I was offline most of yesterday, and I returned to see long threads about health care and the U.S. Supreme Court's ruling [PDF] on the Affordable Care Act [PDF]. That surprised me, because I didn't think you would be greatly interested. That's why I didn't even put it in News Picks, let alone write about it. But now I see I was wrong, that many of you are interested, and I also see a lot of misunderstanding of what the ruling actually says, not only in your comments but in the media. I also see a lot of FUD in the air. So I thought I'd take the time to explain it. If nothing else, it fits our purpose for doing Groklaw, since antiFUD is very much what we set out to do, and we have covered Constitutional issues before, albeit in the First Amendment context usually.

The decision in National Federation of Independent Business v. Sebelius is quite long, so I can't be brief, but I've divided it into chunks, so if there is one aspect that you are particularly interested in, you can just read that part. It's long, but it's not hard. At least, I've tried to make it understandable.

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My purpose is to explain what the decision held, or more accurately to explain by *showing* you what it actually says instead of just telling you. The rest is up to you and entirely your business.

I'll start by explaining something important. In the legal field you *have* to think about all the issues from both sides, your own and the opponent's, and I don't know if that draws a certain type of person or it affects them so that they are more willing to consider others' views, but I view it as an asset. As we go through the main chunks of the decision, I think you'll see that the Chief Justice viewed the issues more as legal issues than political ones, and my descriptions will also be based on the legal, not the political, issues. I'd appreciate it if your comments would focus similarly. There is enough FUD about the Affordable Care Act without us adding to it. I'm trying to clarify, not increase the fog.

The ruling is 193 pages, so I am guessing many of you haven't read it. But please do [PDF]. I'll be hitting only the most important highlights, none of the subsidiary dissenting or concurring opinions except in passing, but it's all available to you, so you can verify what I'm writing about it, as is our style on Groklaw. Mostly I'll show you and just put the legalese into plainer English. Here are the three chunks I'll cover, so you can skip to whatever interests you the most:

Did the Court Have Jurisdiction?
Did Congress Have Authority Under the Commerce Clause?
Did Congress Have Authority Under Its Power to "Lay and Collect Taxes"?

The opinion itself begins by detailing what the lower courts held. I won't explain that part, because you can read it if you want to. He included it because it's his job to do that in moments like this. But we can safely skip it and jump into the first of the three categories I'll be covering, namely jurisdiction.

Did the Court Have Jurisdiction? - The First Question

It seems there is a law called the Anti-Injunction Act that says you can't sue and seek an injunction to block a new tax. You can sue, after you pay, to get a refund, but you can't block the new tax before it even starts. Otherwise, the government would be swamped with litigation all the time. So the question was, was the Affordable Care Act's individual mandate penalty a tax for purposes of this one statute, the Anti-Injunction Act? If so, then no one could sue over it until 2014, after the law is scheduled to go into effect.

See how detailed and abstruse lawyers' arguments are? They try to think of everything applicable that might prevail, and that is what they are supposed to do. Well, some judges are up to the challenges they create. Chief Justice Roberts wrote that the issue of whether it is a tax with *respect to the Anti-Injunction Act*, and only that one law, and its requirements could be answered no, because the Affordable Care Act uses both the word "penalty" and elsewhere about other things the word "tax", and courts assume if you use two words in legislation, you mean to make a distinction. This isn't poetry. It's legislation, where words are unusually precise on purpose. And since Congress wrote both the Anti-Injunction Act and the ACA, it knew how to have it considered a tax for purposes of the Anti-Injunction Act by simply saying that, he points out. And Congress didn't do that. Here's the legalese:

The text of the pertinent statutes suggests otherwise. The Anti-Injunction Act applies to suits “for the purpose of restraining the assessment or collection of any tax.” §7421(a) (emphasis added). Congress, however, chose to describe the “[s]hared responsibility payment” imposed on those who forgo health insurance not as a “tax,” but as a “penalty.” §§5000A(b), (g)(2). There is no immediate reason to think that a statute applying to “any tax” would apply to a “penalty.”

Congress’s decision to label this exaction a “penalty” rather than a “tax” is significant because the Affordable Care Act describes many other exactions it creates as “taxes.” See Thomas More, 651 F. 3d, at 551. Where Congress uses certain language in one part of a statute and different language in another, it is generally presumed that Congress acts intentionally. See Russello v. United States, 464 U. S. 16, 23 (1983).

Amicus argues that even though Congress did not label the shared responsibility payment a tax, we should treat it as such under the Anti-Injunction Act because it functions like a tax.

But that's just the analysis of that one statute. When it comes to deciding if a law that Congress has passed is constitutional, there's a different legal analysis, in Roberts's view, as I'll show you later, but legally for this first question of jurisdiction, the fact there are two words used is fatal to the argument, Roberts held. Here's why he sees a difference:

It is true that Congress cannot change whether an exaction is a tax or a penalty for constitutional purposes simply by describing it as one or the other. Congress may not, for example, expand its power under the Taxing Clause, or escape the Double Jeopardy Clause’s constraint on criminal sanctions, by labeling a severe financial punishment a “tax.” See Bailey v. Drexel Furniture Co., 259 U. S. 20, 36–37 (1922); Department of Revenue of Mont. v. Kurth Ranch, 511 U. S. 767, 779 (1994).

