My favorite quote from the oral arguments in the Affordable Care Act case came at the very end of the argument by the government’s lawyer, Don Verilli. Mr. Verilli and the justices had spent a large amount of time arguing about the Commerce Clause. They then spent just a few minutes discussing an unrelated argument about Congress’s power to levy taxes. Justice Scalia tried to sum up Verrilli’s tax argument, and the following exchange occurred:
JUSTICE SCALIA: You’re saying that all the discussion we had earlier about how this is one big uniform scheme and the Commerce Clause, blah, blah, blah, it really doesn’t matter. This is a tax and the Federal Government could simply have said, without all of the rest of this legislation, could simply have said, everybody who doesn’t buy health insurance at a certain age will be taxed so much money, right?
VERRILLI: It — it used its powers together to solve the problem of the market not -
JUSTICE SCALIA: Yes, but you didn’t need that.
VERRILLI — providing affordable coverage -
JUSTICE SCALIA: You didn’t need that. If it’s a tax, it’s only — raising money is enough.
VERRILLI: It is justifiable under its tax power.
JUSTICE SCALIA: Okay. Extraordinary.
“Extraordinary.” “Extraordinary.” What a beautiful word for Scalia to use there.
He was basically saying, “the idea that after all of this intense argument and controversy over the Commerce Clause, that the Supreme Court should ignore all of that controversy and uphold Obamacare because it imposes nothing more than a tax on people who do not comply is so ridiculous and strange that I am struck with a genuine sense of awe and amazement that an intelligent man representing the federal government would stand in front of the Supreme Court and make the argument with a straight face.”
Yet that is exactly what the court ended up doing. Obamacare is constitutional only because, according to Chief Justice Roberts, it did not actually make anything illegal. In other words, the “individual mandate” does not actually require people to buy health insurance. Instead, it creates an incentive for people to buy health insurance by imposing a tax on people who fail to do so. If a person fails to purchase insurance but pays the tax, that person has committed no crime.
Now, the text of Obamacare pretty clearly indicates the opposite: that people are required to buy health insurance. The act uses the word “mandate” repeatedly. It describes the payment that people must make if they fail to purchase insurance as a “penalty.” It never describes that payment as a “tax.”
But, as Roberts explained, from a constitutional perspective, the language Congress used to describe the payment doesn’t matter. What matters is what that payment actually is. The payment is substantially lower than the expected cost of insurance. It must be paid to the IRS, along with a person’s taxes. According to the government’s attorney, it is not illegal for a person to choose to make the payment to the IRS instead of purchasing insurance. So, a reasonable person could decide to simply make the payment instead of purchasing insurance.
Furthermore, the payments are expected to raise substantial revenue. Indeed, the CBO estimates that four million people will make the payment in lieu of purchasing insurance every year. The fact that this is expected suggests that Congress did not intend to create four million outlaws. Instead, it suggests that Congress chose to pay for Obamacare partially through a tax on uninsured people.
Now, the dissent certainly made some good counterarguments, some of the best of which can be found on pages 18 and 21 of the dissent.
But the bottom line, as Chief Justice Roberts explained, is that Obamacare can be reasonably read as either making it a crime to decline to purchase health insurance or as creating a tax on people who decline to purchase health insurance. It is widely accepted that if a court can reasonably read a law in two different ways, one of which would lead to the law being upheld, the other of which would lead to the law being struck down, the court must uphold the law. That is what Chief Justice Roberts did.
And that is why the Affordable Care Act is constitutional: because the “individual mandate” is not actually a “mandate.” It is a “tax.”