Friday, June 29, 2012

Chief Justice Roberts Exercises the Swing Vote as the US Supreme Court Upholds the 'Individual Mandate' in Obama's Health Care Law

The US Supreme Court handed down its decision in National Federation of Independent Business v. Sebelius yesterday and upheld the individual mandate provision of the Affordable Care Act. In this post, my attempt is to provide a clear and simple analysis of the issues involved and the opinions expressed in the case.

It would be stating the obvious to say that today's decision had tremendous institutional and political significance. The extent of its importance may be understood from the fact that the court, in a rare departure from the usual one hour of oral arguments, allocated six hours to hear arguments concerning the constitutionality of the the Affordable Care Act ('ACA'). 

There were primarily three issues for determination before the U.S Supreme Court in National Federation of Independent Business v. Sebelius:

1. Constitutionality the 'individual mandate' provision of the ACA

I am going to take the liberty of explaining the meaning of 'individual mandate' for the benefit of readers who might not have been following the details of the case. The 'individual mandate' provision of the ACA requires all Americans (except certain specifically excluded categories) to have a certain minimum level of health insurance. All individuals have to buy health insurance from private providers if they are not covered by insurance from Medicare/ Medicaid (government funded health coverage for certain vulnerable sections) or insurance provided by employers. If any individual does not have health insurance by 2014, the only consequence would be that she has to pay a 'shared responsibility payment' to the federal government, which the ACA called a 'penalty'. This penalty will have to made as an additional payment when an individual pays her taxes to the Internal Revenue Service (IRS).  

This issue had two further parts to it:

1-A: Does the 'individual mandate' amount to the federal government forcing individuals to buy a product or was it merely regulating inter-state commerce which was permitted under the Commerce Clause?

The federal government argument argued that the failure to purchase health insurance had a "substantial and deleterious effect on interstate commerce" because the costs of providing health care to those who did not have health insurance would ultimately result in higher premiums for those who did purchase insurance. This cost-shifting problem that arose failure to purchase health insurance, the federal government argued, was being remedied by the ACA. They saw it as only regulation of inter-state commerce (permitted by the Commerce Clause) and not creation of commerce.

The petitioners, however, felt that the power to regulate commerce did not include the power to create commerce. The requirement to mandatorily buy insurance, they contended, forces an individual to take up commerce on the basis that lack of insurance had negative impact on interstate commerce. They rejected the federal government's argument that not buying health insurance was the basis for exercising  the power under the Commerce Clause and argued that inaction cannot be regulated under the Commerce Clause. This was the famous 'broccoli' argument in the lead up to the judgment and whether the federal government could require the mandatory purchase of broccoli in order to address health and diet problems. The federal government's response was that health insurance was a unique product and that the individual mandate in the ACA did not mean that the federal government could mandate the purchase of broccoli or cars.

Decision on the Commerce Clause

Five judges rejected the argument that Congress had the power to bring in the individual mandate under the Commerce Clause. The opinion by Chief Justice Roberts (Part III-A, p. 22 of the document above) and the dissenting opinion (Part I-B of the joint opinion by Justices Scalia, Kennedy, Alito and Thomas at p.136) held that the precedents governing the scope and meaning of the Commerce Clause did not permit the reading suggested by the federal government. 

Four judges speaking through Justice Ginsburg's opinion (Parts I-III, pp. 67-101, joined by Justices Sotomayor, Kagan, and Breyer) were of the view that the individual mandate was a constitutional exercise of power by Congress under the Commerce Clause.

1-B: Can the 'individual mandate' be seen as an exercise of taxing powers by Congress?

This is where the opinion by Chief Justice Roberts is critical and proved to be the swing vote in upholding the 'individual mandate' of the ACA. The federal government's argument was not that the Congress was exercising its taxing powers by requiring everyone to buy health insurance. Instead, the argument was that the 'shared responsibility payment' or the penalty under ACA must be seen as a tax, which Congress could legally impose by exercising its taxing powers. Since the only consequence of not buying the health insurance is to make an additional payment when paying taxes, the government argued that the 'individual mandate' could be seen as taxing not having health insurance. In that sense, it was not a requirement to mandatorily buy health insurance. Instead, it only set a condition for the payment of tax just like earning a certain income or paying tax when buying certain products.  

Chief Justice Roberts in his opinion on whether the 'individual mandate' is a tax (Parts III-B and III-C, pp. 37-51) is of the view that 'the question is not whether that is the most natural interpretation of the mandate, but only whether is a "fairly possible" one'. For the purposes of deciding whether Congress was exercising its taxing powers, Chief Justice Roberts is of the view that the label of 'penalty' attached to the payment that must be made to the IRS cannot be determinative. Through the reasoning he offers in Parts III-B and III-C, Chief Justice Roberts come to the conclusion that the requirement of the ACA that an individual who does not have health insurance must pay a penalty to the IRS can be viewed as a tax.

