Source: http://www.groklaw.net/articlebasic.php?story=20120630110614135
Timestamp: 2017-01-20 15:57:07
Document Index: 214136204

Matched Legal Cases: ['§6671', '§5000', '§5000', '§5000', '§6201', '§6301', '§5000', '§5000', '§5000', '§6201', '§860', '§6671', '§6201', '§1395', '§395', '§18091', '§8', '§18091', '§5000', '§5000', '§5000', '§5000', '§5000', '§163']

Groklaw - Explaining the Legalese of the US Supreme Court's Ruling on the Affordable Care Act ~ pj - Updated 2Xs
Explaining the Legalese of the US Supreme Court's Ruling on the Affordable Care Act ~ pj - Updated 2Xs
Saturday, June 30 2012 @ 03:44 PM EDT
I'd like to show you what the US Supreme Court decision on the Affordable Care Act really says. In doing so, I'll also explain any legalese, and put it in my own simple English. Why? I was offline most of yesterday, and I returned to see long threads about health care and the U.S. Supreme Court's ruling [PDF] on the Affordable Care Act [PDF]. That surprised me, because I didn't think you would be greatly interested. That's why I didn't even put it in News Picks, let alone write about it. But now I see I was wrong, that many of you are interested, and I also see a lot of misunderstanding of what the ruling actually says, not only in your comments but in the media. I also see a lot of FUD in the air. So I thought I'd take the time to explain it. If nothing else, it fits our purpose for doing Groklaw, since antiFUD is very much what we set out to do, and we have covered Constitutional issues before, albeit in the First Amendment context usually. The decision in National Federation of Independent Business v. Sebelius is quite long, so I can't be brief, but I've divided it into chunks, so if there is one aspect that you are particularly interested in, you can just read that part. It's long, but it's not hard. At least, I've tried to make it understandable.Jump To CommentsIn this article, I won't be expressing my own views, or telling you what you should or should not think about the ACA, more properly titled the Patient Protection and Affordable Care Act of 2010. Nor am I telling you what your politics should or shouldn't be or what mine are or are not. That's irrelevant here. Everyone is welcome on Groklaw. I set it up that way, and actually, I have no real politics. That's probably why I didn't realize so many of you would care about this decision, because I haven't been following it except in the most casual way. My purpose is to explain what the decision held, or more accurately to explain by *showing* you what it actually says instead of just telling you. The rest is up to you and entirely your business. I'll start by explaining something important. In the legal field you *have* to think about all the issues from both sides, your own and the opponent's, and I don't know if that draws a certain type of person or it affects them so that they are more willing to consider others' views, but I view it as an asset. As we go through the main chunks of the decision, I think you'll see that the Chief Justice viewed the issues more as legal issues than political ones, and my descriptions will also be based on the legal, not the political, issues. I'd appreciate it if your comments would focus similarly. There is enough FUD about the Affordable Care Act without us adding to it. I'm trying to clarify, not increase the fog. The ruling is 193 pages, so I am guessing many of you haven't read it. But please do [PDF]. I'll be hitting only the most important highlights, none of the subsidiary dissenting or concurring opinions except in passing, but it's all available to you, so you can verify what I'm writing about it, as is our style on Groklaw. Mostly I'll show you and just put the legalese into plainer English. Here are the three chunks I'll cover, so you can skip to whatever interests you the most:
Did Congress Have Authority Under the Commerce Clause?
Did Congress Have Authority Under Its Power to "Lay and Collect Taxes"?
The decision was written by Chief Justice John Roberts, as you know, who when being considered for the court, stated that he thought it was important that the court be separate from politics, that a judge's role was to be an umpire, not someone throwing the ball, and you'd have to agree that with this decision, at least, he tried to live up to his word. The opinion itself begins by detailing what the lower courts held. I won't explain that part, because you can read it if you want to. He included it because it's his job to do that in moments like this. But we can safely skip it and jump into the first of the three categories I'll be covering, namely jurisdiction. Did the Court Have Jurisdiction? - The First Question
Then there is a section on whether the court even had jurisdiction over the matter. Why? If they didn't have jurisdiction, that'd be the end of the matter. The court can't rule on even the constitutionality of a law if it lacks jurisdiction. So what was this issue about?
It seems there is a law called the Anti-Injunction Act that says you can't sue and seek an injunction to block a new tax. You can sue, after you pay, to get a refund, but you can't block the new tax before it even starts. Otherwise, the government would be swamped with litigation all the time. So the question was, was the Affordable Care Act's individual mandate penalty a tax for purposes of this one statute, the Anti-Injunction Act? If so, then no one could sue over it until 2014, after the law is scheduled to go into effect.
