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The Supreme Court and Obamacare: Plain-English Answers to 6 Common Questions

After reading coverage and commentary concerning the Supreme Court’s health care decision for nearly 14 straight hours, I learned two things. 

First, I really need to rein in my caffeine habit. 

Second, there is a great deal of confusion surrounding a variety of the Supreme Court’s holdings. In order to help address this issue, I have compiled answers to common questions I encountered in my reading yesterday. This list is by no means exhaustive (there are definitely more than six questions concerning the decision out there, trust me) but it sets out to address some fundamental issues.

I am happy to answer other questions concerning the Supreme Court’s decision. Just ask them below in the comments. I will do my best to answer within the comments but if I feel I am too limited on space and a comment gets enough Mics, I will add it to the body of the article, so feel free to share this and crowd-source support for your questions!

Without further ado…

Common Questions About The Supreme Court’s Health Care Ruling

1. Why is the mandate constitutional under Congress’ “taxing power” but not under the “commerce power?”

Congress has a number of “enumerated powers,” powers that the Constitution bestows upon Congress to exercise. These powers have varying levels of breadth and reach; some are more limited than others. The power to raise taxes has always been construed as one of the broadest powers and is certainly far broader than the commerce power.

The commerce power only allows Congress to regulate individuals once they enter commerce. Roberts echoed the dissenters in stating that the commerce power does not allow Congress to compel someone to enter commerce in order to then be regulated. Congress’ power to tax is not so limited.

As Chief Justice Roberts pointed out in his majority opinion, “[p]ut simply, Congress may tax and spend. This grant gives the federal government considerable influence even in areas where it cannot directly regulate. The federal government may enact a tax on an activity that it cannot authorize, forbid, or otherwise control.”

Congress uses the taxing power to encourage activity all over the place. First time home-buyer? You get a reduction in taxes. Get married? Have kids? Reduction in taxes. Pursue continued education in your field? Tax credit. Donate to charity? Tax deduction.

In fact, most of the Federal Tax Code consists of a collection of tax incentives and tax subsidies to a whole variety of industries and activities. Even the dissent agreed that the question “wasn’t whether Congress had the power” to incentivize purchase of health insurance via the taxing power, “but whether it did so.”

By concluding that the mandate was actually a tax as exercised under Congress’ taxing power, the majority correctly found the tax to be constitutional.

2. Did the majority make up the “mandate-as-tax” argument? Aren’t courts not allowed to do that?

No. The government argued that the mandate was effectively a tax and therefore constitutional as an exercise of Congress’ taxing power in their briefing and at oral arguments. Moreover, the 4th Circuit came to the exact same conclusion (mandate-as-tax) when addressing the ACA in September of last year.

Although the Court didn’t invent an argument in this case, the Court was within its power to do so. Courts can reach conclusions not asked for by either party using legal reasoning not presented by either party. Such actions are within the power of the Court but are rarely exercised for a number of reasons (lawyers are generally competent enough to raise the best arguments and request the right remedies, for example).

3. If it’s a tax, isn’t the Court blocked from deciding the case by the Tax Anti-Injunction Act?

This was one of the major questions that flew under the radar for most of the health care litigation. In summary, the Tax Anti-Injunction Act (TAIA) prohibits courts from ruling on taxes that have not yet been levied. Put another way, if a tax has been passed but not enacted, the courts must wait until it is applied to determine its legality.

So why then, when the majority concluded that the mandate was a tax, was it not barred from answering the question of legality?

This is, in my opinion, the weakest part of the majority. Chief Justice Roberts effectively writes that although the mandate functions like a tax and is constitutional under the taxing power, its not a tax for purposes of the TAIA. This isn’t the most convincing argument and is generally read as a voluntary sidestep of a procedural hurdle in order to address a question. Why does the Supreme Court get to do that? Because they’re the ones wearing the robes.

Would punting the case until 2014/15 have resulted in a different outcome? Potentially. However, the majority didn’t seem willing to drag this issue out and agreed to come to a decision sooner rather than later. It’s not the most convincing argument but it is what it is.

4. Does the ACA have to go back through Congress to be updated after this ruling?

Maybe but probably not. The mandate was written similarly to a tax in terms of its enforcement in that it delegated all enforcement authority to the IRS. The IRS should be able to promulgate the rules and regulations necessary to effectively enforce the tax once its implemented (it has until 2014 to prepare).

Could the ACA head back to Congress? Absolutely. The Republican House has voted to repeal the ACA several time and has scheduled another such vote for July 9. Congress can tinker with the law as much as it wants. I don’t think there’s much of a shot that any proposed amendments will actually pass both houses but the potential is certainly there.

5. Is the Roberts majority opinion a deft conservative move that upholds the mandate while “gutting” the Commerce Clause power?

Not really. Although this view has been spreading quickly among the blogosphere, it stems more from conservatives looking for a silver lining than an actual tangible legal holding.

For starters, the sections of the majority opinion in which Chief Justice Roberts discusses the limitations of the Commerce Clause (Sections III-A, III-B, and III-D) do not have any other signatory Justices. Meaning, the opinion is just that of Chief Justice Roberts and no other judge. The liberal wing only joined with him in the sections discussing why the mandate was a tax and why the mandate-as-tax was constitutional.

So where are the rumors coming from? Well, the four dissenting judges mirrored the Chief Justice’s view in concluding that Congress did not have power to enact the individual mandate under the Commerce Clause. This suggests that future challenges to similar exercises of federal power may be met by a more unified conservative majority. Until then, the Commerce Clause language in the majority opinion is just dicta, language that is authoritative and persuasive but not legally binding.

6. Does this ruling mean Congress can now regulate whatever it wants by way of imposing taxes on it?

No. Congress’ taxing power, while broad, is not unlimited. Congress could not and cannot incentivize unconstitutional actions via taxation. For example, Congress cannot enact a tax break for people who don’t exercise their right to engage in political speech or give a deduction to individuals who don’t  vote because that would create what courts have called an “unconstitutional condition” on receiving a government benefit.

However, Congress taxation power has always been read to be very expansive. Can Congress charge you $50,000 more in taxes each year but give you a $50,000 tax break if you purchase more than a pound of broccoli a week? Probably. Why doesn’t it? For the same reason it rarely raises taxes on anything: electoral politics.

The fact of the matter is that Congress could probably enact most of the doomsday scenarios some conservatives are wailing about today or tomorrow and the health care opinion did nothing to change that. Congress has had this power for the better part of a century, if not longer. The reason we haven’t seen it is because the electorate doesn’t like it and Congress knows it.

If you stop to think about all of the tax incentives built into the code, you’ll quickly realize that Congress has been doing this forever, merely in ways the population writ-large doesn't mind as much. It's all in how you describe what Congress is doing.

Did you know, for example, that Congress taxes you for not opening a small business? It does so by way of the deductions built into the code to incentivize people to start businesses. Congress also taxes you for not contributing to your retirement account (tax deductions for IRA contributions) and for not having children (child tax credit). Does this mean there is a big-government mandate to save for retirement or to have children? Of course not. There are just tax incentives for doing so.

The debate raging around taxes-as-mandates is all about perspective. The above mentioned tax breaks are unquestionably constitutional and generally accepted as a normal fact of life, but call them a mandate to act and all of a sudden it paints a very different picture. It's all in the eye of the beholder.

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