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June 28, 2012


Supreme Court Does the Unexpected

The Supreme Court has ruled, 5-4, that the individual health care mandate passes constitutional muster as a tax, even though it is invalid under the Commerce Clause:

Our precedent demonstrates that Congress had the power to impose the exaction in Section 5000A under the taxing power, and that Section 5000A need not be read to do more than impose a tax. This is sufficient to sustain it.

In other words, if you don’t want to follow the mandate, you pay the tax (penalty/fine ... whatever). Chief Justice Roberts sided with the liberals in upholding it as a tax, and joined the conservatives in finding that it violated the Commerce Clause, and could not be justified under the Necessary/Proper Clause. (That’s actually a huge win, because it restrains Congress’ power to enact future social welfare laws by resorting to those enumerated powers.)

At the same time, the conservatives (again with the Chief Justice) managed indirectly to limit the application of, but not invalidate entirely, the Medicaid provisions. Justices Ginsburg and Sotomayor would have upheld the Medicaid provisions just as Congress wrote them, including the discretion granted to the Secretary of Health and Human Services to withhold “all or any part” of a State’s Medicaid reimbursements unless it provided the expanded coverages that Congress added through the Act. Chief Justice Roberts, joined by Justices Breyer and Kagan, viewed the grant of this discretion as too coercive, and hence unconstitutional:

Nothing in our opinion precludes Congress from offering funds under the ACA to expand the availability of health care, and requiring that states accepting such funds comply with the conditions on their use. What Congress is not free to do is to penalize States that choose not to participate in that new program by taking away their existing Medicaid funding.

The four dissenters agreed, but regarded the rest of the Medicaid provisions as non-severable, while the Chief Justice and Justices Breyer and Kagan found they could be severed. For the dissenters, accordingly, the invalidity of the discretion granted to the Secretary meant the invalidity of all of the Medicaid expansion provisions. This would have left the rest of the Medicaid provisions in limbo, with four voting to strike them down in toto, two voting to uphold them as constitutional in their entirety, and three holding that although they were partly unconstitutional, the remedy was to sever the constitutional parts from the parts that were unconstitutional. By concurring in part IV-B of the Chief Justice’s opinion (agreeing to keep the rest of the Medicaid provisions intact by severing them), therefore, Justices Ginsburg and Sotomayor produced five votes in favor of the remedy of severance. In the process, however, the Chief Justice, the four conservatives and two liberals (Breyer and Kagan) constituted seven votes in holding that Congress had gone too far in providing the Secretary with such coercive powers. And that, dear readers, is an instance of the politics of the Supreme Court in action.

The joint dissent by Justices Scalia, Kennedy, Thomas and Alito reads for the most part as though it had initially been drafted as the majority’s opinion. Time and again it refers to Justice Ginsburg’s opinion as “The Dissent”, and it responds to the arguments of “the Federal Government” (i.e., the Obama administration, through its Solicitor General), instead of to the Chief Justice specifically. The parts which do question the Chief Justice’s opinion seem to have been inserted afterward.

Could this mean that there was an original majority consisting of the four dissenters plus the Chief Justice who were in favor of striking down the entire Act? And that at some point, the Chief Justice became persuaded that the Act could be upheld as an exercise of the taxing power? We will probably have to wait a long time to find out, when the Chief Justice eventually writes his memoirs.

Bottom line: we are stuck with Obamacare largely as passed. The vote of Chief Justice Roberts saved most of the Act, 5-4, and limited (by the same margin, 5-4) the one part of the Act he did not like. He voted with the four liberals to uphold the mandate, and also to keep the Medicaid provisions of the Act while limiting the conditions that Congress can attach to its funding.

The one major problem I see with the majority’s ruling has not been addressed: the issue of forcing people to enter into contracts under duress. If you have to enter into a contract or else pay a fine, then there is an excellent argument that any such forced contract is involuntary, and hence voidable.

The other inconsistency I see is between part III-C and part IV-A of Chief Justice Roberts’ opinion. In brief, he regards it all right for Congress, under its taxing power, to coerce private citizens into buying insurance by threat of a penalty for not doing so (part III-C), but as improper for Congress, under its spending power, to try to coerce the States into providing the expanded coverages it enacted for certain groups. He manages this feat by calling the first instance an “incentive,” while terming the second instance “a gun to the head.”  I find this distinction constitutionally unpersuasive.

[Note: I have, after carefully studying the opinions, revised my earlier account of the voting on the Medicaid provisions, which had been based on first impressions gleaned from the live SCOTUSblog.  I believe the above account now presents a more accurate reading of the positions of the Justices.] 