See how detailed and abstruse lawyers' arguments are? They try to think of everything applicable that might prevail, and that is what they are supposed to do. Well, some judges are up to the challenges they create. Chief Justice Roberts wrote that the issue of whether it is a tax with *respect to the Anti-Injunction Act*, and only that one law, and its requirements could be answered no, because the Affordable Care Act uses both the word "penalty" and elsewhere about other things the word "tax", and courts assume if you use two words in legislation, you mean to make a distinction. This isn't poetry. It's legislation, where words are unusually precise on purpose. And since Congress wrote both the Anti-Injunction Act and the ACA, it knew how to have it considered a tax for purposes of the Anti-Injunction Act by simply saying that, he points out. And Congress didn't do that. Here's the legalese:
That doesn't work *for this purpose*, however, he is saying, with respect to this one law, the Anti-Injunction Act, because Congress knew what they meant and they said penalty, knowing that tax was the word to use or to state to treat the penalty as a tax for the purposes of the Anti-Injunction Act. He credits Congress with knowing how to write legislation. So Chief Justice Roberts found that significant and dispositive. But that's just the analysis of that one statute. When it comes to deciding if a law that Congress has passed is constitutional, there's a different legal analysis, in Roberts's view, as I'll show you later, but legally for this first question of jurisdiction, the fact there are two words used is fatal to the argument, Roberts held. Here's why he sees a difference: It is true that Congress cannot change whether an exaction is a tax or a penalty for constitutional purposes simply by describing it as one or the other. Congress may not, for example, expand its power under the Taxing Clause, or escape the Double Jeopardy Clause’s constraint on criminal sanctions, by labeling a severe financial punishment a “tax.” See Bailey v. Drexel Furniture Co., 259 U. S. 20, 36–37 (1922); Department of Revenue of Mont. v. Kurth Ranch, 511 U. S. 767, 779 (1994).
What he's saying so far is that Congress wrote both laws. They know about the Anti-Injunction Act and its requirements, so if they *wanted* the penalty to be viewed as a tax for purposes of the Anti-Injunction Act, they could either have called it a tax or said it's a penalty but we want it viewed as a tax for the purposes of the Anti-Injunction Act. But Congress did neither. Roberts viewed that as no oversight, but intentional, and in fact, when interpreting what Congress meant, the rule is that you consider the words actually used to be intentional and to mean what they say. There was one other subtler argument, and here is how Roberts dealt with it:
Amicus attempts to show that Congress did render the Anti-Injunction Act applicable to the individual mandate, albeit by a more circuitous route. Section 5000A(g)(1) specifies that the penalty for not complying with the mandate “shall be assessed and collected in the same manner as an assessable penalty under subchapter B of chapter 68.” Assessable penalties in subchapter 68B, in turn, “shall be assessed and collected in the same manner as taxes.” §6671(a). According to amicus, by directing that the penalty be “assessed and collected in the same manner as taxes,” §5000A(g)(1) made the Anti-Injunction Act applicable to this penalty. The Government disagrees. It argues that §5000A(g)(1) does not direct courts to apply the Anti-Injunction Act, because §5000A(g) is a directive only to the Secretary of the Treasury to use the same “‘methodology and procedures’” to collect the penalty that he uses to collect taxes. Brief for United States 32–33 (quoting Seven-Sky, 661 F. 3d, at 11). In other words, saying you should collect it in the same way you collect taxes isn't the same thing as saying what you are collecting *is* taxes. He decided, therefore, that the government won that argument:
We think the Government has the better reading. As it observes, “Assessment” and “Collection” are chapters of the Internal Revenue Code providing the Secretary authority to assess and collect taxes, and generally specifying the means by which he shall do so. See §6201 (assessment authority); §6301 (collection authority). Section 5000A(g)(1)’s command that the penalty be “assessed and collected in the same manner” as taxes is best read as referring to those chapters and giving the Secretary the same authority and guidance with respect to the penalty. That interpretation is consistent with the remainder of §5000A(g), which instructs the Secretary on the tools he may use to collect the penalty. See §5000A(g)(2)(A) (barring criminal prosecutions); §5000A(g)(2)(B) (prohibiting the Secretary from using notices of lien and levies). The Anti-Injunction Act, by contrast, says nothing about the procedures to be used in assessing and collecting taxes.
That argument has force only if §6201(a) is read in isolation. The Code contains many provisions treating taxes and assessable penalties as distinct terms. See, e.g., §§860(h)(1), 6324A(a), 6601(e)(1)–(2), 6602, 7122(b). There would, for example, be no need for §6671(a) to deem “tax” to refer to certain assessable penalties if the Code already included all such penalties in the term “tax.” Indeed, amicus’s earlier observation that the Code requires assessable penalties to be assessed and collected “in the same manner as taxes” makes little sense if assessable penalties are themselves taxes. In light of the Code’s consistent distinction between the terms “tax” and “assessable penalty,” we must accept the Government’s interpretation: §6201(a) instructs the Secretary that his authority to assess taxes includes the authority to assess penalties, but it does not equate assessable penalties to taxes for other purposes.
The Affordable Care Act does not require that the penalty for failing to comply with the individual mandate be treated as a tax for purposes of the Anti-Injunction Act. The Anti-Injunction Act therefore does not apply to this suit, and we may proceed to the merits. So, that was the basis for deciding that the court couldn't kick the can down the road to 2014, but had jurisdiction to decide the rest of the issues brought to it by both sides right now.
