The U.S. Supreme Court today struck down the controversial individual mandate of the Affordable Care Act under the Commerce Clause, but allowed it to survive as a tax. The controversial law is therefore upheld, and the mandate will be construed as a tax, according to initial reports.
The ruling on the individual mandate, which would have compelled Americans to buy health insurance or pay a fine, came on a 5 to 4 vote.
Writing the majority opinion, Chief Justice John Roberts, a Bush appointee, joined liberal justices in upholding the mandate as a tax. Most observers believed that Justice David Kennedy could be the swing vote that upheld the mandate and law.
The health care law, known as the Patient Protection and Affordable Care Act, was enacted in March of 2010. Almost immediately, a lawsuit was brought by the attorneys general of 26 states, including Wisconsin’s J.B. Van Hollen, claiming the individual mandate was an unconstitutional interpretation of the Commerce Clause. The clause gives Congress the power to regulate interstate commerce.
While deciding not to invalidate the entire law, the court ruled in favor of the states on that narrower point. Van Hollen said the lawsuit was vindicated, even though the law was upheld: “My fundamental reason in joining this lawsuit on behalf of the State of Wisconsin was that the federal government was unconstitutionally expanding its powers, and in doing so, it was eroding the states’ sovereign ability to self govern,” Van Hollen said. “On this issue, we as states have registered a resounding victory. The Court has very clearly stated, once again, that the federal government has limits to its use of the commerce clause and that it cannot be used by the federal government to force a citizen to purchase something.
“As well, we argued that mandating the states to participate in this law or risk losing all prior Medicaid funding, was unconstitutional under the spending clause as coercive,” Van Hollen added. “The Court agreed. States will now have much greater latitude to determine the scope of their Medicaid program. While the decision upholds the Affordable Care Act, it is a tremendous victory for re-establishing Constitutional limits on the power of the federal government. It should be clear that this ruling vindicates the states’ legal arguments. This will be studied for years to come as a landmark decision that promotes federalism and limited government.”
The historic ruling could set the stage for election-year votes over the future of the nation’s health care system. The ruling is a victory for President Obama, but whether it helps him in the fall campaign is yet to be seen. The Obama administration had originally argued that the mandate was not a tax, only to see the legal team defending the law before the Supreme Court argue that it could be construed as a tax.
Barbara Zabawa, an attorney with Whyte Hirschboeck Dudek, noted the focus of the law has been on the question of whether Congress has the power to make Americans purchase health insurance under the Commerce Clause. Only as a back-up argument did the Obama administration argue that the individual mandate was constitutional under the taxing power, she noted, yet it was the back-up argument that won the day for the proponents of the ACA.
Maria Gonzales Knavel, a partner with Foley & Lardner, said the court’s ruling to regard the mandate as a tax is unusual. “I would say that’s probably the most surprising thing regarding this ruling,” she stated. “Legal scholars are going to be discussing this for some time, as to how it can be a tax for constitutional purposes and not for the Anti-Injunction Act.”
Gonzalez noted that the government’s third argument was that even though such a mandate might not permissible under the Commerce Clause, it is within the enumerated powers of Congress’ taxing authority. “Obviously, that’s what persuaded Justice Roberts,” she said. “Some of the other [majority]Â justices felt it could be upheld under the Commerce Clause.”
For a complete view of the Supreme Court’s opinion on this case, visit the court’s website.
Since oral arguments took place earlier this year, Supreme Court watchers have speculated that the individual mandate would be struck down, and perhaps the entire law as well, but few observers predicted this nuance of the court’s eventual decision.
Given the dissenting opinions, it’s clear that four minority justices were prepared to throw out the enitre law. Justice Kennedy, writing the dissenting opinion, said: “The act is invalid in its entirety.”
Both political parties have been strategizing behind the scenes to react to different scenarios. Prior to the vote, it was unclear how President Obama, who signed the ACA into law, and Democrats, who control the U.S. Senate, would respond.
Republicans, who control the House of Representatives, have signaled they would vote to repeal the entire law if the court stopped short of striking it down, and would then act on a series of incremental changes to the health care system.
As for businesses, Gonzalez advised they proceed as though the law is permanent because it would take a significant change in Congress – a 60-vote majority in the U.S. Senate, a majority in the House, and the President’s signature – to repeal the law. Democrats now hold a 53-47 majority in the Senate. Mitt Romney, the presumptive Republican presidential nominee, has said that if elected, he would grant individual states a waiver from the law’s provisions, in effect making it null and void.
Kurt R. Bauer, President/CEO of Wisconsin Manufacturers & Commerce, said the U.S. Supreme Court decision to uphold Obama’s health care law is disappointing and will hurt businesses of all sizes. “The fact that a divided court upheld the constitutionality of the health care law does not make it good public policy,” Bauer said in a statement released Thursday. “As Chief Justice Roberts noted in his decision, Congress, not the Supreme Court, made the policy choices under the Constitution and hopefully lawmakers will have the good sense to repeal this misguided law.
“The so-called Affordable Health Care Act will actually drive up the cost of health care, and in the absence of massive tax increases is likely to bankrupt the federal government, Bauer added. “The uncertainty that businesses of all sizes feel continues with today’s decision and will be a drag on economic growth.”
Legislative reaction
Senate Majority Leader Harry Reid, D-Nevada, said the Court’s ruling settles the matter and that it’s time for Congress to deal with other issues. He conceded that nobody believes the law is perfect and noted that Democrats have shown they will work with Republicans to improve it, but he also said GOP lawmakers are more interested in giving power back to insurance companies.
However, with the mandate now construed as a tax, Republicans are saying the President has broken his promise not to tax the middle class. Republican U.S. Senate candidate Eric Hovde was among the first to respond, and he blasted the decision in the following statement:
“Regrettably, the Supreme Court failed to uphold the Constitution today. Out-of-control spending, crushing debt and record high deficits already made this the most critical election of our life time, and this just reaffirms the importance of electing a President, a Senate and a House that will make the tough decisions and adhere to our Constitution.
“One of my top priorities as a U.S. Senator will be to repeal and replace this trillion-dollar disaster with consumer-driven, free-market solutions, and I am confident that the American people will send a message to Washington this November that they feel the same way.”
Gov. Scott Walker, who suspended work on the state health insurance exchange pending the Supreme Court’s ruling, said he continues to oppose the law and will not take any action to implement it. He issued the following statement:
“One of my first acts as governor was to authorize Attorney General J.B. Van Hollen to add Wisconsin to the federal lawsuit opposing ObamaCare. Wisconsin will not take any action to implement ObamaCare.  I am hopeful that political changes in Washington, D.C. later this year ultimately end the implementation of this law at the federal level.
“If there is no political remedy from Washington and the law moves forward, it would require the majority of people in Wisconsin to pay more money for less health care. Additionally, it would increase the size and cost of government, decrease the quality of health care and, in our state, reduce access for those truly in need of assistance.
“The federal government should not tell individuals and families what to do with health care. The alternative is more transparency and a more active role by consumers, so we can truly control costs.”
President Obama applauded the ruling, praising the Court for upholding the constitutionality of the Affordable Care Act. “In doing so, they have reaffirmed a fundamental principle: that here in America, in the wealthiest nation on earth, no illness or accident should lead to any family’s financial ruin. I know there will be a lot of discussion today about the politics of all this, about who won and who lost. That’s how these things tend to be viewed here in Washington, but that discussion completely misses the point. Whatever the politics, today’s decision was a victory for people all over this country whose lives will be more secure because of this law and the Supreme Court’s decision to uphold it.”
