The following is the full transcript of the Affordable Care Act (ObamaCare) dissent, written jointly by Associate Justices Scalia, Kennedy, Thomas and Alito. Note that Of interest is that Associate Justice Clarence Thomas ends the dissent with a separate one of his own, reiterating that the “the very notion of a substantial effects” test under the Commerce Clause is inconsistent with the original understanding of Congressional powers and earlier Commerce Clause cases.
…the Courtâ€™s continued use of that test â€œhas
encouraged the Federal Government to persist in its view
that the Commerce Clause has virtually no limits.â€ ~ Clarence Thomas
Snippets of interest to me, taken from the transcript:
And the nail in the coffin is that the mandate and penalty are located in Title I of the Act, its operative core, rather than where a tax would be foundâ€”in Title IX,Â .containing the Actâ€™s â€œRevenue Provisions.â€ In sum, â€œthe terms of [the] act rende[r] it unavoidable,â€ Parsons v. Bedford, 3 Pet. 433, 448 (1830), that Congress imposed a regulatory penalty, not a tax.
Â For all these reasons, to say that the Individual Mandate merely imposes a tax is not to interpret the statute but to rewrite it.Â Judicial tax-writing is particularly troubling.
What the Government would have us believe inÂ these cases is that the very same textual indications thatÂ show this is not a tax under the Anti-Injunction Act showÂ that it is a tax under the Constitution. That carries verbal wizardry too far, deep into the forbidden land of theÂ sophists.â˜›â˜›â˜›â˜›â˜›
Major provisions of the Affordable Care Actâ€”i.e., the insurance regulations and taxes, the reductions in federal reimbursements to hospitals and other Medicare spending reductions, the exchanges and their federal subsidies,Â and the employer responsibility assessmentâ€”cannot remainÂ once the Individual Mandate and Medicaid Expansion areÂ invalid. That result follows from the undoubted inabilityÂ of the other major provisions to operate as Congress intended without the Individual Mandate and Medicaid Expansion. Absent the invalid portions, the other major provisions could impose enormous risks of unexpected burdens on patients, the health-care community, and the federal budget. That consequence would be in absoluteÂ conflict with the ACAâ€™s design of â€œshared responsibility,â€ and would pose a threat to the Nation that Congress didÂ not intend.
…central provisions but also many that are entirely unrelatedâ€”hitched on because it was a quick way to get themÂ passed despite opposition, or because their proponents could exact their enactment as the quid pro quo for their needed support.Â We have no reliable basis for knowing which pieces of the Act would have passed on their own.Â It is certain that many of them would not have, and it is not a proper function of this Court to guess which. [reference to Cornhusker Kickback and other backroom deals]
In sum, it is perfectly clear from the goal and structureÂ of the ACA that the offer of the Medicaid Expansion was one that Congress understood no State could refuse. TheÂ Medicaid Expansion therefore exceeds Congressâ€™ spending power and cannot be implemented.
To make the Medicaid Expansion optional despite the ACAâ€™s structureÂ and design â€œâ€˜would be to make a new law, not to enforcean old one. This is no part of our duty.â€™â€
Seven Members of the Court agree that the Medicaid Expansion, as enacted by Congress, is unconstitutional…Because the Medicaid Expansion is unconstitutional, the question of remedy arises. The most natural remedyÂ would be to invalidate the Medicaid Expansion.
We should not accept the Governmentâ€™s invitation toÂ attempt to solve a constitutional problem by rewriting the Medicaid Expansion so as to allow States that reject it to retain their pre-existing Medicaid funds. Worse, the Governmentâ€™s remedy, now adopted by the Court, takesÂ the ACA and this Nation in a new direction and charts a course for federalism that the Court, not the Congress, hasÂ chosen; but under the Constitution, that power and authority do not rest with this Court.
The fragmentation of power produced by theÂ structure of our Government is central to liberty, andÂ when we destroy it, we place liberty at peril. Todayâ€™sÂ decision should have vindicated, should have taught, thisÂ truth; instead, our judgment today has disregarded it.
For the reasons here stated, we would find the Act invalid in its entirety. We respectfully dissent.
UPDATEÂ June 29, 2012 – 7:56 am CDT: We’ve heard rumors that Justice Roberts flipped at the last minute. Look at this:
Campos wrote Thursday in Salon that the dissent had a triumphant tone, as if it were written as a majority opinion, and that the four conservative justices incorrectly refer to Justice Ruth Bader Ginsburg’s concurring opinion as a “dissent.”
“No less than 15 times in the space of the next few pages,Â the dissent refers to Ruth Bader Ginsburg’s concurring opinion as ‘Justice Ginsburg’s dissent,’” Campos wrote.
DeLong pointed out on his popular blog that in Justice Clarence Thomas two-page note on the dissent,Â he refers to the conservatives’ dissent as the “joint opinion”Â instead of the “joint dissent.”
Campos hypothesized that the conservative justices may have intentionally left these typos as a way of signaling to the outside world that Chief Justice Roberts abandoned them at the last moment.
Note that all emphasis below (bold text or green font) is mine. Note also that there are numerous footnotes (about 16-18) which I have not included. I attempted to put the footnote number in bold. Â You can find the footnotes in the original pdf, which also includes the Majority Decision.Â Apologies for the poor formatting.
Begin ObamaCare SCOTUS Dissent Transcript:
JUSTICE SCALIA, JUSTICE KENNEDY, JUSTICE THOMAS,Â and JUSTICE ALITO, dissenting.
Congress has set out to remedy the problem that theÂ best health care is beyond the reach of many AmericansÂ who cannot afford it. It can assuredly do that, by exercising the powers accorded to it under the Constitution. TheÂ question in this case, however, is whether the complexÂ structures and provisions of the Patient Protection andAffordable Care Act (Affordable Care Act or ACA) go beyond those powers. We conclude that they do.
This case is in one respect difficult: it presents twoÂ questions of first impression. The first of those is whetherÂ failure to engage in economic activity (the purchase ofÂ health insurance) is subject to regulation under the Commerce Clause. Failure to act does result in an effectÂ on commerce, and hence might be said to come underÂ this Courtâ€™s â€œaffecting commerceâ€ criterion of CommerceÂ Clause jurisprudence. But in none of its decisions has thisÂ Court extended the Clause that far. The second questionÂ is whether the congressional power to tax and spend,Â U. S. Const., Art. I, Â§8, cl. 1, permits the conditioning ofÂ a Stateâ€™s continued receipt of all funds under a massiveÂ state-administered federal welfare program upon its acceptance of an expansion to that program. Several of ourÂ opinions have suggested that the power to tax and spendÂ cannot be used to coerce state administration of a federalÂ program, but we have never found a law enacted underÂ the spending power to be coercive. Those questions areÂ difficult.
The case is easy and straightforward, however, in another respect. What is absolutely clear, affirmed by theÂ text of the 1789 Constitution, by the Tenth AmendmentÂ ratified in 1791, and by innumerable cases of ours in the
220 years since, is that there are structural limits uponÂ federal powerâ€”upon what it can prescribe with respect toÂ private conduct, and upon what it can impose upon theÂ sovereign States. Whatever may be the conceptual limitsÂ upon the Commerce Clause and upon the power to taxÂ and spend, they cannot be such as will enable the FederalÂ Government to regulate all private conduct and to compel the States to function as administrators of federalÂ programs.
That clear principle carries the day here. The strikingÂ case of Wickard v. Filburn, 317 U. S. 111 (1942), whichÂ held that the economic activity ofÂ growing wheat, evenÂ for oneâ€™s own consumption, affected commerce sufficientlyÂ that it could be regulated, always has been regarded asÂ the ne plus ultra of expansive Commerce Clause jurisprudence. To go beyond that, and to say the failure to grow Â wheat (which is not an economic activity, or any activityÂ at all) nonetheless affects commerce and therefore can beÂ federally regulated, is to make mere breathing in and out the basis for federal prescription and to extend federal power to virtually all human activity.
As for the constitutional power to tax and spend forÂ the general welfare: The Court has long since expandedÂ that beyond (what Madison thought it meant) taxing andÂ spending for those aspects of the general welfare that wereÂ within the Federal Governmentâ€™s enumerated powers,Â see United States v. Butler, 297 U. S. 1, 65â€“66 (1936).Â Thus, we now have sizable federal Departments devotedÂ to subjects not mentioned among Congressâ€™ enumeratedÂ powers, and only marginally related to commerce: the Department of Education, the Department of Health andÂ Human Services, the Department of Housing and UrbanÂ Development. The principal practical obstacle that prevents Congress from using the tax-and-spend power toÂ assume all the general-welfare responsibilities traditionally exercised by the States is the sheer impossibility ofÂ managing a Federal Government large enough to administer such a system. That obstacle can be overcome byÂ granting funds to the States, allowing them to administerÂ the program. That is fair and constitutional enough whenÂ the States freely agree to have their powers employed andÂ their employees enlisted in the federal scheme. But it is aÂ blatant violation of the constitutional structure when theÂ States have no choice.
The Act before us here exceeds federal power both in mandating the purchase of health insurance and in denying nonconsenting States all Medicaid funding. These parts of the Act are central to its design and operation, and all the Actâ€™s other provisions would not have beenÂ enacted without them. In our view it must follow that theÂ entire statute is inoperative.
The Individual Mandate
Article I, Â§8, of the Constitution gives Congress the power to â€œregulate Commerce . . . among the several States.â€ The Individual Mandate in the Act commands
that every â€œapplicable individual shall for each month beginning after 2013 ensure that the individual, and any dependent of the individual who is an applicable individual, is covered under minimum essential coverage.â€ 26 U. S. C. Â§5000A(a) (2006 ed., Supp. IV). If this provision â€œregulatesâ€ anything, it is the failure to maintain minimum essential coverage. One might argue that it regulates that failure by requiring it to be accompanied by payment of a penalty. But that failureâ€”that abstention from commerceâ€”is not â€œCommerce.â€ To be sure, purchasing insurance is â€Commerceâ€; but one does not regulate commerce that does not exist by compelling its existence.
In Gibbons v. Ogden, 9 Wheat. 1, 196 (1824), Chief Justice Marshall wrote that the power to regulate commerce is the power â€œto prescribe the rule by whichÂ commerce is to be governed.â€ That understanding is consistent with the original meaning of â€œregulateâ€ at the time of the Constitutionâ€™s ratification, when â€œto regulateâ€ meantâ€œ[t]o adjust by rule, method or established mode,â€ 2 N.
Webster, An American Dictionary of the English Language (1828); â€œ[t]o adjust by rule or method,â€ 2 S. Johnson,Â A Dictionary of the English Language (7th ed. 1785); â€œ[t]oÂ adjust, to direct according to rule,â€ 2 J. Ash, New and
Complete Dictionary of the English Language (1775); â€œtoput in order, set to rights, govern or keep in order,â€ T.Â Dyche & W. Pardon, A New General English DictionaryÂ (16th ed. 1777).1Â It can mean to direct the manner ofÂ something but not to direct that something come intoÂ being. There is no instance in which this Court or Congress (or anyone else, to our knowledge) has used â€œregulateâ€Â in that peculiar fashion. If the word bore that meaning,Â Congressâ€™ authority â€œ[t]o make Rules for the Government and Regulation of the land and naval Forces,â€ U. S.Â Const., Art. I, Â§8, cl. 14, would have made superfluousÂ the later provision for authority â€œ[t]o raise and supportArmies,â€ id., Â§8, cl. 12, and â€œ[t]o provide and maintain aÂ Navy,â€ id., Â§8, cl. 13.
We do not doubt that the buying and selling of health insurance contracts is commerce generally subject to federal regulation. But when Congress provides that
(nearly) all citizens must buy an insurance contract, it goes beyond â€œadjust[ing] by rule or method,â€ Johnson, supra, or â€œdirect[ing] according to rule,â€ Ash, supra; it
directs the creation of commerce.
In response, the Government offers two theories as to why the Individual Mandate is nevertheless constitutional. Neither theory suffices to sustain its validity,
First, the Government submits that Â§5000A is â€œintegral to the Affordable Care Actâ€™s insurance reformsâ€ and â€œnecessary to make effective the Actâ€™s core reforms.â€ Brief for Petitioners in No. 11â€“398 (Minimum Coverage Provision) 24 (hereinafter Petitionersâ€™ Minimum Coverage Brief). Congress included a â€œfindingâ€ to similar effect in the ActÂ itself. See 42 U. S. C. Â§18091(2)(H).
As discussed in more detail in Part V, infra, the Act contains numerous health insurance reforms, but most notable for present purposes are the â€œguaranteed issueâ€ and â€œcommunity ratingâ€ provisions, Â§Â§300gg to 300ggâ€“4.Â The former provides that, with a few exceptions, â€œeachÂ health insurance issuer that offers health insurance coverage in the individual or group market in a State must
accept every employer and individual in the State that applies for such coverage.â€ Â§300ggâ€“1(a). That is, an insurer may not deny coverage on the basis of, among other things, any pre-existing medical condition that the applicant may have, and the resulting insurance must cover that condition. See Â§300ggâ€“3.
Under ordinary circumstances, of course, insurers wouldÂ respond by charging high premiums to individuals withÂ pre-existing conditions. The Act seeks to prevent this through the community-rating provision. Simply put, theÂ community-rating provision requires insurers to calculate an individualâ€™s insurance premium based on only fourÂ factors:
(i) whether the individualâ€™s plan covers justÂ the individual or his family also,
(ii) the â€œrating areaâ€ inÂ which the individual lives,
(iii) the individualâ€™s age, and
(iv) whether the individual uses tobacco. Â§300gg(a)(1)(A).
Aside from the rough proxies of age and tobacco use (and possibly rating area), the Act does not allow an insurer tofactor the individualâ€™s health characteristics into the priceÂ of his insurance premium. This creates a new incentive for young and healthy individuals without pre-existing conditions. The insurance premiums for those in thisÂ group will not reflect their own low actuarial risks but will
subsidize insurance for others in the pool. Many of them may decide that purchasing health insurance is not an economically sound decisionâ€”especially since the guaranteedissue provision will enable them to purchase it at the
same cost in later years and even if they have developed aÂ pre-existing condition. But without the contribution ofÂ above-risk premiums from the young and healthy, theÂ community-rating provision will not enable insurers toÂ take on high-risk individuals without a massive increaseÂ in premiums.