Having decided that it had jurisdiction to decide the rest of the issues, particularly whether the Act was constitutional or not, the court had two main arguments from the government on this. The first, and main one, was that it had the authority to enact the individual mandate under the Commerce Clause. The second argument the government raised was that if it didn't have the authority to make people buy insurance under the Commerce Clause, alternatively it had the authority to make those who refused to buy insurance pay a penalty instead, under Congress's authority to tax:
The Government advances two theories for the proposition that Congress had constitutional authority to enact the individual mandate. First, the Government argues that Congress had the power to enact the mandate under the Commerce Clause. Under that theory, Congress may order individuals to buy health insurance because the failure to do so affects interstate commerce, and could undercut the Affordable Care Act’s other reforms. Second, the Government argues that if the commerce power does not support the mandate, we should nonetheless uphold it as an exercise of Congress’s power to tax. According to the Government, even if Congress lacks the power to direct individuals to buy insurance, the only effect of the individual mandate is to raise taxes on those who do not do so, and thus the law may be upheld as a tax. As you can see, it's factually wrong to say the government never said it was a tax. It was one of its two arguments before the US Supreme Court. And it's also not true that the Chief Justice somehow invented a way to call it a tax himself. It was the argument before him. I think it's important to point this out, so you are not confused by any Flying FUD. [Actually, on later reflection, this isn't precise. What they said was that it could be Constitutional under Congress's authority to tax.] The court addressed the Commerce Clause argument first, and decided the federal government has no authority to make citizens buy a product they don't want to buy, to, in effect, force them to enter into commerce. Its authority under the Commerce Clause is broad, but only over commerce that exists, not commerce it compels and in essence creates. If you enjoy this sort of thing, you can read Justice Ruth Ginsburg's concurring opinion, where she raises some very compelling arguments that he's wrong in this, but it doesn't matter in the short run, in that he ruled otherwise. I admire Justice Ginsburg quite a lot, personally, and I always enjoy reading what she writes, because it's so clear and logical and because she never pretends that there is no ethical aspect to a decision. And from what I read in the dissent, I think it was possibly Justice Ginsburg who, in the end, got to Chief Justice Roberts. I see in the dissent that they call her opinion a dissenting opinion and it actually is a concurring opinion -- although it's true that she dissented on the Commerce Clause issue, it's still oddly imprecise language -- and on page 141 of the PDF, the dissenters refer to something Chief Justice Roberts wrote (on page 86 of the PDF) as being a "dissent" -- so at one point, the now-dissenters thought apparently that ACA was dead in the water. That would indicate that at some point Roberts perhaps saw things differently and switched sides, and that has made all the difference. Justice Ginsburg has spoken and written about how hard it is to change people's thinking, that it takes time, even when judges have it wrong. Maybe especially then. But she never stops trying to explain. And sometimes, over time, people who are able to think in the legal manner can see an argument as valid that they didn't really grasp earlier. And that can make history different than it otherwise would have been. Chief Justice Roberts began this section by describing the problem the Affordable Care Act is trying to solve, and this is important to comprehending what this issue is all about:
The Government’s first argument is that the individual mandate is a valid exercise of Congress’s power under the Commerce Clause and the Necessary and Proper Clause. According to the Government, the health care market is characterized by a significant cost-shifting problem. Everyone will eventually need health care at a time and to an extent they cannot predict, but if they do not have insurance, they often will not be able to pay for it. Because state and federal laws nonetheless require hospitals to provide a certain degree of care to individuals without regard to their ability to pay, see, e.g., 42 U. S. C. §1395dd; Fla. Stat. Ann. §395.1041, hospitals end up receiving compensation for only a portion of the services they provide. To recoup the losses, hospitals pass on the cost to insurers through higher rates, and insurers, in turn, pass on the cost to policy holders in the form of higher premiums. Congress estimated that the cost of uncompensated care raises family health insurance premiums, on average, by over $1,000 per year. 42 U. S. C. §18091(2)(F). I'll stop here for a second to highlight one thing: I see some saying this is going to be so costly, that it's a tax on everyone. But in actuality, the bill is trying to find a way to reduce that $1,000 surcharge or penalty on those who now pay for their own health insurance, that cost shifting whereby the responsible ones pay for those who are either devil-may-care about it or who can't afford to get health insurance or have been turned down for insurance and so are freeloading. In that sense, it is designed to provide relief to the majority, those who now are getting that burden shifted on to their shoulders. The court continues:
The guaranteed-issue and community-rating reforms do not, however, address the issue of healthy individuals who choose not to purchase insurance to cover potential health care needs. In fact, the reforms sharply exacerbate that problem, by providing an incentive for individuals to delay purchasing health insurance until they become sick, relying on the promise of guaranteed and affordable coverage.
The reforms also threaten to impose massive new costs on insurers, who are required to accept unhealthy individuals but prohibited from charging them rates necessary to pay for their coverage. This will lead insurers to significantly increase premiums on everyone. See Brief for America’s Health Insurance Plans et al. as Amici Curiae in No. 11– 393 etc. 8–9.
All insurance works that way, if you think about it. The expense of whatever horrible event it insures against, flood, fire, whatever, is paid for by a lot of people who never experience any such horrible event but pay anyway. Why would they? Because you never know when it will be you having to deal with the horrible event, and you want to have enough to protect yourself and your family. Health insurance is unique in that everyone actually does experience some kind of event during their lifetime, and that makes paying for it harder to figure out and the ACA decided that broadening the pool was the way to do it, by insisting that everyone carry some part of the load, whether they enjoyed doing so or not, with some exceptions and help for those who really can't afford it.
