Obamacare is a Tax: Supreme Court Rewrites Health Care Reform In Order to Save It

Today’s baby-splitting decision rewrites the Affordable Care Act in order to save it. It’s certainly gratifying that a majority rejected the government’s dangerous assertion of power to require people to engage in economic activity in order to then regulate that activity. That vindicates everything that we who have been leading the constitutional challenge have been saying: The government cannot regulate inactivity. It cannot, as Chief Justice Roberts put it, regulate mere existence. 

Justifying the individual mandate under the taxing power, however, in no way rehabilitates the government’s constitutional excesses. As Justice Kennedy said in summarizing his four-justice dissent from the bench, “Structure means liberty.” If Congress can slip the Constitution’s structural limits simply by “taxing” anything it doesn’t like, its power is no more limited than would it be had it done so under the Commerce Clause. While imposing new taxes may be politically unpopular and therefore harder to do than creating new regulations, that political check does not obviate constitutional ones — and in any event, Congress avoided even that political gauntlet here by explicitly structuring the individual mandate as a commercial regulation.

Nor does the Court vindicate its constitutional sleight-of-hand by rewriting the Medicaid expansion to tie only new federal funding to an acceptance of burdensome and fundamentally transformative regulations. While correct on its face — and a good exposition of the spending power and what strings the federal government can attach to its funds — that analysis is relevant to a hypothetical statute, not the one that Congress actually passed. Moreover, allowing states to opt out of the new Medicaid regime while leaving the rest of Obamacare in place throws the insurance market into disarray, increases costs to individuals, and gives states a different Hobson’s choice — different but no less tragic than the one it previously faced. As Justice Kennedy wrote in dissent, while purporting to apply judicial modesty or restraint, the Court’s rewriting of the law is anything but restrained or modest.

In short, we have reaped the fruits of two poisonous trees of constitutional jurisprudence: On the one (liberal activist) hand, there are no judicially administrable limits on federal power. On the other (conservative pacifist) one, we must defer to Congress and presume (or construe) its legislation to be constitutional. It is that tired old debate that produces the Frankenstein’s monster of today’s ruling. What judges should be doing instead is applying the Constitution, no matter whether that leads to upholding or striking down legislation. And a correct application of the Constitution inevitably rests on the Madisonian principles of ordered liberty and limited government that the document embodies.

In any event, the ball now returns to the people, who opposed Obamacare all along, and whence all legitimate power originates. It is ultimately they who must decide — or not — to rein in the out-of-control government whose unconstitutional actions have taken us to the brink of economic disaster.

This post originally appeared on the Cato Institute's Cato@Liberty blog.

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Ilya Shapiro

Ilya Shapiro is a senior fellow in constitutional studies at the Cato Institute and editor-in-chief of the Cato Supreme Court Review. Before joining Cato, he was a special assistant/advisor to the Multi-National Force in Iraq on rule of law issues and practiced international, political, commercial, and antitrust litigation at Patton Boggs and Cleary Gottlieb. Shapiro has contributed to a variety of academic, popular, and professional publications, including the Wall Street Journal, Harvard Journal of Law & Public Policy, L.A. Times, USA Today, Washington Times, Legal Times, Weekly Standard, and National Review Online, and from 2004 to 2007 wrote the "Dispatches from Purple America" column for TCS Daily.com.

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