Summary of Supreme Court Affordable Care Act Opinion

by Foley Hoag LLP
Contact

Overview

In a 5-4 decision issued today and authored by Chief Justice John Roberts, the United States Supreme Court has upheld the Affordable Care Act (ACA)’s individual mandate — the requirement that most individuals obtain health insurance that meets the statutory definition of minimum essential coverage. The four traditionally liberal justices — Ginsburg, Breyer, Sotomayor, and Kagan — joined Chief Justice Roberts to uphold the mandate as a constitutional application of Congress’s taxing authority. Justices Scalia, Kennedy, Thomas, and Alito dissented.

In reaching this outcome, however, a majority of the Court’s justices — the dissenters as well as Chief Justice Roberts — expressly rejected the argument that Congress was authorized to enact the individual mandate under either the Commerce Clause or the Necessary and Proper Clause of the Constitution.

The Court also issued a fractured opinion on Congress’s authority to expand Medicaid to a larger portion of the population (and on Congress’s related authority to penalize states that did not wish to participate in the expansion). While the Court upheld the authority of Congress to expand the Medicaid program to states that wanted to participate, the Court also held that Congress could not withhold existing Medicaid funds from states in an effort to penalize those states’s refusal to participate in the expansion.

Brief Background
After hearing six hours of oral argument in March 2012, the Court faced four main questions: 1) Whether the Anti-Injunction Act precluded the Court from hearing challenges to the constitutionality of the individual mandate until 2015; 2) whether the individual mandate was constitutional; 3) if the individual mandate was unconstitutional, whether the mandate was “severable” from the remainder of the ACA; and 4) whether the ACA’s expansion of Medicaid was lawful.

Constitutionality of the Mandate
After ruling that the Anti-Injunction Act did not preclude the Court from reaching the merits of the case, the Court first addressed the constitutionality of the individual mandate.

The four traditionally liberal justices were prepared to uphold the constitutionality of the mandate as a permissible exercise of Congress’s authority under any of the three theories proposed by the federal government: namely, the Commerce Clause, the Necessary and Proper Clause, or the Taxing Clause. In contrast, the four dissenting justices argued that the entire ACA was unconstitutional under any of these three theories.

Chief Justice Roberts broke this deadlock in favor of the mandate’s constitutionality. Before doing so, however, he agreed with the dissenters that the mandate was not a constitutional exercise of either the Commerce Clause or the Necessary and Proper Clause. As to the Commerce Clause, Chief Justice Roberts noted that “[t]he power to regulate commerce presupposes the existence of commercial activity to be regulated,” and concluded that the individual mandate “does not regulate existing commercial activity.” In doing so, Chief Justice Roberts rejected the government’s argument that because all individuals will eventually need to utilize the health care system, the mandate can be sustained under the Commerce Clause because “health insurance is a unique product.” Similarly, Chief Justice Roberts rejected the constitutionality of the mandate under the Necessary and Proper Clause, ruling that even if the individual mandate is “necessary” to the Act’s insurance reforms, “such an expansion of federal power is not a ‘proper’ means for making those reforms effective.”

Nevertheless, Chief Justice Roberts agreed that the mandate was a permissible exercise of Congress’s taxing authority, and joined with the four traditionally liberal justices to provide five votes for upholding the mandate. Noting that the Court does not consider whether a given statute embodies sound policies, but rather “whether Congress has the power under the Constitution to enact the challenged provisions,” Chief Justice Roberts, writing for the majority, held that the ACA “merely imposes a tax [that] citizens may lawfully choose to pay in lieu of buying health insurance.”

In other words, while opponents had argued that the mandate forced individuals to either obtain insurance or pay a penalty as punishment for failing to do so, Chief Justice Roberts noted that the choice to purchase insurance and the choice to pay the penalty were both lawful and permissible: “The only thing that [citizens] may not lawfully do is not buy health insurance and not pay the resulting tax.” In short, the majority concluded that “[o]ur precedent demonstrates that Congress had the power to impose the exaction in §5000A under the taxing power, and that §5000A need not be read to do more than impose a tax. That is sufficient to sustain it.”