So that's the problem. Cost shifting. That's what the law is attempting to address. It's a real problem, and at the moment, I read around 30 million Americans are without health insurance. That causes economic hardship on those who do have insurance, because someone has to pay for those 30 million people when they get seriously ill or have an accident and end up in the emergency rooms of the nation's hospitals. Here in the US, they are not supposed to leave you on the curb to die. So the government's argument was that the failure to have insurance “has a substantial and deleterious effect on interstate commerce” by creating the cost-shifting problem. That's how they tried to slip it in under the Commerce Clause. And you'd have to agree, it's not an implausible argument on its face. Again, Justice Ginsburg and the other justices who agreed with her about it thought it was a winning argument. Roberts even goes through a long history of how the Commerce Clause has been employed over history, and for sure, its umbrella is broad. The Chief Justice in fact quotes one case that held this: “[E]ven if appellee’s activity be local and though it may not be regarded as commerce, it may still, whatever its nature, be reached by Congress if it exerts a substantial economic effect on interstate commerce” This argument did convince some of the justices, in fact. For sure the current cost shifting has affected interstate commerce, raising the rates insurance companies charge those who otherwise would be paying $1,000 less. Chief Justice Roberts first acknowledges that it isn't implausible to make the Commerce Clause argument:The Government contends that the individual mandate is within Congress’s power because the failure to purchase insurance “has a substantial and deleterious effect on interstate commerce” by creating the cost-shifting problem. Brief for United States 34. The path of our Commerce Clause decisions has not always run smooth, see United States v. Lopez, 514 U. S. 549, 552–559 (1995), but it is now well established that Congress has broad authority under the Clause. We have recognized, for example, that “[t]he power of Congress over interstate commerce is not confined to the regulation of commerce among the states,” but extends to activities that “have a substantial effect on interstate commerce.” United States v. Darby, 312 U. S. 100, 118–119 (1941). Congress’s power, moreover, is not limited to regulation of an activity that by itself substantially affects interstate commerce, but also extends to activities that do so only when aggregated with similar activities of others. See Wickard, 317 U. S., at 127–128.
Given its expansive scope, it is no surprise that Congress has employed the commerce power in a wide variety of ways to address the pressing needs of the time. Here he is thinking like a lawyer, not a politician, and he is considering the argument with respect. It's not impossible as a legal argument, he is saying, at first glance. The Commerce Clause cases show that precedent is that the Commerce Clause is very broad. But then he lists why he can't go that far so as to rule that the government has the authority under the Commerce Act, due to what he views as constitutional issues:
But Congress has never attempted to rely on that power to compel individuals not engaged in commerce to purchase an unwanted product. I don't think that's actually factual, in that when my mom went on Social Security, she had to get medical coverage and she had to pay for the coverage the government didn't take care of. It was not a option. But let's continue: Legislative novelty is not necessarily fatal; there is a first time for everything. But sometimes “the most telling indication of [a] severe constitutional problem . . . is the lack of historical precedent” for Congress’s action. Free Enterprise Fund v. Public Company Accounting Oversight Bd., 561 U. S. ___, ___ (2010) (slip op., at 25) (internal quotation marks omitted). At the very least, we should “pause to consider the implications of the Government’s arguments” when confronted with such new conceptions of federal power. Lopez, supra, at 564.
The Constitution grants Congress the power to “regulate Commerce.” Art. I, §8, cl. 3 (emphasis added). The power to regulate commerce presupposes the existence of commercial activity to be regulated. If the power to “regulate” something included the power to create it, many of the provisions in the Constitution would be superfluous….
As expansive as our cases construing the scope of the commerce power have been, they all have one thing in common: They uniformly describe the power as reaching “activity.” It is nearly impossible to avoid the word when quoting them. …
The individual mandate, however, does not regulate existing commercial activity. It instead compels individuals to become active in commerce by purchasing a product, on the ground that their failure to do so affects interstate commerce. Construing the Commerce Clause to permit Congress to regulate individuals precisely because they are doing nothing would open a new and potentially vast domain to congressional authority. Every day individuals do not do an infinite number of things. In some cases they decide not to do something; in others they simply fail to do it. Allowing Congress to justify federal regulation by pointing to the effect of inaction on commerce would bring countless decisions an individual could potentially make within the scope of federal regulation, and —under the Government’s theory— empower Congress to make those decisions for him….
Indeed, the Government’s logic would justify a mandatory purchase to solve almost any problem. See Seven-Sky, 661 F. 3d, at 14–15 (noting the Government’s inability to “identify any mandate to purchase a product or service in interstate commerce that would be unconstitutional” under its theory of the commerce power). To consider a different example in the health care market, many Americans do not eat a balanced diet. That group makes up a larger percentage of the total population than those without health insurance. See, e.g., Dept. of Agriculture and Dept. of Health and Human Services, Dietary Guidelines for Americans 1 (2010). The failure of that group to have a healthy diet increases health care costs, to a greater extent than the failure of the uninsured to purchase insurance. See, e.g., Finkelstein, Trogdon, Cohen, & Dietz, Annual Medical Spending Attributable to Obesity: Payer-and Service-Specific Estimates, 28 Health Affairs w822 (2009) (detailing the “undeniable link between rising rates of obesity and rising medical spending,” and estimating that “the annual medical burden of obesity has risen to almost 10 percent of all medical spending and could amount to $147 billion per year in 2008”). Those increased costs are borne in part by other Americans who must pay more, just as the uninsured shift costs to the insured. See Center for Applied Ethics, Voluntary Health Risks: Who Should Pay?, 6 Issues in Ethics 6 (1993) (noting “overwhelming evidence that individuals with unhealthy habits pay only a fraction of the costs associated with their behaviors; most of the expense is borne by the rest of society in the form of higher insurance premiums, government expenditures for health care, and disability benefits”). Congress addressed the insurance problem by ordering everyone to buy insurance. Under the Government’s theory, Congress could address the diet problem by ordering everyone to buy vegetables. See Dietary Guidelines, supra, at 19 (“Improved nutrition, appropriate eating behaviors, and increased physical activity have tremendous potential to . . . reduce health care costs”).
