National Federation of Independent Business v. Sebelius

Background

A group of states, individual plaintiffs, and the National Federation of Independent Business sued over two parts of the 2010 health law: the individual mandate (a rule that most people must have minimum health insurance or pay a payment) and the Medicaid expansion (which conditions federal Medicaid money on states covering many more low-income adults). Lower courts reached different results. The Eleventh Circuit held the mandate exceeded Congress’s power under the Commerce Clause but upheld the Medicaid expansion, and the case reached the Court for review.

Reasoning

The Justices divided their analysis. The Court held that Congress cannot justify the mandate by the Commerce Clause because that clause permits regulation of existing commercial activity, not forcing people to enter commerce. The Court concluded, however, that the mandate can reasonably be read as a tax on those who go without insurance and so can be sustained under Congress’s taxing power. On Medicaid, the Court found unconstitutional the federal threat to withhold all existing Medicaid funds from states that decline the expansion, describing that threat as unconstitutionally coercive.

Real world impact

The practical result is mixed: the individual mandate survives because it can function as a tax collected by the IRS, and most other parts of the law remain in effect. But the federal government cannot condition existing Medicaid funding on a state’s acceptance of the expansion; states must be given a real choice whether to join.

Dissents or concurrances

Justice Ginsburg (joined by others) would have upheld the mandate under the Commerce Clause and the Medicaid expansion under the Spending Clause; Justices Scalia, Kennedy, Thomas, and Alito dissented sharply, urging broader invalidation.