of Congress’s own creation,” he said, and the statutory text is the best evidence of Congress’ intent.

Denniston at SCOTUSblog noted the inconsistency. “Interesting, at least to scholars, that while the mandate and its attached penalty are a tax for purposes of its constitutionality, but not for the Anti-Injunction Act,” he observed.

Addressing a second issue, the court upheld the law’s Medicaid expansion but held that the federal government could not withdraw existing Medicaid funds for states that refuse to go along with the expansion requirements.

Two justices—Breyer and Kagan—joined the section of Roberts’ opinion that found the restriction necessary to preserve the constitutionality of the law. Ginsburg and Sotomayor would have gone further and upheld the Medicaid expansion as written. Because of the dissenters, Roberts’ position prevailed, Ginsburg pointed out in a concurring and dissenting opinion joined in full by Sotomayor. Given the majority view, Ginsburg said, she agrees with Roberts that the remedy is to bar withholding of funds formerly available.

Currently states are required to cover only certain categories of needy individuals, such as pregnant women, needy families, the blind and the disabled. Under the expansion, states will get extra federal funds to cover all individuals under age 65 with incomes below a threshold level.

Roberts said Congress can use its spending power to create incentives to carry out federal policies, but the pressure cannot be turned into compulsion. “In this case, the financial ‘inducement’ Congress has chosen is much more than ‘relatively mild encouragement’—it is a gun to the head,” Roberts said.

The four dissenters took the majority to task for “judicial overreaching.”

“The court today decides to save a statute Congress did not write,” the dissent said. “It rules that what the statute declares to be a requirement with a penalty is instead an option subject to a tax. And it changes the intentionally coercive sanction of a total cut-off of Medicaid funds to a supposedly noncoercive cut-off of only the incremental funds that the act makes available. The court regards its strained statutory interpretation as judicial modesty. It is not. It amounts instead to a vast judicial overreaching.”

The cases are U.S. Department of Health and Human Services v. State of Florida and National Federation of Independent Business v. Sebelius.

Prior coverage:

ABAJournal.com: “Another Health Care Law Scenario: Court Sets the Case for Reargument”

ABAJournal.com: “Chemerinsky: SCOTUS Tackles Law and Politics of the Health Care Act”

ABA Journal: “Dissecting the Health Care Case: Election-Year Term Mirrors New Deal Era”

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