That is not the country the Framers of our Constitution envisioned. To an economist, perhaps, there is no difference between
activity and inactivity; both have measurable economic effects on commerce. But the distinction between doing something and doing nothing would not have been lost on the Framers, who were “practical statesmen,” not meta-physical philosophers. Industrial Union Dept., AFL–CIO v. American Petroleum Institute, 448 U. S. 607, 673 (1980) (Rehnquist, J., concurring in judgment). As we have explained, “the framers of the Constitution were not mere visionaries, toying with speculations or theories, but practical men, dealing with the facts of political life as they understood them, putting into form the government they were creating, and prescribing in language clear and intelligible the powers that government was to take.” South Carolina v. United States, 199 U. S. 437, 449 (1905). The Framers gave Congress the power to regulate commerce, not to compel it, and for over 200 years both our decisions and Congress’s actions have reflected this understanding. There is no reason to depart from that understanding now…. I think perhaps the Chief Justice forgot that the ACA already does punish certain health habits:
Simply put, the community-rating provision requires insurers to calculate an individual’s insurance premium based on only four factors: (i) whether the individual’s plan covers just the individual or his family also, (ii) the “rating area” in which the individual lives, (iii) the individual’s age, and (iv) whether the individual uses tobacco. If you smoke, the insurance companies can charge you more under the ACA. That is in addition to the taxes you pay when you buy cigarettes. Why would it be so terrible if they charged obese people more for insuance, too? I don't really understand that argument, so I can't explain it to you. I can only explain what makes sense to me. The decision makes an assumption next about young people and why they don't buy insurance:
The individual mandate’s regulation of the uninsured as a class is, in fact, particularly divorced from any link to existing commercial activity. The mandate primarily affects healthy, often young adults who are less likely to need significant health care and have other priorities for spending their money. The dissenting opinion seems to labor under that delusion as well. Judges are cloistered from the problems of those without a lot of money, I guess, so they may not realize that young people don't buy insurance not because they'd rather get an iPad, but because even if they do nothing fun ever, they still don't have enough money to buy insurance. Think of all the young people coming out of college who can't find a job currently. What would they pay insurance premiums with? Even those who do work often aren't yet making much, so they can't buy insurance and gamble that they hope they won't need it. But all people want insurance if they can afford it, if only because you just never know. Under the current system, if you don't buy insurance until you get sick, you may not be able to get any affordable insurance after that, and young people get cancer and other costly diseases too. So I must tell the justices that young people are not irresponsible enough not to want it. The economy has squeezed them out, in many, many cases. That's exactly why public opinion polls find that Americans really like the provisions of ACA that already are in effect, including the provision that young people can stay on their parents' health insurance until they are 26. That wouldn't be as popular as it is if most young people just didn't care about getting insurance. Clearly many of them wanted it but could not afford it until ACA was passed.
Roberts concludes his argument:
It is precisely because these individuals, as an actuarial class, incur relatively low health care costs that the mandate helps counter the effect of forcing insurance companies to cover others who impose greater costs than their premiums are allowed to reflect. See 42 U. S. C. §18091(2)(I) (recognizing that the mandate would “broaden the health insurance risk pool to include healthy individuals, which will lower health insurance premiums”). If the individual mandate is targeted at a class, it is a class whose commercial inactivity rather than activity is its defining feature….
So that's why the Commerce Clause argument didn't fly with the majority. There's also a section on why the Congress can't do it as a kind of exception, under its powers to enact "necessary and proper" laws. The commerce power doesn't authorize the mandate, they concluded, so it can't be "necessary and proper".
Did Congress Have Authority Under Its Power to "Lay and Collect Taxes"? However, that wasn't the end of the analysis, because, as you'll remember, the government had raised a second, alternative argument, that Congress has the power to "lay and collect Taxes," in Article I of the Constitution.
Here's how Roberts begins to explain how he analyzes the tax argument: The Government’s tax power argument asks us to view the statute differently than we did in considering its commerce power theory. In making its Commerce Clause argument, the Government defended the mandate as a regulation requiring individuals to purchase health insurance. The Government does not claim that the taxing power allows Congress to issue such a command. Instead, the Government asks us to read the mandate not as ordering individuals to buy insurance, but rather as imposing a tax on those who do not buy that product.
