ObamaCare Mandate Upheld: Those dirty, rotten taxes!
By Melancton Smith • Thursday June 28, 2012 8:19 AM PDT • 3 Comments
I am still working my way through the opinions in the health care case (193 pages in total), which can be found here. But here is what I see as the skinny:
1. Chief Justice Roberts defected from the ranks of the conservatives to uphold the individual mandate. The Vote was 5-4. Roberts, Ginsburg, Breyer, Sotomayor, and Kagan were in the majority. So, Roberts was the “swing vote” on this one; and we all expected Anthony Kennedy to hold the future of ObamaCare in his hands.
2. The opinion does not uphold the statute on Commerce Clause grounds. The Commerce Clause has received the most discussion and ink. But, the Court refused to expand Congress’ power in this area. Roberts notes that the mandate “does not regulate existing commercial activity. It instead compels individuals to become active in commerce by purchasing a product. . . .” In rejecting the Government’s arguments, Roberts states: “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.” Here’s another good quote for friends of liberty:
The Commerce Clause is not a general license to regulate an individual from cradle to grave, simply because he will predictably engage in particular transactions. Any police power to regulate individuals as such, as opposed to their activities, remains vested in the States.
The liberal wing of the Court did not join in this portion of the opinion. But, with the four conservatives plus Roberts, expansion of the commerce power has been halted. And that is good news. The bad news comes when we examine the opinion’s discussion of the taxing power.
3. The individual mandate was upheld based on Congress’ power to tax. Roberts says the tax on those who refuse to buy health insurance is constitutional. “Rather, [the statute] makes going without insurance just another thing the Government taxes, like buying gasoline or earning income. And if the mandate is in effect just a tax hike on certain taxpayers who do not have health insurance, it [is] within Congress’s constitutional power to tax.” The opinion observes that “Congress’s ability to use its taxing power to influence conduct” is not new inasmuch as “[t]ax incentives already promote, for example, purchasing homes and professional educations.”
Roberts concedes that there are limits on the tax power: “We have nonetheless maintained that ‘there comes a time in the extension of the penalizing features of the so-called tax when it loses its character as such and becomes a mere penalty with the characteristics of regulation and punishment.” But, the tax in this case, according to Roberts, does not reach the penalty stage.
4. Bottom line: Roberts cut a deal with the liberals. He appears to have been uncomfortable, as a matter of judicial restraint, in striking down the individual mandate. He agreed to join with the Left to save the mandate as a tax and they permitted him to author this portion of the opinion for the Court. Interestingly, because the court upheld the mandate under the tax power, it had no reason to reach the commerce issue. That Roberts does so in his opinion is curious. The liberal wing makes clear that it would have upheld the mandate under the Commerce Clause.
5. The Medicaid Expansion did not survive (the vote here was 7-2). This is a significant victory for federalism in that we see some restraint finally placed on Congress’ so-called spending power (i.e., can spend for matters not within the enumerated powers). In the past the Court has claimed that limits to the spending power existed, but we have never seen a case when the limits were enforced. We now have that.
The states had argued that by threatening to pull all federal Medicaid funds if the states did not agree to cover all persons under 65 and with incomes below 133 percent of the federal poverty line, the federal government exceeded its power under the Spending Clause and unconstitutionally coerced the states. Such an “offer” of funds, the states contended, amounted to undue influence and impinged on state sovereignty. In other words, the states argued that they have no real choice on the issue of refusing to expand the Medicaid program. If they don’t do what Congress tells them, they lose federal funds and the state budgets will collapse. Medicaid funds, on average, make up 20 percent of a state’s budget.
The Court agreed with the states. It held that when the states first agreed to take the federal money, they could not have foreseen such a dramatic change in the conditions of the grant:
As we have explained, ‘[t]hough Congress’ power to legislate under the spending power is broad, it does not include surprising participating States with postacceptance or retroactive conditions. A State could hardly anticipate that Congress’s reservation of the right to alter or amend the Medicaid program included the power to transform it so dramatically.”
6. I am now working through the dissent authored by Scalia. It reads as if it was the majority opinion at one time. I wonder if Roberts was originally on board, but defected toward the end..... I find it interesting that the dissent frames the tax matter as follows: “The issue is not whether Congress had the power to frame the minimum coverage provision as a tax, but whether it did so.” The appears to recognize that Congress could impose the individual mandate as a tax, but that it failed to properly craft the language of this particular statute. The dissent goes on to properly note that “A tax is an enforced contribution to provide for the support of government; a penalty . . . is an exaction imposed by statute as punishment for an unlawful act.” Based on the language of the statute, the dissent held that the exaction is imposed for violation of law, (i.e., the failure to buy insurance). Hence, the dissent would have struck down the statute under the Commerce Clause and the tax power.