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Federalism in Comparison to the Commerce Clause and the Taxing and Spending Clause

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In regard to basic human rights, life, liberty, education, and freedom of expression often come to mind as a few of mankind’s fundamental entitlements. The United States of America, in particular, prides itself in its ability to be one of the few countries that still allows its citizens to practice many of these rights without fear of persecution or discrimination. Even so, these rights are becoming harder to come by and even more difficult to identify, even in the States, as division arises among parties and belief systems. Healthcare, for example, has stirred much turmoil in the United States as proper medical care is necessary to sustain life, but the expense is not something that many citizens can bare. Lawmakers and legislators have been trying to solve this dilemma for years, as they struggle to find a balance between proper coverage and affordability for all. This proposes another question: Is it constitutional for the government to require healthcare insurance for all United States citizens and penalize those who do not participate – specifically when evaluating the terms of the Commerce Clause and the Taxing and Spending Clause? In doing so, does pressuring States into compliance by threatening to minimize Medicaid funding violate the principles of federalism and ultimately compromise the American standard of healthcare? These questions, as well as many others, boggled the minds of citizens and congressmen and women alike, which quickly brought this issue to the forefront of the United States Supreme Court. In National Federation of Independent Business v. Sebelius, the United States Supreme Court justices reviewed these concerns and ultimately ruled in favor of the Patient Protection and Affordable Care Act, even though some still doubt whether this was the proper solution to the healthcare crisis in America, especially with the recent development of the Tax Cuts and Jobs Act of 2017.

By passing the Patient Protection and Affordable Care Act in 2012, the United States Supreme Court justices hoped to aid in the process of providing all United States citizens with proper and affordable medical insurance. However, doing so may have come at a greater cost than benefit. When lowering the cost of insurance for all, an affordable healthcare system would essentially require each working member to contribute and participate. In foreseeing the functionality of programs such as these, Article 1 Section 8 of the Constitution outlines several clauses, one of which being the Commerce Clause. The Commerce Clause describes an enumerated power possessed by Congress that allows them “to regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes” (U.S. Constitution). Richard Epstein of the Hoover Institute makes a strong argument as to the true intent of the Founding Fathers when the Commerce Clause was written versus the reinterpretation that followed the New Deal. Epstein claims that the Affordable Care Act should not even be considered when looked at under the scope of constitutionality. However, given the context of the Commerce Clause post-New Deal, he states that the emerging “jurisprudence…introduced a set of unprincipled (but fine-grained) distinctions that turned the law into a mass of linguistic absurdities that should lead ordinary people to question the collective sanity of the legal profession” (Epstein). This shift in understanding has caused waves across many court cases even prior to this one, including National Labor Relations Board v. Jones & Laughlin Steel (1937), U.S. v. Darby (1941), and Wickard v. Filburn (1942), which has only continued to distort the true definition of the Commerce Clause. Furthermore, when it comes to the opinions of the justices in regards to the relationship between the Commerce Clause and the Patient Protection and Affordable Care Act, the split interpretation caused a divide among these highly respected individuals. Does the Commerce Clause have the power to legislate the individual mandate? According to Justices Ginsberg, Breyer, Sotomayor, and Kagan, it did; but on the opposing side stood Chief Justice Roberts, and Justices Scalia, Kennedy, Thomas, and Alito. In National Federation of Independent Business v. Sebelius, the Supreme Court justices did not find the Commerce Clause in support of the individual mandate that was to be imposed via this act; however, Article 1 Section 8 still bears another legality that could potentially support the proposed solution to healthcare.

The Taxing and Spending Clause states, “The Congress shall have power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defence and general welfare of the United States…” (U.S. Constitution). When reviewing the clause in support or in opposition of the case, the vote of the Justices appeared to flip, with the exception of Chief Justice Roberts, which ultimately ruled that the “Individual Mandate penalty is a tax for the purposes of the Constitution’s Taxing and Spending Clause and is a valid exercise of Congressional authority” (National Federation). The idea is that the penalty for opting out of healthcare coverage was not comparable to willful offenses that result in fines for unlawful acts. This opinion was held across all justices in favor of the Taxing and Spending Clause upholding the policies of the Patient Protection and Affordable Care Act. The justices believed that even those who choose not to purchase healthcare still actively participate in the market, and therefore should still be regulated as such. On the opposition to this (Justices Scalia, Kennedy, Thomas, and Alito), it is argued that since the payment is written as a “penalty,” it would violate the originality of the Act as it was written to say ‘tax’, although that criticism was outweighed by the majority.