The most straightforward reading of the mandate is that it commands individuals to purchase insurance. After all, it states that individuals “shall” maintain health insurance.	26 U. S. C. §5000A(a).	Congress thought it could enact such a command under the Commerce Clause, and the Government primarily defended the law on that basis. But, for the reasons explained above, the Commerce Clause does not give Congress that power. Under our precedent, it is therefore necessary to ask whether the Government’s alternative reading of the statute—that it only imposes a tax on those without insurance—is a reasonable one. Did you notice something important? If it's a tax, it's a tax only on those who refuse to get insurance even though they could afford to do so. Do you know how many that is expected to be? 2% of the population. And notice the difference between the mandate -- thou shalt buy insurance -- and the tax -- we want you to get insurance, but if you don't you can pay a penalty instead. And let's notice the terms of the penalty. What happens to you if you fail to get insurance?:
The exaction the Affordable Care Act imposes on those without health insurance looks like a tax in many respects. The “[s]hared responsibility payment,” as the statute entitles it, is paid into the Treasury by “tax-payer[s]” when they file their tax returns.	26 U. S. C. §5000A(b). It does not apply to individuals who do not pay federal income taxes because their household income is less than the filing threshold in the Internal Revenue Code. §5000A(e)(2). For taxpayers who do owe the payment, its amount is determined by such familiar factors as taxable income, number of dependents, and joint filing status. §§5000A(b)(3), (c)(2), (c)(4). The requirement to pay is found in the Internal Revenue Code and enforced by the IRS, which—as we previously explained—must assess and collect it “in the same manner as taxes.” Supra, at 13–14. This process yields the essential feature of any tax: it produces at least some revenue for the Government. United States v. Kahriger, 345 U. S. 22, 28, n. 4 (1953). Indeed, the payment is expected to raise about $4 billion per year by 2017. Congressional Budget Office, Payments of Penalties for Being Uninsured Under the Patient Protection and Affordable Care Act (Apr. 30, 2010), in Selected CBO Publications Related to Health Care Legislation, 2009–2010, p. 71 (rev. 2010).
It is of course true that the Act describes the payment as a “penalty,” not a “tax.” But while that label is fatal to the application of the Anti-Injunction Act, supra, at 12–13, it does not determine whether the payment may be viewed as an exercise of Congress’s taxing power. It is up to Congress whether to apply the Anti-Injunction Act to any particular statute, so it makes sense to be guided by Congress’s choice of label on that question. That choice does not, however, control whether an exaction is within Congress’s constitutional power to tax. That's not so awful. And for lovers of freedom, you do still get to choose. If you absolutely don't want insurance, you can refuse it. Just pay the penalty, which is always going to be no more than the cost of the insurance you forego.
The decision goes on to cite a couple of cases that provide precedent that just because you call something "Not a Tax" that doesn't end the investigation of what in reality it is if you are trying to decide if Congress has the taxing authority under the Constitution. For example, in New York v. United States, this court writes, the court upheld as a tax something that was instead called a "surcharge" on out-of-state nuclear waste shipments, part of which was paid to the federal treasury. So does the penalty in the Affordable Care Act match those cases? Does it fall within the Congress's taxing power? Or more precisely, does Congress have the authority to make you pay, whatever you call it? The decision quotes cases that say, in effect, that it isn't the word that matters but how it works. For example, from Nelson v. Sears, Roebuck: “In passing on the constitutionality of a tax law, we are concerned only with its practical operation, not its definition or the precise form of descriptive words which may be applied to it” And from United States v. Soleto:“That the funds due are referred to as a ‘penalty’ . . . does not alter their essential character as taxes” Did you see that? The very same situation arose before, whether calling something a penalty made it not a tax, and the answer was no. The word doesn't matter in this context but the activity. That case is from 1978, so it's clear, I think, that the court didn't make it up out of whole cloth. There is precedent, using the exact word "penalty" and it was interpreted by the court as a tax and hence within Congress's authority to levy. Roberts also cites a case where the law called something a tax when the Supreme Court ruled instead that it was a penalty, Drexel Furniture. So in this part of the analysis, words are not decisive. What matters is how does it work? Is it punitive, for example? Penalty implies getting slapped for doing something you shouldn't do or didn't do that you should have.
So is it reasonable? Can it be interpreted that way in this case? Here's the court's reasoning on why it is not punitive and hence a tax:
The same analysis here suggests that the shared re- sponsibility payment may for constitutional purposes be considered a tax, not a penalty: First, for most Americans the amount due will be far less than the price of insurance, and, by statute, it can never be more.8	It may often be a reasonable financial decision to make the payment rather than purchase insurance, unlike the “prohibitory” financial punishment in Drexel Furniture. 259 U. S., at 37. Second, the individual mandate contains no scienter requirement. Third, the payment is collected solely by the IRS through the normal means of taxation—except that the Service is not allowed to use those means most suggestive of a punitive sanction, such as criminal prosecution. See §5000A(g)(2)....
None of this is to say that the payment is not intended to affect individual conduct. Although the payment will raise considerable revenue, it is plainly designed to expand health insurance coverage. But taxes that seek to influence conduct are nothing new. _______
8 In 2016, for example, individuals making $35,000 a year are expected to owe the IRS about $60 for any month in which they do not have health insurance. Someone with an annual income of $100,000 a year would likely owe about $200. The price of a qualifying insurance policy is projected to be around $400 per month. See D. Newman, CRS Report for Congress, Individual Mandate and Related Information Requirements Under PPACA 7, and n. 25 (2011).
