June 28, 2012

Supreme Court Rules Individual Mandate Survives as a Tax

Marc Comtois

Chief Justice Roberts wrote the opinion. Upholds Individual Mandate as a tax under Congress' taxing powers. Apparently a complicated opinion. Others are more equipped (and have the time) to analyze, but feel free to comment!

ADDENDUM (snarky version): Roberts joined with the courts liberals, so it was 5-4. Not quite the 5-4 decision anyone anticipated, to be sure. What are liberal supporters of the Health Care act going to say about Roberts now? Does this mean the Supreme Court is all-of-a-sudden legit again?

ADDENDUM (serious version): Some are arguing that by upholding the mandate by calling it a tax while expressly ruling that it's NOT legit under the Commerce Clause, CJ Roberts has managed to give liberals a political win while also pushing back against big government overreach, which is something conservatives like. Jay Cost:

First, the Roberts Court put real limits on what the government can and cannot do. For starters, it restricted the limits of the Commerce Clause, which does not give the government the power to create activity for the purpose of regulating it. This is a huge victory for those of us who believe that the Constitution is a document which offers a limited grant of power.

Second, the Roberts Court also threw out a portion of the Medicaid expansion. States have the option of withdrawing from the program without risk of losing their funds. This is another major victory for conservatives who cherish our system of dual sovereignty. This was also a big policy win for conservatives; the Medicaid expansion was a major way the Democrats hid the true cost of the bill, by shifting costs to the states, but they no longer can do this.

Politically, Obama will probably get a short-term boost from this, as the media will not be able to read between the lines and will declare him the winner. But the victory will be short-lived. The Democrats were at pains not to call this a tax because it is inherently regressive: the wealthy overwhelmingly have health insurance so have no fear of the mandate. But now that it is legally a tax, Republicans can and will declare that Obama has slapped the single biggest tax on the middle class in history, after promising not to do that.

UPDATE: Key components of Roberts writing on the SCOTUS ruling (PDF) upholding individual mandate (after the jump):

Why mandate is NOT legitimate under the Commerce Clause:

CHIEF JUSTICE ROBERTS concluded in Part III–A that the individual mandate is not a valid exercise of Congress’s power under the Commerce Clause and the Necessary and Proper Clause. Pp. 16–30. (a) The Constitution grants Congress the power to “regulate Commerce.” Art. I, §8, cl. 3 (emphasis added). The power to regulate commerce presupposes the existence of commercial activity to be regulated. This Court’s precedent reflects this understanding: As expansive as this Court’s cases construing the scope of the commerce power have been, they uniformly describe the power as reaching “activity.” E.g., United States v. Lopez, 514 U. S. 549, 560. The individual mandate, however, 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. 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. Congress already possesses expansive power to regulate what people do. Upholding the Affordable Care Act under the Commerce Clause would give Congress the same license to regulate what people do not do.

Not legal under "Necessary and Proper Clause":

Nor can the individual mandate be sustained under the Necessary and Proper Clause as an integral part of the Affordable Care Act’s other reforms. Each of this Court’s prior cases upholding laws under that Clause involved exercises of authority derivative of, and in service to, a granted power. E.g., United States v. Comstock, 560 U.S. ___. The individual mandate, by contrast, vests Congress with the extraordinary ability to create the necessary predicate to the exercise of an enumerated power and draw within its regulatory scope those who would otherwise be outside of it. Even if the individual mandate is “necessary” to the Affordable Care Act’s other reforms, such an expansion of federal power is not a “proper” means for making those reforms effective. Pp. 27–30.

It's a tax:

...the individual mandate must be construed as imposing a tax on those who do not have health insurance, if such a construction is reasonable. The most straightforward reading of the individual mandate is that it commands individuals to purchase insurance. But, for the reasons explained, the Commerce Clause does not give Congress that power.It is therefore necessary to turn to the Government’s alternative argument: that the mandate may be upheld as within Congress’s power to “lay and collect Taxes.” Art. I, §8, cl. 1. In pressing its taxing power argument, the Government asks the Court to view the mandate
as imposing a tax on those who do not buy that product. Because “every reasonable construction must be resorted to, in order to save a statute from unconstitutionality,” Hooper v. California, 155 U. S. 648, 657, the question is whether it is “fairly possible” to interpret the mandate as imposing such a tax, Crowell v. Benson, 285 U. S. 22, 62. Pp. 31–32.
4. CHIEF JUSTICE ROBERTS delivered the opinion of the Court with respect to Part III–C, concluding that the individual mandate may be upheld as within Congress’s power under the Taxing Clause. Pp. 33–44.
(a) The Affordable Care Act describes the “[s]hared responsibility payment” as a “penalty,” not a “tax.” That label is fatal to the application of the Anti-Injunction Act. It does not, however, control whether an exaction is within Congress’s power to tax. In answering that constitutional question, this Court follows a functional approach,“[d]isregarding the designation of the exaction, and viewing its substance and application.” United States v. Constantine, 296 U. S. 287, 294. Pp. 33–35.
(b) Such an analysis suggests that the shared responsibility payment may for constitutional purposes be considered a tax. The payment is not so high that there is really no choice but to buy health insurance; the payment is not limited to willful violations, as penalties
for unlawful acts often are; and the payment is collected solely by the IRS through the normal means of taxation. Cf. Bailey v. Drexel Furniture Co., 259 U. S. 20, 36–37. None of this is to say that payment is not intended to induce the purchase of health insurance. But the mandate need not be read to declare that failing to do so is unlawful. Neither the Affordable Care Act nor any other law attaches negative legal consequences to not buying health insurance, beyond requiring a payment to the IRS. And Congress’s choice of language—stating that individuals “shall” obtain insurance or pay a “penalty”—does not require reading §5000A as punishing unlawful conduct. It may also be read as imposing a tax on those who go without insurance. See New York v. United States, 505 U. S. 144, 169–174. Pp. 35–40.
(c) Even if the mandate may reasonably be characterized as a tax, it must still comply with the Direct Tax Clause, which provides:“No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.” Art. I, §9, cl. 4. A tax on going without health insurance is not like a capitation or other direct tax under this Court’s precedents. It therefore need not be apportioned so that each State pays in proportion to its population. Pp. 40–41.

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One thing I have to disagree with Cost on: Unless the court is now going to start walking back the Commerce Clause on the basis of this decision (which is at best 50:50, given the unique circumstance of forcing people to buy a product), it did not really "restrict the limits" of the clause. The Constitution did that.

It's very dangerous to get in the mindset that a legislature and executive that are able to long-jump into the sand pit of unconstitutional behavior thereby have expanded their authority to everything just shy of their leap.

Posted by: Justin Katz at June 28, 2012 1:10 PM

Celebrating an outcome one happens to favor is fine, but cutting through the revisionist history already being written by outcome-driven, means-justifying-ends progressives, the two main arguments that ACA-supporters offered before today were that Congress either already had unlimited power under the Commerce Clause or that Congress should be granted such power through judicial activism, living constitutionalism, or whatever one wants to call it. That line of reasoning used to justify unlimited Federal police power was far more dangerous than the Affordable Care Act being upheld in isolation as a "tax." This decision clarifies that open question, which had been doing a tremendous amount of damage to the Court's reputation and American political philosophy. It reaffirms the central principles of limited government, rejects the idea of a Federal police power, and explicitly recognizes some hard limits on Congressional authority under the Commerce Clause. This really is a short-term loss, long-term victory for limited-government advocates.

Posted by: Dan at June 28, 2012 1:33 PM

This is Democrats greatest "victory" since the Assault Weapons Ban.
Somewhere King Pyrrhus is laughing.

Posted by: Tommy Cranston at June 28, 2012 2:14 PM

The idea for individual mandates (mandatory health insurance) aka Romney-care originated at the Heritage Foundation, a right wing think tank in 1989 it has been at the heart of the "personal responsibility" Conservative Republican's health-care reforms for two decades. "Assuring Affordable Health Care for All Americans," as opposed too a single-payer system, (medicare for all) which was favored by the liberals

The right-wing-nuts were for it, before they were against it...LOL
Now they are trying, and failing, in an attempt to re-write history

Posted by: Sammy in Arizona at June 28, 2012 3:23 PM

I wondered when someone would bring this one up. Besides the fact that it was a different sort of mandate, which allowed the removal of a tax break as opposed to paying a penalty tax for non-compliance. In short, it's much more nuanced than Sammy indicates (surprise). But that's only a small point: the larger is that just because one particular think tank thought it a good idea doesn't really support the idea the "all of them did" as Sammy and other liberals imply. Painting with a broad brush and all that. For those inclined:

http://www.outsidethebeltway.com/conservatives-and-the-individual-mandate/

http://www.usatoday.com/news/opinion/forum/story/2012-02-03/health-individual-mandate-reform-heritage/52951140/1

http://www.heritage.org/research/reports/2009/12/why-the-personal-mandate-to-buy-health-insurance-is-unprecedented-and-unconstitutional

Posted by: Marc at June 28, 2012 4:03 PM

The Heritage Foundation is now outraged, eh? Never mind that the mandate was a conservative idea originally proposed by? ...you guessed it:

www.foxnews.com/politics/2012/06/28/individual-health-care-insurance-mandate-has-long-checkered-past/

The mandate, requiring every American to purchase health insurance, appeared in a 1989 published proposal by Stuart M. Butler of the conservative Heritage Foundation called "Assuring Affordable Health Care for All Americans," which included a provision to "mandate all households to obtain adequate insurance."