The ruling in favor of the Taxing and Spending Clause to support the Patient Protection and Affordable Care Act (mainly due to the interpretation of the Taxing and Spending Clause) should not be valid. My personal argument lies in the flaws behind the idea that the taxes instituted on individuals who choose not to participate in the program would not be considered as a willful offense resulting in a fine. If an individual mandate is what is at hand, then this must be applied to every individual. Only when an individual does not comply should some type of penalty be charged, which would be due to participating in a knowingly unlawful action. Whether this is right or wrong is a discussion of morality, but the fact is the case holds a very strong emphasis in individual mandate. If health insurance is to be required by law for all American citizens, then it should not be considered a tax but rather a penalty for those who do not choose to comply with such a law, as Justices Scalia, Kennedy, Thomas, and Alito touched on. Simply creating a ‘loop hole’ via the Patient Protection and Affordable Care Act by claiming the fee for opting out as a ‘tax’ for those not wanting to comply with the law should not be sufficient for neither justice nor citizen. This would then not be covered by the Taxing and Spending Clause, and therefore the Patient Protection and Affordable Care Act would have very little constitutional support left otherwise.

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Beyond the relationships between the Patient Protection and Affordable Care Act and the clauses mentioned in Article 1 Section 8 of the United States Constitution, states feared that they were being unconstitutionally coerced into the federal healthcare reforms due to the threat of Medicaid funding withdrawals if they did not comply with the expansion. This walked the fragile border of breaking the bounds of federalism, a founding component of the Constitution. Separation of federal and state government is clearly illustrated in many of the US’s original governing documents. Where that separation lies, however, brings great dispute in many areas, and healthcare is no exception. Nicholas Bagley of The Yale Law Journal evaluates this in relation to healthcare and identifies some of the major issues, one of which being that states cannot always provide the coverage they would like to due to lack of support for health reform and other limitations. For example, Hawaii and Massachusetts fundamentally support universal healthcare programs, but have had trouble reaching success because “the states do not have the same fiscal capacity as the federal government” and “a federal law—the Employee Retirement Income Security Act of 1974 (ERISA)—bars states from adopting the most expedient laws to expand coverage” (Bagley). This is why many like Bagley claim that “a national solution was appropriate—even necessary” (Bagley); the federal government was going to have to step in if healthcare reform was going to move anywhere. In implementing the Patient Protection and Affordable Care Act, Medicaid funding was to be cut in any state that did not comply with the expansion suggested. This threatened federalism, as once again, the federal government may have been overstepping its boundaries in directing the states in their healthcare reform actions. Chief Justice Roberts, with Justices Scalia, Kennedy, Thomas, Breyer, Alito, and Kagan, ultimately concluded that the elimination of Medicaid funding if the state(s) refuse to agree to the expansion plan was an unconstitutional threat. Justices Ginsberg and Sotomayor disagreed, as they held the belief that “the use of federal funds is not confined to spending programs as first launched” (National Federation). It is important to note that in continuation of this decision, the justices did discuss that if the threat of cancelled Medicaid funding was no longer present, the Act could still be deemed constitutional in its Medicaid expansion plans. This pleased Chief Justice Roberts, as well as Justices Breyer, Ginsburg, Kaygan, and Sotomayor, as it appeared to remove any fear impulse that might impact a state and could stand as a plausible exercise of Congress’s permitted power under the Spending Clause. This remedy did not please Justices Scalia, Thomas, Kennedy, and Alito as that power should remain in Congress and the Court is not in the position to revise the document as proposed. Personally, I believe that is exclusively Congress’s power as well, but otherwise, I would have agreed with this ruling as approved.