Cigarettes, for example, cost more because of taxes designed to influence behavior, he points out. Scienter just means basically that what you did you knew you were doing. Guilty knowledge. It implies in criminal law that you meant to do it, it was willful, and yet you knew it was wrong. But here, he concludes, there is no breaking of a law involved, where punishment enters the picture:
While the individual mandate clearly aims to induce the purchase of health insurance, it need not be read to declare that failing to do so is unlawful. Neither the Act nor any other law attaches negative legal consequences to not buying health insurance, beyond requiring a payment to the IRS. The Government agrees with that reading, confirming that if someone chooses to pay rather than obtain health insur- ance, they have fully complied with the law.Brief for United States 60–61; Tr. of Oral Arg. 49–50 (Mar. 26, 2012).
Indeed, it is estimated that four million people each year will choose to pay the IRS rather than buy insurance. See Congressional Budget Office, supra, at 71. We would expect Congress to be troubled by that prospect if such conduct were unlawful. That Congress apparently regards such extensive failure to comply with the mandate as tolerable suggests that Congress did not think it was creating four million outlaws. It suggests instead that the shared responsibility payment merely imposes a tax citi- zens may lawfully choose to pay in lieu of buying health insurance. It's not criminal to buy cigarettes, as long as you are willing to pay the tax. Similarly, if you refuse to buy insurance even though you can afford to, there is no punishment other than paying what you are supposed to under the law, an amount that could very well be less than what you'd pay for the insurance. But what about the argument that this is a direct tax? Some are screaming that this is raising taxes. Is it? Is it a poll tax, or capitation? The court:
But that raises a logic question. If it's not OK to make people do what they don't want to do under the Commerce Clause, why is it OK to tax them for not doing what they don't want to do? What's the difference?
Three considerations allay this concern. First, and most importantly, it is abundantly clear the Constitution does not guarantee that individuals may avoid taxation through inactivity. A capitation, after all, is a tax that everyone must pay simply for existing, and capitations are expressly contemplated by the Constitution. The Court today holds that our Constitution protects us from federal regulation under the Commerce Clause so long as we abstain from the regulated activity. But from its creation, the Constitution has made no such promise with respect to taxes. See Letter from Benjamin Franklin to M. Le Roy (Nov. 13, 1789) (“Our new Constitution is now established . . . but in this world nothing can be said to be certain, except death and taxes”).
Whether the mandate can be upheld under the Commerce Clause is a question about the scope of federal authority. Its answer depends on whether Congress can exercise what all acknowledge to be the novel course of directing individuals to purchase insurance. Congress’s use of the Taxing Clause to encourage buying something is, by contrast, not new. Tax incentives already promote, for example, purchasing homes and professional educations.	See 26 U. S. C. §§163(h), 25A.	Sustaining the mandate as a tax depends only on whether Congress has properly exercised its taxing power to encourage purchasing health insurance, not whether it can. Upholding the individual mandate under the Taxing Clause thus does not recognize any new federal power. It determines that Congress has used an existing one.
Second, he writes, this isn't punitive within the strict guidelines of taxing authority. There is a line, but this doesn't cross it. Third, he notes the difference between the consequences that would result if the ACA could be enforced under the Commerce Clause as opposed to being a tax:
For those whose primary concern is freedom, here's where in the decision you find it addressed. The decision goes on to discuss the Medicaid expansion but I'll stop here. You can read a number of former attorneys general and how they view the decision in Time magazine, beginning here. And Jack Balkin, who helped write up some of the arguments the court considered on the tax powers issue, points out that this case was always about the tax. And you might find it of interest to read what Judge Richard Posner wrote about the decision, since he is the judge who just tossed out Apple and Motorola's patent dispute, saying neither could prove damages and it was against the public interest to give an injunction to either of them. He is viewed as a conservative, but he always thought the mandate would be approved and should be, under the Commerce Clause:
The young people who refuse to buy health insurance because they don't expect to get sick and if they do go to emergency rooms—and are billed, but just try collecting!—are free riders, like draft dodgers. They increase health costs for the rest of us.
The chief justice, echoing Justice Scalia's "broccoli" comment at the oral argument, rejected (as did the four dissenters, and so that is now the view of a majority of the justices) the Commerce Clause ground for the mandate, saying that to accept that ground would mean that "Congress could address the diet problem by ordering everyone to buy vegetables." This argument, reassuring though it is to our obese population, confuses separate constitutional provisions. The Commerce Clause would empower Congress to order everyone to buy vegetables, because the market for most vegetables is interstate, but the "liberty" protected against the federal government by the Fifth Amendment would doubtless be interpreted to forbid such an imposition, just as it would be interpreted to forbid a federal law requiring everyone to be in bed with the lights out by 10 p.m. in order to economize on the use of electricity and, by doing so, reduce carbon emissions from electrical generating plants.
I am surprised, finally, by the lifelessness of the joint dissenting opinion. As you can see, whatever one's politics, thinking persons can still think, if they just decide to.
