567 U.S. 519 (2012)
In 2010 Congress enacted the Patient Protection and Affordable Care Act containing hundreds of provisions across ten titles.1 The Act requires most Americans to maintain minimum essential health insurance coverage beginning in 2014 or else make a shared responsibility payment calculated as a percentage of household income subject to a floor and ceiling.2 The Act also expands Medicaid by requiring participating states to cover adults with incomes up to 133 percent of the federal poverty level while increasing federal funding but threatening loss of all Medicaid funds for noncompliance.3
On the day the President signed the Act Florida and twelve other states filed suit in the United States District Court for the Northern District of Florida challenging the individual mandate provisions under Article I.4 The original plaintiffs were later joined by eighteen additional states several individuals and the National Federation of Independent Business.5
The District Court held that the individual mandate exceeded congressional power and could not be severed from the remainder of the Act so it struck down the entire statute.6 The Court of Appeals for the Eleventh Circuit affirmed that the individual mandate exceeded congressional power but held the provision severable from the rest of the Act while unanimously upholding the Medicaid expansion.7
Other courts of appeals reached conflicting results on the mandate with the Sixth Circuit and the D.C. Circuit upholding it under the commerce power and the Fourth Circuit applying the Anti-Injunction Act to bar review.8 The Supreme Court granted certiorari to review the Eleventh Circuit judgment on both the individual mandate and the Medicaid expansion and appointed amici curiae to address severability and the Anti-Injunction Act.9
The penalty for noncompliance with the individual mandate first becomes enforceable in 2014.10 The present suit seeks to restrain its future collection.11 The Act describes the payment as a penalty rather than a tax.12 It directs that the payment be assessed and collected in the same manner as taxes but bars the IRS from using criminal prosecutions or levies to enforce it.13
Whether the Anti-Injunction Act bars suits challenging the individual mandate?14
The Anti-Injunction Act provides that no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person.15 The Act applies only to taxes and does not bar challenges to penalties that Congress has labeled as such and directed to be collected in a limited manner without using criminal prosecutions or levies.16
No. The Affordable Care Act describes the shared responsibility payment as a penalty rather than a tax.17 It directs that the payment be assessed and collected in the same manner as taxes but bars the IRS from using criminal prosecutions or levies.18 The penalty first becomes enforceable in 2014.19 The present suit seeks to restrain its future collection.
Because Congress chose the label penalty and placed the provision outside Subchapter 68B the Anti-Injunction Act does not apply to this suit.20
The Anti-Injunction Act does not bar the suit so the Court may proceed to the merits of the constitutional challenges.21
Whether Congress has the power under the Commerce Clause to enact the individual mandate?22
The Commerce Clause authorizes Congress to regulate the channels of interstate commerce persons or things in interstate commerce and those activities that substantially affect interstate commerce.23 The power presupposes the existence of commercial activity to be regulated and does not extend to compelling individuals not engaged in commerce to purchase an unwanted product.24
No. The individual mandate requires most Americans to maintain minimum essential health insurance coverage beginning in 2014 or else make a shared responsibility payment.25 The mandate does not regulate existing commercial activity.26 It instead compels individuals to become active in commerce by purchasing insurance on the ground that their failure to do so affects interstate commerce.27 The established facts show that the mandate primarily affects healthy often young adults.28
Their commercial inactivity rather than activity is its defining feature.29 The Government's theory would permit Congress to regulate inactivity that substantially affects interstate commerce.30
Congress lacks power under the Commerce Clause to enact the individual mandate.31
Related opinions on this issue
I agree with the Chief Justice that the minimum coverage provision is a valid exercise of Congress’s taxing power.32 I therefore concur in the judgment in part.33 I dissent, however, from the Chief Justice's conclusion that the minimum coverage provision is not a valid exercise of the commerce power.34
The provision is a valid regulation of interstate commerce.35 The uninsured, by definition, are active in the health care market.36 They consume health care services, and they pay for those services out of pocket or shift the cost to others.37
