1. The Decision of the Supreme Court on the Constitutionality of the PPACA Wilson Huhn © 2012 1

2. The Four Opinions of the Court 1. Chief Justice John Roberts In part an opinion by himself only, in part joined by two other justices, and in part the Opinion of the Court joined by four other justices. 2. Justice Ginsburg An opinion concurring in part, concurring in the judgment in part, and dissenting in part, joined in part by three other justices and in part by one other justice 3. Justices Scalia, Kennedy, Thomas, and Alito (joint opinion, unsigned) A dissenting opinion 4. Justice Thomas A dissenting opinion 2

3. The Four Opinions of the Court 1. Chief Justice John Roberts Upheld all portions of the PPACA. Struck down a provision of the Medicaid law that would have permitted the government to withhold all of a State’s existing Medicaid funding unless it agreed to expand coverage as applied to the expansion of Medicaid under the PPACA. In all respects his opinion represents the holding of the Supreme Court 2. Justice Ginsburg, joined by Justice Sotomayor and in part by Justices Breyer and Kagan Would have upheld the PPACA in its entirety. 3. Justices Scalia, Kennedy, Thomas, and Alito (joint opinion, unsigned) Would have struck down the PPACA in its entirety. 4. Justice Thomas Would have struck down the PPACA in its entirety. 3

4. Justice Roberts’ Introductory Remarks on Limited Government In the introduction to his opinion, in remarks that are joined by no other Justice, the Chief Justice simply and eloquently sets forth the principles of limited government established by the Constitution. 4

5. Limited Government Means … The Congress is invested with certain enumerated powers that it may not transgress … The court’s powers to strike down legislation are also limited … 5

6. A Threshold Issue: Does the Anti- Injunction Act Apply? The federal Anti-Injunction Act (AIA) prohibits the courts from adjudicating the validity of any “tax” until the tax is assessed. If the AIA applied to this case, the courts could not have decided the constitutionality of the law until 2014, when the individual mandate goes into effect. 6

7. The Court Unanimously Ruled That the AIA Does Not Apply All nine justices agreed that the AIA does not apply to the individual mandate. 7

8. The Reasoning of Chief Justice Roberts on the Applicability of the AIA Justice Roberts looked to the words of the Affordable Care Act and the Anti-Injunction Act in concluding that Congress did not intend for the AIA to apply to the ACA. The ACA calls the individual mandate a “penalty,” not a tax The ACA does not specifically state that the individual mandate is subject to the AIA 8

9. The Four Holdings of the Court on the Constitutionality of the PPACA 1. The individual mandate is constitutional Roberts, Breyer, Ginsburg, Sotomayor, Kagan 2. The expansion of Medicaid is constitutional Roberts, Breyer, Ginsburg, Sotomayor, Kagan 3. If a State refuses to participate in the expanded Medicaid program, it would be constitutional for the federal government to withhold new Medicaid funding, but unconstitutional to withhold existing Medicaid funding. Roberts, Breyer, Kagan, plus the votes of other justices coming to the same conclusion on each point 4. The entire remainder of the Act is constitutional Roberts, Breyer, Ginsburg, Sotomayor, Kagan

10. I. The Individual Mandate Is Constitutional Justice Roberts, joined by the four liberal justices, ruled that the individual mandate of the Affordable Care Act is constitutional under the General Welfare Clause – Congress’ power to tax and spend. 10

11. Article I, Section 8, Clause 1: The “General Welfare Clause” “The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States.” 11

12. Justice Roberts’ opinion on whether the individual mandate is a “tax” It “looks like” and “functions” as a tax – It is in the Internal Revenue Code, keyed to income, collected by the IRS, and will raise significant revenue It does not function as a “penalty” – It is not a penalty for lawbreaking – Citizens have a choice of either purchasing health insurance or paying the tax 12

13. The Contradiction: The individual mandate IS and IS NOT a “tax” The Chief Justice ruled that the individual mandate is not a tax within the meaning of the Anti-Injunction Act … but that it is a tax within the meaning of the General Welfare Clause of the Constitution. Is this interpretation of the law proper? Is it even possible? The Chief Justice’s interpretation is not only possible and proper, it’s fairly reasonable. 13

14. Justice Alito’s Question at Oral Argument JUSTICE ALITO: General Verrilli, today you are arguing that the penalty is not a tax. Tomorrow you are going to be back and you be arguing that the penalty is a tax. Has the Court ever held that something that is a tax for purposes of the taxing power under the Constitution is not a tax under the Anti-Injunction Act? 14

