Top Cases of 2012: Upholding Obamacare, and the rest of the story

January 21, 2013

Westlaw InsiderEditors note:  Over the next weeks we will be featuring posts from our Westlaw Editorial team. This is the team that analyzes cases and statutes and Headnotes and the rest of our editorial enhancements. Enjoy the series:  Westlaw Editorial’s Top Cases of 2012

Hundreds of thousands of newly-issued judicial opinions were added to Westlaw in 2012, but one stands out as the top case. As people waited for it, rumors circulated that it would be released sometime before the last day of the Supreme Court’s 2011-2012 Term. It wasn’t.

When the waiting ended, and the Court released National Federation of Independent Business v. Sebelius, the first “BREAKING STORY” banners on the TV cable news networks announced that the Court had ruled that the Affordable Care Act (ACA) — popularly known as Obamacare — exceeded Congress’s power under the Commerce Clause, by imposing an “individual mandate” compelling consumers to engage in commerce by buying health insurance. Yes, four Justices joined Chief Justice Roberts in that holding, but that wasn’t the whole story.

Four other Justices joined the Chief Justice in holding that the ACA was a “tax” that was within Congress’s taxing powers. Headnote 24 in our editorial enhancements explains why the Court concluded that an exaction that Congress labeled a “penalty” was in fact a “tax” for constitutional purposes:

IRS headnote

Headnote 18 explained why an exaction that was a “tax” for constitutional purposes nevertheless was not a “tax” for purposes of the Anti-Injunction Act (AIA), which bars pre-enforcement suits to restrain the assessment or collection of any tax. Quick answer: the AIA is a statute, not a constitutional constraint, and Congress, in drafting the ACA, could avoid the AIA’s restrictions by choosing the “penalty” label.

Tax penalty Headnote

But, as they say in late night TV ads, “Wait! There’s more!”

The Court also, by a 7-2 margin, struck down the ACA’s “Medicaid expansion” provision, ruling that Congress exceeded its powers under the Spending Clause when it gave the Secretary of Health and Human Services (HHS) the authority to withhold all Medicaid funding from States that chose not to participate in the ACA’s expansion of the Medicaid program. In other words, States must be free to choose whether to participate in the Medicaid expansion.

Related series: The Westlaw editorial process for Patient Protection & Affordable Care Act