National Federation of Independent Business v. Sebelius

(Slip Opinion) OCTOBER TERM, 2011 1

Syllabus

NOTE: Where it is feasible, a syllabus (headnote) will be released, as is

being done in connection with this case, at the time the opinion is issued.

The syllabus constitutes no part of the opinion of the Court but has been

prepared by the Reporter of Decisions for the convenience of the reader.

See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.

SUPREME COURT OF THE UNITED STATES

Syllabus

NATIONAL FEDERATION OF INDEPENDENT

BUSINESS ET AL. v. SEBELIUS, SECRETARY OF

HEALTH AND HUMAN SERVICES, ET AL.

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR

THE ELEVENTH CIRCUIT

No. 11–393. Argued March 26, 27, 28, 2012—Decided June 28, 2012*

In 2010, Congress enacted the Patient Protection and Affordable Care

Act in order to increase the number of Americans covered by health

insurance and decrease the cost of health care. One key provision is

the individual mandate, which requires most Americans to maintain

“minimum essential” health insurance coverage. 26 U. S. C. §5000A.

For individuals who are not exempt, and who do not receive health

insurance through an employer or government program, the means of

satisfying the requirement is to purchase insurance from a private

company. Beginning in 2014, those who do not comply with the

mandate must make a “[s]hared responsibility payment” to the Fed-

eral Government. §5000A(b)(1). The Act provides that this “penalty”

will be paid to the Internal Revenue Service with an individual’s tax-

es, and “shall be assessed and collected in the same manner” as tax

penalties. §§5000A(c), (g)(1).

Another key provision of the Act is the Medicaid expansion. The

current Medicaid program offers federal funding to States to assist

pregnant women, children, needy families, the blind, the elderly, and

the disabled in obtaining medical care. 42 U. S. C. §1396d(a). The

Affordable Care Act expands the scope of the Medicaid program and

increases the number of individuals the States must cover. For ex-

——————

* Together with No. 11–398, Department of Health and Human Ser-

vices et al. v. Florida et al., and No. 11–400, Florida et al. v. Department

of Health and Human Services et al., also on certiorari to the same

court.

2 NATIONAL FEDERATION OF INDEPENDENT

BUSINESS v. SEBELIUS

Syllabus

ample, the Act requires state programs to provide Medicaid coverage

by 2014 to adults with incomes up to 133 percent of the federal pov-

erty level, whereas many States now cover adults with children only

if their income is considerably lower, and do not cover childless adults

at all. §1396a(a)(10)(A)(i)(VIII). The Act increases federal funding to

cover the States’ costs in expanding Medicaid coverage. §1396d(y)(1).

But if a State does not comply with the Act’s new coverage require-

ments, it may lose not only the federal funding for those require-

ments, but all of its federal Medicaid funds. §1396c.

Twenty-six States, several individuals, and the National Federa-

tion of Independent Business brought suit in Federal District Court,

challenging the constitutionality of the individual mandate and the

Medicaid expansion. The Court of Appeals for the Eleventh Circuit

upheld the Medicaid expansion as a valid exercise of Congress’s

spending power, but concluded that Congress lacked authority to en-

act the individual mandate. Finding the mandate severable from the

Act’s other provisions, the Eleventh Circuit left the rest of the Act in-

tact.

Held: The judgment is affirmed in part and reversed in part.

648 F. 3d 1235, affirmed in part and reversed in part.

1. CHIEF JUSTICE ROBERTS delivered the opinion of the Court with

respect to Part II, concluding that the Anti-Injunction Act does not

bar this suit.

The Anti-Injunction Act provides that “no suit for the purpose of

restraining the assessment or collection of any tax shall be main-

tained in any court by any person,” 26 U. S. C. §7421(a), so that those

subject to a tax must first pay it and then sue for a refund. The pre-

sent challenge seeks to restrain the collection of the shared responsi-

bility payment from those who do not comply with the individual

mandate. But Congress did not intend the payment to be treated as

a “tax” for purposes of the Anti-Injunction Act. The Affordable Care

Act describes the payment as a “penalty,” not a “tax.” That label

cannot control whether the payment is a tax for purposes of the Con-

stitution, but it does determine the application of the Anti-Injunction

Act. The Anti-Injunction Act therefore does not bar this suit. Pp. 11–

15.

