Federalism & Limited Government

National Federation of Independent Business v. Sebelius (2012)


  • May 18 2018

 

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Issue

Whether the Commerce Clause or the Taxing and Spending Clause grants the federal government the power to tax or fine individuals who abstain from purchasing health insurance, and whether the federal government violates the Spending Clause or principles of federalism by using leverage against the states to expand state-run Medicaid programs.

Facts

President Obama signed the Patient Protection and Affordable Care Act ACA into law on March 23, 2010. Advocates generally claimed the intent of the law was to provide health insurance and healthcare to more Americans while reducing healthcare costs. One provision of the law mandated that citizens either purchase health insurance or pay a fine to the IRS. A second provision of the law required states to extensively expand their Medicaid programs, which broadened the program’s scope by requiring the states to provide Medicaid coverage to adults with incomes up to 133 percent of the federal poverty level.

Florida, 25 other states, and individual plaintiffs filed suit against the U.S. Department of Health and Human Services HHS. They claimed that the federal government lacked the power under the Commerce Clause to regulate inactivity. In other words, the government could not punish individuals for abstaining from purchasing something, such as health insurance. The plaintiffs also argued that the mandated expansion of Medicaid violated the Spending Clause by placing an unbearable burden on state governments while also violating the principle of federalism.

The Court Below

The District Court for the Northern District of Florida was the first to hear the case. The court held that Congress had the power under the Spending Clause to mandate the expansion of Medicaid within the states. Still, the court ruled in favor of Florida, holding that Congress may not regulate “inactivity” such as refraining from purchasing health insurance, and that the individual mandate was unable to be severed from the rest of the act. Thus the entire act must be suspended. See opinion below:

Florida v. United States Department of Health and Human Services, 780 F.Supp.2d 1256 N.D. Fl., 2011

The federal government appealed to the Eleventh Circuit Court of Appeals. The circuit court agreed that the expansion of Medicaid was constitutional, but that the individual mandate was unconstitutional. The court held that the unconstitutional individual mandate was severable from the rest of the act. Thus the act was reinstated minus the individual mandate. See opinion below:

Florida v. United States Department of Health and Human Services, 648 F.3d 1235 11th Cir., 2011

The Supreme Court granted certiorari. It reversed the decisions of the court below. It held that the individual mandate was a “tax” and fell within Congress’s taxing powers. It also held that the provision requiring the expansion of Medicaid exceeded Congress’s power under the Spending Clause. See opinion below:

National Federation of Independent Business v. Sebelius, 132 S.Ct. 2566 2012

Questions before the Court

I. [Docket 11-393]

Congress effected a sweeping and comprehensive restructuring of the Nation's health insurance markets in the Patient Protection and Affordable Care Act, Pub. L. No. 111-148, 124

Stat. 119 2010, as amended by the Health Care and Education Reconciliation Act of 2010, Pub.

L. No. 111-152, 124 Stat. 109 2010 collectively, the "ACA” or "Act". But the Eleventh Circuit and the Sixth Circuit now have issued directly conflicting final judgments about the facial constitutionality of the ACA's mandate that virtually every individual American must obtain health insurance. 26 U.S.C. § 5000A. Moreover, despite the fact that the mandate is a "requirement" that Congress itself deemed "essential" to the Act's new insurance regulations,

42 U.S.C. § 18091a2I, the Eleventh Circuit held that the mandate is severable from the remainder of the Act.

The question presented is whether the ACA must be invalidated in its entirety because it is non-severable from the individual mandate that exceeds Congress' limited and enumerated powers under the Constitution.

II. [Docket 11-398]

Beginning in 2014, the minimum coverage provision of the Patient Protection and

Affordable Care Act, Pub. L. No. 111-148, 124 Stat. 119, amended by the Health Care and

Education Reconciliation Act of 2010, Pub. L. No. 111-152, 124 Stat. 1029, will require nonexempted individuals to maintain a minimum level of health insurance or pay a tax penalty. 26 U.S.C.A. 5000A. The question presented is:

1. Whether Congress had the power under Article I of the Constitution to enact the minimum coverage provision.

Petitioners also suggest that the Court direct the parties to address the following question:

2. Whether the suit brought by respondents to challenge the minimum coverage provision of the Patient Protection and Affordable Care Act is barred by the Anti-Injunction Act,

26 U.S.C. 7421a.

III. [Docket 11-400]

1. Does Congress exceed its enumerated powers and violate basic principles of federalism when it coerces States into accepting onerous conditions that it could not impose directly by threatening to withhold all federal funding under the single largest grant-in-aid program, or does the limitation on Congress's spending power that this Court recognized in South Dakota v. Dole, 483 U.S. 203 1987, no longer apply?