Medicaid Expansion
The ACA requires states to provide Medicaid coverage by 2014 to nonelderly citizens and eligible legal residents with incomes up to 133 percent of the federal poverty level. At present, many States cover adults with children only if their income is considerably lower, and do not cover childless adults. The government argued that state participation in Medicaid is entirely voluntary, and that states can always withdraw from Medicaid if they find the conditions too onerous. The state opponents responded that the expansion constitutes impermissible federal “coercion,” under the Tenth Amendment to the Constitution, because the practical dependence of states on federal Medicaid funds means that states have no real choice but to abide by the new conditions.

The Court’s holding —pieced together from three separate opinions — is that while Congress is allowed to expand Medicaid, states that do not wish to participate cannot be penalized for this decision by having their existing Medicaid funds withheld.
 

  • The first opinion, by three justices (Chief Justice Roberts, and Justices Breyer and Kagan) held that the Medicaid expansion was constitutional as to states that wanted to accept the additional funds, but that the provision allowing the Secretary of Health and Human Services to withhold all Medicaid funding (existing as well as prospective) from states that refused to accept the expansion funds amounted to unconstitutional coercion.
  • The second opinion, by Justices Ginsburg and Sotomayor, would have found both the expansion and the “withholding” provision constitutional.
  • The third opinion, by the four dissenting justices (Justices Scalia, Kennedy, Thomas, and Alito), would have declared the entire expansion unconstitutional.
As a result, five justices (comprised of the “Roberts Bloc” and the “Ginsburg Bloc”) agreed that the expansion was constitutional for states that wanted to participate. Similarly, seven justices (comprised of the “Roberts bloc” and the “Dissenter bloc”) agreed that the provision allowing the Secretary of HHS to withhold all Medicaid funding (both existing as well as prospective) from states that refused to accept the expansion funds amounted to unconstitutional coercion.

However, amongst these seven justices, the two blocs disagreed as to the remedy, and neither commanded a majority. The three-vote Roberts bloc felt that only the specific offending provision should be struck down (thus preventing states that did not want to participate in the expansion from potentially losing all of their existing Medicaid funds), while the four-vote Dissenter bloc wanted to declare the entire expansion unconstitutional (as to both states that wanted to participate and those that did not).

Justices Ginsburg and Sotomayor sided with the Roberts bloc, breaking the deadlock. In her concurrence, Justice Ginsburg stated she disagreed with the conclusion that the “withholding” provision was unconstitutional. She conceded, however, that if this was nevertheless the conclusion of a majority, the remedy should be the one endorsed by the three-vote Roberts bloc: to “bar the withholding [provision] found impermissible—not, as the joint dissenters would have it, to scrap the expansion altogether.”

The Joint Dissent
In a single jointly-authored dissent, Justices Scalia, Kennedy, Thomas, and Alito argued strongly that both the mandate and the Medicaid expansion were unconstitutional and that as a result, the entire ACA should be found invalid. “The Act before us here exceeds federal power both in mandating the purchase of health insurance and in denying nonconsenting States all Medicaid funding,” they wrote, arguing that “[t]hese parts of the Act are central to its design and operation, and all the Act’s other provisions would not have been enacted without them. In our view it must follow that the entire statute is inoperative.” Justice Thomas also wrote a separate short two-page dissent, rearticulating his long-held opposition to an expansive reading of the Commerce Clause.

On the question of the mandate, the joint dissent echoed Chief Justice Roberts’s skepticism about its constitutionality under the Commerce Clause. The dissenters asserted that if a failure to engage in economic activity (such as the failure to purchase health insurance) were nonetheless deemed to affect commerce, nothing would prevent Congress from making “mere breathing in and out the basis for federal prescription and [extending] federal power to virtually all human activity.”

The joint dissent also argued that Congress’s authority to condition a State’s continued receipt of Medicaid funds on acceptance of Medicaid expansion was unconstitutionally coercive, a point on which (as noted above) they formed a majority. However, the dissenters were not able to form a majority for their proposed remedy: that the entire Medicaid expansion program be struck down as a result. A majority of the Court concluded that the appropriate remedy was instead simply to strike the specific offending provision.

 

Written by:

Foley Hoag LLP
Contact
more
less

Foley Hoag LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.