NFIB v. Sebelius , U.S., No. 11-393,
Key Holding: U.S. Supreme Court holds constitutional Patient
Protection and Affordable Care Act's individual mandate, saying Congress was
authorized under the U.S. Constitution's taxing and spending clause.
Key Impact: Federal government and states may continue to implement
measures pursuant to PPACA.
By Mary Anne Pazanowski and Michelle Amber
In a 5-4 decision,
the U.S. Supreme Court June 28 declared constitutional a key provision of the
federal health reform law, known as the individual mandate or minimum coverage
provision, which requires virtually all U.S. citizens to obtain health care
insurance or pay a penalty (NFIB v.
Sebelius , U.S., No. 11-393, 6/28/12).
Chief Justice John G. Roberts cast the deciding vote to uphold the validity
of the Patient Protection and Affordable Care Act's controversial provision, set
to go into effect in 2014. The ruling, though, rested on somewhat unexpected
grounds: Congress's power under the U.S. Constitution's taxing and spending
While the “most straightforward reading” of the mandate is that it commands
individuals to buy insurance, it also can be read merely as establishing a
condition--lack of health insurance--that triggers a tax, Roberts said.
“Under that theory,” he wrote, “the mandate is not a legal command to buy
insurance. Rather it makes going without insurance just another thing the
Government taxes, like buying gasoline or earning income. And if the mandate is
in effect just a tax hike on certain taxpayers who do not have health insurance,
it may be within Congress's constitutional power to tax.”
Justice Ruth Bader Ginsburg, joined by Justices Stephen G. Breyer, Sonia M.
Sotomayor, and Elena Kagan, wrote an opinion agreeing with Roberts in upholding
the mandate on tax grounds, but they would have gone further and also found the
provision valid under the commerce clause. Opponents had argued that Congress
could not use the commerce clause to force individuals to engage in commercial
activity by requiring them to purchase a commodity or service.
Justices Anthony M. Kennedy, Antonin Scalia, Clarence Thomas, and Samuel A.
Alito dissented. Writing for the four, Kennedy said Congress exceeded federal
power in enacting PPACA when it mandated the purchase of health insurance and
threatened states with the loss of Medicaid funds if they refused to expand
Medicaid in compliance with the health reform law. The “entire statute is
inoperative,” Kennedy wrote for the dissenters.
In the other major holding, the majority left open a few questions about
PPACA's Medicaid expansion provision. Roberts, Breyer, and Kagan would have held
that the provision violates the Constitution by threatening states with the loss
of existing funding if they decline to comply with the expansion. Ginsburg and
Sotomayor would have upheld the provision in its entirety.
Taken together, the two opinions appear to hold that the Medicaid provision
is constitutional, but only if the threat to the states for noncompliance is
limited to loss of new funds provided under PPACA. The administration cannot
take away from the states all existing Medicaid funds, the majority of justices
The court also held that the tax anti-injunction act (AIA), 26 U.S.C. §
7421(a), did not bar its consideration of the case on the merits. This statute
strips courts of jurisdiction to hear pre-enforcement challenges to monetary
extractions. Roberts wrote there was no reason to believe Congress, which
characterized the payment due for noncompliance with the mandate as a “penalty,”
intended it to be treated as a tax for purposes of the AIA.
Since the majority upheld the individual mandate, it did not reach the
question of whether portions of PPACA could be severed and ruled on
independently from the rest. The dissenters would have invalidated the entire
The case stemmed from three separate petitions for review of a decision by
the U.S. Court of Appeals for the Eleventh Circuit. In a split opinion, the
appeals court held the mandate unconstitutional. The commerce clause did not
give Congress authority to require individuals to purchase products they did not
want, the appeals court said.
The Eleventh Circuit also determined that the individual mandate could not
survive as an exercise of Congress's taxing power. Congress repeatedly referred
to the mandate as imposing a “penalty,” not a “tax,” for noncompliance. Courts
uniformly held that the penalty could not be considered a tax for constitutional
purposes, the Eleventh Circuit observed.