The Plurality on the Tax Issue

Five judges agree that the 'individual mandate' is a constitutionally valid exercise of taxing powers and that agreement is at the heart of the court's decision to uphold the constitutionality of Obama's health care law. Even though Justices Ginsburg, Sotomayor, Kagan and Breyer were primarily of the view that the 'individual mandate' was justified under the Commerce Clause, they agreed with Chief Justice Roberts (Part-IV of Justice Ginsburg's opinion, p.102) that the 'individual mandate' could also be seen as a valid exercise of taxing powers by Congress. Justice Ginsburg, while agreeing with the Chief Justice on this issue, notes that it is surprising that while he was willing to see if it was "fairly possible" to view it as a tax, he was not willing to adopt the same approach while dealing with the Commerce Clause. 

Four judges, Justices Scalia, Kennedy, Alito and Thomas, did not find the 'individual mandate' to be a valid exercise of taxing powers by Congress. Therefore, they found the law to be unconstitutional both under the Commerce Clause and the taxing powers. 

2. The Anti-Injunction Act and the Authority of the Supreme Court to Decide the Case

Essentially, the provisions of the Anti-Injunction Act prevent any tax from being challenged in a court until the tax is paid. Since the penalty under the ACA would kick in only in 2014, it was argued that the Supreme Court could not hear the case due to the provisions of the Anti-Injunction Act. 

Here Chief Justice Roberts argues (Part-II, p.18 of the document) that the label of 'penalty' in the ACA is significant since the "Anti-Injunction Act applies to suits for the purpose of restraining the assessment or collection of any tax". Chief Justice Roberts notes that the ACA labels other payments under the legislation as 'taxes' while it is called a 'penalty' under the ACA. More importantly, the Chief Justice is of the view that since both legislations, the ACA and the Anti-Injunction Act, are legislations from Congress it is important to to determine whether it was Congress' intent to make the Anti-Injunction Act applicable to the ACA. The Chief Justice undertakes a textual analysis of the ACA to come to the conclusion that this was indeed not the case and therefore renders the the Anti-Injunction Act inapplicable to the 'individual mandate' provision. 

Justices Ginsburg, Sotomayor, Kagan, and Breyer agreed with the Chief Justice's reasoning concerning the inapplicability of the Anti-Injunction Act. However, the four dissenting judges were quick to argue that the Chief Justice was on the one hand upholding the constitutionality of the 'individual mandate' as a valid exercise of taxing powers but at the same time refusing to treat it as a 'tax' for the purposes of the Anti-Injunction Act. Having decided that the 'individual mandate' is not an exercise of taxing powers, the four dissenting judges had no trouble in holding that the Anti-Injunction Act was inapplicable to the case before them. 

3. The Expansion of 'Medicaid' under the ACA is  Unconstitutional

26 states challenged the provisions of the ACA that dealt with the Medicaid programme and one of the main reasons was the impact it would have on the federal funding they would receive under it. As it stands, States are required to cover only particular categories of people - children, needy families, pregnant women, the blind, the disabled and the elderly. However, the ACA requires States to cover, under the Medicaid programme, all individuals below 65 years whose income is below 133% of the federal poverty line. The federal government would bear the entire difference in costs until 2016 and then it would gradually reduce it to a minimum of 90% of the costs over a few years after that. This issue relates to rather intricate aspects of federalism in the US and the limits on the power of Congress in trying to get States to comply with objectives of the federal government.  The States argued that Congress was looking to force the changes in Medicaid on them by witholding the Medicaid funds in its entirety if the new expanded programme and attached conditions were not accepted.

Seven judges struck down this provision as unconstitutional. Chief Justice Roberts (Part-IV, p. 51 0f the document, with which Justices Kagan and Breyer agreed) and the four dissenting judges (Part-IV, p.154) agreed that the conditions and the manner in which these conditions were attached were in excess of the spending powers of Congress. 

