06.28.2012 1

What the Supreme Court did today

Justices of the Supreme Court of the United StatesBy Nathan Mehrens — Today the U.S. Supreme Court in an opinion by Chief Justice Roberts held that the individual mandate provision in Obamacare, i.e., the requirement for most Americans to purchase health insurance or pay money to the IRS, is a tax that was properly applied by Congress.

The Court held that this payment for not having health insurance was not a “penalty” because it does not punish the individual for an unlawful act, but is instead a use of the tax code to encourage behavior, much like other aspects of the tax code such as tax deductions and credits for certain behaviors and circumstances.

The Court did hold that the imposition of the individual mandate could not be sustained as part of Congress’ Commerce Clause powers, but at the end of the day the result is the same:  those who choose to not purchase health insurance must pay a “tax” to the federal government for exercising that right.

In a surprising move, the Court ruled 7-2 against Obamacare’s expansion of Medicaid to 133% of the Federal poverty line.  The court took issue with the way Obamacare coerces states to accept the new funding levels by threatening to cut all current Medicaid funding for states that do not comply.

Prior to this ruling, the constitutional limit on Congressional spending was only theoretical.  In South Dakota v. Dole, 483 U.S 203 (1987), the Court said that Congressional spending would be unconstitutional if it effectively coerced states into agreeing to a federal program.  In that case they ruled that Congress had not gone that far.

But this is the first case where the Supreme Court has drawn a line in the sand and told Congress that their actions constitute unconstitutional coercion of the states.  Says Chief Justice Roberts,

In this case, the financial “inducement” Congress has chosen is much more than “relatively mild encouragement”—it is a gun to the head.

The conservative justices on the bench (Scalia, Kennedy, Thomas, and Alito) would have thrown out Obamacare in its entirety solely on this issue.  But the Chief Justice, along with Ginsburg, Breyer, Sotomayor, and Kagan, merely severed the part of Obamacare that threatens withholding current funds to states that do not agree to expansion.

Nathan Paul Mehrens is counsel for Americans for Limited Government and previously served in the U.S. Department of Labor under President George W. Bush.

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