The Government presents the Individual Mandate as aÂ unique feature of a complicated regulatory scheme governing many parties with countervailing incentives that mustÂ be carefully balanced. Congress has imposed an extensive
set of regulations on the health insurance industry, andÂ compliance with those regulations will likely cost the industry a great deal. If the industry does not respond byÂ increasing premiums, it is not likely to survive. And if the industry does increase premiums, then there is a serious risk that its productsâ€”insurance plansâ€”will becomeÂ economically undesirable for many and prohibitively ex-
pensive for the rest.
This is not a dilemma unique to regulation of the healthinsurance industry. Government regulation typicallyÂ imposes costs on the regulated industryâ€”especially regulation that prohibits economic behavior in which most market participants are already engaging, such as â€œpiecing outâ€ the market by selling the product to different classes of people at different prices (in the present context,
providing much lower insurance rates to young and healthy buyers). And many industries so regulated faceÂ the reality that, without an artificial increase in demand,Â they cannot continue on. When Congress is regulating
these industries directly, it enjoys the broad power toÂ enact â€œâ€˜all appropriate legislationâ€™â€ to â€œâ€˜protec[t]â€™â€ andÂ â€œâ€˜advanc[e]â€™â€ commerce, NLRB v. Jones & Laughlin Steel Corp., 301 U. S. 1, 36â€“37 (1937) (quoting The Daniel Ball, 10 Wall. 557, 564 (1871)). Thus, Congress might protect the imperiled industry by prohibiting low-cost competition, or by according it preferential tax treatment, or even by granting it a direct subsidy.
Here, however, Congress has impressed into serviceÂ third parties, healthy individuals who could be but are not customers of the relevant industry, to offset the undesirable consequences of the regulation. Congressâ€™ desire to force these individuals to purchase insurance is motivatedÂ by the fact that they are further removed from the marketÂ than unhealthy individuals with pre-existing conditions,
because they are less likely to need extensive care in the near future. If Congress can reach out and command even those furthest removed from an interstate market to participate in the market, then the Commerce Clause
becomes a font of unlimited power, or in Hamiltonâ€™s words, â€œthe hideous monster whose devouring jaws . . . spare neither sex nor age, nor high nor low, nor sacred nor profane.â€ The Federalist No. 33, p. 202 (C. Rossiter ed. 1961).
At the outer edge of the commerce power, this Court hasÂ insisted on careful scrutiny of regulations that do notÂ act directly on an interstate market or its participants. In New York v. United States, 505 U. S. 144 (1992), we held
that Congress could not, in an effort to regulate the disposal of radioactive waste produced in several differentÂ industries, order the States to take title to that waste.
Id., at 174â€“177. In Printz v. United States, 521 U. S. 898 (1997), we held that Congress could not, in an effort to regulate the distribution of firearms in the interstate market, compel state law-enforcement officials to perform background checks. Id., at 933â€“935. In United States v. Lopez, 514 U. S. 549 (1995), we held that Congress could not, as a means of fostering an educated interstate labor
market through the protection of schools, ban the possession of a firearm within a school zone. Id., at 559â€“563. And in United States v. Morrison, 529 U. S. 598 (2000), weÂ held that Congress could not, in an effort to ensure the fullÂ participation of women in the interstate economy, subjectÂ private individuals and companies to suit for gendermotivated violent torts. Id., at 609â€“619. The lesson ofÂ these cases is that the Commerce Clause, even when supplemented by the Necessary and Proper Clause, is notÂ carte blanche for doing whatever will help achieve theÂ ends Congress seeks by the regulation of commerce. AndÂ the last two of these cases show that the scope of theÂ Necessary and Proper Clause is exceeded not only whenÂ the congressional action directly violates the sovereigntyÂ of the States but also when it violates the backgroundÂ principle of enumerated (and hence limited) federal power.
The case upon which the Government principally relies to sustain the Individual Mandate under the NecessaryÂ and Proper Clause is Gonzales v. Raich, 545 U. S. 1 (2005).Â That case held that Congress could, in an effort to restrainÂ the interstate market in marijuana, ban the local cultivation and possession of that drug. Id., at 15â€“22. Raich is no precedent for what Congress has done here. That caseâ€™s prohibition of growing (cf. Wickard, 317 U. S. 111),Â and of possession (cf. innumerable federal statutes) did notÂ represent the expansion of the federal power to direct intoÂ a broad new field. The mandating of economic activity does, and since it is a field so limitless that it converts the Commerce Clause into a general authority to direct theÂ economy, that mandating is not â€œconsist[ent] with the
letter and spirit of the constitution.â€ McCulloch v. Maryland, 4 Wheat. 316, 421 (1819).
Moreover, Raich is far different from the Individual Mandate in another respect. The Courtâ€™s opinion in Raich pointed out that the growing and possession prohibitions were the only practicable way of enabling the prohibitionÂ of interstate traffic in marijuana to be effectively enforced.Â 545 U. S., at 22. See also Shreveport Rate Cases, 234 U. S. 342 (1914) (Necessary and Proper Clause allows regulations of intrastate transactions if necessary to the regulation of an interstate market). Intrastate marijuana couldÂ no more be distinguished from interstate marijuana than,Â for example, endangered-species trophies obtained beforeÂ the species was federally protected can be distinguishedÂ from trophies obtained afterwardsâ€”which made it necessary and proper to prohibit the sale of all such trophies,Â see Andrus v. Allard, 444 U. S. 51 (1979).
With the present statute, by contrast, there are manyÂ ways other than this unprecedented Individual Mandate by which the regulatory schemeâ€™s goals of reducing insurance premiums and ensuring the profitability of insurers
could be achieved. For instance, those who did not purchase insurance could be subjected to a surcharge whenÂ they do enter the health insurance system. Or they couldÂ be denied a full income tax credit given to those who doÂ purchase the insurance.
The Government was invited, at oral argument, toÂ suggest what federal controls over private conduct (otherÂ than those explicitly prohibited by the Bill of Rights or
other constitutional controls) could not be justified as necessary and proper for the carrying out of a general regulatory scheme. See Tr. of Oral Arg. 27â€“30, 43â€“45
(Mar. 27, 2012). It was unable to name any. As we said at the outset, whereas the precise scope of the Commerce Clause and the Necessary and Proper Clause is uncertain,Â the proposition that the Federal Government cannot do
everything is a fundamental precept. See Lopez, 514 U. S., at 564 (â€œ[I]f we were to accept the Governmentâ€™s arguments, we are hard pressed to posit any activity by an individual that Congress is without power to regulateâ€).Â Section 5000A is defeated by that proposition.
The Governmentâ€™s second theory in support of the Individual Mandate is that Â§5000A is valid because it is actually a â€œregulat[ion of] activities having a substantial relation to interstate commerce, . . . i.e., . . . activities that substantially affect interstate commerce.â€ Id., at 558â€“559. See also Shreveport Rate Cases, supra. This argumentÂ takes a few different forms, but the basic idea is thatÂ Â§5000A regulates â€œthe way in which individuals financeÂ their participation in the health-care market.â€ Petitionersâ€™Â Minimum Coverage Brief 33 (emphasis added). That is,Â the provision directs the manner in which individualsÂ purchase health care services and related goods (directingÂ that they be purchased through insurance) and is therefore a straightforward exercise of the commerce power.
The primary problem with this argument is that Â§5000A does not apply only to persons who purchase all, or most, or even any, of the health care services or goods that the mandated insurance covers. Indeed, the main objection many have to the Mandate is that they have no intention of purchasing most or even any of such goods or services and thus no need to buy insurance for those purchases.
The Government responds that the health-care market involves â€œessentially universal participation,â€ id., at 35. The principal difficulty with this response is that it is, in the only relevant sense, not true. It is true enough that everyone consumes â€œhealth care,â€ if the term is taken to include the purchase of a bottle of aspirin. But the health care â€œmarketâ€ that is the object of the Individual Mandate not only includes but principally consists of goods and services that the young people primarily affected by the Mandate do not purchase. They are quite simply not
participants in that market, and cannot be made so (and thereby subjected to regulation) by the simple device of defining participants to include all those who will, later in their lifetime, probably purchase the goods or services
covered by the mandated insurance. 2Â Such a definition ofÂ market participants is unprecedented, and were it to be aÂ premise for the exercise of national power, it would haveÂ no principled limits.
In a variation on this attempted exercise of federal power, the Government points out that Congress in this Act has purported to regulate â€œeconomic and financial
decision[s] to forego [sic] health insurance coverage and [to] attempt to self-insure,â€ 42 U. S. C. Â§18091(2)(A), since those decisions have â€œa substantial and deleterious effect on interstate commerce,â€ Petitionersâ€™ Minimum Coverage Brief 34. But as the discussion above makes clear, the decision to forgo participation in an interstate market is not itself commercial activity (or indeed any activity at all)
within Congressâ€™ power to regulate. It is true that, at the end of the day, it is inevitable that each American will affect commerce and become a part of it, even if not by choice. But if every person comes within the Commerce Clause power of Congress to regulate by the simple reason that he will one day engage in commerce, the idea of a limited Government power is at an end.
Wickard v. Filburn has been regarded as the most expansive assertion of the commerce power in our history. A close second is Perez v. United States, 402 U. S. 146 (1971), which upheld a statute criminalizing the eminently local activity of loan-sharking. Both of those cases, however,Â involved commercial activity. To go beyond that, and toÂ say that the failure to grow wheat or the refusal to makeÂ loans affects commerce, so that growing and lending canÂ be federally compelled, is to extend federal power to virtually everything. All of us consume food, and when we doÂ so the Federal Government can prescribe what its qualityÂ must be and even how much we must pay. But the mereÂ fact that we all consume food and are thus, sooner or later,Â participants in the â€œmarketâ€ for food, does not empowerÂ the Government to say when and what we will buy. ThatÂ is essentially what this Act seeks to do with respect to theÂ purchase of health care. It exceeds federal power.
A few respectful responses to JUSTICE GINSBURGâ€™s dissent on the issue of the Mandate are in order. That dissent duly recites the test of Commerce Clause power thatÂ our opinions have applied, but disregards the premise the test contains. It is true enough that Congress needs only a â€œâ€˜rational basisâ€™ for concluding that the regulated activityÂ substantially affects interstate commerce,â€ ante, at 15 (emphasis added). But it must be activity affecting commerce that is regulated, and not merely the failure toÂ engage in commerce. And one is not now purchasingÂ the health care covered by the insurance mandate simply because one is likely to be purchasing it in the future. Our testâ€™s premise of regulated activity is not invented out of whole cloth, but rests upon the Constitutionâ€™s requirementthat it be commerce which is regulated. If all inactivity affecting commerce is commerce, commerce is everything.Â Ultimately the dissent is driven to saying that there is
really no difference between action and inaction, ante, at 26, a proposition that has never recommended itself, neither to the law nor to common sense. To say, for example, that the inaction here consists of activity in â€œthe selfinsurance market,â€ ibid., seems to us wordplay. By parityÂ of reasoning the failure to buy a car can be called participation in the non-private-car-transportation market. Â Commerce becomes everything.
The dissent claims that we â€œfai[l] to explain why the individual mandate threatens our constitutional order.â€ Ante, at 35. But we have done so. It threatens that order
because it gives such an expansive meaning to the Commerce Clause that all private conduct (including failure to act) becomes subject to federal control, effectively destroying the Constitutionâ€™s division of governmental powers. Thus the dissent, on the theories proposed for the validity of the Mandate, would alter the accepted constitutional relation between the individual and the National Government. The dissent protests that the Necessary and Proper Clause has been held to include â€œthe power to enact criminal laws, . . . the power to imprison, . . . and the power to create a national bank,â€ ante, at 34â€“35. Is not the power
to compel purchase of health insurance much lesser? No, not if (unlike those other dispositions) its application rests upon a theory that everything is within federal control simply because it exists.
The dissentâ€™s exposition of the wonderful things the Federal Government has achieved through exercise of its assigned powers, such as â€œthe provision of old-age and survivorsâ€™ benefitsâ€ in the Social Security Act, ante, at 2, is quite beside the point. The issue here is whether the federal government can impose the Individual Mandate through the Commerce Clause. And the relevant history is not that Congress has achieved wide and wonderful results through the proper exercise of its assigned powers in the past, but that it has never before used the Commerce Clause to compel entry into commerce. 3Â The dissentÂ treats the Constitution as though it is an enumeration ofÂ those problems that the Federal Government can addressâ€”among which, it finds, is â€œthe Nationâ€™s course inÂ the economic and social welfare realm,â€ ibid., and moreÂ specifically â€œthe problem of the uninsured,â€ ante, at 7. Â The Constitution is not that. It enumerates not federallyÂ soluble problems, but federally available powers. TheÂ Federal Government can address whatever problems itÂ wants but can bring to their solution only those powersÂ that the Constitution confers, among which is the power toÂ regulate commerce. None of our cases say anything else.Â Article I contains no whatever-it-takes-to-solve-a-national problem power
The dissent dismisses the conclusion that the power to compel entry into the health-insurance market would include the power to compel entry into the new-car or broccoli markets. The latter purchasers, it says, â€œwill be obliged to pay at the counter before receiving the vehicleÂ or nourishment,â€ whereas those refusing to purchaseÂ health-insurance will ultimately get treated anyway, atÂ othersâ€™ expense. Ante, at 21. â€œ[T]he unique attributes ofÂ the health-care market . . . give rise to a significant freeriding problem that does not occur in other markets.â€Â Ante, at 28. And â€œa vegetable-purchase mandateâ€ (or aÂ car-purchase mandate) is not â€œlikely to have a substantialÂ effect on the health-care costsâ€ borne by other Americans.Â Ante, at 29. Those differences make a very good argumentÂ by the dissentâ€™s own lights, since they show that the failure to purchase health insurance, unlike the failure toÂ purchase cars or broccoli, creates a national, social-welfareÂ problem that is (in the dissentâ€™s view) included among the unenumerated â€œproblemsâ€ that the Constitution authorizes the Federal Government to solve. But those differencesÂ do not show that the failure to enter the health-insuranceÂ market, unlike the failure to buy cars and broccoli, isÂ an activity that Congress can â€œregulate.â€ (Of course oneÂ day the failure of some of the public to purchase American cars may endanger the existence of domestic automobile manufacturers; or the failure of some to eat broccoliÂ may be found to deprive them of a newly discovered cancerfighting chemical which only that food contains, producingÂ health-care costs that are a burden on the rest of usâ€”inÂ which case, under the theory of JUSTICE GINSBURGâ€™s dissent, moving against those inactivities will also comeÂ within the Federal Governmentâ€™s unenumerated problem solving powers.)