I hope this is helpful to you. I'm not a lawyer, as you know, but I am a paralegal. So legalese is not a foreign language to me, and if this makes it easier for you to understand the decision, I'm really glad. If you see errors, let me know. Everyone makes errors, and I'm no exception, but this is my best effort. And yes, I know people call the ACA "ObamaCare" but it seems rude to me since it was coined to speak against the bill, so I prefer not to call it that. Update: There is now some vaguely sourced (law clerks, secretaries) reports that Chief Justice Roberts did in fact switch his vote, originally being on the side of striking down the law. And here are some more reactions from legal scholars, including Lawrence Tribe, who taught law to both President Obama and Chief Justice Roberts, and who predicted the Supreme Court would uphold the law. And here's some indication that it was, in fact, the arguments [PDF] at the hearing of the government’s lawyer, Solicitor General Donald Verrilli, that ultimately resonated and prevailed. For example, under questioning Verilli said this: JUSTICE SCALIA: But fees, you know, license fees, fees for a hunting license, everybody knows those are taxes. I mean, I don't think there is as much of a difference between a fee and a tax as there is between a	penalty and a tax.
GENERAL VERRILLI: And that, and -- and I
think in terms of the tax power, I think it's useful to separate this into two questions. One is a question of characterization. Can this be characterized as a tax; and second, is it a constitutional exercise of the
With respect to the question of characterization, the -- this is -- in the Internal Revenue Code, it is administered by the IRS, it is paid on your Form 1040 on April 15th, I think -
JUSTICE GINSBURG: But yesterday you told me -- you listed a number of penalties that are enforced through the tax code that are not taxes and they are not penalties related to taxes. GENERAL VERRILLI: They may still be exercise of the tax -- exercises of the taxing power, Justice Ginsburg, as this is, and I think there isn't a case in which the Court has, to my mind, suggested
anything that bears this many indicia of a tax can't be considered as an exercise of the taxing power. In fact, it seems to me the License Tax Cases point you in the opposite direction. And beyond that your -- it seems to me the right way to think about this question is whether it is capable of being
understood as an exercise of the tax -
GENERAL VERRILLI: Well, Justice Scalia, what the -- two things about that. First, as it seems to me, what matters is what power Congress was exercising. And they were -- and I think it's clear that the -- they were exercising the tax power as well as -
GENERAL VERRILLI: What the president said -
Emphasis mine. Justice Kagan then asked for more clarification:
From the transcript, it's apparent that the argument that the court eventually adopted was not its invention; Verrilli, who for some reason never gets full credit, it seems, actually solidly placed it before the court himself. One can't help but recall that President Obama did teach Constitutional Law. By the way, here's a map of where the uninsured in America live. And finally, look how many of the so-called experts called this one completely wrong. That's been my experience with "experts" all the time I've been doing Groklaw and hence paying attention to outcomes. So, what can we learn? Read it for yourself. Never go by what some "expert" tells you. They might be pushing an agenda (did that mean-spirited, ad hominem video of Verrilli pausing repeatedly in oral argument persuade you that he was incompetent? -- and yet he prevailed), they might be unqualified, they might be right or wrong, but you'll never know unless you read the original materials yourself. That's exactly why I take the time to always make them available to you. Never think that you can't understand something if you make the necessary effort or that relying on what others describe is necessarily reliable. You can see from this incident that it could be profoundly misleading. There is a difference between propaganda and information. You might find this book by economist Albert O. Hirschman of interest, The Rhetoric of Reaction:
Perversity, Futility, Jeopardy, highlighted and described by Atul Gawande in The New Yorker: He examined the structure of arguments—in the eighteenth century, against expansions of basic rights, such as freedom of speech, thought, and religion; in the nineteenth century, against widening the range of citizens who could vote and participate in government; and, in the twentieth century, against government-assured minimal levels of education, economic well-being, and security. In each instance, the reforms aimed to address deep, pressing, and complex societal problems—wicked problems, as we might call them. The reforms pursued straightforward goals but required inherently complicated, difficult-to-explain means of implementation. And, in each instance, Hirschman observed, reactionary argument took three basic forms: perversity, futility, and jeopardy. It seems even the propaganda is nothing new. Update 2: And speaking of propaganda, there is a new unnamed source claiming, via an article by Paul Campos, professor of law at the University of Colorado, in Slate, that the earlier Jan Crawford CBS News piece was exactly that, propaganda by her unnamed sources:My source insists that “most of the material in the first three quarters of the joint dissent was drafted in Chief Justice Roberts’ chambers in April and May.” Only the last portion of what eventually became the joint dissent was drafted without any participation by the chief justice.
This source insists that the claim that the joint dissent was drafted from scratch in June is flatly untrue. Furthermore, the source characterizes claims by Crawford’s sources that “the fact that the joint dissent doesn’t mention [sic] Roberts’ majority … was a signal the conservatives no longer wished to engage in debate with him” as “pure propagandistic spin,” meant to explain away the awkward fact that while the first 46 pages of the joint dissent never even mention Roberts’ opinion for the court (this is surely the first time in the court’s history that a dissent has gone on for 13,000 words before getting around to mentioning that it is, in fact, dissenting), the last 19 pages do so repeatedly. So, dueling anonymous sources. Who to believe? How is one to tell? How about nobody, and just close the chapter until someone who actually does know and is authorized to speak does so on the record.