Let’s begin by saying Chief Justice Roberts did not want to overturn the Individual Mandate, if that was at all possible. In fact, he is very clear at the beginning of his ruling as to the role the Supreme Court should play.
“We do not consider whether the Act embodies sound policy… We ask only whether Congress has the power under the Constitution to enact the challenged provisions.”
So what was the Chief Justice’s reasoning behind his landmark decision?
He began his argument by considering whether the Court had the authority to hear and rule on the case.
This gets to one of the fundamental issues. Is the Individual Mandate a tax or a penalty?
Under the ‘Anti-Injunction Act’ (a Federal statute), a person can not bring a suit against a tax until it is first paid.
The Chief Justice stated that because Congress referred to the Individual Mandate as a penalty, it did not intend the Mandate to be a tax. Therefore, the Anti-Injunction Act does not apply and the Court can hear and rule on the case.
“Congress uses certain language in one part of a statue and different language in another, it is generally presumed that Congress acts intentionally.”
Chief Justice Roberts then addressed whether Congress has the power under the ‘Commerce Clause’ to enact the Individual Mandate. (The Commerce Clause is an enumerated power given to the Federal Government under the Constitution).
The Government argued that failure to purchase insurance affects interstate commerce (commercial activity between States) by shifting the cost from one person to another.
The Chief Justice agreed activities that have a significant effect on interstate commerce (commercial activity between States) fall within the purview of the ‘Commerce Clause’.
However, the Chief Justice went on to say:
“The language of the Constitution reflects the natural understanding that the power to regulate assumes there is already something to be regulated.”
He further argued:
“Constructing the Commerce Clause to permit Congress to regulate individuals precisely because they are doing nothing would open a new and potentially vast domain to congressional authority.”
Therefore, Chief Justice Roberts concluded:
“The Individual Mandate forces individuals into commerce precisely because they elected to refrain from commercial activity. Such a law cannot be sustained under a clause authorizing Congress to ‘regulate Commerce’.”
Chief Justice Roberts then took up the Government’s argument that the Individual Mandate is an integral part of the regulation. That is, Congress has the authority to mandate insurance under the ‘Necessary and Proper Clause’ of the Constitution.
Again, the Chief Justice disagreed.
The Constitution gives Congress certain enumerated powers. However, it does not give Congress the power to regulate behavior not supported by the Constitution.
“Even if the Individual Mandate is ‘necessary’ to the Act’s insurance reforms, such an expansion of federal power is not a ‘proper’ means for making those reforms effective.”
The Government also presented a second argument in defense of the Individual Mandate.
“The Government asks us to read the mandate not as ordering individuals to buy insurance, but rather as imposing a tax on those who do not buy that product.”
It is here the Chief Justice’s argument took a turn that surprised many.
He argued that the Government does not command or criminalizes the decision not to buy insurance, which would be an indication that the Individual Mandate is a penalty.
“It is estimated that four million people each year will chose to pay the IRS rather than buy insurance… Congress did not think it was creating four million outlaws.”
In relation to the Anti-Injunction Act, Chief Justice Roberts wrote:
“It is of course true that the Act describes the payment as a ‘penalty,’ not a ‘tax.’ But while that label is fatal to the application of the Anti-Injunction Act… it does not determine whether the payment may be viewed as an exercise of Congress’s taxing power.”
In short, if it walks like a duck and talks like a duck then it is probably a duck.
Chief Justice Roberts concluded:
“The Affordable Care Act’s requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a tax. Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness.”
On this basis, Chief Justice Roberts found the Individual Mandate to be Constitutional.