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25 comments

According to analysis I heard, the majority does not consider paying the tax to be a penalty, despite the fact that it is set up so that the lack of insurance is a trigger. I’m not sure what kind of mental gymnastics you have to go through to see that as a tax rather than a penalty, but there you go.

It occurred to me that all those talking heads who are giving the White House a big victory here have missed a crucial point. Obama now heads into November having to defend a new tax that hits lower-middle and middle class people almost exclusively (those with higher incomes will virtually all have insurance through employers). Either that, or they buy insurance that will be a lot more expensive than many of them need (make that almost all if they are under 35). It also means that millions of people who otherwise would have been added to the Medicaid rolls now won’t be, given that their states no longer have a penalty for non-participation in the expansion of that program. However you slice it, the way the decision has been made is going to make the job of defending it to the electorate nearly impossible. We are, as one congressman said this morning, back to 2010.

[1] Posted by David Fischler on 6-28-2012 at 10:09 AM · [top]

My quick reading seems to suggest that the Congress can require you to buy something or otherwise engage in commerce or pay a tax.  And this is a valid exercise of the taxing power.

It seems to me that coupled with the Arizona decision this decision brings to an end the American experiment of limited government.  This effectively guts the Constitution and renders limited federal Government as a thing of the past.

If the Government can compel you do anything or pay a penalty/tax it does not need the Commerce Clause.  From this point on we have a new system of Government.

[2] Posted by Br. Michael on 6-28-2012 at 10:11 AM · [top]

We really do need a new Constitutial Ammendment that reads something like:


The Congress shall pass no law compelling individuals or groups to pay a tax as penalty in lieu of purchasing a good or service.

[3] Posted by BillB on 6-28-2012 at 10:42 AM · [top]

” the one major problem I see with the majority’s ruling has not been addressed: the issue of forcing people to enter into contracts under duress.”
I don’t get the argument you are making.  The State forces you to buy auto insurance or else you can’t legally drive.  You are “coerced” into buying insurance but the insurance contract is not thereby rendered unenforceable.  The coercion is not being exerted by the party with whom you are contracting - accordingly it should have no bearing on its enforceability.

[4] Posted by DaveG on 6-28-2012 at 10:46 AM · [top]

4, David G, the states have that power.  The states and the Federal governments are different sovereigns with different powers.  States have general or “police powers” the federal government has/had limited powers.  It is the states that require auto insurance.

Frankly this is basic civics, but one that many Americans are ignorant of.

But, as I read the opinion, now the federal government, can require you to buy auto insurance or pay a fine/tax.  This opinion gave the federal government the fundamental police powers that the Constitution had hereto for denied it.

[5] Posted by Br. Michael on 6-28-2012 at 10:58 AM · [top]

Also, David G, driving is a privilege which the State may condition upon your satisfying certain requirements: passing a drivers’ exam, a vision exam, etc. And having auto insurance is just one of those conditions. You don’t have to purchase auto insurance if you choose to take the bus.

The same is not true of health insurance—the right to live is, at least not yet, regarded by the State as a privilege.

[6] Posted by A. S. Haley on 6-28-2012 at 11:28 AM · [top]

A. S. Haley,

You write:

the right to live is, at least not yet, regarded by the State as a privilege.

That is a point which I believe might well be debatable. The State, facing the necessity of providing an economic good (healthcare, which is an economic good because its supply is not unlimited) must needs be faced with the question of when, and under what terms and conditions, a given person, with a given set of healthcare needs, will be too financially burdensome to treat. My vague recollection is that this issue is somehow related to what some objectors to the PPACA had termed “death panels.”

After all, the supply of money with which to pay for any service, healthcare or otherwise, is not fundamentally unlimited. Historical evidence that supports my assertion can be found as recently as 1928 in what was then called the Weimar Republic. I would humbly suggest that, if today’s decision is allowed to stand, the day upon which the State will begin regarding the lives of individuals as a privilege, at least operationally if not in its public statements, is not very far in the future, the scoffing of the blindly irrational left and its associated idiots at the earlier use of the term “death panels” notwithstanding.

Pax et bonum,
Keith Töpfer

[7] Posted by Militaris Artifex on 6-28-2012 at 11:53 AM · [top]

The horse left the barn with the passage of Social Security.  This is a logical extention of that and completes the picture.  You can buy your own policy, otherwise you will pay a tax out of your pay check and receive the"medicare” option.  How long before that option wins out over the private contract?  This will end, eventually, concepts such as worker’s compensation…why should employers buy a seperate policy to cover that, when universal HC will cover the same thing…
It has become evident that Government is asserting a “constructive trust” upon everything you earn and own.

