National Federation of Independent Businesses, et al. v. Sibelius ___ U.S.

___ (2012)

Factual Background
Total spending on health care in the U.S. in 2009 is $2.5 Trillion (17.6% of entire economy) 85% of this cost paid by private insurance companies and government sources (Medicare and Medicaid) Leaving 50 Million people uninsured or uncovered These 50 Million consume $100 Billion in health care services Cost of these services absorbed by health care providers (passed on to insured consumers and governments)

Congressional Response
Passes ACA
Requires noninsured individuals to acquire insurance from private insurance companies
Prohibits insurance companies from denying coverage because of pre-existing conditions Requires state to expand Medicaid coverage to all adults under 65 and under the poverty line (or lose existing federal funding for program)

Issues on Appeal
Issue 1: Does the individual mandate fall within Congress power to regulate interstate commerce? Issue 2: Does the individual mandate fall within Congress power to lay and collect taxes Issue 3: Does the Medicaid expansion fall within Congress power to spend?

Issue One Legal Background

Congress has the power to regulate commerce with foreign nations and among the states
Can regulate commerce that crosses state lines (e.g., Northwest Airlines, Dell Computer) Can also regulate local commerce that substantially affects interstate commerce Courts defer to Congress in deciding what substantially affects interstate commerce

Issue One Pro Arguments

The individual mandate clearly and substantially affects interstate commerce
Private insurance companies operate nationwide Medical goods cross state lines Patients cross state lines for health care services Uninsured consume billions of health care services a year Subsidized by insured nationwide

Issue One Con Arguments?

Issue One Courts Arguments

Congress can regulate existing commercial activity The ACA requires individuals to engage in commercial activity The Framers of the Constitution gave Congress the power to regulate commerce, not compel it Held: outside Congress commerce clause power (unconstitutional)

Issue Two
Arguments Pro:
Congresss taxing power is very broad (for the general Welfare) Though Congress did not call the individual mandate a tax, the effect is the same
Individuals who do not get insurance pay an extra tax Collected by the IRS

Held: Falls within tax power (constitutional)

Arguments Con:
Court has never before deemed a penalty for violation of the law a tax

Issue Three
Arguments Con:
Congress has the power of the purse strings Using its spending power, it can condition the payment of federal funds on compliance with requirements set by Congress However, it cannot coerce or unduly influence states rights to administer their own affairs Held: Requiring states to expand Medicaid coverage or lose existing funding is too coercive

Arguments Pro:
Court has never struck down Congress restrictions on the use of taxpayer dollars Held: outside power of the purse (unconstitutional)

Significance - Legal
Majority opinion imposes novel restriction on commerce clause power
Cannot require someone to enter into commercial activity Meet EPA licensing requirements?

And on spending authority

What is too coercive? Based on cost? Custom and practice?

Significance - Practical
Major health care legislation upheld Major health care legislation struck down Returns ACA to the political arena Gives the Roberts Court a new look States must decide whether or not to expand Medicaid Avoids unrolling problems
If ACA struck down, what about aspects of law already in place?