SCOTUS Upholds ObamaCare Mandate As Tax Even Though It’s Not a Tax
Chief Justice Roberts sided with a majority in upholding the individual mandate and, indeed, all but some trivial portions of the Affordable Care Act. Indeed, he wrote the opinion himself.
Doug is in the process of writing up a lengthy discussion, so I’ll reserve my comment to the odd twist by which the Court upheld the mandate: by construing it as a tax rather than a regulation of interstate commerce. Here’s how the Washington Post describes it:
During oral arguments in March, conservative justices indicated they were skeptical about the individual mandate, the provision in the 2,700-page health-care law that requires nearly all Americans to obtain health insurance by 2014 or pay a financial penalty.
Arguing the case for the Obama administration, Solicitor General Donald B. Verrilli Jr.defended the law as a constitutional exercise of congressional power under the charter’s commerce clause to regulate interstate commerce. He said lawmakers were regulating health insurance to deal with the problem of millions of people who lack coverage and therefore shift costs to the insured when they cannot pay for their medical care.
The court rejected the commerce clause argument, but ruled that Congress nevertheless had the power to impose the mandate because it can be considered a tax.
Here’s how the opinion syllabus concerning the analysis reads:
2. 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. The Framers knew the difference between doing something and doing nothing. They gave Congress the power to regulate commerce, not to compel it. Ignoring that distinction would undermine the principle that the Federal Government is a government of limited and
enumerated powers. The individual mandate thus cannot be sustained under Congress’s power to “regulate Commerce.” Pp. 16-27.
(b) 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.
3. CHIEF JUSTICE ROBERTS concluded in Part III-B that 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-
(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 action 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.
(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
This strikes me as incredibly tortured.
First, I fully agree with the majority that Congress lacks power under the Commerce Clause to compel citizens to engage in interstate commerce.
Second, I fully agree with the majority that Congress has the authority under their power to tax to incentivize people to purchase health insurance or, well, just about anything.
My problem with the ruling, though is the not so trivial detail that Congress not only did not enact the individual mandate as a tax but vehemently denied that it was a tax. Likewise, until it came to the oral arguments–at which time the tax idea was a Hail Mary fallback position–so did the Obama administration. It strikes me that this matters. The power to tax, after all, resides with the Congress, not the Supreme Court. And declaring something that isn’t a tax to be a tax is likewise outside the mandate of the judicial branch.
Indeed, I gather that Roberts argues that it’s the Supreme Court’s job to bend over backwards to find a way to construe Congress’ actions as Constitutional. My counter is that it’s Congress’ job to write laws that are Constitutional and the Supreme Court’s role is, to coin a phrase, call balls and strikes. The majority here essentially ruled that Congress struck out but nonetheless awarded them a base.
UPDATE: To be clear, while I think Congress could have accomplished this with a tax, I don’t think they passed a tax; rather, they passed a mandate to buy something with a penalty for not doing so. Even if you want to call it a “tax” rather than a “penalty,” I think Roberts and company get it wrong: Congress doesn’t have the power to tax people for , to reuse the tired analogy that was always used in the Commerce Clause debate, failing to eat their broccoli.
What I do think Congress has the power to do is do exactly the same thing in reverse. That is, they could issue either an increase to the Medicare withholding or some other dedicated PPACA tax and then allow an offsetting deduction on the federal tax return for those who can document that they are insured.
I fully grant that, as a practical matter, it’s the exact same thing. But process matters. And neither Congress nor the Supreme Court followed that process.
UPDATE 2: To put it more succinctly, Roberts gets the fundamentals right: Congress clearly wanted to mandate that people have insurance and have a way of collecting money from those who don’t to cover the costs of free riding. Congress clearly has the power to do that via a tax–although typically through tax credits and deductions rather than outright taxes. My objection is that the law imposes a penalty for failure to buy insurance rather than issuing a tax credit for buying it.