The Heritage Foundation "substantially revised" its proposal four years later, according to a 1994 analysis by the Congressional Budget Office. But the idea of an individual health insurance mandate later appeared in two bills introduced by Republican lawmakers in 1993, according to the non-partisan research group ProCon.org. Among the supporters of the bills were senators Orrin Hatch, R-Utah, and Charles Grassley, R-Iowa, who today oppose the mandate under current law.

Just saying. That's of course not news to many on the left...
www.huffingtonpost.com/cenk-uygur/individual-mandate-affordable-care-act_b_1623963.html

Posted by: Russ at June 28, 2012 4:23 PM

I might also mention this, reported in another leftist rag...

www.forbes.com/sites/brucejapsen/2012/06/17/mandate-to-buy-coverage-health-insurance-industrys-idea-not-obamas/

Posted by: Russ at June 28, 2012 4:29 PM

Russ, I just covered all that w/the links, but I'm glad you're having fun piling on. "Mike check".

Posted by: Marc at June 28, 2012 4:54 PM

"Supreme Court Rules Individual Mandate Survives as a Tax"

What??? How? The president explicitly and repeatedly told us that it is NOT a tax. Nor is the word "tax" in the law!

Posted by: Monique at June 28, 2012 5:21 PM

"What??? How? The president explicitly and repeatedly told us that it is NOT a tax. Nor is the word "tax" in the law!"

The reasoning is that it doesn't matter what anyone calls it, the functionality of the law is what matters.

I personally found the dissent more persuasive, but it's not an absurd line of reasoning.

Posted by: Dan at June 28, 2012 5:29 PM

Welcome other 49 U.S.A. states to healthcare reform!

State of Hawaii is EXEMPT from Obamacare because it would water down healthcare reform Hawaii initiated over 40 years ago which requires any person working 20 or more hours a week must be provided with healthcare insurance by the business they are working for.

As a state Hawaii has had over 40 years to tweak and adjust its healthcare reform and now has the lowest healthcare cost in the nation. My healthcare insurance dropped $100 per month moving from Rhode Island to Hawaii with same insurance provider.

About 90% of state population is covered by healthcare insurance and the other 10% is covered by Quest a state operated healthcare insurance based on a sliding scale ability of the person to pay for services.

Hawaii is the only state closest to providing universal healthcare to entire state population.

Posted by: KenW at June 28, 2012 6:41 PM

I haven't made my way through all of the opinions yet, but I have a few observations:

1. It's not the job of the Supreme Court to correct erroneous actions by the political branches -- even grossly erroneous actions.

2. Unless there is a plain basis in the Constitution for striking down a statute, the Supreme Court must be not just reluctant to invalidate it, the Court must stand aside and let the statute stand.

3. Listening to a replay of the argument last night, I was struck by some of the questions asked by Justice Sotomayor about the us of the taxing power to incentivize action -- tax credits for solar panels, cash for clunkers, etc., etc. ObamaCare is absolutely at the outer edges of that power, but it's not crazy to conclude that it's inside those edges.

4. Judges who defer to the elected branches are preferrable to those who feel obliged to stand in for them. Even if such judges are sometimes wrong, the kinds of errors they make can be corrected by electing a new Congress or President.

Posted by: brassband at June 28, 2012 7:29 PM

This really is quite simple.
What the court has ruled is that citizens can be taxed on what they DON'T possess.

Truly amazing!

A sad day for a once great and proud country.

Posted by: Tim at June 28, 2012 7:30 PM

The Bushies have a long history of picking the wrong justice. #1 had Souter, #2 has the ding-bat Roberts. Roberts single handedly rescued this monster with some stench from the bench. The result? Congress (and the Supremes) have a license to run hog wild and tax purchases AND non purchases. USA...we hardly knew ya.

Posted by: ANTHONY at June 28, 2012 7:49 PM

Posted by Brassband
"questions asked by Justice Sotomayor about the us(es) of the taxing power to incentivize action --"

But isn't it the history of the taxing power been to incentivize activity? "Mortgage" deductions to incentivisze house purchases. All of the exemptions are designed to "incentivize" something. Otherwise, the tax code could fit in 100 pages.

I am dissapointed. Whileit is probably not actually mentioned in the text it was asserted as being enabled by the Commerce Clause. Perhaps that was just an one of the arguments before the court. But it does seem the court substituted something not considered in the legislative process. Now it appears the government has the power to compel purchases. What next? Call it a tax and compel the purcahse of solar panels, electric cars?