The Taxing Power
As far as Â§5000A is concerned, we would stop there. Congress has attempted to regulate beyond the scope of itsÂ Commerce Clause authority, 4Â and Â§5000A is thereforeÂ invalid. The Government contends, however, as expressedÂ in the caption to Part II of its brief, that â€œTHE MINIMUMÂ COVERAGE PROVISION IS INDEPENDENTLY AUTHORIZED BYÂ CONGRESSâ€™S TAXING POWER.â€ Petitionersâ€™ Minimum Coverage Brief 52. The phrase â€œindependently authorizedâ€Â suggests the existence of a creature never hitherto seenÂ in the United States Reports: A penalty for constitutionalÂ purposes that is also a tax for constitutional purposes. InÂ all our cases the two are mutually exclusive. The provision challenged under the Constitution is either a penaltyÂ or else a tax. Of course in many cases what was a regulatory mandate enforced by a penalty could have beenÂ imposed as a tax upon permissible action; or what was imposed as a tax upon permissible action could have been aÂ regulatory mandate enforced by a penalty. But we knowÂ of no case, and the Government cites none, in which theÂ imposition was, for constitutional purposes, both. 5Â TheÂ two are mutually exclusive. Thus, what the Governmentâ€™sÂ caption should have read was â€œALTERNATIVELY, THEÂ MINIMUM COVERAGE PROVISION IS NOT A MANDATE-WITHPENALTY BUT A TAX.â€ It is important to bear this in mindÂ in evaluating the tax argument of the Government and ofÂ those who support it: The issue is not whether CongressÂ had the power to frame the minimum-coverage provisionÂ as a tax, but whether it did so.
In answering that question we must, if â€œfairly possible,â€ Crowell v. Benson, 285 U. S. 22, 62 (1932), construe the provision to be a tax rather than a mandate-with-penalty, since that would render it constitutional rather than unconstitutional (ut res magis valeat quam pereat). But we cannot rewrite the statute to be what it is not. â€œâ€˜â€œ[A]l- though this Court will often strain to construe legislation so as to save it against constitutional attack, it must not and will not carry this to the point of perverting the purpose of a statute . . .â€ or judicially rewriting it.â€™â€ Commodity Futures Trading Commâ€™n v. Schor, 478 U. S. 833, 841 (1986) (quoting Aptheker v. Secretary of State, 378 U. S. 500, 515 (1964), in turn quoting Scales v. United States, 367 U. S. 203, 211 (1961)). In this case, there is simply no way, â€œwithout doing violence to the fair meaning of the words used,â€ Grenada County Supervisors v. Brogden, 112 U. S. 261, 269 (1884), to escape what Congress enacted: a mandate that individuals maintain minimum essential coverage, enforced by a penalty.
Our cases establish a clear line between a tax and a penalty: â€œâ€˜[A] tax is an enforced contribution to provide forÂ the support of government; a penalty . . . is an exaction
imposed by statute as punishment for an unlawful act.â€™â€ United States v. Reorganized CF&I Fabricators of Utah, Inc., 518 U. S. 213, 224 (1996) (quoting United States v. La Franca, 282 U. S. 568, 572 (1931)). In a few cases, this Court has held that a â€œtaxâ€ imposed upon private conduct was so onerous as to be in effect a penalty. But we have never heldâ€”neverâ€”that a penalty imposed for violation of the law was so trivial as to be in effect a tax. We have never held that any exaction imposed for violation of the law is an exercise of Congressâ€™ taxing powerâ€”evenwhen the statute calls it a tax, much less when (as here)the statute repeatedly calls it a penalty. When an actÂ â€œadopt[s] the criteria of wrongdoingâ€ and then imposes aÂ monetary penalty as the â€œprincipal consequence on thoseÂ who transgress its standard,â€ it creates a regulatory penalty, not a tax. Child Labor Tax Case, 259 U. S. 20, 38Â (1922).
So the question is, quite simply, whether the exaction here is imposed for violation of the law. It unquestionably is. The minimum-coverage provision is found in 26
U. S. C. Â§5000A, entitled â€œRequirement to maintain minimum essential coverage.â€ (Emphasis added.) It commands that every â€œapplicable individual shall . . . ensure that the individual . . . is covered under minimum essential coverage.â€ Ibid. (emphasis added). And the immediately following provision states that, â€œ[i]f . . . an applicable individual . . . fails to meet the requirement of subsection (a) . . . there is hereby imposed . . . a penalty.â€ Â§5000A(b)Â (emphasis added). And several of Congressâ€™ legislativeÂ â€œfindingsâ€ with regard to Â§5000A confirm that it sets forth
a legal requirement and constitutes the assertion of regulatory power, not mere taxing power. See 42 U. S. C. Â§18091(2)(A) (â€œThe requirement regulates activity . . .â€);Â Â§18091(2)(C) (â€œThe requirement . . . will add millions of new consumers to the health insurance market . . .â€); Â§18091(2)(D) (â€œThe requirement achieves near-universal coverageâ€); Â§18091(2)(H) (â€œThe requirement is an essential part of this larger regulation of economic activity, and the absence of the requirement would undercut Federal regulation of the health insurance marketâ€); Â§18091(3) (â€œ[T]he
Supreme Court of the United States ruled that insurance
is interstate commerce subject to Federal regulationâ€).
The Government and those who support its view on the tax point rely on New York v. United States, 505 U. S. 144, to justify reading â€œshallâ€ to mean â€œmay.â€ The â€œshallâ€ in that case was contained in an introductory provisionâ€”aÂ recital that provided for no legal consequencesâ€”which said that â€œ[e]ach State shall be responsible for providingÂ . . . for the disposal of . . . low-level radioactive waste.â€ 42Â U. S. C. Â§2021c(a)(1)(A). The Court did not hold thatÂ â€œshallâ€ could be construed to mean â€œmay,â€ but rather thatÂ this preliminary provision could not impose upon the oper-Â ative provisions of the Act a mandate that they did notÂ contain: â€œWe . . . decline petitionersâ€™ invitation to construe Â§2021c(a)(1)(A), alone and in isolation, as a command to the States independent of the remainder of theÂ Act.â€ New York, 505 U. S., at 170. Our opinion thenÂ proceeded to â€œconsider each [of the three operative provisions] in turn.â€ Ibid. Here the mandateâ€”the â€œshallâ€â€”isÂ contained not in an inoperative preliminary recital, but inÂ the dispositive operative provision itself. New York provides no support for reading it to be permissive.
Quite separately, the fact that Congress (in its ownÂ words) â€œimposed . . . a penalty,â€ 26 U. S. C. Â§5000A(b)(1),Â for failure to buy insurance is alone sufficient to render
that failure unlawful. It is one of the canons of interpretation that a statute that penalizes an act makes it unlawful: â€œ[W]here the statute inflicts a penalty for doing an act, although the act itself is not expressly prohibited, yet to doÂ the act is unlawful, because it cannot be supposed that theÂ Legislature intended that a penalty should be inflicted for a lawful act.â€ Powhatan Steamboat Co. v. Appomattox R. Co., 24 How. 247, 252 (1861). Or in the words of Chancellor Kent: â€œIf a statute inflicts a penalty for doing an act,Â the penalty implies a prohibition, and the thing is unlawful, though there be no prohibitory words in the statute.â€
1 J. Kent, Commentaries on American Law 436 (1826).
We never have classified as a tax an exaction imposedÂ for violation of the law, and so too, we never have classified as a tax an exaction described in the legislation itself as a penalty. To be sure, we have sometimes treated as a tax a statutory exaction (imposed for something other than a violation of law) which bore an agnostic label that does not entail the significant constitutional consequencesÂ of a penaltyâ€”such as â€œlicenseâ€ (License Tax Cases, 5 Wall.Â 462 (1867)) or â€œsurchargeâ€ (New York v. United States,Â supra.). But we have neverâ€”neverâ€”treated as a tax anÂ exaction which faces up to the critical difference betweenÂ a tax and a penalty, and explicitly denominates the exaction a â€œpenalty.â€ Eighteen times in Â§5000A itself and elsewhere throughout the Act, Congress called the exaction inÂ Â§5000A(b) a â€œpenalty.â€
That Â§5000A imposes not a simple tax but a mandate toÂ which a penalty is attached is demonstrated by the factÂ that some are exempt from the tax who are not exempt from the mandateâ€”a distinction that would makeÂ no sense if the mandate were not a mandate. Section 5000A(d) exempts three classes of people from the definition of â€œapplicable individualâ€ subject to the minimumÂ coverage requirement: Those with religious objections orÂ who participate in a â€œhealth care sharing ministry,â€Â Â§5000A(d)(2); those who are â€œnot lawfully presentâ€ in the
United States, Â§5000A(d)(3); and those who are incarcerated, Â§5000A(d)(4). Section 5000A(e) then creates a separate set of exemptions, excusing from liability for theÂ penalty certain individuals who are subject to the minimum coverage requirement: Those who cannot affordÂ coverage, Â§5000A(e)(1); who earn too little income to require filing a tax return, Â§5000A(e)(2); who are membersÂ of an Indian tribe, Â§5000A(e)(3); who experience only shortÂ gaps in coverage, Â§5000A(e)(4); and who, in the judgmentÂ of the Secretary of Health and Human Services, â€œhave
suffered a hardship with respect to the capability to obtainÂ coverage,â€ Â§5000A(e)(5). If Â§5000A were a tax, these twoÂ classes of exemption would make no sense; there being no requirement, all the exemptions would attach to the penalty (renamed tax) alone.
In the face of all these indications of a regulatory requirement accompanied by a penalty, the Solicitor GeneralÂ assures us that â€œneither the Treasury Department nor theÂ Department of Health and Human Services interpretsÂ Section 5000A as imposing a legal obligation,â€ Petitionersâ€™Â Minimum Coverage Brief 61, and that â€œ[i]f [those subjectÂ to the Act] pay the tax penalty, theyâ€™re in compliance withÂ the law,â€ Tr. of Oral Arg. 50 (Mar. 26, 2012). These self-serving litigating positions are entitled to no weight.Â What counts is what the statute says, and that is entirelyÂ clear. It is worth noting, moreover, that these assurancesÂ contradict the Governmentâ€™s position in related litigation.Â Shortly before the Affordable Care Act was passed, theCommonwealth of Virginia enacted Va. Code Ann. Â§38.2â€“3430.1:1 (Lexis Supp. 2011), which states, â€œNo resident ofÂ [the] Commonwealth . . . shall be required to obtain orÂ maintain a policy of individual insurance coverage exceptas required by a court or the Department of Social Services . . . .â€ In opposing Virginiaâ€™s assertion of standing toÂ challenge Â§5000A based on this statute, the GovernmentÂ said that â€œif the minimum coverage provision is unconstitutional, the [Virginia] statute is unnecessary, and if theÂ minimum coverage provision is upheld, the state statute isÂ void under the Supremacy Clause.â€ Brief for AppellantÂ in No. 11â€“1057 etc. (CA4), p. 29. But it would be voidÂ under the Supremacy Clause only if it was contradicted byÂ a federal â€œrequire[ment] to obtain or maintain a policy ofÂ individual insurance coverage.â€
Against the mountain of evidence that the minimum coverage requirement is what the statute calls itâ€”a requirementâ€”and that the penalty for its violation is what
the statute calls itâ€”a penaltyâ€”the Government brings forward the flimsiest of indications to the contrary. It notes that â€œ[t]he minimum coverage provision amends theÂ Internal Revenue Code to provide that a non-exempted
individual . . . will owe a monetary penalty, in addition toÂ the income tax itself,â€ and that â€œ[t]he [Internal RevenueÂ Service (IRS)] will assess and collect the penalty in the same manner as assessable penalties under the InternalÂ Revenue Code.â€ Petitionersâ€™ Minimum Coverage Brief 53.Â The manner of collection could perhaps suggest a tax ifÂ IRS penalty-collection were unheard-of or rare. It is not.Â See, e.g., 26 U. S. C. Â§527(j) (2006 ed.) (IRS-collectible penalty for failure to make campaign-finance disclosures);Â Â§5761(c) (IRS-collectible penalty for domestic sales of tobacco products labeled for export); Â§9707 (IRS-collectibleÂ penalty for failure to make required health-insuranceÂ premium payments on behalf of mining employees). InÂ Reorganized CF&I Fabricators of Utah, Inc., 518 U. S.Â 213, we held that an exaction not only enforced by theÂ Commissioner of Internal Revenue but even called a â€œtaxâ€Â was in fact a penalty. â€œ[I]f the concept of penalty meansÂ anything,â€ we said, â€œit means punishment for an unlawfulact or omission.â€ Id., at 224. See also Lipke v. Lederer,Â 259 U. S. 557 (1922) (same). Moreover, while the penaltyÂ is assessed and collected by the IRS, Â§5000A is administered both by that agency and by the Department ofÂ Health and Human Services (and also the Secretary ofÂ Veteran Affairs), see Â§5000A(e)(1)(D), (e)(5), (f)(1)(A)(v),Â (f)(1)(E) (2006 ed., Supp. IV), which is responsible forÂ defining its substantive scopeâ€”a feature that would beÂ quite extraordinary for taxes.