The Anti-Injunction Act and the Affordable Care Act, however, are creatures of Congress’s own creation. How they relate to each other is up to Congress, and the best evidence of Congress’s intent is the statutory text. We have thus applied the Anti-Injunction Act to statutorily described “taxes” even where that label was inaccurate. See Bailey v. George, 259 U. S. 16 (1922) (Anti-Injunction Act applies to “Child Labor Tax” struck down as exceeding Congress’s taxing power in Drexel Furniture).

Congress can, of course, describe something as a penalty but direct that it nonetheless be treated as a tax for purposes of the Anti-Injunction Act. For example, 26 U. S. C. §6671(a) provides that “any reference in this title to ‘tax’ imposed by this title shall be deemed also to refer to the penalties and liabilities provided by” subchapter 68B of the Internal Revenue Code. Penalties in subchapter 68B are thus treated as taxes under Title 26, which includes the Anti-Injunction Act. The individual mandate, however, is not in subchapter 68B of the Code. Nor does any other provision state that references to taxes in Title 26 shall also be “deemed” to apply to the individual mandate.

There was one other subtler argument, and here is how Roberts dealt with it:

Amicus attempts to show that Congress did render the Anti-Injunction Act applicable to the individual mandate, albeit by a more circuitous route. Section 5000A(g)(1) specifies that the penalty for not complying with the mandate “shall be assessed and collected in the same manner as an assessable penalty under subchapter B of chapter 68.” Assessable penalties in subchapter 68B, in turn, “shall be assessed and collected in the same manner as taxes.” §6671(a). According to amicus, by directing that the penalty be “assessed and collected in the same manner as taxes,” §5000A(g)(1) made the Anti-Injunction Act applicable to this penalty. The Government disagrees. It argues that §5000A(g)(1) does not direct courts to apply the Anti-Injunction Act, because §5000A(g) is a directive only to the Secretary of the Treasury to use the same “‘methodology and procedures’” to collect the penalty that he uses to collect taxes. Brief for United States 32–33 (quoting Seven-Sky, 661 F. 3d, at 11).

We think the Government has the better reading. As it observes, “Assessment” and “Collection” are chapters of the Internal Revenue Code providing the Secretary authority to assess and collect taxes, and generally specifying the means by which he shall do so. See §6201 (assessment authority); §6301 (collection authority). Section 5000A(g)(1)’s command that the penalty be “assessed and collected in the same manner” as taxes is best read as referring to those chapters and giving the Secretary the same authority and guidance with respect to the penalty. That interpretation is consistent with the remainder of §5000A(g), which instructs the Secretary on the tools he may use to collect the penalty. See §5000A(g)(2)(A) (barring criminal prosecutions); §5000A(g)(2)(B) (prohibiting the Secretary from using notices of lien and levies). The Anti-Injunction Act, by contrast, says nothing about the procedures to be used in assessing and collecting taxes.

Amicus argues in the alternative that a different section of the Internal Revenue Code requires courts to treat the penalty as a tax under the Anti-Injunction Act. Section 6201(a) authorizes the Secretary to make “assessments of all taxes (including interest, additional amounts, additions to the tax, and assessable penalties).” (Emphasis added.) Amicus contends that the penalty must be a tax, because it is an assessable penalty and §6201(a) says that taxes include assessable penalties.

That argument has force only if §6201(a) is read in isolation. The Code contains many provisions treating taxes and assessable penalties as distinct terms. See, e.g., §§860(h)(1), 6324A(a), 6601(e)(1)–(2), 6602, 7122(b). There would, for example, be no need for §6671(a) to deem “tax” to refer to certain assessable penalties if the Code already included all such penalties in the term “tax.” Indeed, amicus’s earlier observation that the Code requires assessable penalties to be assessed and collected “in the same manner as taxes” makes little sense if assessable penalties are themselves taxes. In light of the Code’s consistent distinction between the terms “tax” and “assessable penalty,” we must accept the Government’s interpretation: §6201(a) instructs the Secretary that his authority to assess taxes includes the authority to assess penalties, but it does not equate assessable penalties to taxes for other purposes.

The Affordable Care Act does not require that the penalty for failing to comply with the individual mandate be treated as a tax for purposes of the Anti-Injunction Act. The Anti-Injunction Act therefore does not apply to this suit, and we may proceed to the merits.

Did Congress Have Authority Under the Commerce Clause?

The Government advances two theories for the proposition that Congress had constitutional authority to enact the individual mandate. First, the Government argues that Congress had the power to enact the mandate under the Commerce Clause. Under that theory, Congress may order individuals to buy health insurance because the failure to do so affects interstate commerce, and could undercut the Affordable Care Act’s other reforms. Second, the Government argues that if the commerce power does not support the mandate, we should nonetheless uphold it as an exercise of Congress’s power to tax. According to the Government, even if Congress lacks the power to direct individuals to buy insurance, the only effect of the individual mandate is to raise taxes on those who do not do so, and thus the law may be upheld as a tax.

