In its landmark decision on the Affordable Care Act (ACA), the Supreme Court upheld the constitutionality of the individual mandate. As of now, beginning January 1, 2014, virtually all Americans will have to maintain a minimum level of health insurance coverage or will be assessed a penalty.
In its briefs, the government defended the mandate as a valid exercise of Congress’ Commerce Power – their rationale being that everyone will need health care at some point in their lives, and those who lack insurance drive up costs for everyone else. The Court didn’t buy this argument and found that Congress’ power to regulate commerce doesn’t extend to the power to regulate inactivity (e.g., the failure to maintain health insurance coverage).
Alternatively, the government argued the mandate was a proper under the Necessary and Proper clause of the Constitution, which grants Congress the authority to enact laws to further its other Constitutional authority. Again, the Court shot down the government’s argument saying this clause doesn’t grant independent powers to Congress – in other words, you can’t use the Necessary and Proper clause as a rationale for something for which you didn’t have authority to do.
Finally, the government argued the mandate was constitutional under Congress’ Taxing Power. Under the ACA, taxpayers who fail to have health insurance coverage will be assessed a “penalty” assessed by the Internal Revenue Service. Here, the Court agreed and upheld the mandate under Congress’ power to tax. Chief Justice Roberts in his majority opinion basically said a tax – whether you call it a penalty or a surcharge – is still a tax.
Now that the mandate has been upheld, all eyes turn to the states – and the feds – as they work to implement the health insurance exchanges. 2014 is a mere 18 months away.©2013 Drinker Biddle & Reath LLP. All Rights Reserved