The Government points out that â€œ[t]he amount of theÂ penalty will be calculated as a percentage of household income for federal income tax purposes, subject to a floor and [a] ca[p],â€ and that individuals who earn so little money that they â€œare not required to file income tax returns for the taxable year are not subject to the penaltyâ€Â (though they are, as we discussed earlier, subject to the
mandate). Petitionersâ€™ Minimum Coverage Brief 12, 53.Â But varying a penalty according to ability to pay is an utterly familiar practice. See, e.g., 33 U. S. C. Â§1319(d) (2006 ed., Supp. IV) (â€œIn determining the amount of a civil penalty the court shall consider . . . the economic impact ofÂ the penalty on the violatorâ€); see also 6 U. S. C. Â§488e(c); 7Â U. S. C. Â§Â§7734(b)(2), 8313(b)(2); 12 U. S. C. Â§Â§1701qâ€“1(d)(3),Â 1723i(c)(3), 1735fâ€“14(c)(3), 1735fâ€“15(d)(3), 4585(c)(2); 15Â U. S. C. Â§Â§45(m)(1)(C), 77hâ€“1(g)(3), 78uâ€“2(d), 80aâ€“9(d)(4),Â 80bâ€“3(i)(4), 1681s(a)(2)(B), 1717a(b)(3), 1825(b)(1), 2615(a)Â (2)(B), 5408(b)(2); 33 U. S. C. Â§2716a(a).
The last of the feeble arguments in favor of petitioners that we will address is the contention that what this statute repeatedly calls a penalty is in fact a tax because itÂ contains no scienter requirement. The presence of such a requirement suggests a penaltyâ€”though one can imagine a tax imposed only on willful action; but the absence of such a requirement does not suggest a tax. Penalties for absolute-liability offenses are commonplace. And where a statute is silent as to scienter, we traditionally presume a mens rea requirement if the statute imposes a â€œsevere
penalty.â€ Staples v. United States, 511 U. S. 600, 618 (1994). Since we have an entire jurisprudence addressing when it is that a scienter requirement should be inferred from a penalty, it is quite illogical to suggest that aÂ penalty is not a penalty for want of an express scienter requirement.
And the nail in the coffin is that the mandate and penalty are located in Title I of the Act, its operative core, rather than where a tax would be foundâ€”in Title IX, .containing the Actâ€™s â€œRevenue Provisions.â€ In sum, â€œthe terms of [the] act rende[r] it unavoidable,â€ Parsons v. Bedford, 3 Pet. 433, 448 (1830), that Congress imposed a regulatory penalty, not a tax.
For all these reasons, to say that the Individual Mandate merely imposes a tax is not to interpret the statute but to rewrite it. Judicial tax-writing is particularly troubling. Taxes have never been popular, see, e.g., Stamp ActÂ of 1765, and in part for that reason, the ConstitutionÂ requires tax increases to originate in the House of Representatives. See Art. I, Â§7, cl. 1. That is to say, they mustÂ originate in the legislative body most accountable to theÂ people, where legislators must weigh the need for the taxÂ against the terrible price they might pay at their nextÂ election, which is never more than two years off. TheÂ Federalist No. 58 â€œdefend[ed] the decision to give theÂ origination power to the House on the ground that theÂ Chamber that is more accountable to the people shouldÂ have the primary role in raising revenue.â€ United StatesÂ v. Munoz-Flores, 495 U. S. 385, 395 (1990). We have noÂ doubt that Congress knew precisely what it was doingÂ when it rejected an earlier version of this legislation thatÂ imposed a tax instead of a requirement-with-penalty. SeeÂ Affordable Health Care for America Act, H. R. 3962, 111thÂ Cong., 1st Sess., Â§501 (2009); Americaâ€™s Healthy FutureÂ Act of 2009, S. 1796, 111th Cong., 1st Sess., Â§1301. Imposing a tax through judicial legislation inverts the constitutional scheme, and places the power to tax in the branch ofÂ government least accountable to the citizenry.
Finally, we must observe that rewriting Â§5000A as a tax in order to sustain its constitutionality would force us to confront a difficult constitutional question: whether this is a direct tax that must be apportioned among the StatesÂ according to their population. Art. I, Â§9, cl. 4. Perhaps itÂ is not (we have no need to address the point); but the meaning of the Direct Tax Clause is famously unclear, and its application here is a question of first impression thatÂ deserves more thoughtful consideration than the lick-and-a-promise accorded by the Government and its supporters. The Governmentâ€™s opening brief did not even address the questionâ€”perhaps because, until today, no federal court has accepted the implausible argument that Â§5000A isÂ an exercise of the tax power.And once respondents raisedÂ the issue, the Government devoted a mere 21 lines of its reply brief to the issue. Petitionersâ€™ Minimum Coverage Reply Brief 25. At oral argument, the most prolongedÂ statement about the issue was just over 50 words. Tr. of Oral Arg. 79 (Mar. 27, 2012). One would expect this CourtÂ to demand more than fly-by-night briefing and argumentÂ before deciding a difficult constitutional question of firstÂ impression.
The Anti-Injunction Act
There is another point related to the Individual Mandate that we must discussâ€”a point that logically should have been discussed first: Whether jurisdiction over the
challenges to the minimum-coverage provision is precluded by the Anti-Injunction Act, which provides that â€œno suitÂ for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person,â€ 26 U. S. C. Â§7421(a) (2006 ed.).
We have left the question to this point because it seemed to us that the dispositive question whether the minimum-coverage provision is a tax is more appropriately
addressed in the significant constitutional context of whether it is an exercise of Congressâ€™ taxing power. Having found that it is not, we have no difficulty in deciding that these suits do not have â€œthe purpose of restraining the assessment or collection of any tax.â€6
The Government and those who support its position onÂ this point make the remarkable argument that Â§5000A isÂ not a tax for purposes of the Anti-Injunction Act, see Brief for Petitioners in No. 11â€“398 (Anti-Injunction Act), butÂ is a tax for constitutional purposes, see Petitionersâ€™ Minimum Coverage Brief 52â€“62. The rhetorical device that tries to cloak this argument in superficial plausibility is
the same device employed in arguing that for constitutional purposes the minimum-coverage provision is a tax:Â confusing the question of what Congress did with the question of what Congress could have done. What qualifies as a tax for purposes of the Anti-Injunction Act, unlikeÂ what qualifies as a tax for purposes of the Constitution, isÂ entirely within the control of Congress. Compare Bailey v.
George, 259 U. S. 16, 20 (1922) (Anti-Injunction Act barred suit to restrain collections under the Child Labor Tax Law), with Child Labor Tax Case, 259 U. S., at 36â€“41 (holding the same law unconstitutional as exceeding Congressâ€™ taxing power). Congress could have defined â€œtaxâ€Â for purposes of that statute in such fashion as to exclude some exactions that in fact are â€œtaxes.â€ It might have
prescribed, for example, that a particular exercise of the taxing power â€œshall not be regarded as a tax for purposes of the Anti-Injunction Act.â€ But there is no such prescription here. What the Government would have us believe inÂ these cases is that the very same textual indications thatÂ show this is not a tax under the Anti-Injunction Act showÂ that it is a tax under the Constitution. That carries verbal wizardry too far, deep into the forbidden land of theÂ sophists.
The Medicaid Expansion
We now consider respondentsâ€™ second challenge to the constitutionality of the ACA, namely, that the Actâ€™s dramatic expansion of the Medicaid program exceeds Congressâ€™ power to attach conditions to federal grants to the States
The ACA does not legally compel the States to participate in the expanded Medicaid program, but the Act authorizes a severe sanction for any State that refuses to go
along: termination of all the Stateâ€™s Medicaid funding. For the average State, the annual federal Medicaid subsidy isÂ equal to more than one-fifth of the Stateâ€™s expenditures. 7 A State forced out of the program would not only lose this
huge sum but would almost certainly find it necessary to increase its own health-care expenditures substantially, requiring either a drastic reduction in funding for otherÂ programs or a large increase in state taxes. And these new taxes would come on top of the federal taxes alreadyÂ paid by the Stateâ€™s citizens to fund the Medicaid programÂ in other States.
The States challenging the constitutionality of the ACAâ€™sÂ Medicaid Expansion contend that, for these practicalÂ reasons, the Act really does not give them any choice atÂ all. As proof of this, they point to the goal and the structure of the ACA. The goal of the Act is to provide near universal medical coverage, 42 U. S. C. Â§18091(2)(D), andÂ without 100% State participation in the Medicaid program, attainment of this goal would be thwarted. Even ifÂ States could elect to remain in the old Medicaid program,Â while declining to participate in the Expansion, therewould be a gaping hole in coverage. And if a substantialÂ number of States were entirely expelled from the program,Â the number of persons without coverage would be evenÂ higher.
In light of the ACAâ€™s goal of near-universal coverage,Â petitioners argue, if Congress had thought that anything less than 100% state participation was a realistic possibility, Congress would have provided a backup scheme. But no such scheme is to be found anywhere in the more thanÂ 900 pages of the Act. This shows, they maintain, thatÂ Congress was certain that the ACAâ€™s Medicaid offer was
one that no State could refuse.
In response to this argument, the Government contendsÂ that any congressional assumption about uniform stateÂ participation was based on the simple fact that the offer of federal funds associated with the expanded coverage is such a generous gift that no State would want to turn itÂ down.
To evaluate these arguments, we consider the extent ofÂ the Federal Governmentâ€™s power to spend money and to attach conditions to money granted to the States.
No one has ever doubted that the Constitution authorizes the Federal Government to spend money, but forÂ many years the scope of this power was unsettled. TheÂ Constitution grants Congress the power to collect taxes â€œto. . . provide for the . . . general Welfare of the United States,â€ Art. I, Â§8, cl. 1, and from â€œthe foundation of theÂ Nation sharp differences of opinion have persisted as toÂ the true interpretation of the phraseâ€ â€œthe general welfare.â€ Butler, 297 U. S., at 65. Madison, it has been said,Â thought that the phrase â€œamounted to no more than aÂ reference to the other powers enumerated in the subsequent clauses of the same section,â€ while Hamilton â€œmaintained the clause confers a power separate and distinctfrom those later enumerated [and] is not restricted inÂ meaning by the grant of them.â€ Ibid.
The Court resolved this dispute in Butler. Writing forÂ the Court, Justice Roberts opined that the MadisonianÂ view would make Article Iâ€™s grant of the spending power aÂ â€œmere tautology.â€ Ibid. To avoid that, he adopted Hamiltonâ€™s approach and found that â€œthe power of Congress toÂ authorize expenditure of public moneys for public purposes is not limited by the direct grants of legislativeÂ power found in the Constitution.â€ Id., at 66. Instead, heÂ wrote, the spending powerâ€™s â€œconfines are set in the clauseÂ which confers it, and not in those of section 8 which bestow and define the legislative powers of the Congress.â€Â Ibid.; see also Steward Machine Co. v. Davis, 301 U. S.Â 548, 586â€“587 (1937); Helvering v. Davis, 301 U. S. 619,Â 640 (1937).
The power to make any expenditure that furthers â€œtheÂ general welfareâ€ is obviously very broad, and shortly after Butler was decided the Court gave Congress wide leewayÂ to decide whether an expenditure qualifies. See Helvering, 301 U. S., at 640â€“641. â€œThe discretion belongs to Congress,â€ the Court wrote, â€œunless the choice is clearly wrong, a display of arbitrary power, not an exercise of judgment.â€ Id., at 640. Since that time, the Court has never held that a federal expenditure was not for â€œtheÂ general welfare.â€
One way in which Congress may spend to promote the general welfare is by making grants to the States. Monetary grants, so-called grants-in-aid, became more frequentÂ during the 1930â€™s, G. Stephens & N. Wikstrom, Ameri-Â can Intergovernmental Relationsâ€”A Fragmented FederalÂ Polity 83 (2007), and by 1950 they had reached $20 billion8Â or 11.6% of state and local government expenditures fromÂ their own sources. 9Â By 1970 this number had grown toÂ $123.7 billion 10Â or 29.1% of state and local governmentÂ expenditures from their own sources. 11Â As of 2010, federal outlays to state and local governments came to overÂ $608 billion or 37.5% of state and local governmentÂ expenditures. 12
When Congress makes grants to the States, it customarily attaches conditions, and this Court has long held thatÂ the Constitution generally permits Congress to do this. See Pennhurst State School and Hospital v. Halderman, 451 U. S. 1, 17 (1981); South Dakota v. Dole, 483 U. S. 203, 206 (1987); Fullilove v. Klutznick, 448 U. S. 448, 474 (1980) (opinion of Burger, C. J.); Steward Machine, supra, at 593.
This practice of attaching conditions to federal fundsÂ greatly increases federal power. â€œ[O]bjectives not thoughtÂ to be within Article Iâ€™s enumerated legislative fields, mayÂ nevertheless be attained through the use of the spendingÂ power and the conditional grant of federal funds.â€ Dole,Â supra, at 207 (internal quotation marks and citation omitted); see also College Savings Bank v. Florida PrepaidÂ Postsecondary Ed. Expense Bd., 527 U. S. 666, 686 (1999)Â (by attaching conditions to federal funds, Congress mayÂ induce the States to â€œtak[e] certain actions that CongressÂ could not require them to takeâ€).
This formidable power, if not checked in any way, would present a grave threat to the system of federalism createdÂ by our Constitution. If Congressâ€™ â€œSpending Clause powerto pursue objectives outside of Article Iâ€™s enumerated legislative fields,â€ Davis v. Monroe County Bd. of Ed., 526 U. S. 629, 654 (1999) (KENNEDY, J., dissenting) (internalÂ quotation marks omitted), is â€œlimited only by Congressâ€™ notion of the general welfare, the reality, given the vastÂ financial resources of the Federal Government, is that the Spending Clause gives â€˜power to the Congress to tear down the barriers, to invade the statesâ€™ jurisdiction, and to become a parliament of the whole people, subject to no restrictions save such as are self-imposed,â€™â€ Dole, supra, at 217 (Oâ€™Connor, J., dissenting) (quoting Butler, 297 U. S., at 78). â€œ[T]he Spending Clause power, if wielded withoutÂ concern for the federal balance, has the potential to obliterate distinctions between national and local spheres ofÂ interest and power by permitting the Federal Government to set policy in the most sensitive areas of traditionalÂ state concern, areas which otherwise would lie outside its reach.â€ Davis, supra, at 654â€“655 (KENNEDY, J., dissenting).
