The FAQs: The Supreme Court Ruling on Obamacare

Note: The FAQs is TGCs new series in which we answer your questions about the latest news and current events.

The Supreme Court this morning ruled that two main provisions of the Patient Protection and Affordable Care Act of 2010 (commonly referred to as “Obamacare”) were, for the most part, constitutional. How did this happen? What does it mean for our constitutional system? Here's a few answers.

What did the Court do?

The Court, by a vote of 5-4, held that (1) Congress had the power to impose a tax on anyone who refuses to buy health insurance and (2) Congress could vastly expand the Medicaid program, but (3) Congress could not penalize states that refused to join the expansion of Medicaid. Chief Justice John Roberts joined the four Democratic-appointed Justices, including Justice Elena Kagan (who was the Obama Administration's Solicitor General at the time the law was written) in upholding most of the law, but joined the four other Republican appointees in limiting Congress' power to coerce the states into accepting the expansion of Medicaid.

Wait, wasn't this case about interstate commerce?

That was what everyone had expected. Many Supreme Court decisions are about individual rights to be free of government intrusion, but here the Court's decision was about what the federal government had the power to do in the first place. Unlike the states, which have general “police power” to regulate anything that's not specifically protected by individual rights, Congress has only those powers the Constitution expressly gives it. As Chief Justice Roberts's opinion stressed, Congress' powers “must be read carefully to avoid creating a general federal authority akin to the police power.” It's more debatable if his resolution of the case succeeded at that task.

The main argument raised by the challengers to Obamacare was that Congress does not have the power to mandate that individuals buy health insurance. Conservatives argued that this amounts to a federal power to make people do almost anything, including eating broccoli or joining a gym, to be justified on the grounds that it affects people's health and thus the costs of their care. The Solicitor General, on behalf of President Obama, argued that Congress had this power under the Commerce Clause, which grants Congress authority to “regulate Commerce with foreign nations, and among the several States, and with the Indian Tribes.” But the Administration was unable to explain how its view of the Commerce Clause had any limits, and Chief Justice Roberts joined the four other Republican appointees in concluding that the mandate exceeded the Commerce power.

Legally, this is a landmark victory for judicial conservatives. The Court held in two cases in the mid-1990s that the Commerce Clause does not allow Congress to regulate things like gun-free school zones and domestic violence on the theory that they “affect commerce,” but this was the first time since the 1930s that the Court held that an explicitly economic regulation went too far. The Commerce Clause has already gone very far afield from what the voters who ratified the Constitution thought they were agreeing to: the courts for 150 years had treated “Commerce . . . among the several States” as meaning only commerce that actually crossed state lines or involved transportation networks like railroads and rivers. The very first major Commerce Clause case in 1824—involving New York giving an exclusive steamboat license to Robert Fulton—had drawn a distinction between interstate commerce (which was a federal responsibility) and state “quarantine and health laws,” which “are considered as flowing from the acknowledged power of a State, to provide for the health of its citizens” and thus not a federal responsibility. Even to this day, when deciding when the states are not allowed to regulate interstate commerce, the Supreme Court uses the same basic definition.

Chief Justice Roberts's opinion does not undo the expansion of the Commerce Clause that began during the New Deal, but it does draw a clear line as a stopping point: Congress cannot “compel individuals not engaged in commerce to buy an unwanted product,” because “[t]he power to regulate commerce presupposes the existence of commercial activity to be regulated. . . . 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.” The Chief Justice noted that “the Government's logic would justify a mandatory purchase to solve almost any problem,” such as fighting obesity “by ordering everyone to buy vegetables.” He was harsh in denouncing the pervasive nanny-state-ism the Obama administration's arguments would justify:

People, for reasons of their own, often fail to do things that would be good for them or good for society. Those failures—joined with the similar failures of others—can readily have a substantial effect on interstate commerce. Under the Government's logic, that authorizes Congress to use its commerce power to compel citizens to act as the Government would have them act.

That is not the country the Framers of our Constitution envisioned. . . . Accepting the Government's theory would give Congress the same license to regulate what we do not do, fundamentally changing the relation between the citizen and the Federal Government.

. . . The Commerce Clause is not a general license to regulate an individual from cradle to grave . . .

So, why did the Court uphold the mandate?