[8] Posted by aacswfl1 on 6-28-2012 at 12:39 PM · [top]

I was surprised when I heard the decision, especially after Fox and CNN originally reported the individual mandate had been struck down. One of the bottom lines is that elections have consequences, and we’ll find out this November if the court’s decision turns out to be a Pyrrhic victory for President Obama and the Democrats.

[9] Posted by the virginian on 6-28-2012 at 01:34 PM · [top]

One thing I haven’t seen talked about much is the fact that the Taxing Power is a much harder sell politically than the unfettered Commerce Clause would’ve been.  Contra many conservative observers, I don’t think this is the end of the world—the Court today just pulled off the cloak and required that any invocation of the Taxing Power be honestly described as such.

The American people are going to get tomorrow’s newspapers and find that Obamacare was really just a big tax increase.  Look how narrowly Obamacare passed, and remember how loudly those voting in favor of it insisted that it wasn’t a tax.

I think the Court’s opinion goes a long way toward shifting the debate back to Congress, where it belongs.  So Congress enacts a horrible tax?  Wait two years (less, probably) and elect the challengers who’ve run on a platform of attacking the horrible tax and who’ve pledged to repeal it with H.R. 1 come January.

[10] Posted by SCVJefe on 6-28-2012 at 02:34 PM · [top]

I agree it is a strange form of tax - if you don’t buy insurance we will tax you but there was never any doubt (in my mind) that if it could be classfied as a tax, it would likely be upheld.  Congresss and the President said over and over it was not a tax and the authority for it lay under the Commerce Clause.  I thought Roberts would hold them to that positon and lead a 5-4 majorty finding it unconstitutional but I always thought that if they were honest and had called it a tax from the get go, it would have to be sustained.  Now the President and his party have to go before the public and convince them that the biggest tax increase in history (along with the expiring Bush tax cuts) is how you get out of the economic doldrums.  A majority of the public might buy it, but I don’t think so.

[11] Posted by DaveG on 6-28-2012 at 02:49 PM · [top]

Well, the people voted for it and now the court says we must be taxed to pay for it.  That will raise the tax only 35%.  Of course the government will try to cut corners and do it on the cheap so if you want quality you will have to have some money to go to the cash clinic.  His electronics records are already cutting down productivity by 50% so patients are backing up.  In our hospital yesterday there were five patients who waited five hours to be discharged, because the hospitalist had to enter the orders, followups, histories, etc. in the computer first.  Oh yes, under Obamacare the law says only a phisician and not a nurse, scribe, technician, etc. can enter any health or medical records.  I love it when a plan comes together.  This will cut down on utilization and cost.  Less patients.  It will be worth it all.  Enjoy!

[12] Posted by PROPHET MICAIAH on 6-28-2012 at 03:20 PM · [top]

I thought you could only be taxed for undertaking or engaging in some activity.  This is a tax for not doing something.  What’s next, Mayor Bloomberg taxing you for not eating your broccoli?  How about taxing overweight people if they do not join a gym and work out at least 4 times a week?  I haven’t gone to law school, but it seems like a really big stretch to call this thing a tax.

[13] Posted by Daniel on 6-28-2012 at 03:25 PM · [top]

I’m pretty stunned by this.  I fear that Br. Michael’s brief analysis in #2 followed by Daniel’s in 13 may be correct.  But Prophet Micaiah - “the people” most certainly did not vote for this. 

I’m afraid that even if this disasterous piece of legislation is repealled, SCOTUS has created an even worse precident that will remain.

[14] Posted by Nikolaus on 6-28-2012 at 07:17 PM · [top]

No Nikolauus, in our country we are still a republic and we elect the politicians who vote for us.  Obamacare passed because a majority elected a president and congress that before the election they outlined what they would vote in especially Obamaacare.  The good news is that in less than five months we can vote them out or approve what they are doing.  I fear that the majority still like socialized medicine, especially if the bill can be sent to someone else!  Cheers.

[15] Posted by PROPHET MICAIAH on 6-28-2012 at 09:26 PM · [top]

Mr. Haley wrote:

The same is not true of health insurance—the right to live is, at least not yet, regarded by the State as a privilege



Maybe not yet as mentioned above by #7 but I gather being healthy is a privilege and therefore must be taxed. just a bit of humor. good night all. wink

[16] Posted by SC blu cat lady on 6-28-2012 at 10:03 PM · [top]

Martial Artist (#7) and SC blu cat lady (#15) are right to remind us that all may not be as it seems, and that the things we now take for granted may hang by a thread if Obamacare becomes fully implemented.