Recognizing this potential for abuse, our cases have long held that the power to attach conditions to grants to the States has limits. See, e.g., Dole, supra, at 207â€“208; id., at 207 (spending power is â€œsubject to several general restrictions articulated in our casesâ€). For one thing, anyÂ such conditions must be unambiguous so that a State atÂ least knows what it is getting into. See Pennhurst, supra,Â at 17. Conditions must also be related â€œto the federalÂ interest in particular national projects or programs,â€Â Massachusetts v. United States, 435 U. S. 444, 461 (1978),Â and the conditional grant of federal funds may not â€œinduceÂ the States to engage in activities that would themselves beÂ unconstitutional,â€ Dole, supra, at 210; see Lawrence CountyÂ v. Lead-Deadwood School Dist. No. 40â€“1, 469 U. S.Â 256, 269â€“270 (1985). Finally, while Congress may seek toÂ induce States to accept conditional grants, Congress mayÂ not cross the â€œpoint at which pressure turns into compulsion, and ceases to be inducement.â€ Steward Machine, 301Â U. S., at 590. Accord, College Savings Bank, supra, at 687;Â Metropolitan Washington Airports Authority v. Citizens forÂ Abatement of Aircraft Noise, Inc., 501 U. S. 252, 285 (1991)Â (White, J., dissenting); Dole, supra, at 211.
When federal legislation gives the States a real choiceÂ whether to accept or decline a federal aid package, theÂ federal-state relationship is in the nature of a contractualÂ relationship. See Barnes v. Gorman, 536 U. S. 181, 186Â (2002); Pennhurst, 451 U. S., at 17. And just as a contractÂ is voidable if coerced, â€œ[t]he legitimacy of Congressâ€™ powerÂ to legislate under the spending power . . . rests on whetherÂ the State voluntarily and knowingly accepts the termsÂ of the â€˜contract.â€™â€ Ibid. (emphasis added). If a federalÂ spending program coerces participation the States haveÂ not â€œexercise[d] their choiceâ€â€”let alone made an â€œinformedÂ choice.â€ Id., at 17, 25.
Coercing States to accept conditions risks the destruction of the â€œunique role of the States in our system.â€ Davis, supra, at 685 (KENNEDY, J., dissenting). â€œ[T]heÂ Constitution has never been understood to confer upon Congress the ability to require the States to govern according to Congressâ€™ instructions.â€ New York, 505 U. S., atÂ 162. Congress may not â€œsimply commandeer the legislative processes of the States by directly compelling them toÂ enact and enforce a federal regulatory program.â€ Id.,Â at 161 (internal quotation marks and brackets omitted).Â Congress effectively engages in this impermissible compulsion when state participation in a federal spendingÂ program is coerced, so that the Statesâ€™ choice whether toÂ enact or administer a federal regulatory program is rendered illusory.
Where all Congress has done is to â€œencourag[e] stateÂ regulation rather than compe[l] it, state governments remain responsive to the local electorateâ€™s preferences; state officials remain accountable to the people. [But] where the Federal Government compels States to regulate,Â the accountability of both state and federal officials is diminished.â€ New York, supra, at 168.
Amici who support the Government argue that forcingÂ state employees to implement a federal program is more respectful of federalism than using federal workers toÂ implement that program. See, e.g., Brief for Service Employees International Union et al. as Amici Curiae in No. 11â€“398, pp. 25â€“26. They note that Congress, instead of expanding Medicaid, could have established an entirelyÂ federal program to provide coverage for the same group of people. By choosing to structure Medicaid as a cooperativeÂ federal-state program, they contend, Congress allows forÂ more state control. Ibid
This argument reflects a view of federalism that ourÂ cases have rejectedâ€”and with good reason. When Congress compels the States to do its bidding, it blurs theÂ lines of political accountability. If the Federal Government makes a controversial decision while acting on itsÂ own, â€œit is the Federal Government that makes the decision in full view of the public, and it will be federal officials that suffer the consequences if the decision turns outÂ to be detrimental or unpopular.â€ New York, 505 U. S., atÂ 168. But when the Federal Government compels theÂ States to take unpopular actions, â€œit may be state officialsÂ who will bear the brunt of public disapproval, while theÂ federal officials who devised the regulatory program mayremain insulated from the electoral ramifications of theirÂ decision.â€ Id., at 169; see Printz, supra, at 930. For thisÂ reason, federal officeholders may view this â€œdepartur[e]Â from the federal structure to be in their personal interests. . . as a means of shifting responsibility for the eventualÂ decision.â€ New York, 505 U. S., at 182â€“183. And even state officials may favor such a â€œdeparture from the constitutional plan,â€ since uncertainty concerning responsibility may also permit them to escape accountability. Id., at 182. If a program is popular, state officials may claim credit; if it is unpopular, they may protest that they wereÂ merely responding to a federal directive.
Once it is recognized that spending-power legislation cannot coerce state participation, two questions remain:Â (1) What is the meaning of coercion in this context? (2) IsÂ the ACAâ€™s expanded Medicaid coverage coercive? We now turn to those questions.
The answer to the first of these questionsâ€”the meaningÂ of coercion in the present contextâ€”is straightforward. As we have explained, the legitimacy of attaching conditions to federal grants to the States depends on the voluntariness of the Statesâ€™ choice to accept or decline the offeredÂ package. Therefore, if States really have no choice other than to accept the package, the offer is coercive, and the
conditions cannot be sustained under the spending power.Â And as our decision in South Dakota v. Dole makes clear, theoretical voluntariness is not enough.
In South Dakota v. Dole, we considered whether the spending power permitted Congress to condition 5% of theÂ Stateâ€™s federal highway funds on the Stateâ€™s adoption ofÂ a minimum drinking age of 21 years. South Dakota argued that the program was impermissibly coercive, but weÂ disagreed, reasoning that â€œCongress ha[d] directed onlyÂ that a State desiring to establish a minimum drinking ageÂ lower than 21 lose a relatively small percentage of certainfederal highway funds.â€ 483 U. S., at 211. Because â€œallÂ South Dakota would lose if she adhere[d] to her chosenÂ course as to a suitable minimum drinking age [was] 5%of the funds otherwise obtainable under specified highway grant programs,â€ we found that â€œCongress ha[d] offered relatively mild encouragement to the States to enactÂ higher minimum drinking ages than they would otherwiseÂ choose.â€ Ibid. Thus, the decision whether to comply withthe federal condition â€œremain[ed] the prerogative of theÂ States not merely in theory but in fact,â€ and so the program at issue did not exceed Congressâ€™ power. Id., at 211â€“Â 212 (emphasis added).
The question whether a law enacted under the spendingÂ power is coercive in fact will sometimes be difficult, but where Congress has plainly â€œcrossed the line distinguishing encouragement from coercion,â€ New York, supra, at 175, a federal program that coopts the Statesâ€™ political processes must be declared unconstitutional. â€œ[T]he federal balance is too essential a part of our constitutional
structure and plays too vital a role in securing freedom forÂ us to admit inability to intervene.â€ Lopez, 514 U. S., at 578 (KENNEDY, J., concurring).
The Federal Governmentâ€™s argument in this case at best pays lip service to the anticoercion principle. The Federal Government suggests that it is sufficient if States are â€œfree, as a matter of law, to turn downâ€ federal funds. Brief for Respondents in No. 11â€“400, p. 17 (emphasis added); see also id., at 25. According to the Federal Government, neither the amount of the offered federal fundsÂ nor the amount of the federal taxes extracted from theÂ taxpayers of a State to pay for the program in question isÂ relevant in determining whether there is impermissibleÂ coercion. Id., at 41â€“46.
This argument ignores reality. When a heavy federalÂ tax is levied to support a federal program that offers large grants to the States, States may, as a practical matter, be unable to refuse to participate in the federal program and to substitute a state alternative. Even if a State believes that the federal program is ineffective and inefficient, withdrawal would likely force the State to impose a huge tax increase on its residents, and this new state tax would come on top of the federal taxes already paid by residents to support subsidies to participating States. 13
Acceptance of the Federal Governmentâ€™s interpretation of the anticoercion rule would permit Congress to dictate policy in areas traditionally governed primarily at the state or local level. Suppose, for example, that Congress enacted legislation offering each State a grant equal to theÂ Stateâ€™s entire annual expenditures for primary and secondary education. Suppose also that this funding came with conditions governing such things as school curriculum, the hiring and tenure of teachers, the drawing of school districts, the length and hours of the school day, theÂ school calendar, a dress code for students, and rules forÂ student discipline. As a matter of law, a State could turnÂ down that offer, but if it did so, its residents would notÂ only be required to pay the federal taxes needed to supportÂ this expensive new program, but they would also be forcedÂ to pay an equivalent amount in state taxes. And if theÂ State gave in to the federal law, the State and its subdivisions would surrender their traditional authority in theÂ field of education. Asked at oral argument whether suchÂ a law would be allowed under the spending power, theÂ Solicitor General responded that it would. Tr. of Oral Arg.Â 44â€“45 (Mar. 28, 2012)
Whether federal spending legislation crosses the lineÂ from enticement to coercion is often difficult to determine, and courts should not conclude that legislation is unconstitutional on this ground unless the coercive nature of anÂ offer is unmistakably clear. In this case, however, there can be no doubt. In structuring the ACA, Congress unambiguously signaled its belief that every State would have
no real choice but to go along with the Medicaid Expansion. If the anticoercion rule does not apply in this case,Â then there is no such rule.
The dimensions of the Medicaid program lend strongÂ support to the petitioner Statesâ€™ argument that refusing toÂ accede to the conditions set out in the ACA is not a realistic option. Before the ACAâ€™s enactment, Medicaid funded medical care for pregnant women, families with dependents, children, the blind, the elderly, and the disabled. See 42 U. S. C. Â§1396a(a)(10) (2006 ed., Supp. IV). The ACA greatly expands the programâ€™s reach, making new fundsÂ available to States that agree to extend coverage to all individuals who are under age 65 and have incomes belowÂ 133% of the federal poverty line. See Â§1396a(a)Â (10)(A)(i)(VIII). Any State that refuses to expandÂ its Medicaid programs in this way is threatened with aÂ severe sanction: the loss of all its federal Medicaid funds.Â See Â§1396c (2006 ed.).
Medicaid has long been the largest federal program of grants to the States. See Brief for Respondents in No. 11â€“ 400, at 37. In 2010, the Federal Government directed more than $552 billion in federal funds to the States. See Nat. Assn. of State Budget Officers, 2010 State Expenditure Report: Examining Fiscal 2009â€“2011 State Spending, p. 7 (2011) (NASBO Report). Of this, more than $233 billion went to pre-expansion Medicaid. See id., at 47.14 This amount equals nearly 22% of all state expenditures combined. See id., at 7.
The States devote a larger percentage of their budgets to Medicaid than to any other item. Id., at 5. Federal funds account for anywhere from 50% to 83% of each
Stateâ€™s total Medicaid expenditures, see Â§1396d(b) (2006 ed., Supp. IV); most States receive more than $1 billion in federal Medicaid funding; and a quarter receive more thanÂ $5 billion, NASBO Report 47. These federal dollars totalÂ nearly two thirdsâ€”64.6%â€”of all Medicaid expendituresÂ nationwide.15Â Id., at 46
The Court of Appeals concluded that the States failed to establish coercion in this case in part because the â€œstates have the power to tax and raise revenue, and therefore can create and fund programs of their own if they do not likeÂ Congressâ€™s terms.â€ 648 F. 3d 1235, 1268 (CA11 2011); see Brief for Sen. Harry Reid et al. as Amici Curiae in No. 11â€“ 400, p. 21 (â€œStates may always choose to decrease expenditures on other programs or to raise revenuesâ€). But the sheer size of this federal spending program in relation to state expenditures means that a State would be very hard pressed to compensate for the loss of federal funds by cutting other spending or raising additional revenue. Arizona, for example, commits 12% of its state expenditures to Medicaid, and relies on the Federal GovernmentÂ to provide the rest: $5.6 billion, equaling roughly one-third of Arizonaâ€™s annual state expenditures of $17 billion. See NASBO Report 7, 47. Therefore, if Arizona lost federal Medicaid funding, the State would have to commit an additional 33% of all its state expenditures to fund an equivalent state program along the lines of pre-expansion Medicaid. This means that the State would have to allocate 45% of its annual expenditures for that one purpose. See ibid.
The States are far less reliant on federal funding for any other program. After Medicaid, the next biggest federalÂ funding item is aid to support elementary and secondaryÂ education, which amounts to 12.8% of total federal outlaysto the States, see id., at 7, 16, and equals only 6.6% ofÂ all state expenditures combined. See ibid. In Arizona,Â for example, although federal Medicaid expenditures areÂ equal to 33% of all state expenditures, federal educationfunds amount to only 9.8% of all state expenditures. SeeÂ ibid. And even in States with less than average federalÂ Medicaid funding, that funding is at least twice the size ofÂ federal education funding as a percentage of state expenditures. Id., at 7, 16, 47.
A State forced out of the Medicaid program would faceÂ burdens in addition to the loss of federal Medicaid funding. For example, a nonparticipating State might be found to be ineligible for other major federal funding sources, such as Temporary Assistance for Needy Families (TANF), which is premised on the expectation that States will participate in Medicaid. See 42 U. S. C. Â§602(a)(3) (2006ed.) (requiring that certain beneficiaries of TANF funds beâ€œeligible for medical assistance under the State[â€™s Medicaid] planâ€). And withdrawal or expulsion from the Medicaid program would not relieve a Stateâ€™s hospitals of their obligation under federal law to provide care for patientsÂ who are unable to pay for medical services. The Emergency Medical Treatment and Active Labor Act, Â§1395dd,Â requires hospitals that receive any federal funding toÂ provide stabilization care for indigent patients but does not offer federal funding to assist facilities in carrying outÂ its mandate. Many of these patients are now covered by Medicaid. If providers could not look to the MedicaidÂ program to pay for this care, they would find it exceedingly difficult to comply with federal law unless they were given substantial state support. See, e.g., Brief for Economists as Amici Curiae in No 11â€“400, p. 11.