Instead of the Commerce Clause, Chief Justice Roberts and the four Democratic-appointed justices found that the mandate could be justified because the penalty for violating it was a tax. This was something of a surprise: President Obama had loudly denied that the mandate was a tax, Congress had not treated the mandate as a tax, the Court refused to treat it as a tax for purposes of a jurisdictional statute that would have postponed decision on the issue to 2014, and the Chief Justice's own opinion admits that the “most straightforward reading” of the statute is to treat the mandate as a mandate, not a tax. But, straining to find some justification for what Congress had done, the Court decided that it was a tax because the payment of a penalty to the IRS (determined in part by reference to your income) was the only consequence for ignoring the mandate; you can't be sent to jail or face any other consequences as long as you pay up. In this sense, the taxing power is more limited than the Commerce Clause, which is routinely used to justify enacting criminal statutes and forests of regulation.

It's also a politically explosive way of justifying the mandate. It flies in the face of President Obama's famous campaign promise not to raise any taxes on anyone making under $250,000 a year, and the opinion is quite explicit about the fact that the burden of those taxes will fall heavily on young people, who are less likely to buy or need insurance. But it also places Republican presidential nominee Mitt Romney in an uncomfortable position, since his own Massachusetts health care plan had mandates that he has taken pains not to characterize as taxes. It is for precisely this reason that Justice Scalia's dissent took issue with recharacterizing the mandate as a tax after it was passed through Congress under the pretense of being something else.

The Chief Justice concluded that, unlike the Commerce Clause, “the Constitution does not guarantee that individuals may avoid taxation through inactivity,” wryly citing to Benjamin Franklin's observation in 1789 that “Our new Constitution is now established . . . but in this world nothing can be said to be certain, except death and taxes.” Unlike the Commerce Clause, the Court's opinion was much vaguer in explaining what limit there may be on taxation, simply noting that at some point, punitive taxes become more “regulation and punishment” than taxes. The Court thus left open the possibility that if the mandate (or any other regulatory-minded tax) is widely ignored and Congress tried to increase the penalty, it could be declared unconstitutional in the future.

What about Medicaid?

Obamacare's vast expansions of the multi-trillion-dollar Medicaid program are arguably much more significant than the mandate. Medicaid is jointly funded between the federal government and the states, and already consumes an ever-increasing share of state spending. Some states projected that under the new rules, which make many more people eligible for the program, Medicaid would consume around a quarter of their budgets (the average state's share is already 20 percent). In theory, state participation is voluntary, but in practice, every state is currently in the program. Many governors, especially Republicans, balked at a huge expansion of their budgets by a program outside their control at a time when state budgets are already deeply stressed, but Congress threatened in the bill that any state refusing to agree to the new eligibility rules would lose every penny of their funding. They complained to the Court that this was a threat to independent state self-government.

The Court has warned for years that, while Congress could attach strings to federal spending, it could not simply coerce states into doing its bidding. Chief Justice Roberts, joined by Justices Breyer and Kagan and with the agreement of the four Republican-appointed Justices, finally put some teeth in this warning, holding that the size of Congress' threat amounted to “a gun to the head” of the states that Congress could not be permitted to use. But Roberts, joined by Breyer and Kagan, concluded that Congress could reasonably threaten to withhold only the funding for the expansion of Medicaid and not pre-existing funding for the entire program. That split decision may allow some governors the wiggle room, if they want it, to say no to Congress, but it allows the budget-busting expansion of Medicaid to go forward in any state that accepts the new rules.

Are the lawsuits over Obamacare over?

The Court has spoken on the first round of challenges to Obamacare. The voters still get a say: they have already thrown out the Democratic majority in the House that voted for the bill, and if a Republican president and Senate are elected and they follow through on promises to repeal Obamacare, that will be the end of this chapter of the story. But if the statute is not repealed in its entirety, more legal challenges remain in the pipeline. Many religious organizations, led by Catholic hospitals and universities, are presently challenging on religious freedom grounds the Obama administration's mandate to provide coverage for contraception. There are also challenges to the Independent Payment Advisory Board (IPAB), colloquially referred to as the “death panel.” The courts will still have to grapple with these challenges, and they may be resolved very differently from today's result. Perhaps Franklin should have added that, besides death and taxes, we can be certain of more litigation.

Other Posts in this Series:

Southern Baptists, Calvinism, and God's Plan of Salvation

Are Mormons Christian?

The Contraceptive-Abortifacient Mandate

Do Muslims and Christians Worship the Same God?