The court addressed the Commerce Clause argument first, and decided the federal government has no authority to make citizens buy a product they don't want to buy, to, in effect, force them to enter into commerce. Its authority under the Commerce Clause is broad, but only over commerce that exists, not commerce it compels and in essence creates. If you enjoy this sort of thing, you can read Justice Ruth Ginsburg's concurring opinion, where she raises some very compelling arguments that he's wrong in this, but it doesn't matter in the short run, in that he ruled otherwise. I admire Justice Ginsburg quite a lot, personally, and I always enjoy reading what she writes, because it's so clear and logical and because she never pretends that there is no ethical aspect to a decision. And from what I read in the dissent, I think it was possibly Justice Ginsburg who, in the end, got to Chief Justice Roberts.

I see in the dissent that they call her opinion a dissenting opinion and it actually is a concurring opinion -- although it's true that she dissented on the Commerce Clause issue, it's still oddly imprecise language -- and on page 141 of the PDF, the dissenters refer to something Chief Justice Roberts wrote (on page 86 of the PDF) as being a "dissent" -- so at one point, the now-dissenters thought apparently that ACA was dead in the water. That would indicate that at some point Roberts perhaps saw things differently and switched sides, and that has made all the difference.

Justice Ginsburg has spoken and written about how hard it is to change people's thinking, that it takes time, even when judges have it wrong. Maybe especially then. But she never stops trying to explain. And sometimes, over time, people who are able to think in the legal manner can see an argument as valid that they didn't really grasp earlier. And that can make history different than it otherwise would have been.

Chief Justice Roberts began this section by describing the problem the Affordable Care Act is trying to solve, and this is important to comprehending what this issue is all about:

The Government’s first argument is that the individual mandate is a valid exercise of Congress’s power under the Commerce Clause and the Necessary and Proper Clause. According to the Government, the health care market is characterized by a significant cost-shifting problem. Everyone will eventually need health care at a time and to an extent they cannot predict, but if they do not have insurance, they often will not be able to pay for it. Because state and federal laws nonetheless require hospitals to provide a certain degree of care to individuals without regard to their ability to pay, see, e.g., 42 U. S. C. §1395dd; Fla. Stat. Ann. §395.1041, hospitals end up receiving compensation for only a portion of the services they provide. To recoup the losses, hospitals pass on the cost to insurers through higher rates, and insurers, in turn, pass on the cost to policy holders in the form of higher premiums. Congress estimated that the cost of uncompensated care raises family health insurance premiums, on average, by over $1,000 per year. 42 U. S. C. §18091(2)(F).

The court continues:

In the Affordable Care Act, Congress addressed the problem of those who cannot obtain insurance coverage because of preexisting conditions or other health issues. It did so through the Act’s “guaranteed-issue” and “community-rating” provisions. These provisions together prohibit insurance companies from denying coverage to those with such conditions or charging unhealthy individuals higher premiums than healthy individuals. See §§300gg, 300gg–1, 300gg–3, 300gg–4. The guaranteed-issue and community-rating reforms do not, however, address the issue of healthy individuals who choose not to purchase insurance to cover potential health care needs. In fact, the reforms sharply exacerbate that problem, by providing an incentive for individuals to delay purchasing health insurance until they become sick, relying on the promise of guaranteed and affordable coverage.

The reforms also threaten to impose massive new costs on insurers, who are required to accept unhealthy individuals but prohibited from charging them rates necessary to pay for their coverage. This will lead insurers to significantly increase premiums on everyone. See Brief for America’s Health Insurance Plans et al. as Amici Curiae in No. 11– 393 etc. 8–9.

The individual mandate was Congress’s solution to these problems. By requiring that individuals purchase health insurance, the mandate prevents cost-shifting by those who would otherwise go without it. In addition, the mandate forces into the insurance risk pool more healthy individuals, whose premiums on average will be higher than their health care expenses. This allows insurers to subsidize the costs of covering the unhealthy individuals the reforms require them to accept. The Government claims that Congress has power under the Commerce and Necessary and Proper Clauses to enact this solution.

Health insurance is unique in that everyone actually does experience some kind of event during their lifetime, and that makes paying for it harder to figure out and the ACA decided that broadening the pool was the way to do it, by insisting that everyone carry some part of the load, whether they enjoyed doing so or not, with some exceptions and help for those who really can't afford it.

So that's the problem. Cost shifting. That's what the law is attempting to address. It's a real problem, and at the moment, I read around 30 million Americans are without health insurance. That causes economic hardship on those who do have insurance, because someone has to pay for those 30 million people when they get seriously ill or have an accident and end up in the emergency rooms of the nation's hospitals. Here in the US, they are not supposed to leave you on the curb to die. So the government's argument was that the failure to have insurance “has a substantial and deleterious effect on interstate commerce” by creating the cost-shifting problem. That's how they tried to slip it in under the Commerce Clause. And you'd have to agree, it's not an implausible argument on its face. Again, Justice Ginsburg and the other justices who agreed with her about it thought it was a winning argument.

