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'Obamacare'

Supreme Court upholds health care reform

Individual mandate is constitutional

On a 5-4 vote, the U.S. Supreme Court upheld the individual mandate of the Affordable Care Act on Thursday, boosting health care reform in a dramatic victory for President Barack Obama in an election year.

The majority of the court, joined by Chief Justice John Roberts, said the individual mandate is constitutional because it is a tax.

Read a copy of the complete ruling

While there were not five votes to uphold the law based on Congress' constitutional power to regulate commerce, the majority agreed that the penalty for not purchasing health insurance is the equivalent of 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," the court said.

The court limited the Medicaid provision of the law, but did not entirely invalidate it. States that don't provide Medicaid coverage to people under 130 percent of the poverty line can lose new federal funding, but not the funding that was provided previously, the court said.

In upholding the individual mandate, the court wrote:

Our precedent demonstrates that Congress had the power to impose the exaction in Section 5000A under the taxing power, and that Section 5000A need not be read to do more than impose a tax. This is sufficient to sustain it.

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The most straightforward reading of the individual mandate is that it commands individuals to purchase insurance. But, for the reasons explained, the Commerce Clause does not give Congress that power. It is therefore necessary to turn to the Government’s alternative argument: that the mandate may be upheld as within Congress’s power to “lay and collect Taxes.”

Because the court rejected the Obama administration's argument under the Commerce Clause, some national news organizations initially reported—erroneously—that the law had been struck down.

Roberts was joined by Justices Ruth Bader Ginsburg, Sonia Sotomayor, Stephen Breyer and Elena Kagen. Justice Anthony Kennedy read the dissent in court.

The court's ruling on what is popularly known as "Obamacare" gives the president a boost as he seeks reelection in November, a pollster said.

"You can hear the sigh of relief at the White House," said Peter Brown of the Quinnipiac University Polling Institute.

The decision "allows the president's signature achievement to stand. Since politics is the ultimate zero-sum game, what's good for Obama is bad for Gov. Mitt Romney," Brown said.

"The decision, however, will allow Romney to continuing campaigning against the law and promising to repeal it," Brown said.

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Key quotes

Selected quotes from the majority opinion upholding health care reform:

The most straightforward reading of the individual mandate is that it commands individuals to purchase insurance. But, for the reasons explained, the Commerce Clause does not give Congress that power.It is therefore necessary to turn to the Government's alternative argument: that the mandate may be upheld as within Congress's power to "lay and collect Taxes."

The payment is not so high that there is really no choice but to buy health insurance; the payment is not limited to willful violations, as penalties for unlawful acts often are; and the payment is collected solely by the IRS through the normal means of taxation.

CHIEF JUSTICE ROBERTS, joined by JUSTICE BREYER and JUSTICE KAGAN, concluded in Part IV that the Medicaid expansion violates the Constitution by threatening States with the loss of their existing Medicaid funding if they decline to comply with the expansion.

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."

The Government's tax power argument asks us to view the statute differently than we did in considering its commerce power theory.

None of this is to say that the payment is not intended to affect individual conduct. Although the payment will raise considerable revenue, it is plainly designed to expand health insurance coverage. But taxes that seek to influence conduct are nothing new. Some of our earliest federal taxes sought to deter the purchase of imported manufactured goods in order to foster the growth of domestic
industry.

In distinguishing penalties from taxes, this Court has explained that "if the concept of penalty means anything,it means punishment for an unlawful act or omission."

While the individual mandate clearly aims to induce the purchase of health insurance, it need not be read to declare that failing to doso is unlawful. Neither the Act nor any other law attaches negative legal consequences to not buying health insurance, beyond requiring a payment to the IRS.

Whether the mandate can be upheld under the Commerce Clause is a question about the scope of federal authority. Its answer depends on whether Congress can exercise what all acknowledge to be the novel course of directing individuals to purchase insurance. Congress's use of the Taxing Clause to encourage buying something is, by contrast, not new. Tax incentives already promote,for example, purchasing homes and professional educations. ... Sustaining the mandate as a tax depends only on whether Congress has properly exercised its taxing power to encourage purchasing health insurance, not whether it can. Upholding the individual mandate under the Taxing Clause thus does not recognize any new federal power. It determines that Congress has used an existing one.

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.