Supreme Court case National Federation of Independent Businessvs Sebelius (2012)

Case Description

On June 28, 2012, the Supreme Court decided National Federation of Independent Business v. Sebelius, No. 11-393, holding that the two challenged provisions of the Patient Protection and Affordable Care Act (the "ACA"), which expand the scope of Medicaid and require most Americans to buy health insurance, are valid exercises of Congress's power under the taxing and spending clauses of the Constitution (Hall: 51). But the federal government cannot coerce States to participate in the Medicaid expansion by threatening to withdraw all of their Medicaid funding, and Congress could not have enacted the health insurance mandate under its power to regulate commerce. The Court's decision has key implications for both Democrats and Republicans as they head into the fall election cycle (Zimmerman: 1).

The two provisions of the ACA at stake

In 2010, Congress enacted and President Obama signed into law the ACA, 124 Sta. 119. Two aspects of the law were immediately challenged by individuals and States as exceeding Congress's enumerated powers under the Constitution.

First, the ACA requires most Americans to purchase "minimum essential" health insurance, 26 U.S.C. § 5000A(b)(1), on pain of being required to pay a "penalty" that will be no less than several hundred dollars per year and no more than the cost of the annual premium for a specified level of coverage, § 5000A(c). The penalty will be paid to the IRS in the same manner as tax penalties. § 5000A(g)(1). This provision is commonly referred to as the "individual mandate." (Zimmerman: 3)

Second, the ACA significantly expands the Medicaid program by providing health coverage to new classes of people that previously were not eligible, including adults without children and families with higher incomes. The Congressional Budget Office has estimated the cost of the expansion at approximately $100 billion per year, approximately 40% above current levels. The ACA will provide new funds to States that agree to participate in the expansion (Hilvering v. Davis). Under the existing Medicaid Act, the Secretary of Health and Human Services has the discretion to withdraw all Medicaid funding from any State that does not comply with Medicaid's coverage requirements, which include the new requirements contained in the expansion (Stelter, The New York Times).

The constitutional grants of authority at issue

When the case arrived at the Supreme Court, it raised issues under the three separate grants of authority to Congress: (1) the power to "regulate Commerce ... among the several States," U.S. Const., Art. I, § 8, cl. 3; (2) the power to "lay and collect Taxes," id. Art. I, § 8, cl. 1; and (3) the power to "pay the Debts and provide for the ... general welfare of the United States," id. Art. I, § 8, cl. 1. Added to all these powers is Congress's power to "make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers," id. Art. I, § 8, cl. 18.

The threshold issue of the Anti-Injunction Act

Before the Court could reach the constitutional ...