A constitutional classic for the ages: the Commerce Clause; the Taxing Clause; the General Welfare Clause; severability; quotes from the Federalist papers; 14 merit briefs; 126 amicus briefs; six hours of oral argument and four opinions.
At stake? The Patient Protection and Affordable Care Act (PPACA) (Pub.L.No. 111-148, 124 Stat.119), the so-called “Obamacare,” and its 906 pages of provisions.
The issue? The uninsured. Although figures vary widely, millions of Americans are without health-care coverage. Moral commentary aside, PPACA posits it is this group who drive up health-care costs. While largely healthy, the uninsured who seek care can seldom afford it, and when costs are substantial, the situation is exacerbated. Care is still provided; federal and state laws mandate it. But where does payment come from? These costs are shifted to employer plans and public programs, causing an inflationary impact. PPACA identified this group as the linchpin to health-care payment reform. In short, provide the uninsured with coverage and the costs of care will stabilize.
This theory fostered PPACA’s mandate for every American to obtain coverage — or pay an annual penalty. To make coverage accessible, insurers were to guarantee issuance to anyone who applied (“guaranteed issue”). The cost was held in check by forbidding consideration of the individual’s medical history, but would be based upon an actuarial assessment of the surrounding community (“community rating”). A definition of essential coverage was made, mandating all who offered coverage to provide this minimum floor. Medicaid eligibility was expanded to new classes of people and raised the income qualification to 133 percent of the federal poverty level. Employers had a significant role, subject to a penalty for not providing coverage. Employees were entitled to vouchers from their employers (based on a needs test) to opt out of employer-based coverage and defray the expense of independently obtaining coverage. Coverage pools in each state called “exchanges” were to accommodate individual purchasers unable to obtain coverage through employers or the marketplace. Employers who provided coverage above certain levels were subject to a “Cadillac tax” to help fund the exchanges. Subsidies were set up for hospitals serving the typically uninsured/recently covered, although serious concessions were made by the hospitals regarding payment rates in exchange.
PPACA’s passage and provisions have been highly contentious. It passed the U.S. Senate by only one vote, and passed the House by seven votes. The president signed it into law two days later on March 23, 2010.
A maelstrom of litigation ensued. Over two dozen federal cases were spawned. Six cases filed for writ of certiorari before the U.S. Supreme Court. Three cases were taken and consolidated. Dep’t of Health & Human Servs. v. Florida, 648 F.3d 1235 (11th Cir.2011) (as the core case, bearing numbers 11-398 and 11-400), and Nat’l Fed’n of Indep. Bus. v. Sebellius (as case 11-393 to explore issues of severability if any aspect of the act was declared invalid).
The questions before the Court were whether the individual mandate was proper under the Commerce Clause of Article I, section 8, clause 3; whether expansion of the Medicaid program (with threat of withholding all federal Medicaid monies to a state that did not adopt the PPACA expansion), was a proper use of the Spending Clause of Article I, section 8, clause 1. Two trailing issues, in terms of briefing and time at oral argument, existed in whether the individual mandate could alternatively be upheld under the Tax Clause of Article I, section 8, clause 1, and whether the penalty associated with the individual mandate could be considered a “tax” and be barred under the Anti-Injunction Act (raising issues of ripeness and justiciability).
The result was as contentious as the act itself. It essentially produced three opinions: one authored by Justice Ginsburg, joined by Justices Breyer, Sotomayor and Kagan. Another opinion was authored by Justice Scalia, joined by Justices Thomas, Kennedy and Alito; and then the Opinion of the Court, authored by Chief Justice Roberts, to which the other two opinions did not join except in result. Justice Thomas issued a separate two-page opinion calling for stricter interpretation of limits upon the Commerce Clause as expressed in his dissent in United States v. Lopez, 514 U.S. 549, 584 (1995).
The result? A majority decision without a majority opinion.
Regarding the individual mandate, the Chief Justice sided with Justices Scalia, Thomas, Kennedy and Alito (although writing separate opinions), that PPACA’s command for persons without coverage to enter commerce (purchasing individual coverage) or face a penalty was unconstitutional. Justice Roberts rejected the Government’s argument that as everyone is in or will be in the health-care market, they can be regulated in advance, stating:
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 … 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.
(Roberts, Slip Op., at 23 and 26). Also rebutting the Government’s position, Justice Scalia wrote “[i]f all inactivity affecting commerce is commerce, commerce is everything.” (Scalia, Slip Op., at 13).
