National Federation of Independent Business v. Sebelius

Summarized by:

  • Court: United States Supreme Court
  • Area(s) of Law: Constitutional Law
  • Date Filed: June 28, 2012
  • Case #: 11-393
  • Judge(s)/Court Below: Roberts, C.J., announced the Court's judgment and delivered its opinion with respect to Parts I, II, and III-C, which Ginsburg, Breyer, Sotomayor and Kagan, JJ., joined; an opinion with respect to Part IV, which Breyer and Kagan, JJ., joined; and an opinion with respect to Parts III-A, III-B, and III-D. Ginsburg, J., filed an opinion concurring in part, concurring in the judgment in part, and dissenting in part, which Sotomayor, J., joined and which Breyer and Kagan, JJ., joined as to parts I, II, III, and IV. Scalia, Kennedy, Thomas, and Alito, JJ., filed a joint dissenting opinion. Thomas, J., filed a dissenting opinion.
  • Full Text Opinion

The Patient Protection and Affordable Care Act's individual mandate is a valid exercise of Congress's taxing power, but the Medicaid expansion violates the Constitution's Spending Clause.

This case was consolidated with U.S. Department of Health and Human Services v. Florida and Florida v. Department of Health and Human Services.

After Congress passed the Patient Protection and Affordable Care Act (Act) in 2010, a consortium of twenty-six states, several individuals, and the National Federation of Independent Business (Petitioners) challenged the constitutionality of the Act’s mandate that most Americans maintain a minimum level of health insurance coverage or pay a penalty to be collected by the IRS (individual mandate). The twenty-six states also challenged the constitutionality of the Act’s requirement that states expand their Medicaid programs to include all adults under age 65 with incomes below 133% of the poverty line, or else face the loss of all federal Medicaid funds.

After a surfeit of disparate decisions, in which the Court of Appeals for the Eleventh Circuit held that the individual mandate exceeded Congress’s power, but that the Medicaid expansion was a valid exercise of the Spending Clause power; the Courts of Appeals for the Sixth and DC Circuits upheld the law in its entirety and the Court of Appeals for the Fourth Circuit determined that the Anti-Injunction Act (26 U. S. C. §7421(a)) prevented consideration of the merits, the Supreme Court granted cert to answer four questions: (1) Whether the Anti-Injunction Act deprives the Court of jurisdiction to hear challenges to the individual mandate; (2) Whether the individual mandate itself is constitutional; (3) If the individual mandate is not constitutional, whether that portion of the Act can be severed from the remainder of the Act; and (4) Whether the Medicaid expansion is an unconstitutional violation of the Spending Clause.

(1) The Court held that it could reach the merits of this case. For the purpose of the Anti-Injunction Act, which requires that suits to invalidate taxes come after the tax has been paid, the payment collected from those who choose not to buy health insurance is a penalty and not a tax, which means that the Anti-Injunction Act does not bar the suit.

(2) The Court held that the individual mandate is a constitutional exercise of Congress’s Article I taxing power. The Court reasoned that as a matter of statutory construction, the presumption against unconstitutionality requires that every reasonable construction of a statute be considered in order to save a statute from unconstitutionality. Since it is “fairly possible” to interpret the mandate as a tax—there is no intent requirement, the cost is not so high as to compel the purchase of insurance, and it is collected by the IRS with other taxes—the fact that the mandate seeks to elicit certain behavior does not invalidate it.
Though there was no majority opinion on the Commerce Clause issue, writing for himself, the Chief Justice wrote that the individual mandate was not within Congress’s commerce clause power because Congress may regulate, but it may not compel, commerce, and although the mandate may be “necessary” to Congress’s larger health care regulation, it is not a “proper” exercise of congressional power. Justices Scalia, Kennedy, Thomas and Alito wrote similarly in a joint dissent.

(3) Because the individual mandate was found to be constitutional, the Court did not reach the issue of severability.

(4) The Court refused to uphold the Medicaid expansion and found that it exceeded Congress’ spending power by threatening to terminate other aid to states in order to force the states into a program. Writing for himself and Justices Breyer and Kagan, the Chief Justice wrote that that while Congress may pressure states to participate in federal programs, threatening states with the loss of over 10 percent of a State’s overall budget is a form of “economic dragooning” in violation of the Constitution’s Spending Clause. Though they did not sign on to the Chief Justice’s opinion, the authors of the joint dissent reached a similar conclusion with regard to the Medicaid expansion.

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