Full Text US Supreme Court Obamacare Ruling Online With Bill Singer's Commentary

June 28, 2012

READ the full-text of the Supreme Court's historic ruling in

From Bill Singer:

Today's decision is an exercise in eloquence that is not often seen from this Court.  Whether in the Roberts' Opinion, Ginsburg's Opinion, or in the Dissent, we have an historic constitutional decision that attempts to ensure that our Constitution remains a living and breathing document rather than an ossified fossil.

Roberts wrestles with defining the key issue before the Court and seems to have come upon the challenge by warning that "the Framers gave Congress the power to regulate commerce, not to compel it," and suggests that, to this extent, Obamacare would fail.  However, in an amazing bit of legerdemain, Roberts pulls victory from the jaws of defeat when he concludes that the "Federal Government does not have the power to order people to buy health insurance. Section 5000A would therefore be unconstitutional if read as a command. The Federal Government does have the power to impose a tax on those without health insurance." 

The equally forceful Dissent laments that the Court has failed to respect the separation of powers between the States and the federal government:" The fragmentation of power produced by the structure of our Government is central to liberty, and when we destroy it, we place liberty at peril."

Ultimately, this case stands on quite a shaky, wobbly foundation but for the amazing presence of Roberts among those who fashioned an Opinion that largely leaves Obamacare in tact. Given the fancy tap dancing that the Chief Justice did to compound a majority, one wonders if the unique facts of Obamacare may have carried the day whereas another bit of legislation not necessarily impacting the important healthcare issues might have fared differently.  Oddly, the concept of Federalism was sustained here, even though split into two camps. The majority decision goes to great pains to admonish efforts to force citizens to engage in interstate commerce as a pretext to enlarging and expanding federal powers at the expense of the states -- and the opinion further rests upon the most delicate of distinctions: interstate commerce versus the right to tax.

As to the ramifications for the securities industry, one only need to cock an eye towards Dodd-Frank and all of the aspirational mandates that Congress has left to the SEC and the CFTC to craft and draft into rules and regulations.  To the extent that the work product seeks to compel action and conduct that would offer an opening to the federal government to expand into previous unfilled roles or to arrogate regulatory powers that were previously reserved for the states or not granted explicitly to Congress, one should expect the Court will again be split along the same lines with Roberts finding himself the deciding vote.  One only need consider the clamor raised by many state regulators against the JOBS Act and Crowdfunding to anticipate battle lines in the future on these same issues of what the minority called the need to preserve the structural fragmentation in our government that reins in the all-consuming growth of the federal government at the expense of the states.  

Without question, this court has a solid 4-vote bloc that will sustain state's rights and hoe the Libertarian line that the federal government's powers emanate from the Constitution and unless spelled out in that document, do not exist.  The extension of that belief is that the states came with their rights into the Union and only surrendered those to the federal government that were set forth in the Constitution.

A secondary and equally important lesson from today's ruling is how it serves as a model for all those Europeans now wrestling with the concept of a fiscal and/or political union.  Our Constitution still bleeds when cut over the issue of state's rights and that tension remains part of the fabric of our society.  Europe would be well advised to seek a similar compact that preserves the rights of constitutent states and individuals on a continent that has too often found itself enamored with emperors, empresses, kings, queens, and horrendous dictators.  


From the Court's Syllabus:

In 2010, Congress enacted the Patient Protection and Affordable Care Act in order to increase the number of Americans covered by health insurance and decrease the cost of health care. One key provision is the individual mandate, which requires most Americans to maintain"minimum essential" health insurance coverage. 26 U. S. C. §5000A.For individuals who are not exempt, and who do not receive health insurance through an employer or government program, the means of satisfying the requirement is to purchase insurance from a private company. Beginning in 2014, those who do not comply with the mandate must make a "[s]hared responsibility payment" to the Federal Government. §5000A(b)(1). The Act provides that this "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. §§5000A(c), (g)(1).Another key provision of the Act is the Medicaid expansion. The current Medicaid program offers federal funding to States to assist pregnant women, children, needy families, the blind, the elderly, and the disabled in obtaining medical care. 42 U. S. C. §1396d(a). The Affordable Care Act expands the scope of the Medicaid program and increases the number of individuals the States must cover. For exvample, the Act requires state programs to provide Medicaid coverage by 2014 to adults with incomes up to 133 percent of the federal poverty level, whereas many States now cover adults with children only if their income is considerably lower, and do not cover childless adults at all. §1396a(a)(10)(A)(i)(VIII). The Act increases federal funding to cover the States' costs in expanding Medicaid coverage. §1396d(y)(1).But 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. §1396c.

Twenty-six States, several individuals, and the National Federation of Independent Business brought suit in Federal District Court,challenging the constitutionality of the individual mandate and theMedicaid expansion. The Court of Appeals for the Eleventh Circuit upheld the Medicaid expansion as a valid exercise of Congress's spending power, but concluded that Congress lacked authority to enact the individual mandate. Finding the mandate severable from the Act's other provisions, the Eleventh Circuit left the rest of the Act intact.