The court also found PPACA's Medicaid expansion provision constitutional. It
said Congress has authority under the spending clause to place conditions on
outlays of federal funds and that the condition in question was not unduly
Finally, the court held that the individual mandate, though unconstitutional,
could be separated from the remainder of PPACA, thus saving the rest of the
The parties challenging the law--26 states, led by Florida--and the National
Federation of Independent Business--an advocacy group for small
businesses--filed separate petitions arguing against the Eleventh Circuit's
severability ruling. The states also asked the court to review the Medicaid
The Obama administration filed its own petition requesting the court to
review the constitutional issue and determine whether Congress had authority to
enact the individual mandate.
The high court granted all three petitions (29 HRR 1237, 11/21/11) and heard
oral arguments over three days in late March (30 HRR 344, 4/2/12).
Groups representing employers expressed disappointment with the Supreme
Court's June 28 decision.
The National Association of Manufacturers said the ruling does not end the
association's efforts to lower health care costs.
“Since the beginning of the health care debate, manufacturers have
consistently made it clear that lowering costs should be the central focus of
any health care reform effort,” said NAM President and Chief Executive Officer
Noting that 97 percent of manufacturers offer “generous health benefits to
their employees,” he said “skyrocketing health care costs represent the single
biggest obstacle for them continuing to do so. It is clear that the Affordable
Care Act did not address this issue and, in fact, will make matters worse.”
Timmons said there is still a lot of work to be done to reduce health care
costs. “Escalating health care costs are job killers, forcing manufacturers to
pay more in premiums rather than investing in their business and creating jobs,”
The NAM president called on Congress to repeal PPACA and replace it with
reforms that benefit manufacturers and their employees. Implementation of legal
liability reform and enhancement of competition by allowing insurance to be
purchased across state lines, as well as increasing the focus on preventive
medicine are all “actions that would address the high health care costs that
harm manufacturers across the United States.”
U.S. Chamber of Commerce President and Chief Executive Officer Thomas J.
Donohue said the decision does not change “the reality that the health care law
is fundamentally flawed. Left unchanged, it will cost many Americans their
employer-based health insurance, undermine job creation, and raise health care
costs for all,” he contended.
Donohue said it is “imperative that policymakers and the business community
now work together to develop and support genuine reforms that control costs,
improve access, ensure quality, and promote wellness.” He added that the chamber
and the business community “are ready to go to work to enact true health care
Union leaders, on the other hand, cheered the decision upholding the
comprehensive national health care law.
AFL-CIO President Richard Trumka said the country now can move forward with
implementing and building upon PPACA.
“With this decision, more than 105 million Americans will continue to benefit
from the elimination of lifetime limits and the coverage of preventive services
without cost-sharing, and more than 6 million young adults will remain covered
by their parents' health care plans,” Trumka said.
The AFL-CIO president contended that PPACA is only the first step in
expanding health care coverage, improving care, and controlling costs, and the
country needs to build on PPACA, Medicare, and Medicaid to “fix our broken
health system and advance along the path to a more equitable and cost-effective
National Nurses United, which represents 175,000 registered nurses across the
country, agreed the decision “should not be seen as the end of the efforts by
health care activists for a permanent fix of our broken healthcare system.”
The union plans to step up its campaign for a “universal program based on
patient need, not on profits, or ability to pay. That's Medicare for all,” NNU
Co-President Jean Ross, said in a June 28 statement.
According to the union, the Affordable Care Act still leaves some 27 million
people without health coverage, does little to constrain costs, or to stop
denials of needed care by insurance companies “because they don't want to pay
The union's members who see patients every day say the health care crisis is
greater than ever as the economic crisis in this nation persists, according to
NNU Co-President Karen Higgins. Because of the economy, “we will continue to see
a steady stream of employers dropping health coverage or shift more and more
costs to their employees,” she contended.
Text of the opinion is available at http://op.bna.com/hl.nsf/r?Open=mapi-8vpkj5.