For these reasons, the offer that the ACA makes to the Statesâ€”go along with a dramatic expansion of Medicaid orÂ potentially lose all federal Medicaid fundingâ€”is quiteÂ unlike anything that we have seen in a prior spendingpower case. In South Dakota v. Dole, the total amountÂ that the States would have lost if every single StateÂ had refused to comply with the 21-year-old drinkingÂ age was approximately $614.7 millionâ€”or about 0.19%Â of all state expenditures combined. See Nat. Assn.Â of State Budget Officers, 1989 (Fiscal Years 1987â€“Â 1989 Data) State Expenditure Report 10, 84 (1989),Â http://www.nasbo.org/publications-data/state expenditurereport/archives. South Dakota stood to lose, at most,Â funding that amounted to less than 1% of its annual stateÂ expenditures. See ibid. Under the ACA, by contrast, theÂ Federal Government has threatened to withhold 42.3% ofÂ all federal outlays to the states, or approximately $233Â billion. See NASBO Report 7, 10, 47. South DakotaÂ stands to lose federal funding equaling 28.9% of its annualÂ state expenditures. See id., at 7, 47. Withholding $614.7million, equaling only 0.19% of all state expendituresÂ combined, is aptly characterized as â€œrelatively mild encouragement,â€ but threatening to withhold $233 billion,Â equaling 21.86% of all state expenditures combined, is aÂ different matter.
What the statistics suggest is confirmed by the goalÂ and structure of the ACA. In crafting the ACA, Congress clearly expressed its informed view that no State couldÂ possibly refuse the offer that the ACA extends
The stated goal of the ACA is near-universal health care coverage. To achieve this goal, the ACA mandates thatÂ every person obtain a minimum level of coverage. It attempts to reach this goal in several different ways. The guaranteed issue and community-rating provisions are designed to make qualifying insurance available and affordable for persons with medical conditions that mayÂ require expensive care. Other ACA provisions seek toÂ make such policies more affordable for people of modestÂ means. Finally, for low-income individuals who areÂ simply not able to obtain insurance, Congress expandedÂ Medicaid, transforming it from a program covering onlyÂ members of a limited list of vulnerable groups into a program that provides at least the requisite minimum levelÂ of coverage for the poor. See 42 U. S. C. Â§Â§1396a(a)(10)(A)(i)(VIII) (2006 ed., Supp. IV), 1396uâ€“7(a), (b)(5),Â 18022(a). This design was intended to provide at leastÂ a specified minimum level of coverage for all Americans,Â but the achievement of that goal obviously depends onparticipation by every single State. If any Stateâ€”notÂ to mention all of the 26 States that brought this suitâ€”chose to decline the federal offer, there would be a gapingÂ hole in the ACAâ€™s coverage.
It is true that some persons who are eligible for Medicaid coverage under the ACA may be able to secure private insurance, either through their employers or by obtaining subsidized insurance through an exchange. See 26 U. S. C. Â§36B(a) (2006 ed., Supp. IV); Brief for Respondents in No. 11â€“400, at 12. But the new federal subsidies are not available to those whose income is below the federal poverty level, and the ACA provides no means, otherÂ than Medicaid, for these individuals to obtain coverage and comply with the Mandate. The Government countersÂ that these people will not have to pay the penalty, see, e.g., Tr. of Oral Arg. 68 (Mar. 28, 2012); Brief for Respondents in No. 11â€“400, at 49â€“50, but that argument misses the point: Without Medicaid, these individuals will not have coverage and the ACAâ€™s goal of near-universal coverage will be severely frustrated.
If Congress had thought that States might actuallyÂ refuse to go along with the expansion of Medicaid, Congress would surely have devised a backup scheme so thatÂ the most vulnerable groups in our society, those previouslyÂ eligible for Medicaid, would not be left out in the cold. ButÂ nowhere in the over 900-page Act is such a scheme to beÂ found. By contrast, because Congress thought that someStates might decline federal funding for the operation ofÂ a â€œhealth benefit exchange,â€ Congress provided a backupÂ scheme; if a State declines to participate in the operationÂ of an exchange, the Federal Government will step inÂ and operate an exchange in that State. See 42 U. S. C.Â Â§18041(c)(1). Likewise, knowing that States would notÂ necessarily provide affordable health insurance for alienslawfully present in the United Statesâ€”because MedicaidÂ does not require States to provide such coverageâ€”Congress extended the availability of the new federal insurance subsidies to all aliens. See 26 U. S. C. Â§36B(c)Â (1)(B)(ii) (excepting from the income limit individualsÂ who are â€œnot eligible for the medicaid program . . . byÂ reason of [their] alien statusâ€). Congress did not makeÂ these subsidies available for citizens with incomes belowÂ the poverty level because Congress obviously assumedÂ that they would be covered by Medicaid. If Congress hadÂ contemplated that some of these citizens would be leftÂ without Medicaid coverage as a result of a Stateâ€™s withdrawal or expulsion from the program, Congress surelyÂ would have made them eligible for the tax subsidies provided for low-income aliens.
These features of the ACA convey an unmistakableÂ message: Congress never dreamed that any State would refuse to go along with the expansion of Medicaid. Congress well understood that refusal was not a practicalÂ option.
The Federal Government does not dispute the inferenceÂ that Congress anticipated 100% state participation, but itÂ argues that this assumption was based on the fact that ACAâ€™s offer was an â€œexceedingly generousâ€ gift. Brief for Respondents in No. 11â€“400, at 50. As the Federal Government sees things, Congress is like the generous benefactor who offers $1 million with few strings attached toÂ 50 randomly selected individuals. Just as this benefactorÂ might assume that all of these 50 individuals would snapup his offer, so Congress assumed that every State wouldÂ gratefully accept the federal funds (and conditions) to goÂ with the expansion of Medicaid.
This characterization of the ACAâ€™s offer raises obvious questions. If that offer is â€œexceedingly generous,â€ as the Federal Government maintains, why have more than half the States brought this lawsuit, contending that the offer is coercive? And why did Congress find it necessary to threaten that any State refusing to accept this â€œexceedingly generousâ€ gift would risk losing all Medicaid funds? Congress could have made just the new funding providedÂ under the ACA contingent on acceptance of the terms ofÂ the Medicaid Expansion. Congress took such an approachÂ in some earlier amendments to Medicaid, separating new coverage requirements and funding from the rest of the program so that only new funding was conditioned on new eligibility extensions. See, e.g., Social Security Amendments of 1972, 86 Stat. 1465.
Congressâ€™ decision to do otherwise here reflects its understanding that the ACA offer is not an â€œexceedingly generousâ€ gift that no State in its right mind would decline. Instead, acceptance of the offer will impose veryÂ substantial costs on participating States. It is true that the Federal Government will bear most of the initial costs associated with the Medicaid Expansion, first payingÂ 100% of the costs of covering newly eligible individuals between 2014 and 2016. 42 U. S. C. Â§1396d(y). But that is just part of the picture. Participating States will beÂ forced to shoulder substantial costs as well, because after 2019 the Federal Government will cover only 90% of the costs associated with the Expansion, see ibid., with state spending projected to increase by at least $20 billion byÂ 2020 as a consequence. Statement of Douglas W. Elmendorf, CBOâ€™s Analysis of the Major Health Care LegislationÂ Enacted in March 2010, p. 24 (Mar. 30, 2011); see also R.Â Bovbjerg, B. Ormond, & V. Chen, Kaiser Commission onÂ Medicaid and the Uninsured, State Budgets under FederalÂ Health Reform: The Extent and Causes of Variations inÂ Estimated Impacts 4, n. 27 (Feb. 2011) (estimating newÂ state spending at $43.2 billion through 2019). After 2019,Â state spending is expected to increase at a faster rate; theÂ CBO estimates new state spending at $60 billion throughÂ 2021. Statement of Douglas W. Elmendorf, supra, at 24.Â And these costs may increase in the future because ofÂ the very real possibility that the Federal Government willÂ change funding terms and reduce the percentage of fundsÂ it will cover. This would leave the States to bear an increasingly large percentage of the bill. See Tr. of OralÂ Arg. 74â€“76 (Mar. 28, 2012). Finally, after 2015, the Stateswill have to pick up the tab for 50% of all administrativeÂ costs associated with implementing the new program, seeÂ Â§Â§1396b(a)(2)â€“(5), (7) (2006 ed., Supp. IV), costs that couldÂ approach $12 billion between fiscal years 2014 and 2020,Â see Dept. of Health and Human Services, Center for Medicaid and Medicare Services, 2010 Actuarial Report on the Financial Outlook for Medicaid 30.
In sum, it is perfectly clear from the goal and structureÂ of the ACA that the offer of the Medicaid Expansion was one that Congress understood no State could refuse. TheÂ Medicaid Expansion therefore exceeds Congressâ€™ spending power and cannot be implemented.
Seven Members of the Court agree that the Medicaid Expansion, as enacted by Congress, is unconstitutional. See Part IVâ€“A to IVâ€“E, supra; Part IVâ€“A, ante, at 45â€“55 (opinion of ROBERTS, C. J., joined by BREYER and KAGAN, JJ.). Because the Medicaid Expansion is unconstitutional, the question of remedy arises. The most natural remedyÂ would be to invalidate the Medicaid Expansion. However,Â the Government proposesâ€”in two cursory sentences atÂ the very end of its briefâ€”preserving the Expansion. UnderÂ its proposal, States would receive the additional Medicaid funds if they expand eligibility, but States wouldÂ keep their pre-existing Medicaid funds if they do notÂ expand eligibility. We cannot accept the Governmentâ€™sÂ suggestion.
The reality that States were given no real choice but toÂ expand Medicaid was not an accident. Congress assumed States would have no choice, and the ACA depends onÂ Statesâ€™ having no choice, because its Mandate requiresÂ low-income individuals to obtain insurance many of them can afford only through the Medicaid Expansion. Furthermore, a Stateâ€™s withdrawal might subject everyone inÂ the State to much higher insurance premiums. That is because the Medicaid Expansion will no longer offset theÂ cost to the insurance industry imposed by the ACAâ€™s insurance regulations and taxes, a point that is explained in more detail in the severability section below. To make the Medicaid Expansion optional despite the ACAâ€™s structureÂ and design â€œâ€˜would be to make a new law, not to enforce
an old one. This is no part of our duty.â€™â€ Trade-Mark Cases, 100 U. S. 82, 99 (1879).
Worse, the Governmentâ€™s proposed remedy introduces aÂ new dynamic: States must choose between expanding Medicaid or paying huge tax sums to the federal fisc forÂ the sole benefit of expanding Medicaid in other States. If this divisive dynamic between and among States can beÂ introduced at all, it should be by conscious congressional choice, not by Court-invented interpretation. We do notÂ doubt that States are capable of making decisions whenÂ put in a tight spot. We do doubt the authority of thisÂ Court to put them there.
The Government cites a severability clause codified withÂ Medicaid in Chapter 7 of the United States Code statingÂ that if â€œany provision of this chapter, or the applicationÂ thereof to any person or circumstance, is held invalid, theÂ remainder of the chapter, and the application of suchÂ provision to other persons or circumstances shall not beÂ affected thereby.â€ 42 U. S. C. Â§1303 (2006 ed.). But thatÂ clause tells us only that other provisions in Chapter 7Â should not be invalidated if Â§1396c, the authorization forÂ the cut-off of all Medicaid funds, is unconstitutional. ItÂ does not tell us that Â§1396c can be judicially revised, toÂ say what it does not say. Such a judicial power wouldÂ not be called the doctrine of severability but perhapsÂ the doctrine of amendatory invalidationâ€”similar to theÂ amendatory veto that permits the Governors of someÂ States to reduce the amounts appropriated in legislation. The proof that such a power does not exist is the fact thatÂ it would not preserve other congressional dispositions, butÂ would leave it up to the Court what the â€œvalidatedâ€ legislation will contain. The Court today opts for permittingÂ the cut-off of only incremental Medicaid funding, but itÂ might just as well have permitted, say, the cut-off of fundsÂ that represent no more than x percent of the Stateâ€™s budget. The Court severs nothing, but simply revises Â§1396c toÂ read as the Court would desire.
We should not accept the Governmentâ€™s invitation toÂ attempt to solve a constitutional problem by rewriting the Medicaid Expansion so as to allow States that reject it to retain their pre-existing Medicaid funds. Worse, the Governmentâ€™s remedy, now adopted by the Court, takesÂ the ACA and this Nation in a new direction and charts a course for federalism that the Court, not the Congress, hasÂ chosen; but under the Constitution, that power and authority do not rest with this Court.
The Affordable Care Act seeks to achieve â€œnearÂ universalâ€ health insurance coverage. Â§18091(2)(D) (2006Â ed., Supp. IV). The two pillars of the Act are the Individual Mandate and the expansion of coverage under Medicaid.Â In our view, both these central provisions of the Actâ€”theIndividual Mandate and Medicaid Expansionâ€”are invalid.Â It follows, as some of the parties urge, that all other provisions of the Act must fall as well. The following sectionÂ explains the severability principles that require this conclusion. This analysis also shows how closely interrelatedÂ the Act is, and this is all the more reason why it is judicialÂ usurpation to impose an entirely new mechanism forÂ withdrawal of Medicaid funding, see Part IVâ€“F, supra,Â which is one of many examples of how rewriting the ActÂ alters its dynamics.
When an unconstitutional provision is but a part of aÂ more comprehensive statute, the question arises as to the validity of the remaining provisions. The Courtâ€™s authority to declare a statute partially unconstitutional has beenÂ well established since Marbury v. Madison, 1 Cranch 137 (1803), when the Court severed an unconstitutional provision from the Judiciary Act of 1789. And while the Court has sometimes applied â€œat least a modest presumption in favor of . . . severability,â€ C. Nelson, Statutory Interpretation 144 (2010), it has not always done so, see, e.g., Minnesota v. Mille Lacs Band of Chippewa Indians, 526 U. S. 172, 190â€“195 (1999).
An automatic or too cursory severance of statutory provisions risks â€œrewrit[ing] a statute and giv[ing] it anÂ effect altogether different from that sought by the measure viewed as a whole.â€ Railroad Retirement Bd. v. Alton R. Co., 295 U. S. 330, 362 (1935). The Judiciary, if itÂ orders uncritical severance, then assumes the legislative function; for it imposes on the Nation, by the Courtâ€™sÂ decree, its own new statutory regime, consisting of policies, risks, and duties that Congress did not enact. ThatÂ can be a more extreme exercise of the judicial power thanÂ striking the whole statute and allowing Congress to address the conditions that pertained when the statute wasÂ considered at the outset.
