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Thursday, July 5, 2012

On the PPACA Decision

I have had several people ask me about the Supreme Court decision last week regarding the Patient Protection and Affordable Care Act (PPACA) (i.e. Obamacare) in the case National Federation of Independent Business v. Sebelius, 567 U.S. ___ (2012).  I did read the entire thing last Thursday when it came out and, as is my wont, I decided to wait a while to digest the decision and reflect on it before writing anything about it.

Basically, I liked the decision.  Also, I was happy that most of my predictions for the decision came true.  Ok, here is a breakdown of what the issues in the decision:


  • Whether Congress had the power under Article I of the Constitution to enact the minimum coverage provision.


  • Does PPACA's mandate that virtually every individual obtain health insurance exceed Congress's enumerated powers and, if so, to what extent (if any) can the mandate be severed from the remainder of the Act?


  • Does Congress exceed its enumerated powers and violate basic principles of federalism when it coerces States into accepting onerous conditions that it could not impose directly by threatening to withhold all federal funding under the single largest grant-in-aid program, or does the limitation on Congress's spending power that this Court recognized in South Dakota v. Dole no longer apply?


  • Whether the Anti-Injunction Act, which stipulates that "no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person, whether or not such person is the person against whom such tax was assessed" 26 U.S.C. §7421(a), bars the pre-enforcement challenge by the respondent's to the minimum coverage provision of the PPACA.
(from http://en.wikipedia.org/wiki/National_Federation_of_Independent_Business_v._Sebelius, section entitled “Preliminary Activity at the U.S. Supreme Court”)
On the issue of the AIA, the easy call was that the Court would say that the AIA did not apply and therefore the challenge could go forward, and this is exactly what happened.  On the issue of the mandate, I guessed correctly that it would not be upheld under the Commerce Clause ("To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes."; Art. I, Sec. 8, Cl. 3), however, I (like most people) discounted the taxing power.  There was so little time spent on it that I ignored the possibility of its being used.  Oops.  Severability (whether the law could stand or not if the mandate fell) is moot, but I gave it a 50-50 shot after arguments.  As for the final argument about the Medicaid expansion, I was honestly unsure, but I think I gave that one a 50-50 shot too.  Yes, a classic hedge and CYA maneuver.

Here is what the decision by Chief Justice Roberts said:

[1] The law was not a tax for the purposes of the AIA because it was not designated as one by Congress.
[2] The mandate is unconstitutional under the Commerce Clause.  However, the mandate was a constitutional exercise of Congress’ power using the power to tax.
[3] The Medicaid expansion is constitutional; however, the federal government cannot force states to accept the monies at the risk of losing all Medicaid money.

There were 3 dissenting opinions.  One was by Justice Ginsberg which was joined by Justices Sotomayer, Breyer, and Kagan.  This decision concurred in part with the majority opinion and dissented in part.  The second was written by either Justice Scalia or Justice Kennedy (have heard either at one point or another) and joined by Justices Alito and Thomas.  The final dissent was a 1 paragraph dissent by Justice Thomas.  Basically, it seems that the entire court agreed on point 1 above; the first part of point 2 was agreed to by Roberts, Scalia, Kennedy, Alito, and Thomas and the second part by Roberts, Ginsberg, Sotomayer, Breyer, and Kagan; and point 3 was agreed to by all except Ginsberg and Sotomayer.  Now, the 4 more conservative Justices did not officially agree to any part of the decision, but their thoughts lined up there, hence my counting them as part of it.

Ok, now to my thoughts.

First, I want to address the mandate.  A lot of people say that they do not understand why the mandate was deemed unconstitutional under the Commerce Clause when the government can force you to buy other types of insurance (car, home, renters, etc.).  The difference between the mandate and the other insurances is that you are only obligated to get those insurances if you are going to use what you are insuring.  In other words, you only need to buy car insurance if you are going to drive.  So, purchasing insurance is a requirement to entering the market.  Note however, that the consumer chooses to enter the market and is then required to purchase the insurance.  So, a choice is being made here.  That is what the Court noted in the opinion.  Under the mandate, everyone would be forced to purchase insurance which would mean that Congress would be creating commerce rather than regulating it.  That is why the Court ruled it unconstitutional under the Commerce Clause.

However, the Court did say that the mandate was a constitutional use of Congress’ taxing power.  Now, this leads to the obvious question: If this is using Congress’ taxing power, then isn’t it a tax and therefore subject to the AIA?  Basically, the Court played with semantic technicalities.  Because Congress did not label the law a tax, it was not one under the AIA.  However, because the IRS is the agency who is collecting the penalty, it uses Congress’ taxing power.  Yes, the reasoning is a little tortured, but it is viable and as Chief Justice Roberts said (paraphrasing), if grounds can reasonably be found to hold a law constitutional, it should be held constitutional.  This is judicial restraint and deference.

So basically what the Court said is that because the consumer is given a choice (buy insurance or pay the tax/penalty), there is no coercion and therefore the mandate is constitutional.

Now, another issue of the mandate; this part was not a part of the decision, but I want to mention; is that the mandate was originally an idea from the Heritage Foundation.  I had heard this from several sources, but have never been able to find the original document.  However, since I have found this news on several different sites of different ideological leanings, I will accept it as fact.  Now, the first thing to note is that the mandate was thought up as a more conservative option to President Clinton’s healthcare plan.  The mandate was also pilloried by the more conservative elements in the US.  So the mandate is actually more of a moderate idea, not conservative.  Second, the Republicans supported the mandate until it was proposed as a part of the PPACA.  Can’t say I am fond of the switch done on political gamemenship grounds rather than principled grounds.  Period.  If you support something, support it no matter who introduces it.

As for the Medicaid portion, basically all the Court said is that the federal government cannot withhold all Medicaid monies if states do not go along with the PPACA, only the portion given under the PPACA can be withheld.  Not much to say about it.

I know when I read the ruling that I was impressed with the opinion.  It was not perfect, however, I felt that it struck a good balance between the sides and gave everyone something, which makes a nice compromise.  I know my initial thought was of Chief Justice Marshall and his decision in Marbury v. Madison (1801).  Bit overblown perhaps, but that is what was in my mind.  I appreciate the fact that Chief Justice Roberts took a step back from his ideology and considered what was best for the nation as a whole and considered judicial deference.  Too many judges (on all sides!) don’t do this and it was nice to see it happen.

Any thoughts or comments?