Roberts even goes through a long history of how the Commerce Clause has been employed over history, and for sure, its umbrella is broad. The Chief Justice in fact quotes one case that held this:

“[E]ven if appellee’s activity be local and though it may not be regarded as commerce, it may still, whatever its nature, be reached by Congress if it exerts a substantial economic effect on interstate commerce”

Chief Justice Roberts first acknowledges that it isn't implausible to make the Commerce Clause argument:

The Government contends that the individual mandate is within Congress’s power because the failure to purchase insurance “has a substantial and deleterious effect on interstate commerce” by creating the cost-shifting problem. Brief for United States 34. The path of our Commerce Clause decisions has not always run smooth, see United States v. Lopez, 514 U. S. 549, 552–559 (1995), but it is now well established that Congress has broad authority under the Clause. We have recognized, for example, that “[t]he power of Congress over interstate commerce is not confined to the regulation of commerce among the states,” but extends to activities that “have a substantial effect on interstate commerce.” United States v. Darby, 312 U. S. 100, 118–119 (1941). Congress’s power, moreover, is not limited to regulation of an activity that by itself substantially affects interstate commerce, but also extends to activities that do so only when aggregated with similar activities of others. See Wickard, 317 U. S., at 127–128.

Given its expansive scope, it is no surprise that Congress has employed the commerce power in a wide variety of ways to address the pressing needs of the time.

But Congress has never attempted to rely on that power to compel individuals not engaged in commerce to purchase an unwanted product.

Legislative novelty is not necessarily fatal; there is a first time for everything. But sometimes “the most telling indication of [a] severe constitutional problem . . . is the lack of historical precedent” for Congress’s action. Free Enterprise Fund v. Public Company Accounting Oversight Bd., 561 U. S. ___, ___ (2010) (slip op., at 25) (internal quotation marks omitted). At the very least, we should “pause to consider the implications of the Government’s arguments” when confronted with such new conceptions of federal power. Lopez, supra, at 564.

The Constitution grants Congress the power to “regulate Commerce.” Art. I, §8, cl. 3 (emphasis added). The power to regulate commerce presupposes the existence of commercial activity to be regulated. If the power to “regulate” something included the power to create it, many of the provisions in the Constitution would be superfluous….

As expansive as our cases construing the scope of the commerce power have been, they all have one thing in common: They uniformly describe the power as reaching “activity.” It is nearly impossible to avoid the word when quoting them. …

The individual mandate, however, does not regulate existing commercial activity. It instead compels individuals to become active in commerce by purchasing a product, on the ground that their failure to do so affects interstate commerce. Construing the Commerce Clause to permit Congress to regulate individuals precisely because they are doing nothing would open a new and potentially vast domain to congressional authority. Every day individuals do not do an infinite number of things. In some cases they decide not to do something; in others they simply fail to do it. Allowing Congress to justify federal regulation by pointing to the effect of inaction on commerce would bring countless decisions an individual could potentially make within the scope of federal regulation, and —under the Government’s theory— empower Congress to make those decisions for him….

Indeed, the Government’s logic would justify a mandatory purchase to solve almost any problem. See Seven-Sky, 661 F. 3d, at 14–15 (noting the Government’s inability to “identify any mandate to purchase a product or service in interstate commerce that would be unconstitutional” under its theory of the commerce power). To consider a different example in the health care market, many Americans do not eat a balanced diet. That group makes up a larger percentage of the total population than those without health insurance. See, e.g., Dept. of Agriculture and Dept. of Health and Human Services, Dietary Guidelines for Americans 1 (2010). The failure of that group to have a healthy diet increases health care costs, to a greater extent than the failure of the uninsured to purchase insurance. See, e.g., Finkelstein, Trogdon, Cohen, & Dietz, Annual Medical Spending Attributable to Obesity: Payer-and Service-Specific Estimates, 28 Health Affairs w822 (2009) (detailing the “undeniable link between rising rates of obesity and rising medical spending,” and estimating that “the annual medical burden of obesity has risen to almost 10 percent of all medical spending and could amount to $147 billion per year in 2008”). Those increased costs are borne in part by other Americans who must pay more, just as the uninsured shift costs to the insured. See Center for Applied Ethics, Voluntary Health Risks: Who Should Pay?, 6 Issues in Ethics 6 (1993) (noting “overwhelming evidence that individuals with unhealthy habits pay only a fraction of the costs associated with their behaviors; most of the expense is borne by the rest of society in the form of higher insurance premiums, government expenditures for health care, and disability benefits”). Congress addressed the insurance problem by ordering everyone to buy insurance. Under the Government’s theory, Congress could address the diet problem by ordering everyone to buy vegetables. See Dietary Guidelines, supra, at 19 (“Improved nutrition, appropriate eating behaviors, and increased physical activity have tremendous potential to . . . reduce health care costs”).

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

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

Simply put, the community-rating provision requires insurers to calculate an individual’s insurance premium based on only four factors: (i) whether the individual’s plan covers just the individual or his family also, (ii) the “rating area” in which the individual lives, (iii) the individual’s age, and (iv) whether the individual uses tobacco.

