A couple of months before the Affordable Care Act (Obamacare) became law in March 2010, I wrote in this column that it might very well be ruled unconstitutional by the courts because it was not supported by the Commerce Clause, the basis of power for Congress to enact much of its laws. Well, I was half right.
Last week, the Supreme Court ruled that the act was not supported by the Commerce Clause. However, the court ruled that because a person has the right to pay a tax penalty instead of buying health insurance, it is instead constitutional under Congress’ power to tax.
Now, before I get into the details of the court’s opinion, I would urge you to read the first several pages of the opinion, which can be found at http://www.supremecourt.gov/opinions/11pdf/11-393c3a2.pdf. In a somewhat unusual move, Chief Justice John Roberts went to great lengths to make the introduction to his majority opinion understandable to a non-lawyer. Among other points, he explains the difference between the limits on federal power under the Bill of Rights (such as the First Amendment), compared to the power of Congress to act in the first place, such as under the Commerce Clause or Congress’ taxing power, the issues in this case. Commit an act of patriotism this week and read some of the real words of the Supreme Court, straight from the horse’s mouth.
In short, the chief justice ruled (along with the four other conservatives on the court) that the Commerce Clause does not support the federal government regulating economic “inactivity,” regardless of how broad the Commerce Clause may be to regulate all sorts of economic “activity” that affects interstate commerce. As he stated: “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.”
However, in an unexpected move, he did agree (along with the court’s four liberals) with the government’s back-up argument: that the act can be seen simply as a tax, which is fully within the federal government’s power to enact. He pointed out that a person acts perfectly lawfully by paying a tax penalty instead of buying insurance – the act states that the IRS cannot pursue criminal penalties for doing so. Further, the tax is either much less or no greater than the cost of buying insurance (depending on the person’s tax bracket), so is not “coercive.” (He indicated the outcome could be different if Congress ramps up the tax in the future).
He also reasoned that taxing inactivity is nothing new, although I do think this was a weak point of his opinion. His examples included “capitation” taxes, “a tax that everyone must pay simply for existing,” which he acknowledged are expressly prohibited by the Constitution. (His point being that the Founders knew how to specifically ban something they didn’t like – but isn’t the act’s tax similar?) He also cited the mortgage interest deduction – but it seems quite different to be ineligible for a deduction due to inactivity on the one hand, and suffering a tax penalty for inactivity on the other.
But he did make a larger point on the practical difference of upholding the act under Congress’ taxing power instead of under the Commerce Clause: “Under the Commerce Clause, Congress may simply command individuals to do as it directs. An individual who disobeys may be subjected to criminal sanctions. By contrast, Congress’s authority under the taxing power is limited to requiring an individual to pay money into the federal treasury, no more. If a tax is properly paid, the government has no power to compel or punish individuals subject to it.”
He pointed out that you do have to at least pay the tax or suffer criminal sanctions, like any other tax. But his point that the ruling does not lay the groundwork for an expansive “big brother” federal government is well taken.
The chief justice may have written a broad conservative opinion on the Commerce Clause, but this one time at least he reigned in “judicial activism” by upholding the act on narrow grounds. Let’s all step back from the political rhetoric surrounding this issue for a while and realize that for better or worse, we are going to try this grand experiment in expanded private health insurance for all who want it, and see how it turns out.
Matt Kenna is a Durango attorney practicing public interest conservation law. Reach him at email@example.com.