National Federation Of Independent Business v. Sebelius

132 S.Ct. 2566 (2012)

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Nature of the Case

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Facts

Congress enacted Obamacare. The individual mandate requires most Americans to maintain 'minimum essential' health insurance coverage. Those who do not comply with the mandate must make a 'shared responsibility payment' to the Federal Government. The Act provides that the penalty will be paid to the Internal Revenue Service with an individual's taxes, and 'shall be assessed and collected in the same manner' as tax penalties, such as the penalty for claiming too large an income tax refund. The Act, however, bars the IRS from using several of its normal enforcement tools, such as criminal prosecutions and levies. Florida and 12 other States (P) filed a complaint claiming that the individual mandate provisions of the Act exceeded Congress's powers under Article I of the Constitution. The District Court agreed. The Court of Appeals for the Eleventh Circuit affirmed the District Court's holding that the individual mandate exceeds Congress's power. The panel unanimously agreed that the individual mandate did not impose a tax, and thus could not be authorized by Congress's power to 'lay and collect Taxes.' A majority also held that the individual mandate was not supported by Congress's power to 'regulate Commerce ... among the several States.' According to the majority, the Commerce Clause does not empower the Federal Government to order individuals to engage in commerce, and the Government's efforts to cast the individual mandate in a different light were unpersuasive. Judge Marcus dissented, reasoning that the individual mandate regulates economic activity that has a clear effect on interstate commerce. The court struck down only the individual mandate, leaving the Act's other provisions intact. The second provision challenged is the Medicaid expansion. In order to receive funding, States must comply with federal criteria governing matters such as who receives care and what services are provided at what cost. Federal funds received through the Medicaid program have become a substantial part of state budgets, now constituting over 10 percent of most States' total revenue. Obamacare increases the number of individuals the States must cover. If a State does not comply with the Act's new coverage requirements, it may lose not only the federal funding for those requirements but all of its federal Medicaid funds. The Court of Appeals unanimously held that the Medicaid expansion is a valid exercise of Congress's power under the Spending Clause. U.S. Const., Art. I, § 8, cl. 1. And the court rejected the States' claim that the threatened loss of all federal Medicaid funding violates the Tenth Amendment by coercing them into complying with the Medicaid expansion. The Court granted certiorari.