Case brief summary
The federal government only has powers listed in the Constitution. Congress can tax and spend for the public good, but cannot force people to buy a product or threaten to cut a state's existing funding to force new programs.
Facts
A 2010 health law required most people to buy insurance or pay a penalty. It also required states to expand Medicaid for more low income adults or lose all their existing Medicaid funding.
Procedural history
States, individuals, and a business group sued. A trial court struck down the mandate. An appeals court agreed but kept the rest of the law, and upheld the Medicaid expansion. The Supreme Court took the case.
Issue
Can Congress require people to buy insurance or pay a penalty, and can it threaten states with losing all Medicaid funding if they refuse to expand the program?
Holding
The insurance requirement is valid as a tax, though not as trade regulation. Threatening to cut all existing Medicaid funding is unconstitutional, but only that threat must be removed, not the whole law.
Reasoning
The power to regulate commerce assumes there is already some activity to regulate, and the mandate instead forces people who are doing nothing to enter commerce, which would give Congress almost unlimited power over daily life. However, the payment people owe for not having insurance looks and functions like a tax since it goes to the IRS, is based on income, and does not criminally punish anyone, so it can be upheld under Congress's taxing power using the IRS and tax forms. For the Medicaid expansion, Congress can offer new money with new strings attached, but threatening to pull all existing Medicaid funding, over ten percent of most state budgets, if a state does not accept a dramatically different and larger program is too coercive and crosses the line from persuasion into force, so only the threat to the old funding must be removed, leaving the rest of the law standing.
Opinions
Majority (Roberts): The mandate fails under the Commerce Clause, which only lets Congress regulate existing activity, but survives because it can reasonably be read as a tax within Congress's taxing power.
Concurrences (Ginsburg, joined partly by Sotomayor, Breyer, and Kagan): Ginsburg would have also upheld the mandate under the Commerce Clause and disagreed that the Medicaid funding threat was unconstitutional, but agreed on the remedy.
Dissent (Scalia, Kennedy, Thomas, and Alito, joint opinion): The entire health care law should fall because neither the Commerce Clause nor the taxing power supports the mandate, and the Medicaid expansion is also unconstitutional.
Dissent (Thomas): Separately argued that the substantial effects test used in Commerce Clause cases goes too far and should be reconsidered entirely.