Regarding the funding conditions placed upon the Medicaid expansion, the result was slightly different with a 7-2 outcome, the Chief Justice (with Justices Breyer and Kagan), joined by Justices Scalia, Thomas, Kennedy and Alito. Whereas Congress can condition the grant of monies, it cannot do so if the conditions or consequences amount to coercion. The Chief Justice found the funding consequences crossed the line. First, the expansion was so vast as to materially alter existing terms of participation between the states and Medicaid. Second, the penalty was onerous, with states refusing to adopt the expansion losing all of their Medicaid funding (not just funding for the expansions). Thus, the threat amounted to withholding 42 percent of all federal funding to the states, in turn comprising up to 22 percent of all state expenditures. Justice Scalia quipped, “[i]f the anticoercion rule does not apply in this case, then there is no such rule.” (Scalia, at 38).
With both the individual mandate and the Medicaid funding conditions struck down, Justices Scalia, Thomas, Kennedy and Alito would end the inquiry. However, the Chief Justice took a different approach that neither pleased his detractors nor the remainder who eventually concurred in result.
Although invalid under the Commerce Clause, the Chief Justice examined whether the mandate could be upheld as a valid exercise of the taxing power — in deference to the principle that all grounds for validity should be explored before ruling a statute unconstitutional. Justice Roberts noted while defined as a “penalty,” it did not function like a penalty — its cost was not punitive, but income-indexed; it contained no scienter requirement (a customary hallmark of a penalty); its collection was imbedded in the tax code and to be collected by the IRS (rather than by a regulating agency such as the case in a true penalty); and the punitive tools of IRS collection were expressly barred. Thus, the Chief Justice reasoned that while called a “penalty,” the provision was actually a valid revenue-raising measure under the Taxing Clause.
Justices Ginsburg, Sotomayor and Kagan concurred in the Chief Justice’s determination, but not his opinion.
The dissenters howled. Whether Congress could have acted under a clause is radically different than whether they actually did. That Congress called it a “penalty” 18 times was probative. Assessed only for violating the mandate showed its operation was as a penalty, not as a general revenue-raising measure. The dissenters found it illogical, stating “[w]e never have classified as a tax an exaction imposed for violation of the law, and so too, we have never classified as a tax an exaction described the legislation itself as a penalty.” (Scalia, at 20.) Scalia continued: “Against the mountain of evidence that the minimum coverage requirement is what the statute calls it — a requirement — and that the penalty for its violation is what the statute calls it — a penalty — the Government brings forward the flimsiest of indications to the contrary.” Observing no federal court had found the mandate authorized under the Taxing Clause, the dissenters labeled the Chief Justice’s position “implausible,” noting the Government only devoted 21 lines of their reply brief to the topic, and only engaged in 50 words’ worth of dialogue at oral argument.
Having voted the Medicaid funding provisions unconstitutional, the dissenters would have ended the inquiry with a subsequent finding of nonseverability, striking the entirety of PPACA.
Justices Roberts, Breyer and Kagan disagreed. A distinction was made between the expansion of Medicaid (which was valid), and the funding conditions (which were invalid). Noting DHHS’ power through other statutes to withhold funding for noncompliance, the holding within this case barred application. Noting a severability clause within DHHS’ funding statute, the Chief Justice concluded the expansion could be retained while the funding conditions could be stricken — and not strike the remainder of PPACA. Because Justices Ginsburg and Sotomayor would have upheld the funding conditions, they agreed in the end result, producing a 5-4 vote to reform and save the Medicaid expansion funding provision.
The dissenters howled anew. The cited severability clause only applies to existing programs under Chapter 7 of the U.S. Code, Title 42, not PPACA. Thus, the dissent accused the majority of writing a new law rather than examining the one before it. (Scalia, at 47.) The decision to reform the funding penalty to only the incremental expansion was viewed to be without statutory or judicial authority, wherein “[t]he Court today decides to save a statute Congress did not write,” calling the Court’s disposition “invented and atextual.” (Scalia, at 64.)
The aftermath for PPACA is unclear. Even the Chief Justice was circumspect, writing “the Court does not express any opinion upon the wisdom of the Affordable Care Act ….” (Roberts, at 59). Justice Scalia was more dour: “[i]t creates a debilitated, inoperable version of healthcare regulation that Congress did not enact and the public does not expect … [a]nd it leaves the public and the States to expend vast sums of money on requirements that may or may not survive the necessary congressional revision.” (Scalia, at 64).
Regardless of PPACA’s fate, its legacy is certain. The schism regarding the Commerce Clause and Congress’ power to regulate the individual has deepened. The test of severability and how to measure congressional intent (legislative history, linkage to remaining provisions, remaining function or all of the above) is currently without consensus. The justification of regulation through the taxing power has been advanced beyond prior boundaries. The definition of a direct tax (normally prohibited) was contested, but not resolved. Linguistics were sorely tested — as were the theories and precedent to which they were applied. A constitutional law classic for the ages. A majority decision without a majority opinion.■