The Supreme Court decided Monday to hear the appeal of various states seeking to reverse a lower court ruling that the individual mandate provision of the Affordable Care Act is unconstitutional. As with the abortion case to be heard this week, the case will put Chief Justice John Roberts at a critical crossroads as the new swing vote on the Court. However, the Obamacare decision (as I discussed earlier in a column) is a bill coming due for Roberts on his reasoning in the first Obamacare decision.
The United States Court of Appeals for the Fifth Circuit upheld the district court ruling on the individual mandate but sent the rest back down with instructions on whether and how it can be struck down.
As I noted earlier, the seeds for this decision were planted long before the challenge was filed by Texas and 19 other states. From the outset, the constitutionality of the ACA was questioned by some of us due to the inclusion of the “individual mandate” which required all Americans to purchase health insurance. That provision immediately raised objections under federalism principles. Congress was penalizing individuals and states for the failure to buy a product and then regulating that failure under the claim of Interstate Commerce.
A majority of justices viewed that scheme as a violation of states rights. However, the Obama administration and the Democrats argued that the individual mandate was the thumping heart of the ACA and it could not live without it. This argument was repeated before the Supreme Court, which voted 5-4 to preserve the individual mandate as both constitutional and essential to the ACA.
The individual mandate, and the ACA as a whole, were only saved by Roberts effectively switching sides mid-opinion. After agreeing with the majority on violation of federalism guarantees, Roberts declared the individual mandate was still constitutional as an exercise of Congress’ taxing authority. The reason is that the penalty could be viewed as a type of tax.
Roberts’ tax rationale came as a surprise to many of us, since none of the original parties were arguing that the mandate was a tax. Indeed, one of the drafters, Jonathan Gruber, a Massachusetts Institute of Technology economist, admitted later that “this bill was written in a tortured way to make sure CBO did not score the mandate as taxes.” Roberts’ rationale would prove too clever by half when the penalty was eliminated in 2017 in a tax cut bill.