The decision makes an assumption next about young people and why they don't buy insurance:

The individual mandate’s regulation of the uninsured as a class is, in fact, particularly divorced from any link to existing commercial activity. The mandate primarily affects healthy, often young adults who are less likely to need significant health care and have other priorities for spending their money.

Under the current system, if you don't buy insurance until you get sick, you may not be able to get any affordable insurance after that, and young people get cancer and other costly diseases too. So I must tell the justices that young people are not irresponsible enough not to want it. The economy has squeezed them out, in many, many cases. That's exactly why public opinion polls find that Americans really like the provisions of ACA that already are in effect, including the provision that young people can stay on their parents' health insurance until they are 26. That wouldn't be as popular as it is if most young people just didn't care about getting insurance. Clearly many of them wanted it but could not afford it until ACA was passed.

Roberts concludes his argument:

It is precisely because these individuals, as an actuarial class, incur relatively low health care costs that the mandate helps counter the effect of forcing insurance companies to cover others who impose greater costs than their premiums are allowed to reflect. See 42 U. S. C. §18091(2)(I) (recognizing that the mandate would “broaden the health insurance risk pool to include healthy individuals, which will lower health insurance premiums”). If the individual mandate is targeted at a class, it is a class whose commercial inactivity rather than activity is its defining feature….

Everyone will likely participate in the markets for food, clothing, transportation, shelter, or energy; that does not authorize Congress to direct them to purchase particular products in those or other markets today. The Commerce Clause is not a general license to regulate an individual from cradle to grave, simply because he will predictably engage in particular transactions. Any police power to regulate individuals as such, as opposed to their activities, remains vested in the States.

Did Congress Have Authority Under Its Power to "Lay and Collect Taxes"?

Here's how Roberts begins to explain how he analyzes the tax argument:

The Government’s tax power argument asks us to view the statute differently than we did in considering its commerce power theory. In making its Commerce Clause argument, the Government defended the mandate as a regulation requiring individuals to purchase health insurance. The Government does not claim that the taxing power allows Congress to issue such a command. Instead, the Government asks us to read the mandate not as ordering individuals to buy insurance, but rather as imposing a tax on those who do not buy that product.

The text of a statute can sometimes have more than one possible meaning. To take a familiar example, a law that reads “no vehicles in the park” might, or might not, ban bicycles in the park. And it is well established that if a statute has two possible meanings, one of which violates the Constitution, courts should adopt the meaning that does not do so. Justice Story said that 180 years ago: “No court ought, unless the terms of an act rendered it unavoidable, to give a construction to it which should involve a violation, however unintentional, of the constitution.” Parsons v. Bedford, 3 Pet. 433, 448–449 (1830). Justice Holmes made the same point a century later: “[T]he rule is settled that as between two possible interpretations of a statute, by one of which it would be unconstitutional and by the other valid, our plain duty is to adopt that which will save the Act.” Blodgett v. Holden, 275 U. S. 142, 148 (1927) (concurring opinion).

The most straightforward reading of the mandate is that it commands individuals to purchase insurance. After all, it states that individuals “shall” maintain health insurance. 26 U. S. C. §5000A(a). Congress thought it could enact such a command under the Commerce Clause, and the Government primarily defended the law on that basis. But, for the reasons explained above, the Commerce Clause does not give Congress that power. Under our precedent, it is therefore necessary to ask whether the Government’s alternative reading of the statute—that it only imposes a tax on those without insurance—is a reasonable one.

Under the mandate, if an individual does not maintain health insurance, the only consequence is that he must make an additional payment to the IRS when he pays his taxes. See §5000A(b). That, according to the Government, means the mandate can be regarded as establishing a condition—not owning health insurance—that triggers a tax—the required payment to the IRS. Under that theory, the mandate is not a legal command to buy insurance. Rather, it makes going without insurance just another thing the Government taxes, like buying gasoline or earning income. And if the mandate is in effect just a tax hike on certain taxpayers who do not have health insurance, it may be within Congress’s constitutional power to tax.

The question is not whether that is the most natural interpretation of the mandate, but only whether it is a “fairly possible” one. Crowell v. Benson, 285 U. S. 22, 62 (1932). As we have explained, “every reasonable construction must be resorted to, in order to save a statute from unconstitutionality.” Hooper v. California, 155 U. S. 648, 657 (1895). The Government asks us to interpret the mandate as imposing a tax, if it would otherwise violate the Constitution. Granting the Act the full measure of deference owed to federal statutes, it can be so read, for the reasons set forth below.

The exaction the Affordable Care Act imposes on those without health insurance looks like a tax in many respects. The “[s]hared responsibility payment,” as the statute entitles it, is paid into the Treasury by “tax-payer[s]” when they file their tax returns. 26 U. S. C. §5000A(b). It does not apply to individuals who do not pay federal income taxes because their household income is less than the filing threshold in the Internal Revenue Code. §5000A(e)(2). For taxpayers who do owe the payment, its amount is determined by such familiar factors as taxable income, number of dependents, and joint filing status. §§5000A(b)(3), (c)(2), (c)(4). The requirement to pay is found in the Internal Revenue Code and enforced by the IRS, which—as we previously explained—must assess and collect it “in the same manner as taxes.” Supra, at 13–14. This process yields the essential feature of any tax: it produces at least some revenue for the Government. United States v. Kahriger, 345 U. S. 22, 28, n. 4 (1953). Indeed, the payment is expected to raise about $4 billion per year by 2017. Congressional Budget Office, Payments of Penalties for Being Uninsured Under the Patient Protection and Affordable Care Act (Apr. 30, 2010), in Selected CBO Publications Related to Health Care Legislation, 2009–2010, p. 71 (rev. 2010).