2. May Congress treat States no differently from any other employer when imposing invasive mandates as to the manner in which they provide their own employees with insurance coverage, as suggested by Garcia v. San Antonio Metropolitan Transit Authority, 469 U.S. 528

1985, or has Garcia's approach been overtaken by subsequent cases in which this Court has explicitly recognized judicially enforceable limits on Congress's power to interfere with state sovereignty?

3. Does the Affordable Care Act's mandate that virtually every individual obtain health insurance exceed Congress's enumerated powers and, if so, to what extent if any can the mandate be severed from the remainder of the Act?

CCJ filed an amicus curie in the 11th Circuit Court of Appeals in support of Florida

Summary:

Congress is obligated to debate the constitutionality of an act before passing it if the act gives unprecedented power to the government. In this case, however, neither the House nor the Senate held hearings on the constitutionality of the Act prior to its passage. This was despite both the Congressional Research Service in 2009 and the Congressional Budget Office in 1994 warning that the implementation of a health-insurance individual mandate would exceed any Congressional power ever approved by the Supreme Court. Throughout history, Congress has facilitated ample discussion as to the constitutionality of monumental legislation. In this case, however, many members of Congress openly admitted never to have read the bill. When asked about its constitutionality, supporters of the ACA only provided academic scholarship that interpreted the Commerce Clause as granting almost unlimited power to Congress. This bill exceeds constitutional limitations and encroaches on authority of the states.

The legislative process leading to the passage of the ACA was systematically flawed because it applied the law unequally to different states. In the words of 1st century B.C. Roman politician Marcus Tullius Cicero, “[T]here is no more effective practical guarantee against arbitrary and unreasonable government than to require that the principles of law… be imposed generally.” For millennia the power of western law has come from its equal application to all citizens. The ACA only passed because of quid pro quo measures, trade-offs, and last-minute presidential promises to refrain from enforcing certain provisions. Democratic Congressman Rick Boucher stated, “Louisiana, Tennessee, Connecticut and Montana have each received special benefits in the health care reform legislation not made available to other states.” Senator Mary Landrieu of Louisiana only agreed to support the act after a provision was inserted to provide hundreds of millions of dollars to her state. The 60th senator to vote for the bill, Ben Nelson of Nebraska, agreed to vote for the bill after Majority Leader Harry Reid promised that Nebraska would not have to pay its portion of the Medicaid expansion.

Even with the numerous kickbacks, supporters of the bill did not have the votes needed in the Senate to pass the final version of the ACA, so they resorted to a legislative loophole known as “budget reconciliation.” The loophole allowed the majority to make substantive changes to the bill while bypassing the threat of filibuster. Furthermore, the House only passed the reconciliation bill after Obama signed an eleventh-hour executive order on March 24, 2010, which claimed to restrict the public funding of abortion. Certain Democratic representatives were concerned that the ACA would fund abortion. The executive order was powerless because presidential proclamations cannot negate statutory law. It was merely an act of showmanship allowing certain House members to save public face.

Every landmark social legislation during the past century has passed with wide margins and has reflected bipartisan support. The Social Security Act of 1935 received a vote of 372-33 in the House and 77-6 in the Senate. The bipartisan consensus required two months of debate in committees. Congress passed the Social Security Amendments of 1965 after debate on over 500 amendments. The House voted 307-116 in favor and the Senate voted 70-24. Congress passed the Civil Rights Act of 1964 by a margin of 289-126 in the House and 73-27 in the Senate. Both chambers understood the unprecedented expansion of government authority and debated the constitutionality of the act before they passed it. Most recently, The Personal Responsibility and Work Opportunity Reconciliation Act of 1996, a Republican bill, was signed by a Democratic President. Congress voted 328-101 in the House and 78-21 in the Senate in favor of the act. The ACA represents a fundamental departure from the long legacy of partisan compromise and congressional debate on social legislation. By contrast, using the budget reconciliation process, the final party-line vote for the ACA was 220-207 in the House and 56-43 in the Senate.

Final Outcome

The Supreme Court ruled that the individual mandate requiring health insurance exceeded Congress’s power under the Commerce Clause, but that the mandate could be considered a “tax” within Congress’s taxing powers. Thus the Court upheld the individual mandate and ruled against CCJ’s position. Regarding the second issue, the Court decided that Congress did not have the authority under the Spending Clause to require the states to adopt the expanded Medicaid requirements.