Parsing the Supreme Court’s Decision

In terms of public policy, the Supreme Court’s 5:4 decision to uphold the bulk of the Patient Protection and Affordable Care Act (PPACA) is an enormous victory for President Obama and the 111th Congress that enacted it. Politically, it may be a wash—for Obama and Democrats, it’s a relief to have the High Court’s seal of approval vindicating their signature accomplishment. For congressional Republicans, it strengthens their resolve and sharpens their message: the only way to get rid of Obamacare is to elect us so that we can repeal it. It puts Romney in the awkward position of raising campaign contributions by vowing to repeal a law based on the very similar one he touted—on camera, individual mandate and all–while he was governor of Massachusetts. Expect Obama and congressional Republicans to keep talking about the issue while Romney and congressional Democrats—who lost their majority in part because of PPACA’s unpopularity—to steer clear.

The expansion and contraction of the Commerce Clause
Beyond the immediate policy and political implications, it is the Court’s constitutional interpretation that merits closer attention. Chief Justice Roberts assigned himself the task of writing the majority opinion so that he could limit its scope. He emphatically rejects the Commerce Clause (Art. I, sec. 8, cl. 3) as the basis for Congress’s action even though it was the crux of the Solicitor General’s argument and buying health insurance is surely commerce. Instead, his opinion relies on Art. I, sec. 8, cl. 1, Congress’s power to “lay and collect taxes,” as the constitutional justification for the PPACA.

Since the end of the New Deal era, the Supreme Court has read the Commerce Clause very expansively. For example, a 1941 case unanimously upheld the Fair Labor Standards Act regulating minimum wage and maximum hour restrictions on the basis of the Commerce Clause. In 1942, a farmer growing wheat for his own use above his Agricultural Adjustment Act allotment was penalized and the action was upheld by a unanimous Court that reasoned the wheat he didn’t sell removed it from “the stream of commerce,” so Congress was justified in its application of the Commerce Clause. In a landmark 1964 desegregation case, the justices affirmed the Civil Rights Act’s applicability to local public accommodations based on the “flow of goods and people” that constituted commerce–another unanimous decision. For decades, the Court gave Congress the green light to use the Commerce Clause to exercise federal power provided there was some plausible way it could be linked to commerce.

In 1994, that changed when the Court said “no” to Congress’s exercise of its power to “regulate commerce…among the several states.” The question was whether the 1990 Gun-Free School Zones Act was a legitimate exercise of the Commerce Clause. A narrowly divided Court said that gun possession in a school zone could not be considered economic activity. Moreover, the law was a criminal statute unrelated to commerce, and therefore a power reserved to the states. Chief Justice Rehnquist wrote the majority opinion and was joined by O’Connor, Scalia, Thomas, and notably, Kennedy. As one would expect, Ginsburg and Breyer were among the dissenters, along with Stevens and Souter, who saw a broader role for Congress in keeping with years of precedent.

States’ Rights and Medicaid
The Attorneys General from 26 states that brought suit against the PPACA did not go home empty- handed. Justices Breyer and Kagan joined the five conservative members of the Court in overturning the provision that would have booted states from getting any Medicaid dollars if they declined to expand eligibility for coverage. Claiming that the provision was coercive and “put a gun to the head” of the states, the Chief Justice staked out familiar conservative territory in chiding Congress for overreaching. If some states choose not to participate, many of their uninsured residents will remain so, but the choice must remain voluntary.

Just as the Arizona immigration decision made clear that a state could not interfere with an area of law where federal legislation “preempted” state action, the PPACA decision clarifies that states, not Congress, are preeminent in exercising the traditional “police powers” of protecting the safety, health, and welfare of the people.

The bottom line
The individual mandate that Americans must buy health insurance or pay a fine is a constitutional exercise of Congress’s power to tax. Congress can regulate commerce, but it can’t compel it. Congress can attach strings to a new program, but it can’t renege on its promise to states by stripping them of funds to which they were already entitled under the existing Medicaid program. The PPACA decision’s rejection of the Commerce Clause means that the green light is now yellow at best, if not red. Congress may have won this battle, but it might still lose the war.