It is of course true that the Act describes the payment as a “penalty,” not a “tax.” But while that label is fatal to the application of the Anti-Injunction Act, supra, at 12–13, it does not determine whether the payment may be viewed as an exercise of Congress’s taxing power. It is up to Congress whether to apply the Anti-Injunction Act to any particular statute, so it makes sense to be guided by Congress’s choice of label on that question. That choice does not, however, control whether an exaction is within Congress’s constitutional power to tax.

The decision goes on to cite a couple of cases that provide precedent that just because you call something "Not a Tax" that doesn't end the investigation of what in reality it is if you are trying to decide if Congress has the taxing authority under the Constitution. For example, in New York v. United States, this court writes, the court upheld as a tax something that was instead called a "surcharge" on out-of-state nuclear waste shipments, part of which was paid to the federal treasury. So does the penalty in the Affordable Care Act match those cases? Does it fall within the Congress's taxing power? Or more precisely, does Congress have the authority to make you pay, whatever you call it? The decision quotes cases that say, in effect, that it isn't the word that matters but how it works. For example, from Nelson v. Sears, Roebuck:

“In passing on the constitutionality of a tax law, we are concerned only with its practical operation, not its definition or the precise form of descriptive words which may be applied to it”

“That the funds due are referred to as a ‘penalty’ . . . does not alter their essential character as taxes”

Roberts also cites a case where the law called something a tax when the Supreme Court ruled instead that it was a penalty, Drexel Furniture. So in this part of the analysis, words are not decisive. What matters is how does it work? Is it punitive, for example? Penalty implies getting slapped for doing something you shouldn't do or didn't do that you should have.

So is it reasonable? Can it be interpreted that way in this case? Here's the court's reasoning on why it is not punitive and hence a tax:

The same analysis here suggests that the shared re- sponsibility payment may for constitutional purposes be considered a tax, not a penalty: First, for most Americans the amount due will be far less than the price of insurance, and, by statute, it can never be more.⁸ It may often be a reasonable financial decision to make the payment rather than purchase insurance, unlike the “prohibitory” financial punishment in Drexel Furniture. 259 U. S., at 37. Second, the individual mandate contains no scienter requirement. Third, the payment is collected solely by the IRS through the normal means of taxation—except that the Service is not allowed to use those means most suggestive of a punitive sanction, such as criminal prosecution. See §5000A(g)(2)....

None of this is to say that the payment is not intended to affect individual conduct. Although the payment will raise considerable revenue, it is plainly designed to expand health insurance coverage. But taxes that seek to influence conduct are nothing new.

_______
⁸ In 2016, for example, individuals making $35,000 a year are expected to owe the IRS about $60 for any month in which they do not have health insurance. Someone with an annual income of $100,000 a year would likely owe about $200. The price of a qualifying insurance policy is projected to be around $400 per month. See D. Newman, CRS Report for Congress, Individual Mandate and Related Information Requirements Under PPACA 7, and n. 25 (2011).

But here, he concludes, there is no breaking of a law involved, where punishment enters the picture:

While the individual mandate clearly aims to induce the purchase of health insurance, it need not be read to declare that failing to do so is unlawful. Neither the Act nor any other law attaches negative legal consequences to not buying health insurance, beyond requiring a payment to the IRS. The Government agrees with that reading, confirming that if someone chooses to pay rather than obtain health insur- ance, they have fully complied with the law.Brief for United States 60–61; Tr. of Oral Arg. 49–50 (Mar. 26, 2012).

Indeed, it is estimated that four million people each year will choose to pay the IRS rather than buy insurance. See Congressional Budget Office, supra, at 71. We would expect Congress to be troubled by that prospect if such conduct were unlawful. That Congress apparently regards such extensive failure to comply with the mandate as tolerable suggests that Congress did not think it was creating four million outlaws. It suggests instead that the shared responsibility payment merely imposes a tax citi- zens may lawfully choose to pay in lieu of buying health insurance.

But what about the argument that this is a direct tax? Some are screaming that this is raising taxes. Is it? Is it a poll tax, or capitation? The court:

A tax on going without health insurance does not fall within any recognized category of direct tax. It is not a capitation. Capitations are taxes paid by every person, “without regard to property, profession, or any other circumstance.” Hylton, supra, at 175 (opinion of Chase, J.) (emphasis altered). The whole point of the shared responsibility payment is that it is triggered by specific circumstances—earning a certain amount of income but not obtaining health insurance. The payment is also plainly not a tax on the ownership of land or personal property. The shared responsibility payment is thus not a direct tax that must be apportioned among the several States.

