Yesterday the U.S. Supreme Court upheld the Patient Protection and Affordable Care Act. While some of the media’s “talking heads” may say they were not surprised by the decision few, if any, can say that they were not surprised by the Court’s reasoning in upholding the Act’s most controversial element requiring most Americans to have “minimum essential” health insurance.
The High Court accepted the government’s secondary argument that what the Act calls a “penalty” against Americans that do not obtain the required insurance is valid on a tax since the penalty is to be paid to the IRS and varies based on income. At first blush is seems like taxes are levied against Americans that make a choice to take an action like purchase a good, own land or live in a particular state, as opposed to choosing not to do something like the purchasing of insurance contemplated in the Act.
Writing for the majority, Chief Justice Roberts framed the tax analysis under the premise that a number of people would opt to pay the penalty rather than pay for health insurance. The Court repeatedly refers to the penalty as a “payment” rather than a “fine” or “penalty” (as it is referred to in the legislation) to emphasize its point that the penalty is not punitive. Roberts wrote that “The payment is not so high that there is really no choice but to buy health insurance; the payment is not limited to willful violations, as penalties for unlawful acts often are; and the payment is collected solely by the IRS through the normal means of taxation.”
Chief Justice Roberts went on to explain that “[N]either the Affordable Care Act nor any other law attaches negative legal consequences to not buying health insurance, beyond requiring a payment to the IRS.” He particularly stressed that “Congress’s choice of language…does not require reading §5000A as punishing unlawful conduct. It may also be read as imposing a tax on those who go without insurance.”
We have concerns whether the Court’s characterization of the penalty as a tax will act as an instruction manual for greater government control over citizens’ inaction simply by characterizing penalties as taxes in any legislation.