PPACA: Dissent Analysis

This post was authored by Wolters Kluwer editors Danielle Capilla & Tracy Pfeiffer.

As we reported yesterday in our coverage of the majority opinion, the United States Supreme Court voted 5-4 to uphold the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148). The four dissenters included Justices Scalia, Kennedy, Thomas and Alito.

In the opinion’s introduction, the dissenting justices agreed that PPACA should be struck down in its entirety. They found that Congress exceed its power through both the individual mandate to purchase health insurance and its denial of Medicaid funding to states that do not consent to the expansion of their Medicaid programs. As those two elements are both central to the operation of PPACA as a whole, the dissenters believe that the remaining provisions would not have been enacted without, and were therefore inseverable from, those elements.

Following that conclusion, the dissenters focused on each individual issue in turn:

Individual Mandate

Commerce Clause

Regarding the government’s argument that Congress has the power impose an individual mandate to purchase health insurance through the Commerce Clause, the dissenters appear aligned with the reasoning of the majority opinion. Dissenting justices expressed the same concerns that it is unprecedented for the Court to interpret the regulation of commerce as compelling the participation of citizens in commercial behavior in which they were not engaged in prior. To “regulate” is to “direct the manner of something,” not to bring about that something’s existence.

The government’s contention that the Congress’s commerce power applies to young, health individuals who will participate in the insurance market in the future was not persuasive. Congress cannot define participants in the market by predicting their future participation later in their lifetime. Such an interpretation would have “no principled limits” as a premise for the exercise of federal power.

 Necessary and Proper Clause

Also like the majority, the dissenters reject the government’s contention that the mandate is “necessary and proper” to its insurance reform scheme. Precedent cases illustrate that the scope of the Necessary and Proper Clause is exceeded when it “violates the background of principle of enumerated (and hence limited) federal power.”

The dissenting justices disagreed that forcing young, healthy individuals to participate in an insurance market that they choose not to participate in is not the proper means to achieve the government’s goal of reducing premiums while ensuring the profitability of health insurers. The justices even suggested alternative means such as imposing a surcharge on the uninsured when they do elect to buy health insurance or offer an income tax credit for buying health care coverage that the uninsured will not receive.

 Taxing Power

Unlike the majority, the dissenters take issue with interpreting as a tax what is referred to in PPACA’s text as a “penalty.” They maintain that labels do in fact matter, and that it must be considered one or the other for constitutional purposes, as has been the case in precedents. They claim the issue that must be decided by the Court is not whether the government had the power to frame the mandate as a tax, but whether it actually did so.

While the Court should attempt to read legislation as constitutional, it cannot judicially rewrite a statute to “the point of perverting” its purpose. The dissenters concluded that Congress plainly intended to enact a “mandate that individuals maintain minimum essential coverage, enforced by a penalty,” not a tax. The Court has never found that a penalty imposed on citizens for violation of a law is an exercise of the constitutional taxing power, particularly when the text repeatedly (18 times in PPACA) refers to it as a “penalty.”

The dissenters bolstered their position that PPACA imposes a penalty, not a simple tax, by the fact that no citizen is exempt from the mandate, although some are exempt from the penalty. Additionally, the absence of a “scienter requirement” was not persuasive to the justices that the penalty was a tax as penalties are often based on strict-liability offenses. Finally, the location of the mandate and penalty provisions are in Title I of PPACA, its “operating core,” not in Title IX “Revenue Provisions” where taxes would be listed.

The Anti-Injunction Act

Having found that the mandate’s penalty is not a tax, the dissenters held that the suit was not barred by the Anti-Injunction Act for having “the purpose of restraining the assessment or collection of any tax.” They referred to the majority’s definition of the same penalty as a tax for constitutional purposes, but not a tax for Anti-Injunction Act purposes, as “verbal wizardry” carried “too far, deep into the forbidden land of the sophists.”

Medicaid Expansion

As discussed in the majority opinion, the issue at hand was whether Congress exceeded its authority to require states to expand their Medicaid coverage to qualifying individuals as defined by PPACA. Specifically, by 2014, states would have to cover all individuals under the age of 65 with income below 133 percent of the federal poverty limit. Furthermore, everyone with Medicaid coverage would be entitled to an essential health benefit package.

The federal government would cover 100 percent of the costs of this expansion through 2016; after that, federal assistance would gradually decrease until it reached 90 percent. Compliance with this expansion was governed by funding; states that chose not to expand their Medicaid rolls would obviously not receive the funding for expansion and would lose their former funding, forcing them to fund their Medicaid program on their own. The majority opinion found that Congress could not revoke the original Medicaid funding if a state chose not to expand their Medicaid program.

In the dissenting opinion, Justice Kennedy noted that “our cases have long held that the power to attach conditions to grants to the States has limits” and that those limits must ensure that a state can independently and voluntarily decide whether or not to accept the federal money. This is crucial because if Congress compels a state to take an unpopular action, “it may be state officials who will bear the brunt of public disapproval, while the federal officials who devised the regulatory program may remain insulated from the electoral ramifications of their decision.”

Here the justices found that while the states could, as a matter of law, decide not to expand Medicaid coverage, practically speaking they could not make that decision. Furthermore it was clear to the court that Congress intended 100% of the states to participate in the Medicaid expansion program. The remedy suggested by the majority opinion is also unacceptable to the dissenting justices, they note that “States must choose between expanding Medicaid or paying huge tax sums to the federal fisc for the sole benefit of expanding Medicaid in other States.” They found the entire Medicaid expansion proposal unconstitutional and with no practical remedy.

Severability

The question of severability was not discussed in the majority opinion as they found the majority of PPACA constitutional. The dissent however, after finding both the individual mandate and the Medicaid expansion program unconstitutional, took a detailed look at whether or not the rest of the act could stand without these portions. The court applied a two part test to see if the act was severable.

  • After the Court holds a statutory provision unconstitutional, it then determines whether the now truncated statute will operate in the manner Congress intended.

  • Then, even if the remaining provisions can operate as Congress designed them to operate, the Court must determine if Congress would have enacted them standing alone and without the unconstitutional portion.

In this case the court determined that Congress intended to pass “near universal health care coverage” with a system set up to make it fiscally viable. Without the individual mandate and Medicaid expansion, near universal coverage is not achieved, nor are the new programs fiscally viable. For those reasons the dissenting justices found that the individual mandate and the Medicaid expansion project were not severable.

 

The dissenting justices ended the opinion with a firm statement: “For the reasons here stated, we would find the Act invalid in its entirety.”

Justice Thomas – Dissenting

Justice Thomas joined the dissent with a one page dissent of his own, noting that under the Commerce Clause the government was making an unprecedent claim that it can regulate not only economic activity but economic inactivity.