There may, however, be a more fundamental objection to a tax on those who lack health insurance. Even if only a tax, the payment under §5000A(b) remains a burden that the Federal Government imposes for an omission, not an act. If it is troubling to interpret the Commerce Clause as authorizing Congress to regulate those who abstain from commerce, perhaps it should be similarly troubling to permit Congress to impose a tax for not doing something.

Three considerations allay this concern. First, and most importantly, it is abundantly clear the Constitution does not guarantee that individuals may avoid taxation through inactivity. A capitation, after all, is a tax that everyone must pay simply for existing, and capitations are expressly contemplated by the Constitution. The Court today holds that our Constitution protects us from federal regulation under the Commerce Clause so long as we abstain from the regulated activity. But from its creation, the Constitution has made no such promise with respect to taxes. See Letter from Benjamin Franklin to M. Le Roy (Nov. 13, 1789) (“Our new Constitution is now established . . . but in this world nothing can be said to be certain, except death and taxes”). Whether the mandate can be upheld under the Commerce Clause is a question about the scope of federal authority. Its answer depends on whether Congress can exercise what all acknowledge to be the novel course of directing individuals to purchase insurance. Congress’s use of the Taxing Clause to encourage buying something is, by contrast, not new. Tax incentives already promote, for example, purchasing homes and professional educations. See 26 U. S. C. §§163(h), 25A. Sustaining the mandate as a tax depends only on whether Congress has properly exercised its taxing power to encourage purchasing health insurance, not whether it can. Upholding the individual mandate under the Taxing Clause thus does not recognize any new federal power. It determines that Congress has used an existing one.

Third, although the breadth of Congress’s power to tax is greater than its power to regulate commerce, the taxing power does not give Congress the same degree of control over individual behavior. Once we recognize that Congress may regulate a particular decision under the Commerce Clause, the Federal Government can bring its full weight to bear. Congress may simply command individuals to do as it directs. An individual who disobeys may be subjected to criminal sanctions. Those sanctions can include not only fines and imprisonment, but all the attendant consequences of being branded a criminal: deprivation of otherwise protected civil rights, such as the right to bear arms or vote in elections; loss of employment opportunities; social stigma; and severe disabilities in other controversies, such as custody or immigration disputes.

By contrast, Congress’s authority under the taxing power is limited to requiring an individual to pay money into the Federal Treasury, no more. If a tax is properly paid, the Government has no power to compel or punish individuals subject to it. We do not make light of the severe burden that taxation—especially taxation motivated by a regulatory purpose—can impose. But imposition of a tax nonetheless leaves an individual with a lawful choice to do or not do a certain act, so long as he is willing to pay a tax levied on that choice.

The Affordable Care Act’s requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a tax. Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness.

The young people who refuse to buy health insurance because they don't expect to get sick and if they do go to emergency rooms—and are billed, but just try collecting!—are free riders, like draft dodgers. They increase health costs for the rest of us. The chief justice, echoing Justice Scalia's "broccoli" comment at the oral argument, rejected (as did the four dissenters, and so that is now the view of a majority of the justices) the Commerce Clause ground for the mandate, saying that to accept that ground would mean that "Congress could address the diet problem by ordering everyone to buy vegetables." This argument, reassuring though it is to our obese population, confuses separate constitutional provisions. The Commerce Clause would empower Congress to order everyone to buy vegetables, because the market for most vegetables is interstate, but the "liberty" protected against the federal government by the Fifth Amendment would doubtless be interpreted to forbid such an imposition, just as it would be interpreted to forbid a federal law requiring everyone to be in bed with the lights out by 10 p.m. in order to economize on the use of electricity and, by doing so, reduce carbon emissions from electrical generating plants.

I am surprised, finally, by the lifelessness of the joint dissenting opinion.

I hope this is helpful to you. I'm not a lawyer, as you know, but I am a paralegal. So legalese is not a foreign language to me, and if this makes it easier for you to understand the decision, I'm really glad. If you see errors, let me know. Everyone makes errors, and I'm no exception, but this is my best effort. And yes, I know people call the ACA "ObamaCare" but it seems rude to me since it was coined to speak against the bill, so I prefer not to call it that.

Update: There is now some vaguely sourced (law clerks, secretaries) reports that Chief Justice Roberts did in fact switch his vote, originally being on the side of striking down the law. And here are some more reactions from legal scholars, including Lawrence Tribe, who taught law to both President Obama and Chief Justice Roberts, and who predicted the Supreme Court would uphold the law. And here's some indication that it was, in fact, the arguments [PDF] at the hearing of the government’s lawyer, Solicitor General Donald Verrilli, that ultimately resonated and prevailed. For example, under questioning Verilli said this:

JUSTICE SCALIA: But fees, you know, license fees, fees for a hunting license, everybody knows those are taxes. I mean, I don't think there is as much of a difference between a fee and a tax as there is between a penalty and a tax.

GENERAL VERRILLI: And that, and -- and I think in terms of the tax power, I think it's useful to separate this into two questions. One is a question of characterization. Can this be characterized as a tax; and second, is it a constitutional exercise of the power?