2. CHIEF JUSTICE ROBERTS concluded in Part III–A that the indi-

vidual mandate is not a valid exercise of Congress’s power under the

Commerce Clause and the Necessary and Proper Clause. Pp. 16–30.

(a) The Constitution grants Congress the power to “regulate

Commerce.” Art. I, §8, cl. 3 (emphasis added). The power to regulate

commerce presupposes the existence of commercial activity to be reg-

ulated. This Court’s precedent reflects this understanding: As ex-

pansive as this Court’s cases construing the scope of the commerce

Cite as: 567 U. S. ____ (2012) 3

Syllabus

power have been, they uniformly describe the power as reaching “ac-

tivity.” E.g., United States v. Lopez, 514 U. S. 549, 560. The individ-

ual mandate, however, does not regulate existing commercial activi-

ty. It instead compels individuals to become active in commerce by

purchasing a product, on the ground that their failure to do so affects

interstate commerce.

Construing the Commerce Clause to permit Congress to regulate

individuals precisely because they are doing nothing would open a

new and potentially vast domain to congressional authority. Con-

gress already possesses expansive power to regulate what people do.

Upholding the Affordable Care Act under the Commerce Clause

would give Congress the same license to regulate what people do not

do. The Framers knew the difference between doing something and

doing nothing. They gave Congress the power to regulate commerce,

not to compel it. Ignoring that distinction would undermine the prin-

ciple that the Federal Government is a government of limited and

enumerated powers. The individual mandate thus cannot be sus-

tained under Congress’s power to “regulate Commerce.” Pp. 16–27.

(b) Nor can the individual mandate be sustained under the Nec-

essary and Proper Clause as an integral part of the Affordable Care

Act’s other reforms. Each of this Court’s prior cases upholding laws

under that Clause involved exercises of authority derivative of, and

in service to, a granted power. E.g., United States v. Comstock, 560

U. S. ___. The individual mandate, by contrast, vests Congress with

the extraordinary ability to create the necessary predicate to the ex-

ercise of an enumerated power and draw within its regulatory scope

those who would otherwise be outside of it. Even if the individual

mandate is “necessary” to the Affordable Care Act’s other reforms,

such an expansion of federal power is not a “proper” means for mak-

ing those reforms effective. Pp. 27–30.

3. CHIEF JUSTICE ROBERTS concluded in Part III–B that the individ-

ual mandate must be construed as imposing a tax on those who do

not have health insurance, if such a construction is reasonable.

The most straightforward reading of the individual mandate is that

it commands individuals to purchase insurance. But, for the reasons

explained, the Commerce Clause does not give Congress that power.

It is therefore necessary to turn to the Government’s alternative ar-

gument: that the mandate may be upheld as within Congress’s power

to “lay and collect Taxes.” Art. I, §8, cl. 1. In pressing its taxing

power argument, the Government asks the Court to view the man-

date as imposing a tax on those who do not buy that product. Be-

cause “every reasonable construction must be resorted to, in order to

save a statute from unconstitutionality,” Hooper v. California, 155

U. S. 648, 657, the question is whether it is “fairly possible” to inter-

4 NATIONAL FEDERATION OF INDEPENDENT

BUSINESS v. SEBELIUS

Syllabus

pret the mandate as imposing such a tax, Crowell v. Benson, 285

U. S. 22, 62. Pp. 31–32.

4. CHIEF JUSTICE ROBERTS delivered the opinion of the Court with

respect to Part III–C, concluding that the individual mandate may be

upheld as within Congress’s power under the Taxing Clause. Pp. 33–

44.

(a) The Affordable Care Act describes the “[s]hared responsibility

payment” as a “penalty,” not a “tax.” That label is fatal to the appli-

cation of the Anti-Injunction Act. It does not, however, control

whether an exaction is within Congress’s power to tax. In answering

that constitutional question, this Court follows a functional approach,

“[d]isregarding the designation of the exaction, and viewing its sub-

stance and application.” United States v. Constantine, 296 U. S. 287,

294. Pp. 33–35.

(b) Such an analysis suggests that the shared responsibility

payment may for constitutional purposes be considered a tax. 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 penal-

ties for unlawful acts often are; and the payment is collected solely by

the IRS through the normal means of taxation. Cf. Bailey v. Drexel

Furniture Co., 259 U. S. 20, 36–37. None of this is to say that pay-

ment is not intended to induce the purchase of health insurance. But

the mandate need not be read to declare that failing to do so is un-

lawful. Neither the Affordable Care Act nor any other law attaches

negative legal consequences to not buying health insurance, beyond

requiring a payment to the IRS. And Congress’s choice of language—

stating that individuals “shall” obtain insurance or pay a “penalty”—

does not require reading §5000A as punishing unlawful conduct. It

may also be read as imposing a tax on those who go without insur-

ance. See New York v. United States, 505 U. S. 144, 169–174.