While there will always be the concrete, law is ever changing. The constitutionality of the Patient Protection and Affordable Care Act was confirmed in National Federation of Independent Business v. Sebelius. However, an overturn may soon be in store as the Tax Cuts and Jobs Act (2017) eliminated the individual mandate tax, which is a key component to the success of the proposed healthcare program. This uncertainty of the future of United States healthcare is evaluated by Paul Larkin, Jr., Rumpel Senior Legal Research Fellow. He states, “what the Supreme Court settled in 2012 Congress unsettled in 2017 when it passed the Tax Cuts and Jobs Act. That new law eliminated the tax on which the Supreme Court had relied when it upheld Obamacare under Congress’s authority to impose taxes” (Larkin). His concern is simple: the only ground that maintained the constitutionality of the Patient Protection and Affordable Care Act was now gone, so can the Act still be accepted as law? Defenders may choose to argue that Congress still holds the power to regulate the healthcare market, but it is unlikely that regulation will provide as the entire basis for healthcare reform. With the introduction of the Tax Cuts and Jobs Act, many states were once again concerned with the constitutionality and overall legitimacy of the Patient Protection and Affordable Care Act.

Larkin continued his research into the effects that the changes in law would have on healthcare reform by looking into how individual states were reacting to the new found questions surrounding the Act. He noticed that Idaho took a very unique approach: simply ignore the Patient Protection and Affordable Care Act. Governor Butch Otter authorized the state insurance department to permit healthcare not compliant with that of the Act, which the department then published via bulletin to release the offers to their residents. Of course, citizens were still given the original option that complied with that of the Supreme Court ruling, but other choices were available as well to supply health coverage. However, compliance with the Patient Protection and Affordable Care Act is not optional, and the Supreme Court can easily impose the Article 6 Supremacy Clause and overturns the governor’s efforts, which inevitable cancels out all of Idaho’s previous revisions to their healthcare structure. Larkin’s research also revealed less dramatic efforts that challenged the ruling of National Federation of Independent Business v. Sebelius by Texas, which was to “litigate the constitutionality of the Patient Protection and Affordable Care Act in the standard and proper manner” (Larkin). With the support of several other states and governors, Texas asked their state court to declare the Act no longer constitutional under the complaint that the individual mandate is a critical part of the Act and once the tax for nonparticipants is no longer required (which began in January 2019), it will no longer be covered by the Taxing and Spending Clause, therefore deeming it unconstitutional.

Healthcare reform is something America is in desperate need of, but unfortunately, I do not believe we have found the solution yet. Especially with the ever-evolving dynamic of the law, the legality of the Patient Protection and Affordable Care Act can never be confidently confirmed and therefore should not be implemented into our law, as uncertainty still surrounds the document. With new laws and proposals every single day, this Act is simply not strong enough to maintain over the course of time. Already the noncompliance tax has been challenged, which was a major basis for the individual mandate and pushing point for the Justices in their decision processes. The rulings of the National Federation of Independent Business v. Sebelius seemingly compromise the Constitution, specifically when regarding the Taxing and Spending Clause. The Court must be careful not to abuse its power, and unfortunately, I believe tricky word play between ‘penalty’ and ‘tax’ have fooled the nation into agreeing that this will somehow create an equal healthcare system. The Act also threatens the heart of federalism and challenges both the power of state and Congress. With the threat of Medicaid funding withdrawals, states were at risk of being coerced into this Act, which is a fear-based strategy that is unconstitutional and could lead to greater damage of the healthcare system. Proposals to remove the threat entirely did help alleviate some tension within the document, but it was questioned whether or not the Court even had the power to make such revisions. Even so, the National Federation of Independent Business v. Sebelius Supreme Court ruling perhaps introduced one of the most controversial healthcare documents to date. Whether it lasts is to be determined, but it is certain that we must comply for now.

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Federalism in Comparison to the Commerce Clause and the Taxing and Spending Clause. (2022, September 01). Edubirdie. Retrieved January 30, 2023, from
“Federalism in Comparison to the Commerce Clause and the Taxing and Spending Clause.” Edubirdie, 01 Sept. 2022,
Federalism in Comparison to the Commerce Clause and the Taxing and Spending Clause. [online]. Available at: <> [Accessed 30 Jan. 2023].
Federalism in Comparison to the Commerce Clause and the Taxing and Spending Clause [Internet]. Edubirdie. 2022 Sept 01 [cited 2023 Jan 30]. Available from:
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