Chief Justice John Roberts’ surprising decision to uphold the Affordable Care Act [PDF] is a refreshing reminder that court decisions are usually about the law, not political ideology. Journalists and the general public, lacking legal expertise, tend to interpret decisions in terms of politically favored outcomes, and impute similar motives to judges. In reality, judges tend to split along ideological lines not because they make politically informed decisions, but rather political ideology tends to align with jurisprudential approach. Still, most decisions are sincere interpretations of law according to coherent principles. Roberts’ decision is an exceptionally incisive treatment of the issues at hand.
Most strikingly, Roberts upheld the constitutionality of the Act while rejecting the application of the Commerce Clause to the so-called “individual mandate.” He plainly affirms: “The Federal Government does not have the power to order people to buy health insurance. Section 5000A would therefore be unconstitutional if read as a command.” The “mandate,” then, cannot be interpreted as a mandate. It is not illegal to refuse to buy health insurance, as there are no legal penalties save the requirement to pay slightly higher taxes. By rejecting a Commerce Clause argument, Roberts cuts off the possibility of future mischief by Congress attempting to regulate all activity and inactivity. Justice Scalia, in his dissent, gives a biting criticism of the opinion of Ginsburg et al., which would effectively abolish all limits on the scope of federal power. He pointedly notes the central fallacy of her instrumentalist philosophy, supposing that the Constitution enumerates problems to be solved, rather than powers of government.
Yet Roberts separates himself from the Court’s “conservative” wing – which in this instance includes the “moderate” Justice Kennedy – by allowing that the penalty imposed on the uninsured is effectively a tax, even though the law itself calls it a “penalty.” In Section III-B of his opinion, he cites precedent showing that the label applied to a fee or penalty does not control its constitutional status as a tax (though it does control the applicability of the Anti-Injunction Act, here ruled inapplicable). Further, he upholds the principle of judicial restraint by insisting that a law should not be overturned if there can be found a reasonable construction whereby it is constitutional. The construction that the mandate is a tax, though unintended by the legislature, is reasonable, and therefore the law may be upheld. This heuristic favors the functional effect of the law, rather than legislative intent or wording. Yet this interpretation does not oppose the intent of legislators, who would surely prefer that their law be held constitutional even if not on the same grounds. Roberts cites precedent showing that it is not necessary for Congress to specify the correct power it is using, as long as it is in fact using a constitutional power.
The interpretation that the “penalty” is a tax is reasonable, according to Roberts, for several reasons. There is no indication that a person may be prosecuted for failing to purchase insurance, so such omission is not a crime, in which case the additional tax is not a fine. The “penalty” is collected through ordinary income tax filing, and those who do not have to file do not pay anything. The penalty is small (only 2.5% of adjusted taxable income), in most cases much less than the cost of buying insurance, and can never exceed the cost of insurance. In fact, it is projected that 4 million will elect to pay this penalty rather than purchase insurance. Roberts also suggests that the absence of a scienter requirement proves that this is not a penalty for unlawful behavior, but Scalia rightfully skewers this notion. Nonetheless, the rest of the Chief Justice’s arguments hold.
Once it is admitted that the mandate is a tax, one need only show that it is a constitutionally allowable tax, and Chief Justice Roberts makes relatively easy work of this task. He cites numerous precedents of taxes designed to incentivize behavior, and notes that the specification of a determinate circumstance (having taxable income, yet lacking insurance) exempts this from being a capitation tax or “direct tax” in the sense of Article 1, Sec. 2. He further observes that omitting to do something does not exempt us from taxation. The proposed tax is not so high as to become unconstitutionally punitive.
The treatment of the “mandate” as a tax is by no means academic. As the Chief Justice notes:
Once we recognize that Congress may regulate a particular decision under the Commerce Clause, the Federal Government can bring its full weight to bear. Congress may simply command individuals to do as it directs. An individual who disobeys may be subjected to criminal sanctions.
With a tax, by contrast, the government has no coercive authority beyond “requiring an individual to pay money into the Federal Treasury.” There is no further penalty, and the government cannot coerce anyone to buy health insurance, any more than they can force smokers to quit.
The ruling in National Federation of Independent Business v. Sebelius places important limits on future attempts at government mandates, not only because the government is denied broad coercive power over private action or inaction, but also because any future “mandate” will be clearly perceived as a tax, and thus difficult to pass. The so-called “mandate” amounts to a regressive tax, being a flat 2.5% rate, with mandatory minimums, on taxable income. This tax will disproportionately impact the young and the middle class.
Ironically, the “individual mandate” was ruled constitutional in part because it is so weak. The cost is so low, and easily avoided, that there is reason to doubt the basic premise of Obamacare, namely that a shifting of the cost burden to the young and uninsured will make health care more affordable in general. If increased mandatory coverage is not matched by sufficient increases in enrollment, premiums will only go up, discouraging even more people from enrolling, and creating a vicious spiral. Already, in the early phases, premiums have risen more rapidly than previously, with larger co-payments. This is because shifting costs through health insurance reform does little to address the fundamental cost structure problems at the provider level. Hospitals, doctors, and pharmaceutical companies strongly support Obamacare for good reason, and it is not because they expect their revenue to decrease.