The Court has applied a two-part guide as the framework for severability analysis. The test has been deemed â€œwell established.â€ Alaska Airlines, Inc. v. Brock, 480Â U. S. 678, 684 (1987). First, if the Court holds a statutory provision unconstitutional, it then determines whetherÂ the now truncated statute will operate in the manner Congress intended. If not, the remaining provisions must beÂ invalidated. See id., at 685. In Alaska Airlines, the Court clarified that this first inquiry requires more than asking whether â€œthe balance of the legislation is incapable of functioning independently.â€ Id., at 684. Even if the remaining provisions will operate in some coherent way,Â that alone does not save the statute. The question is whether the provisions will work as Congress intended. The â€œrelevant inquiry in evaluating severability is whether the statute will function in a manner consistent with the intent of Congress.â€ Id., at 685 (emphasis in original).Â See also Free Enterprise Fund v. Public Company Accounting Oversight Bd., 561 U. S. ___, ___ (2010) (slip op., at 28) (the Act â€œremains fully operative as a law with these tenure restrictions excisedâ€) (internal quotation marks omitted); United States v. Booker, 543 U. S. 220, 227 (2005) (â€œ[T]wo provisions . . . must be invalidated in orderÂ to allow the statute to operate in a manner consistentÂ with congressional intentâ€); Mille Lacs, supra, at 194 (â€œ[E]mbodying as it did one coherent policy, [the entire order]Â is inseverableâ€).
Second, even if the remaining provisions can operate asÂ Congress designed them to operate, the Court must determine if Congress would have enacted them standingÂ alone and without the unconstitutional portion. If Congress would not, those provisions, too, must be invalidated.Â See Alaska Airlines, supra, at 685 (â€œ[T]he unconstitutional provision must be severed unless the statute created in its absence is legislation that Congress would notÂ have enactedâ€); see also Free Enterprise Fund, supra, atÂ ___ (slip op., at 29) (â€œ[N]othing in the statuteâ€™s text orÂ historical context makes it â€˜evidentâ€™ that Congress, facedÂ with the limitations imposed by the Constitution, wouldÂ have preferred no Board at all to a Board whose membersÂ are removable at willâ€); Ayotte v. Planned Parenthood ofÂ Northern New Eng., 546 U. S. 320, 330 (2006) (â€œWould theÂ legislature have preferred what is left of its statute to noÂ statute at allâ€); Denver Area Ed. TelecommunicationsÂ Consortium, Inc. v. FCC, 518 U. S. 727, 767 (1996) (plurality opinion) (â€œWould Congress still have passed Â§10(a) hadÂ it known that the remaining provisions were invalidâ€Â (internal quotation marks and brackets omitted)).
The two inquiriesâ€”whether the remaining provisionsÂ will operate as Congress designed them, and whetherÂ Congress would have enacted the remaining provisionsÂ standing aloneâ€”often are interrelated. In the ordinary course, if the remaining provisions cannot operate according to the congressional design (the first inquiry), it almost necessarily follows that Congress would not have enactedÂ them (the second inquiry). This close interaction mayÂ explain why the Court has not always been precise inÂ distinguishing between the two. There are, however,Â occasions in which the severability standardâ€™s first inquiry (statutory functionality) is not a proxy for the secondÂ inquiry (whether the Legislature intended the remaining provisions to stand alone).
The Act was passed to enable affordable, â€œnear-universalâ€Â health insurance coverage. 42 U. S. C. Â§18091(2)(D). The resulting, complex statute consists of mandates andÂ other requirements; comprehensive regulation and penalties; some undoubted taxes; and increases in some governmental expenditures, decreases in others. Under the severability test set out above, it must be determined ifÂ those provisions function in a coherent way and as Congress would have intended, even when the major provisions establishing the Individual Mandate and Medicaid Expansion are themselves invalid.
Congress did not intend to establish the goal of near universal coverage without regard to fiscal consequences.Â See, e.g., ACA Â§1563, 124 Stat. 270 (â€œ[T]his Act will reduce the Federal deficit between 2010 and 2019â€). And it did not intend to impose the inevitable costs on any one industry or group of individuals. The whole design of the Act is to balance the costs and benefits affecting each setÂ of regulated parties. Thus, individuals are required toÂ obtain health insurance. See 26 U. S. C. Â§5000A(a). Insurance companies are required to sell them insurance regardless of patientsâ€™ pre-existing conditions and to complyÂ with a host of other regulations. And the companies must pay new taxes. See Â§4980I (high-cost insurance plans);Â 42 U. S. C. Â§Â§300gg(a)(1), 300ggâ€“4(b) (community rating);Â Â§Â§300ggâ€“1, 300ggâ€“3, 300ggâ€“4(a) (guaranteed issue);Â Â§300ggâ€“11 (elimination of coverage limits); Â§300ggâ€“14(a) (dependent children up to age 26); ACA Â§Â§9010, 10905,Â 124 Stat. 865, 1017 (excise tax); Health Care and Education Reconciliation Act of 2010 (HCERA) Â§1401, 124 Stat.Â 1059 (excise tax). States are expected to expand Medicaid eligibility and to create regulated marketplaces called exchanges where individuals can purchase insurance. See 42 U. S. C. Â§Â§1396a(a)(10)(A)(i)(VIII) (2006 ed., Supp. IV) (Medicaid Expansion), 18031 (exchanges). Some personsÂ who cannot afford insurance are provided it through the Medicaid Expansion, and others are aided in their purchase of insurance through federal subsidies available onÂ health-insurance exchanges. See 26 U. S. C. Â§36B (2006Â ed., Supp. IV), 42 U. S. C. Â§18071 (2006 ed., Supp. IV)Â (federal subsidies). The Federal Governmentâ€™s increasedÂ spending is offset by new taxes and cuts in other federalÂ expenditures, including reductions in Medicare and inÂ federal payments to hospitals. See, e.g., Â§1395ww(r) (Medicare cuts); ACA Title IX, Subtitle A, 124 Stat. 847 (â€œRevenue Offset Provisionsâ€). Employers with at least 50Â employees must either provide employees with adequateÂ health benefits or pay a financial exaction if an employeeÂ who qualifies for federal subsidies purchases insuranceÂ through an exchange. See 26 U. S. C. Â§4980H (2006 ed.,Â Supp. IV).
In short, the Act attempts to achieve near-universal health insurance coverage by spreading its costs to individuals, insurers, governments, hospitals, and employersâ€”Â while, at the same time, offsetting significant portionsÂ of those costs with new benefits to each group. For example, the Federal Government bears the burden of paying billions for the new entitlements mandated by the Medicaid Expansion and federal subsidies for insurance purchases on the exchanges; but it benefits from reductions in the reimbursements it pays to hospitals. Hospitals lose those reimbursements; but they benefit from theÂ decrease in uncompensated care, for under the insuranceÂ regulations it is easier for individuals with pre-existingÂ conditions to purchase coverage that increases paymentsÂ to hospitals. Insurance companies bear new costs imposedÂ by a collection of insurance regulations and taxes, including â€œguaranteed issueâ€ and â€œcommunity ratingâ€ requirementsÂ to give coverage regardless of the insuredâ€™s pre-existingÂ conditions; but the insurers benefit from the new, healthy purchasers who are forced by the Individual Mandate to buy the insurersâ€™ product and from the new lowincome Medicaid recipients who will enroll in insurance companiesâ€™ Medicaid-funded managed care programs. In summary, the Individual Mandate and Medicaid Expansion offset insurance regulations and taxes, which offsetÂ reduced reimbursements to hospitals, which offset increases in federal spending. So, the Actâ€™s major provisionsÂ are interdependent.
The Act then refers to these interdependencies asÂ â€œshared responsibility.â€ See ACA Subtitle F, Title I, 124 Stat. 242 (â€œShared Responsibilityâ€); ACA Â§1501, ibid.Â (same); ACA Â§1513, id., at 253 (same); ACA Â§4980H, ibid. (same). In at least six places, the Act describes the Individual Mandate as working â€œtogether with the other provisions of this Act.â€ 42 U. S. C. Â§18091(2)(C) (2006 ed.,Â Supp. IV) (working â€œtogetherâ€ to â€œadd millions of new consumers to the health insurance marketâ€); Â§18091(2)(E) (working â€œtogetherâ€ to â€œsignificantly reduceâ€ the economicÂ cost of the poorer health and shorter lifespan of the uninsured); Â§18091(2)(F) (working â€œtogetherâ€ to â€œlower healthÂ insurance premiumsâ€); Â§18091(2)(G) (working â€œtogetherâ€ toÂ â€œimprove financial security for familiesâ€); Â§18091(2)(I)Â (working â€œtogetherâ€ to minimize â€œadverse selection and broaden the health insurance risk pool to include healthy individualsâ€); Â§18091(2)(J) (working â€œtogetherâ€ to â€œsignificantly reduce administrative costs and lower healthÂ insurance premiumsâ€). The Act calls the Individual Mandate â€œan essential partâ€ of federal regulation of healthÂ insurance and warns that â€œthe absence of the requirementÂ would undercut Federal regulation of the health insurance market.â€ Â§18091(2)(H).
One preliminary point should be noted before applyingÂ severability principles to the Act. To be sure, an argument can be made that those portions of the Act that none of the parties has standing to challenge cannot be held nonseverable. The response to this argument is that our casesÂ do not support it. See, e.g., Williams v. Standard Oil Co. of La., 278 U. S. 235, 242â€“244 (1929) (holding nonseverable statutory provisions that did not burden the parties).Â It would be particularly destructive of sound governmentÂ to apply such a rule with regard to a multifaceted piece ofÂ legislation like the ACA. It would take years, perhapsÂ decades, for each of its provisions to be adjudicated separatelyâ€”and for some of them (those simply expendingÂ federal funds) no one may have separate standing. TheÂ Federal Government, the States, and private parties oughtÂ to know at once whether the entire legislation fails.
The opinion now explains in Part Vâ€“Câ€“1, infra, why theÂ Actâ€™s major provisions are not severable from the MandateÂ and Medicaid Expansion. It proceeds from the insurance regulations and taxes (Câ€“1â€“a), to the reductions in reimbursements to hospitals and other Medicare reductionsÂ (Câ€“1â€“b), the exchanges and their federal subsidies (Câ€“1â€“c),Â and the employer responsibility assessment (Câ€“1â€“d).
Part Vâ€“Câ€“2, infra, explains why the Actâ€™s minor provisions also are not severable.
The Actâ€™s Major Provisions
Major provisions of the Affordable Care Actâ€”i.e., the insurance regulations and taxes, the reductions in federal reimbursements to hospitals and other Medicare spending reductions, the exchanges and their federal subsidies,Â and the employer responsibility assessmentâ€”cannot remainÂ once the Individual Mandate and Medicaid Expansion areÂ invalid. That result follows from the undoubted inability of the other major provisions to operate as Congress intended without the Individual Mandate and Medicaid Expansion. Absent the invalid portions, the other major provisions could impose enormous risks of unexpected burdens on patients, the health-care community, and the federal budget. That consequence would be in absoluteÂ conflict with the ACAâ€™s design of â€œshared responsibility,â€ and would pose a threat to the Nation that Congress didÂ not intend.Â
Insurance Regulations and Taxes
Without the Individual Mandate and Medicaid Expansion, the Affordable Care Actâ€™s insurance regulations andÂ insurance taxes impose risks on insurance companies andÂ their customers that this Court cannot measure. Those risks would undermine Congressâ€™ scheme of â€œshared responsibility.â€ See 26 U. S. C. Â§4980I (2006 ed., Supp. IV) (high-cost insurance plans); 42 U. S. C. Â§Â§300gg(a)(1)
(2006 ed., Supp. IV), 300ggâ€“4(b) (community rating); Â§Â§300ggâ€“1, 300ggâ€“3, 300ggâ€“4(a) (guaranteed issue);Â Â§300ggâ€“11 (elimination of coverage limits); Â§300ggâ€“14(a) (dependent children up to age 26); ACA Â§Â§9010, 10905,Â 124 Stat. 865, 1017 (excise tax); HCERA Â§1401, 124 Stat.1059 (excise tax).
The Court has been informed by distinguished economists that the Actâ€™s Individual Mandate and Medicaid Expansion would each increase revenues to the insuranceÂ industry by about $350 billion over 10 years; that thisÂ combined figure of $700 billion is necessary to offset the approximately $700 billion in new costs to the insurance industry imposed by the Actâ€™s insurance regulations andÂ taxes; and that the new $700-billion burden would otherwise dwarf the industryâ€™s current profit margin. See Brief for Economists as Amici Curiae in No. 11â€“393 etc. (Severability), pp. 9â€“16, 10a.
If that analysis is correct, the regulations and taxes willÂ mean higher costs for insurance companies. Higher costsÂ may mean higher premiums for consumers, despite theÂ Actâ€™s goal of â€œlower[ing] health insurance premiums.â€ 42 U. S. C. Â§18091(2)(F) (2006 ed., Supp. IV). Higher costsÂ also could threaten the survival of health-insurance companies, despite the Actâ€™s goal of â€œeffective health insurance
The actual cost of the regulations and taxes may beÂ more or less than predicted. What is known, however, is that severing other provisions from the Individual Mandate and Medicaid Expansion necessarily would impose significant risks and real uncertainties on insurance companies, their customers, all other major actors in the system, and the government treasury. And what also is known is this: Unnecessary risks and avoidable uncertainties are hostile to economic progress and fiscal stability and thus to the safety and welfare of the Nation and theÂ Nationâ€™s freedom. If those risks and uncertainties are to be imposed, it must not be by the Judiciary.
Reductions in Reimbursements to Hospitals and
Other Reductions in Medicare Expenditures
The Affordable Care Act reduces payments by the Federal Government to hospitals by more than $200 billion over 10 years. See 42 U. S. C. Â§1395ww(b)(3)(B)(xi)â€“(xii)Â (2006 ed., Supp. IV); Â§1395ww(q); Â§1395ww(r); Â§1396râ€“4(f)(7).