15. Solicitor General Verrilli’s Answer GENERAL VERRILLI: No, Justice Alito, but the Court has held in the license tax cases that something can be a constitutional exercise of the taxing power whether or not it is called a tax. And that's because the nature of the inquiry that we will conduct tomorrow is different from the nature of the inquiry that we will conduct today. Tomorrow the question is whether Congress has the authority under the taxing power to enact it and the form of words doesn't have a dispositive effect on that analysis. Today we are construing statutory text where the precise choice of words does have a dispositive effect on the analysis. 15

16. What Chief Justice Roberts did … In interpreting the application of the Anti- Injunction Act to the Affordable Care Act, the Chief Justice looked to the words of those two statutes to determine whether Congress intended to delay these lawsuits. In determining whether or not the individual mandate of the Affordable Care Act constitutes a “tax,” Justice Roberts had to determine whether the law was in fact a tax … no matter what “label” Congress used to describe the measure. Accordingly he used what he called a “functional approach” in reaching this determination. 16

17. Textual and Functional Approaches to the Interpretation of the Law A statute must be interpreted according to the intent of the legislature, and the best evidence of the legislature’s intent is the words of the statute. The intent of the legislature is irrelevant, however, in determining whether or not a statute constitutes a “tax” for constitutional purposes. In that context what matters is whether or not the statute functions as a tax. 17

18. Justice Roberts responds that the individual mandate does not “punish” a “violation of the law” The Chief Justice found that a person may either purchase insurance or pay the tax. There is no criminal sanction. People who pay the penalty are not “lawbreakers.” Accordingly, the enforcement mechanism of the individual mandate is a “tax” – and not a penalty for law violation. 18

19. Ruling on Commerce Clause and Necessary and Proper Clause In Part III-A and III-B of his opinion, Chief Justice Roberts took the position that the individual mandate is not constitutional under the Commerce Clause because it regulates economic inactivity rather than economic activity. 19

20. II. The Expansion of Medicaid Is Constitutional Chief Justice Roberts rules that Congress has the power to expand the Medicaid program and to withhold additional funding from any State that chooses not to participate in the expanded program. 20

21. Roberts’ Advice to the States “Congress may attach appropriate conditions to federal taxing and spending programs to preserve its control over the use of federal funds. In the typical case we look to the States to defend their prerogatives by adopting “the simple expedi­ent of not yielding” to federal blandishments when they do not want to embrace the federal policies as their own. Massachusetts v. Mellon, 262 U. S. 447, 482 (1923). The States are separate and independent sovereigns. Some­times they have to act like it.” 21

22. III. The States’ Existing Funding for Medicaid May Not Be Withdrawn Chief Justice Roberts, in an opinion joined by Justices Breyer and Sotomayor, ruled that while Congress has the authority of offer the states funding to expand Medicaid coverage, it lacks the authority under the Constitution to withhold existing funding for Medicaid if they refuse to participate in the expanded program. 22

23. Reasoning: Expanded Medicaid Is a Different Program than Existing Medicaid The key to this portion of the Court’s ruling is Justice Roberts’ finding that the expansion of Medicaid represents a new program rather than an amendment of an existing program. For Congress to cut off funding to an existing program because the states refuse to participate in a new one constitutes “coercion.” 23

24. IV. The Remainder of the Act Is Constitutional In the final portion of his opinion dealing with “severability,” Justice Roberts ruled that the remainder of the Affordable Care Act is “severable” from the provision allowing the federal government to terminate “all” of a state’s Medicaid funding. Accordingly, the remainder of the Affordable Care Act is constitutional. 24

25. The Dissenting Justices Would Have Struck Down the Entire PPACA The four dissenting justices voted to invalidate the entire Patient Protection and Affordable Care Act, with only the most cursory discussion of a few of its 450 other provisions. The PPACA is the largest and most significant act of Congress in decades – one of the most significant in all of American history. Of all of the judges who considered this matter in the lower federal courts, only one reached the same conclusion. 25

26. My Opinion It is very possible that Justice Roberts changed his mind in this case. When he reached the severability issue and saw the determination of his conservative colleagues to strike down the entire law, he may have fully realized that the doctrine of “limited powers” applies not only to Congress but also to the courts. The courts have no authority to formulate the economic policy of the United States. Instead, the courts are bound to respect the economic judgments of Congress, whether Congress is exercising its authority to regulate the economy or its power to tax and spend for the public welfare. 26

27. End 27