By now anyone paying attention knows that Supreme Court Chief Justice John Roberts’ ruling determined the Affordable Care Act to be constitutional because the penalty that enforces the individual mandate is a tax. Less well known is that Roberts’ ruling also declared the opposite: The penalty that enforces the individual mandate is not a tax.
Roberts’ reasoning is inconsistent and strategic. It enables him to do two things he otherwise could not do in the same ruling: declare the ACA constitutional and limit congressional power under the commerce clause. Here’s how his strategic inconsistency works.
Roberts first deals with the tax question in section II of his ruling, available here [PDF]. He notes that the amicus brief commissioned by the court argues that because the penalty “functions like a tax” and is “assessed and collected in the same manner as taxes,” it is a tax. He then states that “the government disagrees” because (a) the ACA directs the Treasury Secretary “to use the same ‘methodology and procedures’ to collect the penalty that he uses to collect taxes,” and (b) the means of collection does not determine whether the penalty is a tax. Roberts concludes:
“we must accept the Government’s interpretation: [the ACA] instructs the Secretary that his authority to assess taxes includes the authority to assess penalties, but it does not equate assessable penalties to taxes for other purposes.”
Here Roberts determines the penalty is not a tax. This enables the court to rule on the case. If the penalty were a tax, the Anti-Injunction Act would forbid judicial action until after the taxes were paid — after someone had suffered an injury for which they could seek redress — and thus not until 2014.
Later, in section III-C, Roberts performs an about-face. He argues that the use of the term “penalty” is inaccurate; because the payment in question has numerous characteristics of a tax — including, ironically given the argument cited above, that it “is collected solely by the IRS through the normal means of taxation” — it must be designated a tax. Roberts concludes the ACA “is therefore constitutional, because it can reasonably be read as a tax.”
The reason for Roberts’ double-definition is clear. He defines the payment as a penalty so the court can rule on the case. He defines the payment as a tax so he can find the ACA a constitutional application of the powers of taxation rather than an unconstitutional exaction of a penalty.
The conservative dissenting justices certainly call attention to Roberts’ inconsistency. They deride his position because it presumes that “the very same textual indications that show this is not a tax under the Anti-Injunction Act show that it is a tax under the Constitution. That carries verbal wizardry too far, deep into the forbidden land of the sophists.”
The commerce clause
Roberts could have ruled the ACA constitutional based on the commerce clause. The government’s argument on this point was simple. Everyone will need health care at some point, and because all are guaranteed care regardless of ability to pay, everyone should possess insurance so that insurers need not charge policyholders higher premiums to cover those who receive uncompensated care. Regulating this ongoing interstate commerce, the government contended, is justified by the commerce clause.
Roberts rejected the government’s contention that because all will need health care sometime, all are active in the market now. “Everyone,” he writes, “will likely participate in the markets for food, clothing, transportation, shelter, or energy; that does not authorize Congress to direct them to purchase particular products in those or other markets today.”
But Roberts’ analogies are faulty. Health care is like food, clothing, transportation, shelter and energy in that everyone will purchase them, but it is unlike these items in that the government assures none of them. As Justice Ginsberg stated in her dissent, “The inevitable yet unpredictable need for medical care and the guarantee that emergency care will be provided when required are conditions nonexistent in other markets.”
Roberts’ ruling, nonetheless, is now law, and those of us who applaud the ACA’s constitutionality must also accept restrictions to the commerce clause that could have far-reaching implications. The New Yorker’s Jeffrey Toobin repeats Ginsburg’s claim that the commerce-clause ruling is “stunningly retrogressive” and states it could evoke challenges to consumer safety laws, and New York Times columnist James Stewart suggests the ruling would justify challenges to the Fair Labor Standards Act and to environmental regulations.
We can trace those implications back to the chief justice’s strategic inconsistency. The only way he could find the ACA constitutional on the tax question and issue a restrictive reading of the commerce clause was to say the payment associated with the individual mandate both was and was not a tax.
Definitions matter. Some more than others. While Mitt Romney’s frantic efforts to figure out whether to call the individual mandate’s enforcement mechanism a penalty or a tax may be for simple political expedience, Chief Justice Roberts’ decision to embrace both definitions may have policy consequences for decades to come.
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