A Defense of NFIB v. Sibelius
Don't let people tell you otherwise- the Supreme Court got the Obamacare case exactly right
NFIB v. Sibelius, the first, biggest Supreme Court case upholding Obamacare (conservatives went to the Supreme Court twice more in an attempt to sink the statute, and lost badly), has not fared well with the legal commentariat in the 9 years since it was decided. From the get-go, it was criticized for its result. On the one hand, conservatives hated the Court’s ruling that the taxation power in the Constitution permitted Congress to mandate that individuals obtain health insurance. On the other hand, liberals hated that the Court struck down the statute’s mandatory expansion of Medicaid.
Since the decision, things have only gotten worse. A series of reports based on anonymous sources close to the Court has purportedly revealed a deal was made among the justices that resulted in the ultimate result, upholding the individual mandate and striking down the Medicaid expansion, even though supposedly this was a result nobody on the Court wanted. Obviously, if something like this happened (to be clear, nobody has ever gone on the record confirming it, and the most likely sources for this story, former clerks, very likely had their own ideological views on the case and may very well have been ticked off by the compromise, “split the baby” ruling), it doesn’t make the Court look good: the Court is supposed to be deciding cases on legal principles, not making horse trades.
And yet, if you actually read Sibelius, the entire thing mostly makes a lot of sense. If it really was a product of a deal, it was a deal that gave rise to a totally plausible result which interpreted the Constitution in plausible ways.
Since we still fight so much over this decision as well as SCOTUS more generally, I believe a defense of Sibelius is in order.
Sibelius has three parts:
A ruling that Obamacare’s individual mandate does not regulate “economic activity” and thus is not an exercise of Congress’ power to regulate interstate commerce.
A ruling that Obamacare’s individual mandate is a tax that falls within Congress’ power to lay and collect taxes.
A ruling that the Medicaid expansion’s conditions were overly coercive and had to be made voluntary, so states could decide on their own whether or not to participate.
Of these three rulings, only (1) is legally questionable. And (1) is practically almost irrelevant.
Let’s get (1) out of the way first. The Commerce Clause of the Constitution allows Congress to regulate commerce among the several states. At the 10,000 foot level, of course a remake of the nation’s health care system regulates commerce among the several states. But the Supreme Court’s precedents allow that top-level analysis only where a regulation targets “economic activity”. This came about in a couple of precedents in the 1990’s that involved statutes directed at gun possession around schools and domestic violence. Earlier precedents had held that so long as Congress was regulating an economic activity, the specifics of the legislation could regulate even purely local conduct. So, for instance, FDR could regulate an individual farmer’s production of wheat for his own consumption, because it was part of a market-wide program of farm price supports. And LBJ could integrate a tiny barbecue on some back road in the South, because that tiny barbecue participated in the national food service market.
But gun possession and domestic violence were different, the Court held. They were non-economic activities, not economic activities. They might have an effect on interstate commerce, but they weren’t themselves economic, so they couldn’t be aggregated with other economic activities to form the basis for Congress’ power to regulate them.
So that was the state of the law pre-Sibelius. Economic activity, even local economic activity, could be regulated by Congress, so long as the law in the big picture regulated some interstate commerce. Non-economic activity by itself could not be regulated by Congress.
Sibelius concerned a third category- economic inactivity. Health care was clearly part of the economy, but the decision not to purchase health insurance wasn’t activity; it was inactivity. And SCOTUS held that economic inactivity, like non-economic activity, was outside the commerce power.
I think that was wrong, all things considered, for rather boring reasons. (Essentially, a gun possession regulation is still a gun possession regulation, even when imposed nationally, but the health care mandate was clearly part and parcel of a larger scheme to regulate the economy. So it should have fallen within the commerce power.) But the holding is really pretty harmless- can you think of another example where Congress might ever pass an economic mandate unconnected to some other power in the Constitution? This decision is a one-off, and it doesn’t even strike down Obamacare, because the Court found it to be a tax.
And the tax holding, number (2) in my list, is correct. Obamacare provided that if you didn’t get health insurance, the IRS would impose a tax penalty on you. This is essentially no different from a million tax credit schemes. For instance, if you don’t buy an electric car, you pay more in taxes than a person with your same income who does. Taxing people differently based on their choices is a crucial part of taxation, and had the Court ruled the other way on this issue, the entire tax code would have been in jeopardy.
Finally, we come to holding (3), the Medicaid expansion. At issue was the conditional spending doctrine. Now, to be clear, nothing in the Constitution specifically provides that Congress can’t condition spending. It says Congress can simply spend to promote the general welfare. But it’s easy enough to see why some limits on conditional spending have evolved over the years: what if Congress, for instance, passed a statute that said unless a state did what Congress wanted it do, Congress would withdraw federal law enforcement, or close military bases and allow a state to be invaded, or imposed some other draconian condition? The notion is that if there is some form of state sovereignty protected by the Constitution (and everyone agrees there is, as is reflected in the Tenth Amendment), there has to be some limit to how much Congress can do to screw over a state.
But where do you place the limit? An earlier case, South Dakota v. Dole, had upheld a small cut in highway funding for states that did not raise their drinking age from 18 to 21. But, importantly, that cut was small. Had Obamacare provided that, say, a state would lose 10% of its Medicaid funding if it did not participate in the Medicaid expansion, that would have been constitutional. The problem is, that wasn’t what Obamacare did: it said that states that refused the expansion would be kicked out of Medicaid entirely.
At this point, it’s worth understanding something: kicking a state completely off of Medicaid would almost surely have killed a lot of residents. Indeed, we know this from liberal critics of Sibelius: they love to point out that because states were allowed not to expand Medicaid by the Court, there were excess preventable deaths in those states.
But you can’t have this argument both ways. If Medicaid saves lives (which it does), than kicking a state completely off of Medicaid would have killed its residents. So Obamacare was as close to a gun to a state’s head as you can get: change your law to participate in this program or we will start killing your Medicaid recipients. And once you state the argument that way, it’s easy to see why the Supreme Court struck it down. Of course Congress doesn’t have the power to threaten to kill people to force state compliance with federal mandates.
So Sibelius came to the right result, and its reasoning was correct in all respects except one, with that exception being an issue that will never arise again and wasn’t used to strike down the statute. Why, then, does this obviously correct decision continue to come in for such criticism? Part of it is simply that a lot of the critics on the left simply don’t like the Supreme Court for other reasons. They don’t like, for instance, that it is likely to overturn Roe v. Wade, don’t like that it upheld state gerrymandering, etc.
But the real damage was probably done by this reporting about a deal. Indeed, the stronger version of the argument is that Chief Justice Roberts endorsed an argument he didn’t believe in. But even if there was a deal, we don’t know Chief Justice Roberts’ mental state. And deals are generally made because people are satisfied with the results: would you say that Nancy Pelosi does not believe in the final “Build Back Better” reconciliation bill because it contains a bunch of compromises from Pelosi’s original vision?
But even the weaker version of this- that because there may have been a behind the scenes deal, the decision is illegitimate- is, in fact, wrong. The Supreme Court, unlike politicians, reasons in public. They tell you why they are doing things. If SCOTUS puts out an unpersuasive opinion (which sometimes happens!), people are all over it. This is one institution we really can judge by what it says.
And what it said in the Sibelius case was basically right. Hopefully when the history is ultimately written, it will be seen that way.