Held: The judgment is affirmed in part and reversed in part.

A particularly interesting aspect of the Court's majority rationale in the Robert's Opinion at Pages 23-24:

[P]eople, for reasons of their own, often fail to do things that would be good for them or good for society. Those failures-joined with the similar failures of others-can readily have a substantial effect on interstate commerce. Under the Government's logic, that authorizes Congress to use its commerce power to compel citizens to act as the Government would have them act.

That is not the country the Framers of our Constitution envisioned. James Madison explained that the Commerce Clause was "an addition which few oppose and from whichno apprehensions are entertained." The Federalist No. 45, at 293. While Congress's authority under the Commerce Clause has of course expanded with the growth of thenational economy, our cases have "always recognized that the power to regulate commerce, though broad indeed, has limits." Maryland v. Wirtz, 392 U. S. 183, 196 (1968). The Government's theory would erode those limits, permitting Congress to reach beyond the natural extent of its authority, "everywhere extending the sphere of its activity anddrawing all power into its impetuous vortex." The Federalist No. 48, at 309 (J. Madison). Congress already enjoys vast power to regulate much of what we do. Accepting the Government's theory would give Congress the same license to regulate what we do not do, fundamentally changing the relation between the citizen and the Federal

To an economist, perhaps, there is no difference between activity and inactivity; both have measurable economic effects on commerce. But the distinction between doing something and doing nothing would not have been lost on the Framers, who were "practical statesmen," not metaphysical philosophers. Industrial Union Dept., AFL-CIO v. American Petroleum Institute, 448 U. S. 607, 673 (1980) (Rehnquist, J., concurring in judgment). As we have explained, "the framers of the Constitution were not mere visionaries, toying with speculations or theories, but practical men, dealing with the facts of political life as they understood them, putting into form the government they were creating, and prescribing in language clear and intelligible the powers that government was to take." South Carolina v. United States, 199 U. S. 437, 449 (1905). The Framers gave Congress the power to regulate commerce, not to compel it, and for over 200 years both our decisions and Congress's actions have reflected this understanding. There is no reason to depart from that understanding now.

Then there is this nugget from Page 24 of Roberts' Opinion:

The Federal Government does not have the power to order people to buy health insurance. Section 5000A would therefore be unconstitutional if read as a command. The Federal Government does have the power to impose a tax on those without health insurance. Section 5000A is therefore constitutional, because it can reasonably be read as a tax.

From the Roberts' Opinion (Pages 58-59):

The Affordable Care Act is constitutional in part and unconstitutional in part. The individual mandate cannot be upheld as an exercise of Congress's power under the Commerce Clause. That Clause authorizes Congress to regulate interstate commerce, not to order individuals to engage in it. In this case, however, it is reasonable to construe what Congress has done as increasing taxes on those who have a certain amount of income, but choose to go without health insurance. Such legislation is within Congress's power to tax.

As for the Medicaid expansion, that portion of the Affordable Care Act violates the Constitution by threatening existing Medicaid funding. Congress has no authority to order the States to regulate according to its instructions.Congress may offer the States grants and require the States to comply with accompanying conditions, but the States must have a genuine choice whether to accept the offer. The States are given no such choice in this case:They must either accept a basic change in the nature of Medicaid, or risk losing all Medicaid funding. The remedy for that constitutional violation is to preclude the Federal Government from imposing such a sanction. That remedy does not require striking down other portions of the Affordable Care Act.

The Framers created a Federal Government of limited powers, and assigned to this Court the duty of enforcing those limits. The Court does so today. But the Court does not express any opinion on the wisdom of the Affordable Care Act. Under the Constitution, that judgment is reserved to the people.

The Scalia, Kennedy, Thomas, Alito Dissent sums up its opposition on page 65:

[T]he values that should have determined our course today are caution, minimalism, and the understanding that the Federal Government is one of limited powers. But the Court's ruling undermines those values at every turn. In the name of restraint, it overreaches. In the name of constitutional avoidance, it creates new constitutional questions. In the name of cooperative federalism, it undermines state sovereignty.

The Constitution, though it dates from the founding of the Republic, has powerful meaning and vital relevance to our own times. The constitutional protections that this case involves are protections of structure. Structural protections-notably, the restraints imposed by federalism and separation of powers-are less romantic and have less obvious a connection to personal freedom than the provisions of the Bill of Rights or the Civil War Amendments. Hence they tend to be undervalued or even forgotten by our citizens. It should be the responsibility of the Court to teach otherwise, to remind our people that the Framers considered structural protections of freedom the most important ones, for which reason they alone were embodied in the original Constitution and not left to later amendment. The fragmentation of power produced by the structure of our Government is central to liberty, and when we destroy it, we place liberty at peril. Today's decision should have vindicated, should have taught, this truth; instead, our judgment today has disregarded it.