The concept is straightforward: Near-universal coverageÂ will reduce uncompensated care, which will increase hospitalsâ€™ revenues, which will offset the governmentâ€™s reductions in Medicare and Medicaid reimbursements to hospitals. Responsibility will be shared, as burdens and benefits balance each other. This is typical of the wholeÂ dynamic of the Act.
Invalidating the key mechanisms for expanding insurance coverage, such as community rating and the Medicaid Expansion, without invalidating the reductions in Medicare and Medicaid, distorts the ACAâ€™s design ofÂ â€œshared responsibility.â€ Some hospitals may be forced to raise the cost of care in order to offset the reductions in reimbursements, which could raise the cost of insurance premiums, in contravention of the Actâ€™s goal of â€œlower[ing]Â health insurance premiums.â€ 42 U. S. C. Â§18091(2)(F)Â (2006 ed., Supp. IV). See also Â§18091(2)(I) (goal ofÂ â€œlower[ing] health insurance premiumsâ€); Â§18091(2)(J)Â (same). Other hospitals, particularly safety-net hospitals thatÂ serve a large number of uninsured patients, may be forcedÂ to shut down. Cf. National Assn. of Public Hospitals, 2009Â Annual Survey: Safety Net Hospitals and Health SystemsÂ Fulfill Mission in Uncertain Times 5â€“6 (Feb. 2011). LikeÂ the effect of preserving the insurance regulations andÂ taxes, the precise degree of risk to hospitals is unknowable. It is not the proper role of the Court, by severingÂ part of a statute and allowing the rest to stand, to imposeÂ unknowable risks that Congress could neither measureÂ nor predict. And Congress could not have intended thatÂ result in any event.
There is a second, independent reason why the reductions in reimbursements to hospitals and the ACAâ€™s other Medicare cuts must be invalidated. The ACAâ€™s $455 billion in Medicare and Medicaid savings offset the $434Â billion cost of the Medicaid Expansion. See CBO Estimate, Table 2 (Mar. 20, 2010). The reductions allowed Congress to find that the ACA â€œwill reduce the FederalÂ deficit between 2010 and 2019â€ and â€œwill continue to reduce budget deficits after 2019.â€ ACA Â§Â§1563(a)(1), (2), 124 Stat. 270.
That finding was critical to the ACA. The Actâ€™s â€œshared responsibilityâ€ concept extends to the federal budget.Â Congress chose to offset new federal expenditures with budget cuts and tax increases. That is why the UnitedÂ States has explained in the course of this litigation that â€œ[w]hen Congress passed the ACA, it was careful to ensureÂ that any increased spending, including on Medicaid, wasÂ offset by other revenue-raising and cost-saving provisions.â€ Memorandum in Support of Governmentâ€™s MotionÂ for Summary Judgment in No. 3â€“10â€“cvâ€“91, p. 41.
If the Medicare and Medicaid reductions would no longerÂ be needed to offset the costs of the Medicaid Expansion,Â the reductions would no longer operate in the mannerÂ Congress intended. They would lose their justification andÂ foundation. In addition, to preserve them would be â€œtoÂ eliminate a significant quid pro quo of the legislative compromiseâ€ and create a statute Congress did not enact.Â Legal Services Corporation v. Velazquez, 531 U. S. 533,Â 561 (2001) (SCALIA, J., dissenting). It is no secret thatÂ cutting Medicare is unpopular; and it is most improbableÂ Congress would have done so without at least the assurance that it would render the ACA deficit-neutral. SeeÂ ACA Â§Â§1563(a)(1), (2), 124 Stat. 270.
Health Insurance Exchanges and Their Federal Subsidies
The ACA requires each State to establish a healthinsurance â€œexchange.â€ Each exchange is a one-stop marketplace for individuals and small businesses to compare community-rated health insurance and purchase theÂ policy of their choice. The exchanges cannot operate in theÂ manner Congress intended if the Individual Mandate, Medicaid Expansion, and insurance regulations cannot
remain in force.
The Actâ€™s design is to allocate billions of federal dollarsÂ to subsidize individualsâ€™ purchases on the exchanges. Individuals with incomes between 100 and 400 percent of the poverty level receive tax credits to offset the cost of insurance to the individual purchaser. 26 U. S. C. Â§36B (2006 ed., Supp. IV); 42 U. S. C. Â§18071 (2006 ed., Supp.IV). By 2019, 20 million of the 24 million people who willÂ obtain insurance through an exchange are expected toÂ receive an average federal subsidy of $6,460 per person.Â See CBO, Analysis of the Major Health Care Legislation Enacted in March 2010, pp. 18â€“19 (Mar. 30, 2011). Without the community-rating insurance regulation, however,Â the average federal subsidy could be much higher; forÂ community rating greatly lowers the enormous premiumsÂ unhealthy individuals would otherwise pay. FederalÂ subsidies would make up much of the difference.
The result would be an unintended boon to insurance companies, an unintended harm to the federal fisc, and a corresponding breakdown of the â€œshared responsibilityâ€ between the industry and the federal budget thatÂ Congress intended. Thus, the federal subsidies must be invalidated.
In the absence of federal subsidies to purchasers, insurance companies will have little incentive to sell insurance on the exchanges. Under the ACAâ€™s scheme, few, if any,Â individuals would want to buy individual insurance policies outside of an exchange, because federal subsidies would be unavailable outside of an exchange. Difficulty in attracting individuals outside of the exchange would inÂ turn motivate insurers to enter exchanges, despite theÂ exchangesâ€™ onerous regulations. See 42 U. S. C. Â§18031. That system of incentives collapses if the federal subsidiesÂ are invalidated. Without the federal subsidies, individuals would lose the main incentive to purchase insurance inside the exchanges, and some insurers may be unwilling to offer insurance inside of exchanges. With fewer buyersÂ and even fewer sellers, the exchanges would not operateÂ as Congress intended and may not operate at all.
There is a second reason why, if community rating is invalidated by the Mandate and Medicaid Expansionâ€™sÂ invalidity, exchanges cannot be implemented in a mannerÂ consistent with the Actâ€™s design. A key purpose of anÂ exchange is to provide a marketplace of insurance optionsÂ where prices are standardized regardless of the buyerâ€™s pre-existing conditions. See ibid. An individual whoÂ shops for insurance through an exchange will evaluate different insurance products. The products will offer different benefits and prices. Congress designed the exchanges so the shopper can compare benefits and prices.Â But the comparison cannot be made in the way CongressÂ designed if the prices depend on the shopperâ€™s pre-existingÂ health conditions. The prices would vary from person toÂ person. So without community ratingâ€”which prohibitsÂ insurers from basing the price of insurance on pre-existingÂ conditionsâ€”the exchanges cannot operate in the mannerÂ Congress intended.
The employer responsibility assessment provides an incentive for employers with at least 50 employees to provide their employees with health insurance optionsÂ that meet minimum criteria. See 26 U. S. C. Â§4980H (2006 ed., Supp. IV). Unlike the Individual Mandate, the employer-responsibility assessment does not requireÂ employers to provide an insurance option. Instead, it requires them to make a payment to the Federal Government if they do not offer insurance to employees and ifÂ insurance is bought on an exchange by an employee who qualifies for the exchangeâ€™s federal subsidies. See ibid.
For two reasons, the employer-responsibility assessment must be invalidated. First, the ACA makes a direct link between the employer-responsibility assessment and the exchanges. The financial assessment against employers occurs only under certain conditions. One of them is the purchase of insurance by an employee on an exchange.Â With no exchanges, there are no purchases on the exchanges; and with no purchases on the exchanges, there isÂ nothing to trigger the employer-responsibility assessment.Â Second, after the invalidation of burdens on individualsÂ (the Individual Mandate), insurers (the insurance regulations and taxes), States (the Medicaid Expansion), the Federal Government (the federal subsidies for exchangesÂ and for the Medicaid Expansion), and hospitals (the reductions in reimbursements), the preservation of the employer responsibility assessment would upset the ACAâ€™s designÂ of â€œshared responsibility.â€ It would leave employers as theÂ only parties bearing any significant responsibility. ThatÂ was not the congressional intent.
The Actâ€™s Minor Provisions
The next question is whether the invalidation of theÂ ACAâ€™s major provisions requires the Court to invalidate the ACAâ€™s other provisions. It does.
The ACA is over 900 pages long. Its regulations includeÂ requirements ranging from a break time and secludedÂ place at work for nursing mothers, see 29 U. S. C. Â§207(r)(1) (2006 ed., Supp. IV), to displays of nutritional content at chain restaurants, see 21 U. S. C. Â§343(q)(5)(H).Â The Act raises billions of dollars in taxes and fees, including exactions imposed on high-income taxpayers, see ACA Â§Â§9015, 10906; HCERA Â§1402, medical devices, see 26 U. S. C. Â§4191 (2006 ed., Supp. IV), and tanning booths, see Â§5000B. It spends government money on, among otherÂ things, the study of how to spend less government money.Â 42 U. S. C. Â§1315a. And it includes a number of provisionsÂ that provide benefits to the State of a particular legislator.Â For example, Â§10323, 124 Stat. 954, extends Medicare coverage to individuals exposed to asbestos from a mine in Libby, Montana. Another provision, Â§2006, id., at 284, increases Medicaid payments only in Louisiana.
Such provisions validate the Senate Majority Leaderâ€™sÂ statement, â€œâ€˜I donâ€™t know if there is a senator that doesnâ€™t have something in this bill that was important to them. . . . [And] if they donâ€™t have something in it important to them, then it doesnâ€™t speak well of them. Thatâ€™s what this legislation is all about: Itâ€™s the art of compromise.â€™ â€ Pear, In Health Bill for Everyone, Provisions for a Few, N. Y.
Times, Jan. 4, 2010, p. A10 (quoting Sen. Reid). Often, aÂ minor provision will be the price paid for support of aÂ major provision. So, if the major provision were unconstitutional, Congress would not have passed the minor one.
Without the ACAâ€™s major provisions, many of theseÂ minor provisions will not operate in the manner Congress intended. For example, the tax increases are â€œRevenueÂ Offset Provisionsâ€ designed to help offset the cost to the Federal Government of programs like the Medicaid Expansion and the exchangesâ€™ federal subsidies. See Title IX, Subtitle Aâ€”Revenue Offset Provisions, 124 Stat. 847.Â With the Medicaid Expansion and the exchanges invalidated, the tax increases no longer operate to offset costs, and they no longer serve the purpose in the Actâ€™s scheme of â€œshared responsibilityâ€ that Congress intended.
Some provisions, such as requiring chain restaurants toÂ display nutritional content, appear likely to operate asÂ Congress intended, but they fail the second test for severability. There is no reason to believe that Congress would have enacted them independently. The Court has not previously had occasion to consider severability in the context of an omnibus enactment like the ACA, which includes not only many provisions that are ancillary to itsÂ central provisions but also many that are entirely unrelatedâ€”hitched on because it was a quick way to get themÂ passed despite opposition, or because their proponents could exact their enactment as the quid pro quo for their needed support. When we are confronted with such a so-called â€œChristmas tree,â€ a law to which many nongermane ornaments have been attached, we think the proper rule must be that when the tree no longer exists the ornaments are superfluous. We have no reliable basis for knowing which pieces of the Act would have passed on their own. It is certain that many of them would not have, and it is not a proper function of this Court to guess which. To sever the statute in that manner â€œâ€˜would be to make a new law, not to enforce an old one. This is not part of our duty.â€™â€
Trade-Mark Cases, 100 U. S., at 99.
This Court must not impose risks unintended by Congress or produce legislation Congress may have lacked the support to enact. For those reasons, the unconstitutionality of both the Individual Mandate and the MedicaidÂ Expansion requires the invalidation of the Affordable CareÂ Actâ€™s other provisions.
* * *
The Court today decides to save a statute Congress didÂ not write. It rules that what the statute declares to be a requirement with a penalty is instead an option subject to a tax. And it changes the intentionally coercive sanction of a total cut-off of Medicaid funds to a supposedlyÂ noncoercive cut-off of only the incremental funds that theÂ Act makes available.
The Court regards its strained statutory interpretationÂ as judicial modesty. It is not. It amounts instead to a vast judicial overreaching. It creates a debilitated, inoperable version of health-care regulation that Congress did not enact and the public does not expect. It makes enactment of sensible health-care regulation more difficult, since Congress cannot start afresh but must take as its point of departure a jumble of now senseless provisions, provisions that certain interests favored under the Courtâ€™s new design will struggle to retain. And it leaves the public and
the States to expend vast sums of money on requirementsÂ that may or may not survive the necessary congressional revision.
The Courtâ€™s disposition, invented and atextual as it is,Â does not even have the merit of avoiding constitutionalÂ difficulties. It creates them. The holding that the Individual Mandate is a tax raises a difficult constitutional question (what is a direct tax?) that the Court resolves with inadequate deliberation. And the judgment on the Medicaid Expansion issue ushers in new federalism concerns and places an unaccustomed strain upon the Union.Â Those States that decline the Medicaid Expansion mustÂ subsidize, by the federal tax dollars taken from theirÂ citizens, vast grants to the States that accept the MedicaidÂ Expansion. If that destabilizing political dynamic, soÂ antagonistic to a harmonious Union, is to be introduced atÂ all, it should be by Congress, not by the Judiciary.
The values that should have determined our course today are caution, minimalism, and the understanding thatÂ the Federal Government is one of limited powers. But the Courtâ€™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 ofÂ the Republic, has powerful meaning and vital relevanceÂ to our own times. The constitutional protections that this case involves are protections of structure. Structural protectionsâ€”notably, the restraints imposed by federalismÂ and separation of powersâ€”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 toÂ 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 laterÂ amendment. The fragmentation of power produced by theÂ structure of our Government is central to liberty, and
when we destroy it, we place liberty at peril. Todayâ€™sÂ decision should have vindicated, should have taught, thisÂ truth; instead, our judgment today has disregarded it.
For the reasons here stated, we would find the Act invalid in its entirety. We respectfully dissent.
End dissent transcript