The Affordable Healthcare Act's Designation as a Tax

1 The Affordable Healthcare Act's Designation as a Tax The National Federal of Independent Business V. Sebelius was a case in the U.S. supreme court about the Medicaid expansion provisions and the individual mandate of the Affordable Care Act (ACA). Considering the provisions in question, the ACA needed most of the individuals to be in a position to maintain the minimum health insurance coverage, and it compelled the states to expand their Medicaid program or lose the federal Medicaid funds. The court upheld the individual mandate as a legal exercise of congress' Article 1 taxing power and established that state participation in the Medicaid expansion program was voluntary.

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2 Considering a few highlights about the case, a coalition of individuals, estates, and businesses challenged the Affordable Care Act (ACA) because the law’s individual health insurance mandate went beyond the authority of Congress to regulate interstate commerce under article 1 and did not fall within the power of the Congress when it comes to the issue of tax. The plaintiff also asserted that the Medicaid expansion went against the tenth amendment by requiring the states to follow the federal regulations. As such, the issues that were to be addressed by the courts were whether the Medicaid expansion provision was coercive in an unconstitutional way to the states, whether the individual mandate could be severed from the rest of the law, and whether it was within the jurisdiction of the Congress to require individuals to purchase health insurance (McCauley, 2017). The court upheld the individual mandate as constitutional under the spending and taxing clause of the constitution. It also struck down the provisions that would withhold the federal Medicaid funds from states that would not expand the program while expanding Medicaid in general.

The landmark ruling is important because it clarified the scope of the authority of Congress when it comes to regulating interstate commerce under the article 1 commerce clause.

It became apparent that the constitution protects people from federal regulation under the commerce clause for as long as they keep off from the regulated activity (Mashaw, 2013).

However, the constitution did not make that promise, especially when it comes to taxes.

A dissenting opinion asserted that the individual mandate was not a legitimate exercise when it comes to power to tax, considering that the statute looked at the fine as a penalty instead of a tax. It was deemed that the affordable care act should be overturned as a whole. It could not function as intended without the individual mandate. There was a clear need for the shared responsibility payment to be considered a tax and not a penalty. For most Americans, the amount

3 due is likely to be much less than the price of insurance, and going by the statute, this can never be more (Renan, 2015). Therefore, it can sometimes be a reasonable financial decision to make payment as opposed to purchasing insurance.

In drawing the line between taxes and penalties, courts have affirmed that if the concept of penalty is anything to go by, it is all about punishment for an unlawful omission or Act. Thus, even though the individual mandate is tailored towards purchasing health insurance, it should not necessarily amount to a declaration that failure to do that becomes unlawful (Renan, 2015).

Going by the individual mandate, individuals are commanded to purchase insurance.

However, the commerce clause denied Congress that power. The alternative argument by the government is that z the mandate is supposed to be held by Congress's power to "lay and collect taxes." The courts are urged to view the mandate as imposing a tax on those who do not buy that product. On the other hand, the Affordable Care Act describes the shared responsibility payment as a penalty and not a tax. The Act does not control whether an exaction is within the power of Congress to tax. Shared responsibility payment may, for constitutional purposes, be looked at as a tax. The payment is said not to be so high that there is no choice but to buy health insurance (Mashaw, 2013). It is also not limited to the willful violations, as the payments are collected through the normal means of taxation.

Suppose a person fails to maintain health insurance under the mandate. In that case, the only consequence they are likely to face is that they are supposed to make an additional payment to the internal revenue service (IRS) when the taxes are paid. This points to the fact that the mandate is not a legal command to buy insurance. It simply makes going without insurance another item taxed by the federal government (Walsh, 2016). If the mandate is simply a tax hike

4 on the specific taxpayers who may not be having health insurance, this may be within the constitutional powers for Congress to tax.

The Act requires that some people are supposed to pay a financial penalty if they do not purchase health insurance as there are some grounds over which this can be characterized as a tax. Given that the constitution allows this kind of tax, there is no point in forbidding it or judging its fairness (Liberty Univ., Inc. v. Geithner, 671 F. 3d 391 (2011) (Gostin & Garcia, 2012). Thus, it suffices to say that the tax is constitutional because it can be read as a tax to a greater extent.

Ideally, it follows that construing the commerce clause to permit Congress to regulate people simply because they are doing nothing is likely to open a new and potentially broad domain to the authority of Congress. In this regard, Congress exhibits so many powers that are tailored towards regulating what people do. Moreover, enforcing the Affordable Care Act under the commerce clause will give Congress the same license to check on what people do not do. As such, Congress has the power to regulate commerce instead of compelling it (780 F. Supp. 2d 1256 (ND Fla. 2011) (Johnson, 2012).

Conclusion The majority’s opinion in the above case affirmed that the individual mandate aspect of the ACA was not constitutional under theories that are advanced by the commerce clause. The provision was more of a proper tax, which affirmed the federal government's great latitude when assessing the financial burden of purchasing health insurance. The court demonstrated its ability to review the acts of Congress and dismissed the arguments that the Act was proper, and strived to highlight the fact that it was a tax.

5 References Gostin, L.O., & Garcia, K.K. (2012). Affordable Care Act litigation: The Supreme Court and the future of health care reform. JAMA, 307(4), 369-370.

Johnson, S.R. (2012). It's Not a Tax (Statutorily), but It Is a Tax (Constitutionally). NewsQuarterly, 32(1), 13.

Mashaw, J.L. (2013). Legal, imagined, and real worlds: reflections on National Federation of Independent Business v. Sebelius. Journal of Health Politics, Policy, and Law, 38(2), 255-266.

McCauley, S. (2017). Revising the Marks Rule in Light of a Plurality Prone Supreme Court: A Case Study of National Federation of Independent Businesses v. Sebelius. BU Pub. Int. LJ, 26, 257.

Renan, D. (2015). Pooling powers. Colum. L. Rev., 115, 211.

Walsh, K.C. (2016). The Limits of Reading Law in the Affordable Care Act Cases. Notre Dame L. Rev., 92, 1997.