Their economic activity substantially affects interstate commerce.38 The minimum coverage provision is a rational means of regulating that activity.39
Joined by Justice Kennedy, Justice Thomas, And Justice Alito
The individual mandate is not a valid exercise of Congress's power under the Commerce Clause.40 The power to regulate commerce presupposes the existence of commerce, not the absence of it.41 The individual mandate compels individuals to become active in commerce by purchasing a product.42 That is not regulation of commerce; it is creation of commerce.43
I join the dissenting opinion of Justice Scalia, Justice Kennedy, Justice Thomas, and Justice Alito.44 I write separately to note that the Court's continuing expansion of the Commerce Clause is inconsistent with the original meaning of the Constitution. I adhere to my view that the very notion of a substantial effects test under the Commerce Clause is inconsistent with the original understanding of Congress's powers and with this Court's early Commerce Clause cases.45
The Government's unprecedented claim in this suit that it may regulate not only economic activity but also inactivity that substantially affects interstate commerce is a case in point.46
Whether Congress has the power under the Taxing Clause to enact the individual mandate?47
Congress possesses the power to lay and collect taxes duties imposts and excises.48 An exaction may be sustained as a tax even if labeled a penalty.49 This is true when it is paid into the Treasury by taxpayers when they file returns.50 The amount is determined by factors such as taxable income.51 It produces revenue for the Government.52 It lacks a scienter requirement.53 It is collected by the IRS through normal means of taxation without punitive enforcement tools.54
Yes. The shared responsibility payment is paid into the Treasury by taxpayers when they file returns.55 It does not apply to those below the filing threshold.56 It is determined by taxable income number of dependents and filing status.57
It produces revenue expected to reach about four billion dollars per year by 2017.58 It lacks a scienter requirement. It is collected by the IRS except that criminal prosecutions and levies are barred.59 These practical characteristics allow the payment to be viewed as a tax rather than a penalty for constitutional purposes.60
The individual mandate may reasonably be characterized as a tax and is therefore within Congress's power under the Taxing Clause.61
Whether the Medicaid expansion exceeds Congress's authority under the Spending Clause by coercing the states?62
Congress may offer funds to the States and condition those offers on compliance with specified conditions under the Spending Clause.63 When the financial inducement turns into compulsion such as by threatening to withhold all existing Medicaid funds that constitute over ten percent of most States total revenue the condition becomes unconstitutionally coercive.64
Yes. The Affordable Care Act expands Medicaid by requiring participating states to cover adults with incomes up to 133 percent of the federal poverty level while increasing federal funding but threatening loss of all Medicaid funds for noncompliance.65 Federal funds received through Medicaid have become a substantial part of state budgets now constituting over 10 percent of most States total revenue.66 The threat to withhold all existing Medicaid funding unless States accept the expansion constitutes compulsion rather than a permissible condition.67
The Medicaid expansion as enacted exceeds Congress's authority under the Spending Clause because it coerces the states.68
Related opinions on this issue
I also agree that the Medicaid expansion as enacted by Congress is unconstitutional.69 The threat to withhold all of a State's existing Medicaid funding unless the State accepts the expansion is a penalty, not a permissible condition.70 I therefore concur in the judgment in part on that issue as well.71
Whether the individual mandate is severable from the remainder of the Affordable Care Act?72
When a provision of a statute is held unconstitutional the remainder may be preserved if Congress would have enacted the statute without the invalid provision and if the remainder is capable of functioning independently.73
Yes. The Eleventh Circuit held the individual mandate severable from the remainder of the Act.74 No party supported the District Court's contrary conclusion that the entire Act must fall.75 The established facts show that the mandate and the Medicaid expansion are distinct provisions.76 The Court upheld the mandate as a tax while addressing the Medicaid coercion separately without striking down the entire statute.77
The individual mandate is severable from the remainder of the Affordable Care Act.78