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.


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.

SCOTUS: Health Care Reform Decision, UPDATED

In a bare bones analysis of the just-released opinion regarding the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148), it appears based on media reports that PPACA was found constitutional in a 5-4 decision, with the controversial individual mandate standing after being found an allowable tax.

Our analysis today will be as follows:

  • A look at the majority opinion, first regarding the individual mandate and then the Medicaid issues.
  • A look at the dissenting opinion, written by Justice Kennedy
  • Chief Justice Robert’s independent writing
  • Justice Ginsberg’s independent writing

You can find a PDF of the opinion here: PPACA

SCOTUS: Health Care Reform Post 1

Today it is anticipated that the Supreme Court will release its ruling on the Patient Protection and Affordable Care Act. The Court proceedings will begin promptly at 10:00 am Eastern time, however it is likely that the opinions on health care reform will be the last item on the agenda. As soon as the opinions are released we will begin updating this site on the decision. In the meantime, you can review the oral arguments and briefs that occurred in March.

  • Day 1: Arguments on whether the Court can even hear the case. Is the penalty for not purchasing health insurance a tax?
  • Day 2: Arguments on whether the individual mandate is constitutional.
  • Day 3: Arguments on the severability of the mandate and expansion of Medicaid.
  • Synopsis of amicus briefs regarding the issues of Medicaid and severability.
  • Discussion of whether Medicaid should be expanded under the law.
  • An overview of public vs. legal opinions on the case.

What’s All This About the Death Spiral for Health Insurance Coverage?

Anyone and everyone with an interest in the healthcare system is anxiously awaiting the Supreme Court’s decision on the validity of the Patient Protection and Affordable Care Act. Will the individual mandate be thrown out? If it is, will the insurance market reforms go with it? Will health insurers be allowed to raise rates out of proportion to any change in the risks they take, forcing older, sicker individuals without group coverage into a coverage “death spiral”? If the consumer protections stand, will the cost of covering people who need insurance push the health insurance industry into its own “death spiral”? And does a lack of insurance coverage really increase a person’s risk of death?

In 2002, the Institute of Medicine reviewed the available research and found that an adult under 65 without insurance was more likely to die than an adult with insurance. One study that followed subjects for 17 years found that the risk of death increased 25 percent among adults who were uninsured. IOM estimated that 18,000 people died each year because they lacked health insurance coverage.  Some of the reasons for the disparity may be obvious. The uninsured are not likely to get cancer screenings, for example, so when they do get cancer they are diagnosed later and are more likely to die. But uninsured trauma victims also were more likely to die; they were less likely to be admitted to the hospital and received fewer services while there. And uninsured patients who presented with a heart attack were more likely to die in the hospital or shortly thereafter. IOM estimated that 18,000 adults under age 65 die each year because they had no insurance.

Families USA recently updated IOM’s research and found that the number had grown to 26,100. An article in Forbes pointed out that some of the IOM data was actually from 1993—”before the Internet, before …Lipitor,” so that the actual death toll today is probably higher.

No matter what the Supreme Court decides, one result we won’t see from Congress is a thoughtful discussion of what system is best for the country as a whole. Where should the money come from for primary care, preventive care, or the drugs people need? Should the healthcare options available to you depend on where you work, or if you’re a young adult without employer-based coverage, where your parents work?

Of course, that’s not the issue before the Supreme Court. The Justices must apply legal standards concerning individual rights, government power and the relationship between the federal government and the states. The average nonlawyer may not see much difference between having to buy car insurance and having to buy health insurance, but because the health insurance mandate is federal, the legal issues are completely different.

JD Power just released a survey indicating that employers may be likely to substitute a defined-contribution benefit for group coverage if the Affordable Care Act is upheld. From there, it’s easy for some to jump to the conclusion that PPACA will drive a nail into the coffin of employer-sponsored coverage.

But actually, the percentage of workers and families with employer-sponsored insurance (ESI) has been dropping for a long time. In 1988, 73 percent of American workers under age 65 were covered by ESI, 55 percent through their own employer, 17 percent through a family member, and 85 percent of Americans under age 65 had health insurance. In 2010, according to the Employee Benefits Research Institute, 58.7 percent of nonelderly individual were covered by employer-based health plans, 68.6 percent of working adults had coverage. The percentage of workers with coverage through their own employer was down to 51.5 percent, the lowest since 1994.

Higher rates of unemployment due to the recession account for some of the decrease, but more and more workers aren’t offered coverage through their employers. In 1997, 79.8 percent of workers were employed by firms that offered health insurance, and 70.1 percent were eligible for the coverage. Access to insurance increased somewhat by 2002, when 81.1 percent of workers were employed by organizations that offered health insurance and 71.6 percent were eligible. But by 2010, the percentage of workers who were eligible for coverage dropped to 67.5 percent. That year, 46.7 percent of workers between 18 and 64 reported that their employers did not offer health insurance, and another 14.7 percent were not eligible for benefits. Of these, 9 percent were not eligible because they were contract or temporary workers.

Availability of insurance and the “take-up” rate vary by the size of the employer and the salary of the worker. Lower-income workers are less likely to be offered coverage and less likely to be able to afford it. The smaller employers have to pay more for coverage, while they are often less able to afford it. (Most new jobs come from small businesses. Does that matter?)

Don’t the changes in health insurance benefits parallel the changes in the availability of pension and retirement benefits? The decrease in benefits of all kinds reflects larger changes in the economy and society as a whole. Health insurance benefits began as a way to raise compensation when pay raises were unavailable because of price freezes. If employers no longer consider the benefit viable, we’ll have to find another way to assure people have access to care. If the Supreme Court strikes down PPACA, we’ll have to talk about how—and whether—we’ll do that.