A divided Supreme Court issued its decision upholding most provisions of the Patient Protection and Affordable Care Act (PPACA) on Thursday, June 28, 2012. As most everyone may by now be aware, the Supreme Court upheld the individual mandate of PPACA under Congress’s taxing power. While most media reports focused on the top line holding, a closer reading of the opinion reveals several important points. While President Obama’s primary legislation from the beginning of his term was upheld, the Supreme Court’s analysis and holdings offered several key limitations on the power and scope of the federal government.
Most importantly, Chief Justice Roberts joined with the four more conservative justices (forming a majority) to reject the key argument advanced by the Obama administration, namely that Congress had the power to impose the individual mandate under the Constitution’s Commerce Clause. Roberts held (and by virtue of the fact that the four dissenting justices agreed with his analysis on this point, formed a majority for the proposition) “[t]he proposition that Congress may dictate the conduct of an individual today because of prophesied future activity finds no support” in constitutional law, and, therefore, “[t]he commerce power . . . does not authorize the mandate.” (Slip Opinion at 26, 30). Chief Justice Roberts then decided that the mandate could be justified as a tax. Chief Justice Roberts (in a bit of inside baseball for constitutional lawyers) included important language making his Commerce Clause interpretation binding law by indicating that he could not have upheld PPACA under the taxing power without first deciding the commerce clause question: “Without deciding the Commerce Clause question, I would find no basis to adopt” the analysis that the individual mandate was authorized under Congress’s taxing power. (Slip Opinion at 44). Thus, Chief Justice Roberts’ Commerce Clause analysis was necessary to his decision, not dicta, and, therefore, it is binding law on the lower courts. This could have important ramifications for any future attempts by Congress to justify legislation under its Commerce Clause Power.
Second, by a 7-2 majority of the justices, the Supreme Court narrowly interpreted certain provisions related to PPACA’s Medicaid expansion. The Court’s interpretation will, as a practical matter, provide states that do not want to expand the Medicaid program with additional flexibility. Under the Court’s decision, states may choose not to expand their Medicaid programs and still continue to participate in Medicaid as it exists pre-PPACA. This holding could have significant ramifications for any number of areas in which Congress conditions funds provided to the States, from environmental programs to educational programs.
In conclusion, while PPACA was upheld for the most part, the decision was by no means a clear “victory” for the administration. A copy of the opinion is available here. A copy of our firm’s more detailed client alert about the opinion is available here.