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The Implications

June 29, 2012 9:41 AM

Erwin Chemerinsky
Dean and Distinguished Professor of Law,
University of California, Irvine School of Law

Now that the anticipation is over and the decision has been read (all 193 pages), attention must focus on how, if at all, the Court's decision has changed the law. There were three major conclusions to the Court's decision.

First, the individual mandate is within the scope of Congress taxing power. This, unquestionably, is the most important aspect of the Court's decision and it doesn't change the law at all. The Court's conclusion that the individual mandate is a tax breaks no new ground. The Supreme Court previously had said that the label used in not determinative. Nor is it at all surprising that this was treated as a tax. It is in every way functionally a tax: it is collected by the IRS, it is calculated by a percentage of income (or a flat rate), and it generates revenue for the federal government. Not one federal tax has been declared unconstitutional since 1937 and so upholding this one is not remarkable in terms of the law.

Second, five justices said that the individual mandate is outside the scope of the commerce power. From one perspective, this is just dicta because the Court upheld the individual mandate on other grounds. But Chief Justice Roberts said that he needed to decide this in order to justify interpreting the individual mandate as a tax. That seems a dubious justification for his addressing the commerce power or making his discussion a holding. But putting that aside, five justices said that Congress cannot regulate inactivity. This seems highly questionable as applied here because everyone is engaged in activity with regard to health care; they are either purchasing health insurance or self-insuring. Congress was regulating the latter. Still, it is not clear how much this will matter in the future since it is rare for Congress to require activity.

The third holding is the most important in changing the law: the Supreme Court said that the burden on the states with regard to Medicaid funding exceeded the scope of Congress's spending power because it was too coercive. This is the first time in American history that conditions on federal spending have been declared unconstitutional as being unduly coercive. Many federal spending programs impose conditions on states taking federal money. There likely will be many challenges after the Court's decision. But the Court did not give any criteria as to how to decide when conditions are so coercive as to violate the Constitution.

Overall, the decision must be seen as following 75 years of Supreme Court decisions upholding federal social welfare legislation. If the Court had done anything else, that would have been a very dramatic change in the law.

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FEATURED DISCUSSION ARCHIVE:


Obamacare Decision: Reactions, July 2012
Law School Faculty Diversity, May-June 2012
Class Actions, May 2012
Constitutionality of Individual Mandate, March 2012
Human Rights and International Law, February-March 2012
The constitutionality of President Obama's recess appointments, January 2012
Do caps on medical malpractice damages hurt consumers?, December 2011
Trial Lawyers Inc.: State Attorneys General, October 2011
Wal-Mart v. Dukes, April 2011
Kagan Supreme Court nomination, May-June 2010
Election roundtable, November-December 2006
Who's the boss, September 2006
Medical judgement, July 2006
Lawyer Licensing, May 2006
Contingent claims, April 2006
Smoking guns, July 2004

Isaac Gorodetski
Project Manager,
Center for Legal Policy at the
Manhattan Institute
igorodetski@manhattan-institute.org

Katherine Lazarski
Press Officer,
Manhattan Institute
klazarski@manhattan-institute.org

Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.