(CN) – The Supreme Court today upheld the constitutionality of health care reform, including a provision that requires most Americans to buy insurance, while four dissenting justices said the entire law should have been thrown out.
Chief Justice John Roberts joined a five-justice majority made up of the court’s more liberal justices in upholding the so-called individual mandate of the Patient Protection and Affordable Care Act, which President Barack Obama signed in March 2010.
Though they agreed that the law was constitutional, Justices Ruth Bader Ginsburg, Sonia Sotomayor, Stephen Breyer and Elena Kagan argued for a more expansive interpretation of the law in a separate opinion. Justice Anthony Kennedy, who had been expected to cast the swing vote in the case, ultimately signed onto a joint dissent with Justices Antonin Scalia, Samuel Alito and Clarence Thomas.
A provision of health care reform known as the individual mandate took up most of the court’s attention. Otherwise known as the minimum-coverage provision, it imposes penalties on eligible citizens who choose not to purchase health insurance. The provision is set to take effect in 2014, empowering the Internal Revenue Service to collect the penalty with an individual’s taxes, just as it would collect a penalty against those who overstate their income tax refunds.
Roberts was the lone member of the majority to find that the provision violates the commerce clause of the U.S. Constitution, but all five agreed that the measure survived under taxing powers.
The government’s commerce clause argument failed because the individual mandate does not regulate existing commercial activity, the 59-page decision states.
“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,” Roberts wrote. “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. Every day individuals do not do an infinite number of things. In some cases they decide not to do something; in others they simply fail to do it. Allowing Congress to justify federal regulation by pointing to the effect of inaction on commerce would bring countless decisions an individual could potentially make within the scope of federal regulation, and – under the government’s theory – empower Congress to make those decisions for him.” (Emphasis in original.)
Such logic could justify mandating that Americans eat a balanced diet, the court said, noting that this group has more members and also adds to health care costs.
“People, for reasons of their own, often fail to do things that would be good for them or good for society,” Roberts wrote. “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.”
Roberts also refused to let the government justify the individual mandate under the necessary-and-proper clause of the Constitution, but the majority was more receptive to the government’s taxing powers.
They noted that “the government asks us to read the mandate not as ordering individuals to buy insurance, but rather as imposing a tax on those who do not buy that product.”
This tactic worked.
“While the individual mandate clearly aims to induce the purchase of health insurance, it need not be read to declare that failing to do so is unlawful,” Roberts wrote. “Neither the act nor any other law attaches negative legal consequences to not buying health insurance, beyond requiring a payment to the IRS. The government agrees with that reading, confirming that if someone chooses to pay rather than obtain health insurance, they have fully complied with the law.”
The majority noted that Congress has often used the taxing clause to encourage buying something.
“Tax incentives already promote, for example, purchasing homes and professional educations,” Roberts wrote. “Sustaining the mandate as a tax depends only on whether Congress has properly exercised its taxing power to encourage purchasing health insurance, not whether it can. Upholding the individual mandate under the taxing clause thus does not recognize any new federal power. It determines that Congress has used an existing one.”
The court authorized the mandate under the taxing clause after refusing to let the Anti-Injunction Act strip jurisdiction, as the 4th Circuit had ruled in September.
“The Affordable Care Act does not require that the penalty for failing to comply with the individual mandate be treated as a tax for purposes of the Anti-Injunction Act,” Roberts wrote. “The Anti-Injunction Act therefore does not apply to this suit.”
Since the provision passed constitutional scrutiny, the justices also did not consider the question of whether pieces of the law could be struck out to preserve the remaining legislation.
Another component of the law that the justices considered, known as the Medicaid expansion, gives states federal funding if they provide specified health care to all citizens whose income falls below a certain threshold.
The court found that this power is constitutional under the spending clause but limited.
Congress has long used the spending clause to trade funding for actions that it could not otherwise require, but Supreme Court precedent has also “recognized limits” on this power, the decision states.
“Respecting this limitation is critical to ensuring that spending clause legislation does not undermine the status of the states as independent sovereigns in our federal system,” Roberts wrote.
States have “a legitimate choice whether to accept the federal conditions in exchange for federal funds,” but the court agreed that they also face a threat for refusing.
“Instead of simply refusing to grant the new funds to states that will not accept the new conditions, Congress has also threatened to withhold those states’ existing Medicaid funds,” Roberts wrote.
“The threatened loss of over 10 percent of a state’s overall budget … is economic dragooning that leaves the states with no real option but to acquiesce in the Medicaid expansion,” he added.
Roberts took pains to note that invalidating an application of a statute does not rewrite it, thus preserving the rest of the act.
“The court today limits the financial pressure the secretary may apply to induce states to accept the terms of the Medicaid expansion,” Roberts wrote. “As a practical matter, that means states may now choose to reject the expansion; that is the whole point. But that does not mean all or even any will. Some states may indeed decline to participate, either because they are unsure they will be able to afford their share of the new funding obligations, or because they are unwilling to commit the administrative resources necessary to support the expansion. Other states, however, may voluntarily sign up, finding the idea of expanding Medicaid coverage attractive, particularly given the level of federal funding the act offers at the outset.
“We have no way of knowing how many states will accept the terms of the expansion, but we do not believe Congress would have wanted the whole act to fall, simply because some may choose not to participate.”
The court consolidated three related petitions when it took up the case in November. In addition to Roberts’ majority opinion, the court’s 193-page resolution contains three partial and full dissents.
Though several federal appeals courts have ruled on different lawsuits brought against the law, the justices agreed to consider only the Florida challenge.
U.S. District Judge Roger Vinson in Pensacola, Fla., had ruled on Jan. 31 that the act could not survive if the unconstitutional provision was severed. Appointed to the bench by President Ronald Reagan, Vinson later suspended his declaratory judgment order, which would have stopped implementation of the law pending the appeal.
That case was the only one in which the individual mandate was also deemed unconstitutional on appeal. Though the 11th Circuit agreed with Vinson that the mandate exceeds Congress’ powers under the commerce clause, it said the provision could be struck out to preserve the rest of the law.
The Congressional Budget Office estimates that four million people each year will choose to pay the IRS rather than buy insurance.