Obamacare

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The Court concluded that the federal government did not have the power to require individuals to buy health insurance, but it did have the power to impose a penalty on those who failed to do so. The Code Sec. 5000A(a) individual mandate that required persons to carry minimum essential health coverage for themselves and their dependents exceeded the federal government's powers under the Commerce Clause (Article I, §8, clause 3) because it would require inactive individuals to become active in interstate commerce. In addition, regardless of how integral the mandate was to the health care reform law as a whole, the Necessary and Proper Clause (Article I, §8, clause 18) did not provide independent authority for it.
However, the shared responsibility payment that Code Sec. 5000A(b) imposed for violating the mandate was a constitutional exercise of the federal government's Taxing Power under Article I, §8, clause 1. The Taxing Power is broader than the Commerce Power, because it gives the federal government a lesser amount of control over individual conduct, limited to financial coercion but not extending to criminal punishments. Although it was identified as a penalty, the payment is actually a tax because it was not intended to be punitive: its amount is relatively small, it applies even if the taxpayer does not knowingly violate the mandate, and the IRS has the sole authority to assess and collect it. The fact that the payment was intended to affect individual conduct does not preclude it from being a tax, especially since there are no criminal penalties for failing to carry insurance. In addition, the payment does not violate the prohibition on direct or capitation taxes (Article I, §9, clause 4) because it is triggered by specific circumstances, and is not imposed on every person or on the ownership of land or personal property.
Although the penalty actually functions as a tax, it is not subject to the Anti-Injunction Act under Code Sec. 7421(a) . Since Congress characterized the payment as a penalty, rather than a tax, it was clear that Congress did not intend for the Anti-Injunction Act to apply. This intention is not affected by the fact that the penalty is a tax for purposes of determining whether Congress had the power to impose it. The issue of the Anti-Injunction Act was a matter of statutory interpretation, so the language Congress used determined the outcome. However, the constitutional issue of whether Congress has the power to impose the tax was determined by the way the penalty actually operated, rather than what it was called.
Finally, the federal government could not withhold existing federal Medicaid funding in order to force a state to extend Medicaid coverage to individuals whose income was less than 133% of the applicable federal poverty levels. The extension so exceeded the original parameters of the Medicaid program that states could not be considered to have voluntarily agreed to it at the time they agreed to participate in the Medicaid program. However, this provision could simply be severed from the remainder of PPACA."