National Federation of Independent Business v. Sebelius
A. Facts
Congress enacted the Patient Protection and Affordable Care Act in 2010. The Act
includes an individual mandate provision, compelling citizens to have “minimum essential”
health insurance. Those who do not do so must pay a penalty to the IRS along with their taxes.
The Act also includes a Medicaid expansion provision, increasing the number of people the
States must cover. If a state does not comply with the Act, it may lose all of its federal
Medicaid funds. The National Federation of Independent Business, along with 26 states and
various individuals, brought suit, arguing against the constitutionality of these two provisions.
B. Procedural History
District Court held that Congress did not have constitutional power to enact the
individual mandate. District Court also held that this provision could not be severed from the
rest of the Act, so the entire Act was struck down.
Court of Appeals for the Eleventh Circuit affirmed the holding that Congress could not
enact the individual mandate because it did not fall under Congress’s taxing powers or the
Commerce Clause. Reversed District Court’s holding about the severability of the Act, and
therefore upheld the Act’s other provisions, including the Medicaid expansion.
C. Issues
Does Congress have the power to enact the individual mandate and Medicaid expansion
provisions of the Patient Protection and Affordable Care Act?
D. Holding
Congress has the power to enact the individual mandate provision under its taxing
powers, but not under the Commerce Clause or Necessary and Proper Clause.
The Medicaid expansion provision violates the Constitution by threatening states with
losing all their Medicaid funds if they do not comply.
E. Judgment
5-4. Affirmed in part and reversed in part.
F. Legal Reasoning
Opinion: Chief Justice Roberts
I. The Anti-Injunction Act states that “no suit for the purpose of restraining the
assessment or collection of any tax shall be maintained in any court.” It is contended that
the IRS treats the penalty for not complying with the Act as a tax, and so the AntiInjunction Act bars this suit.
A. Congress labeled it a “penalty,” rather than a “tax”
i. The ACA describes other exactions as “taxes.” This means Congress
acted intentionally in using specific language, calling it a “penalty,” not a
“tax”
B. The Anti-Injunction Act does not apply to this suit, so the Court has authority
to proceed
II. Government argues that Congress can enact the mandate under the Commerce Clause
and the Necessary and Proper Clause, but Court disagrees.
A. Court finds that the individual mandate is not authorized by Congress’s power
under the Commerce Clause or Necessary and Proper Clause
i. Upholding the ACA under the Commerce Clause would give
Congress the power to regulate what people do not do
ii. Congress has the power to regulate commerce, not to compel it
III. The individual mandate must be construed as imposing a tax
A. The individual mandate’s only effect is raising taxes on individuals who do
not comply, so it may be upheld as within Congress’s power to “lay and
collect Taxes.”
IV. The Medicaid expansion violates the Constitution by threatening states with losing all
Medicaid funds if they do not comply.
A. Roberts: “When Congress threatens to terminate other grants as a means of
pressuring the States to accept a Spending Clause program, the legislation
runs counter to this Nation’s system of federalism.”
Concurring in part and dissenting in part: Justice Ginsburg
I. Anti-Injunction Act does not prevent the Court from considering this case
II. Individual mandate falls under Congress’s taxing power
III. Individual mandate also falls under the Commerce Clause power
IV. Medicaid expansion penalty falls under the Spending Clause power
Dissent: Justices Scalia, Kennedy, Thomas, and Alito
I. The Act exceeds Congress’s power both in the individual mandate and in denying
noncomplying states their Medicaid funding.
Dissent: Justice Thomas
I. Individual mandate is beyond Congress’s power under Commerce Clause and
Necessary and Proper Clause.
A. A “substantial effects” test under the Commerce Clause is inconsistent with
Congress’s power and early Commerce Clause cases.
G. Precedent
Precedent case: Gibbons v. Ogden, which upheld a broad definition of Congress’s powers
under the Commerce Clause.
The main case is a narrow interpretation of this precedent, striking down the broadness of
the Commerce Clause. Together these cases fit into Box II (B).
H. Source of Law
Art. I, §8, cl. 1; Art. I, §8, cl. 3; Art. I, §8, cl. 18; Anti-Injunction Act
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