Invocation of Judicial Deference

The opinions by Chief Justice Roberts and Justice Ginsburg invoke concerns of judicial deference while upholding the measure adopted by Congress. In the words of the Chief Justice: 
Members of this Court are vested with the authority to interpret the law; we possess neither the expertise nor the prerogative to make policy judgments. Those decisions are entrusted to our Nation’s elected leaders, who can be thrown out of office if the people disagree with them. It is not our job to protect the people from the consequences of their political choices. Our deference in matters of policy cannot, however, become abdication in matters of law.
However, Justice Ginsburg finds the Chief Justice's opinion on the Commerce Clause problematic on those very grounds. She draws attention to the phase in the US Supreme Court's history when economic regulations enacted by legislators were frequently struck down in the first half of the 20th century. Referring to the Chief Justice's opinion on the Commerce Clause, Justice Ginsburg said: 
Why should the Chief Justice strive so mightily to hem in Congress’ capacity to meet the new problems arising constantly in our ever­ developing modern economy? I find no satisfying response to that question in his opinion.
However, when the case first went to the US Supreme Court President Obama would not have considered Chief Justice Roberts to be a likely saviour and might have pinned his hopes on Justice Kennedy. Chief Justice Roberts has broken ranks with the conservative wing on the court and it will be interesting to see how that dynamic develops. Undoubtedly, the reputation of the Court was at stake given the criticism it has received subsequent to its controversial 5-4 decisions on gun control in McDonald v. City of Chicago and political spending by corporations in Citizens United v. FEC. The Chief Justice has certainly saved the day for the Court and commentators see it as the beginning of the Roberts Court, shifting the focus from Justice Kennedy who has been the swing vote on the current US Supreme Court.  We will have the chance to see the dynamics of the swing vote very soon when the US Supreme Court's hears arguments on the constitutionality of affirmative action measures in Fisher v. University of Texas at the beginning of its next term in October 2012. With Justice Kagan recusing herself from the case, all eyes will be on the swing vote as the legacy of Bakke and Grutter comes before the US Supreme Court.

 The SCOTUS blog coverage on the health care case is here: http://www.scotusblog.com/case-files/cases/national-federation-of-independent-business-v-sebelius/





3 comments:

Gautam Bhatia said...

Anup,

Considering the fact that Chief Justice Robert's decision did not *require* him to address the commerce clause issue, and considering that in cases of fragmented opinions, the holding of the Court is the holding of those members who "concurred in the judgment on the *narrowest grounds*" (Marks vs United States) - don't you think that Chief Justice Robert's narrowing down of the commerce clause carries no precedential force?

Raag said...

Gautam, in a strictly technical sense, I would agree with you. However, given the clear political/ideological divides visible in the Supreme Court and controversial judicial involvement with the commerce clause, those in the majority on this point (the Chief joined by the 4 dissenting judges) will no doubt view this view as precedent for subsequent decisions. This would be especially so as the opinion continues to operate on principles previously supported by these judges. Alongside, the remaining five judges - with a narrower view of the clause - have previously demonstrated similar stands (see US v. Lopez,514 US 549 and US v. Morrison, 529 US 598) either through their own opinions or those with similar political stands. This is especially relevant given that this tendency has only recently been acquired by members of the Court, after a long period of liberal attitudes towards the clause in support of Government actions (this is a crude generalization, but it points to the direction I am heading towards).

Accordingly, while one may view the Chief's opinion on the commerce clause as operating beyond the precise legal requirements of the case, it would be dangerous to ignore this opinion as lacking predecential force, without a view of the larger political context in which the US SC is operating.

Anup Surendranath said...

@Gautam -- thanks for your comment.
I do believe that the plurality on the Commerce Clause issue has value as a precedent. Five judges have ruled a certain way on the activity/ inactivity point with respect to the Commerce Clause. In essence, what saved the day for ACA was that there was a penalty attached. The penalty provision is what allowed Roberts to justify it under the taxing powers and in that sense it was not the mandate to buy that was being upheld. In terms of what is allowed/ disallowed under the Commerce Clause, the agreement amongst 5 judges will be used to define the powers of Congress.

@Raag -- I am not sure I agree with your analysis. I think that the pattern you seek to establish concerning the US Supreme Court's attitude to the Commerce Clause is rather forced. Lopez and Morrison (both decisions of the Rehnquist Court in 1995 and 2000 respectively) do not exactly serve the purpose. Undoubtedly, those cases were decided under the Commerce Clause. But I am sure you realise that the provisions under challenge in those cases were completely different from the 'individual mandate' in the ACA.

In Lopez, it was a provision of the Gun Free School Zones Act (a criminal statute) prohibiting anyone from knowingly possessing a fire arm in a school zone that was under challenge. In Morrison, the civil remedy for victims of gender violence created by Congress was under challenge. The US Supreme Court did say that both of those provisions were beyond the powers of Congress under the Commerce Clause but you will see that the 'individual mandate' of the ACA is fundamentally different. The 'individual mandate' is an unambiguous intervention in a major economic policy by Congress.

In that sense, the health case decision is the first of its kind in many decades. To find an appropriate and accurate equivalent, we might have to go back to the decisions of the US Supreme Court during the New Deal era when major economic decisions taken by Congress were struck down --- that forced Roosevelt to consider a 'court packing' strategy with a proposal to increase the number of US Supreme Court judges to 15!