Meanwhile, for one of the most interesting reads yet on the constitutional politics that could lie behind the unique position taken by Chief Justice Roberts in this case, I recommend this interpretation of the same opinion by Prof. Laurence Tribe, who taught John Roberts constitutional law when he was a student at Harvard Law School.

Do you get a sense of the size of the divide that is out there?

[17] Posted by A. S. Haley on 6-28-2012 at 11:56 PM · [top]

Third party indirect payers for health care, whether the government or insurance companies are concerned with keeping costs down even at the expense of the patient’s health. Their reasons for this may differ but the end result is the same, either access to health care has to be limited or payments for services have to be decreased. At some point it becomes a matter of economic survival for them to determine that certain members of the population should not be allowed to determine the extent of their own health care.

So get ready for the role of so called “ethics boards” to be expanded and for the withdrawal of care without the patient’s or family’s consent to become routine even in cases where the odds of survivability with treatment is very high.

[18] Posted by Paula Loughlin on 6-29-2012 at 11:38 AM · [top]

Paula, I can actually see a situation where they would want a patient to remain alive.  Concerning elderly in nursing homes, the longer they remain alive, the longer the nursing home gets Medicaid or some other form of payment.  As the long as the person remains alive they get paid. That is all they care about- payment.  Where it comes from does not matter (well they prefer private pay because they can charge more for the same services) to them.  Oh and if you think once the relative’s money runs out, you are off the hook, think again. Many states now are passing laws to allow nursing homes to sue ANY family member to pay for the care of their relative.  Nice,eh?

[19] Posted by SC blu cat lady on 6-29-2012 at 01:18 PM · [top]

The same is not true of health insurance—the right to live is, at least not yet, regarded by the State as a privilege

Let’s not give the State any more ideas.

[20] Posted by the virginian on 6-29-2012 at 01:43 PM · [top]

[19] SC blu cat lady,

The nursing home management may want the patient to remain alive, but I think it unlikely in the extreme that they will have a voice in the decision. The purpose of the so-called “ethics boards” is primarily to ensure that every decision to deny a patient an available treatment is bound to some (reasonably) consistent systematic process that is consistent across juriscictions. We are either going to terminate any patient over the age of N years, who has symptoms a, g, and q, and a specified level of result on however many objective diagnostic tests, or we are not. Failure to follow such protocols would be roundly seen by the public to be inconsistent and (at minimum) negligent, and might even end up being subject to prosecution. Medical care is not what economists call a free good.

Pax et bonum,
Keith Töpfer

[21] Posted by Militaris Artifex on 6-29-2012 at 03:13 PM · [top]

This is about believing someone else is paying for your healthcare.  Sad so many folks think this is the answer to their problems.

[22] Posted by B. Hunter on 7-1-2012 at 03:26 PM · [top]

As a practicing MD, I think there’s virtually no way that ObamaCare in its present form will go forward, simply because the accounting flim-flam that it’s built on is patently unsustainable; exhibit A being the laughable idea of finding $500 BILLION in Medicare cuts while adding 15-25 million new Medicaid enrollees. 

As a conservative looking at this glass half-full, I’d like to think that SCOTUS gave the GOP and Tea Party a huge rallying point, IF they play their hand well.  The argument that this is not the mother of all taxes has been explicitly rejected by the highest court in the land.  The man behind the curtain has been exposed for what he is: a classic tax-and-spend liberal on steroids.  Romney needs to hammer on this point, especially to all the independents who swung blue in 2008 and are about to feel the squeeze from higher taxes as well as ongoing economic stagnation.  And he has to articulate a rational, fiscally sound counterproposal.

[23] Posted by Joshua 24:15 on 7-1-2012 at 07:13 PM · [top]

[22] B. Hunter,

Margaret Thatcher: “The trouble with socialism is that you eventually run out of other people’s money.”

Frederic Bastiat (1801-1850): “Government is the great fiction, through which everybody endeavors to live at the expense of everybody else.”

Pax et bonum,
Keith Töpfer

[24] Posted by Militaris Artifex on 7-1-2012 at 10:48 PM · [top]

H. Potter (#24), your quotes are exactly on point; to them I would add the following prescient question by President Grover Cleveland in 1887:

If the Government supports the people, then who will support the Government?

[25] Posted by A. S. Haley on 7-1-2012 at 11:00 PM · [top]

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