Posted by: Warrington Faust at June 28, 2012 9:34 PM

Brassband,

There's a bigger difference, I think, than Warrington is describing. As liberals like to remind us, tax credits, deductions, and incentives generally are really *expenditures* given out in the form of tax credits for convenience. (RI's tax credit programs illustrate this beautifully.)

Here, you don't have the government giving away a credit (deduction, whatever), but rather forcefully confiscating money. The reflection of the expenditure is a fine, which makes the policy a mandate enforced, for convenience, through the tax system.

It seems to me that Congress ought to have some prior authority (e.g., the Commerce Clause) before the question of whether the tax mechanism is legitimate even comes into play.

Whatever the justifications that may be found for Roberts, I fear that retrospect will prove this decision every bit as destructive as legal penumbras and use of the 14th Amendment to make "Congress" mean "anybody who works in government at any level in any capacity."

If there's a silver lining to this, it's that it creates a very stark illustration of why such big matters should not be handled by the federal government at all.

Posted by: Justin Katz at June 28, 2012 9:47 PM

I am also disappointed that this is seen as a "victory" by some. Thinking it was the last,best, hope for a better health care system.

I often reflect on a statement by one of my history professors "If things did not happen they way they did, does not mean they would not have happened at all".

I dislike the idea that it seems to focus on paying the cost of health care, rather than a method to reduce health care costs. I fear that we will engender a "student loan" problem. Having made more money available to meet costs, those costs will skyrocket.

Posted by: Warrington Faust at June 29, 2012 10:07 AM

"I just covered all that w/the links..."

So conservatives were before it until they were against it. Got it. I take it, the idea has nothing at all to do with the '93 Republican bill either.

"The Democrats' 2010 Health Reform Plan Evokes 1993 Republican Bill"
www.kaiserhealthnews.org/checking-in-with/durenberger-1993-gop-bill-q-and-a.aspx

‘Happiest day of my life’ for Ferguson, architect of ‘Chafeecare’
blogs.wpri.com/2012/06/28/happiest-day-of-my-life-for-ferguson-architect-of-chafeecare/

Sorry to interupt the spinning. Megadittos, Marc.

Posted by: Russ at June 29, 2012 12:27 PM

Hey, lefties, you know what today's Republicans call Nixon?

Socialist!

"Nixon's Plan For Health Reform, In His Own Words"
www.kaiserhealthnews.org/stories/2009/september/03/nixon-proposal.aspx

Posted by: Russ at June 29, 2012 12:31 PM

"If there's a silver lining to this, it's that it creates a very stark illustration of why such big matters should not be handled by the federal government at all."

So you're in favor of eliminating Medicare. Is that correct?

Posted by: Russ at June 29, 2012 1:17 PM

Russ, Healthcare reform has been a Republican initiative for many years now as you point out all the way back to Republican President Nixon. It appears those who call themselves Republican can’t settle on a basic party agenda!I’m becoming confused by Republican and Tea Party agenda double speak!

Massachusetts population is about 6,587,536 people - Jul 2011 and about 5% population does not have Republican ex-governor Romneycare healthcare insurance; Source: U.S. Census Bureau. Mitt Romney has pledged to kill Obamacare if elected! What???? Because the first Democratic African-American President pushed through a Republican idea which is almost a copy-cat of what he pushed through in State of Massachusetts and is working?????? So is Romney saying he was wrong as governor to push healthcare reform in MA??????? If so they say it only takes one vote to make a difference!

Hawaii used to have the highest state population covered by healthcare insurance till 2009 and recession. Hawaii population is about 1,374,810 people - Jul 2011 and about 7.7% population does not have Republican sponsored state-wide healthcare reform idea made into state law June 12, 1974 called “Hawaii Prepaid Health Care (PHC) Act (PHCA)”; Source: U.S. Census Bureau. Hawaii’s healthcare reform is different from Obamacare and the state is EXEMPTED because Obamacare would water down state healthcare law but Obama did copy some of HI provisions especially when it comes to religion. Hawaii’s been working healthcare reform tweaking and fine tuning over last 40 years including over 2 years of drafting original legislatration. Hawaii has the lowest healthcare costs in the nation and the happiest and less stressed state-wide population in the nation.

Posted by: KenW at June 30, 2012 2:06 AM

What Roberts is saying is that elections and legislation have consequences which can't necessarily be undone by courts.Haven't we conservatives criticized judicial activism?
Who couldn't see the tax issue here,given that the IRS and not HHS,was in charge of enforcing the ACA?
We were happy with Roberts' opinions in McDonald,Heller,Citizens United(I didn't really study that one at all),and some other cases.Now he's a turncoat for telling us the truth?Come on.
Obama lied his ass off to the public about this tax issue.
I guess no one will be happy with this entry-oh,well.

Posted by: joe bernstein at June 30, 2012 8:56 PM
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