With respect to the question of characterization, the -- this is -- in the Internal Revenue Code, it is administered by the IRS, it is paid on your Form 1040 on April 15th, I think -

JUSTICE GINSBURG: But yesterday you told me -- you listed a number of penalties that are enforced through the tax code that are not taxes and they are not penalties related to taxes.

GENERAL VERRILLI: They may still be exercise of the tax -- exercises of the taxing power, Justice Ginsburg, as this is, and I think there isn't a case in which the Court has, to my mind, suggested anything that bears this many indicia of a tax can't be considered as an exercise of the taxing power. In fact, it seems to me the License Tax Cases point you in the opposite direction. And beyond that your -- it seems to me the right way to think about this question is whether it is capable of being understood as an exercise of the tax -

JUSTICE SCALIA: The president said it wasn't a tax, didn't he?

GENERAL VERRILLI: Well, Justice Scalia, what the -- two things about that. First, as it seems to me, what matters is what power Congress was exercising. And they were -- and I think it's clear that the -- they were exercising the tax power as well as -

JUSTICE SCALIA: You're making two arguments. Number one, it's a tax; and number two, even if it isn't a tax, it's within the taxing power. I'm just addressing the first.

GENERAL VERRILLI: What the president said -

JUSTICE SCALIA: Is it a tax or not a tax? The president didn't think it was.

GENERAL VERRILLI: The president said it wasn't a tax increase because it ought to be understood as an incentive to get people to have insurance. I don't think it's fair to infer from that anything about whether that is an exercise of the tax power or not.

JUSTICE KAGAN: I suppose, though, General, one question is whether the determined efforts of Congress not to refer to this as a tax make a difference. I mean, you're suggesting we should just look to the practical operation. We shouldn't look at labels. And that seems right, except that here we have a case in which Congress determinedly said, this is not a tax, and the question is why should that be irrelevant?

GENERAL VERRILLI: I don't think that that's a fair characterization of the actions of Congress here, Justice Kagan. On the -- December 23rd, a point of constitutional order was called, too, in fact, with respect to this law. The floor sponsor, Senator Baucus, defended it as an exercise of the taxing power. In his response to the point of order, the Senate voted 60 to 39 on that proposition. The legislative history is replete with members of Congress explaining that this law is constitutional as an exercise of the taxing power. It was attacked as a tax by its opponents. So I don't think this is a situation where you can say that Congress was avoiding any mention of the tax power.

It would be one thing if Congress explicitly disavowed an exercise of the tax power. But given that it hasn't done so, it seems to me that it's -- not only is it fair to read this as an exercise of the tax power, but this Court has got an obligation to construe it as an exercise of the tax power, if it can be upheld on that basis.

One can't help but recall that President Obama did teach Constitutional Law. By the way, here's a map of where the uninsured in America live.

And finally, look how many of the so-called experts called this one completely wrong. That's been my experience with "experts" all the time I've been doing Groklaw and hence paying attention to outcomes. So, what can we learn? Read it for yourself. Never go by what some "expert" tells you. They might be pushing an agenda (did that mean-spirited, ad hominem video of Verrilli pausing repeatedly in oral argument persuade you that he was incompetent? -- and yet he prevailed), they might be unqualified, they might be right or wrong, but you'll never know unless you read the original materials yourself. That's exactly why I take the time to always make them available to you.

Never think that you can't understand something if you make the necessary effort or that relying on what others describe is necessarily reliable. You can see from this incident that it could be profoundly misleading. There is a difference between propaganda and information.

You might find this book by economist Albert O. Hirschman of interest, The Rhetoric of Reaction: Perversity, Futility, Jeopardy, highlighted and described by Atul Gawande in The New Yorker:

He examined the structure of arguments—in the eighteenth century, against expansions of basic rights, such as freedom of speech, thought, and religion; in the nineteenth century, against widening the range of citizens who could vote and participate in government; and, in the twentieth century, against government-assured minimal levels of education, economic well-being, and security. In each instance, the reforms aimed to address deep, pressing, and complex societal problems—wicked problems, as we might call them. The reforms pursued straightforward goals but required inherently complicated, difficult-to-explain means of implementation. And, in each instance, Hirschman observed, reactionary argument took three basic forms: perversity, futility, and jeopardy.

Update 2: And speaking of propaganda, there is a new unnamed source claiming, via an article by Paul Campos, professor of law at the University of Colorado, in Slate, that the earlier Jan Crawford CBS News piece was exactly that, propaganda by her unnamed sources:

My source insists that “most of the material in the first three quarters of the joint dissent was drafted in Chief Justice Roberts’ chambers in April and May.” Only the last portion of what eventually became the joint dissent was drafted without any participation by the chief justice.

This source insists that the claim that the joint dissent was drafted from scratch in June is flatly untrue. Furthermore, the source characterizes claims by Crawford’s sources that “the fact that the joint dissent doesn’t mention [sic] Roberts’ majority … was a signal the conservatives no longer wished to engage in debate with him” as “pure propagandistic spin,” meant to explain away the awkward fact that while the first 46 pages of the joint dissent never even mention Roberts’ opinion for the court (this is surely the first time in the court’s history that a dissent has gone on for 13,000 words before getting around to mentioning that it is, in fact, dissenting), the last 19 pages do so repeatedly.