Pp. 35–40.

(c) Even if the mandate may reasonably be characterized as a

tax, it must still comply with the Direct Tax Clause, which provides:

“No Capitation, or other direct, Tax shall be laid, unless in Proportion

to the Census or Enumeration herein before directed to be taken.”

Art. I, §9, cl. 4. A tax on going without health insurance is not like a

capitation or other direct tax under this Court’s precedents. It there-

fore need not be apportioned so that each State pays in proportion to

its population. Pp. 40–41.

5. CHIEF JUSTICE ROBERTS, joined by JUSTICE BREYER and JUSTICE

KAGAN, concluded in Part IV that the Medicaid expansion violates

the Constitution by threatening States with the loss of their existing

Medicaid funding if they decline to comply with the expansion.

Pp. 45–58.

Cite as: 567 U. S. ____ (2012) 5

Syllabus

(a) The Spending Clause grants Congress the power “to pay the

Debts and provide for the . . . general Welfare of the United States.”

Art. I, §8, cl. 1. Congress may use this power to establish cooperative

state-federal Spending Clause programs. The legitimacy of Spending

Clause legislation, however, depends on whether a State voluntarily

and knowingly accepts the terms of such programs. Pennhurst State

School and Hospital v. Halderman, 451 U. S. 1, 17. “[T]he Constitu-

tion simply does not give Congress the authority to require the States

to regulate.” New York v. United States, 505 U. S. 144, 178. When

Congress threatens to terminate other grants as a means of pressur-

ing the States to accept a Spending Clause program, the legislation

runs counter to this Nation’s system of federalism. Cf. South Dakota

v. Dole, 483 U. S. 203, 211. Pp. 45–51.

(b) Section 1396c gives the Secretary of Health and Human Ser-

vices the authority to penalize States that choose not to participate in

the Medicaid expansion by taking away their existing Medicaid fund-

ing. 42 U. S. C. §1396c. The threatened loss of over 10 percent of a

State’s overall budget is economic dragooning that leaves the States

with no real option but to acquiesce in the Medicaid expansion. The

Government claims that the expansion is properly viewed as only a

modification of the existing program, and that this modification is

permissible because Congress reserved the “right to alter, amend, or

repeal any provision” of Medicaid. §1304. But the expansion accom-

plishes a shift in kind, not merely degree. The original program was

designed to cover medical services for particular categories of vulner-

able individuals. Under the Affordable Care Act, Medicaid is trans-

formed into a program to meet the health care needs of the entire

nonelderly population with income below 133 percent of the poverty

level. A State could hardly anticipate that Congress’s reservation of

the right to “alter” or “amend” the Medicaid program included the

power to transform it so dramatically. The Medicaid expansion thus

violates the Constitution by threatening States with the loss of their

existing Medicaid funding if they decline to comply with the expan-

sion. Pp. 51–55.

(c) The constitutional violation is fully remedied by precluding

the Secretary from applying §1396c to withdraw existing Medicaid

funds for failure to comply with the requirements set out in the ex-

pansion. See §1303. The other provisions of the Affordable Care Act

are not affected. Congress would have wanted the rest of the Act to

stand, had it known that States would have a genuine choice whether

to participate in the Medicaid expansion. Pp. 55–58.

6. JUSTICE GINSBURG, joined by JUSTICE SOTOMAYOR, is of the view

that the Spending Clause does not preclude the Secretary from with-

holding Medicaid funds based on a State’s refusal to comply with the

6 NATIONAL FEDERATION OF INDEPENDENT

BUSINESS v. SEBELIUS

Syllabus

expanded Medicaid program. But given the majority view, she

agrees with THE CHIEF JUSTICE’s conclusion in Part IV–B that the

Medicaid Act’s severability clause, 42 U. S. C. §1303, determines the

appropriate remedy. Because THE CHIEF JUSTICE finds the withhold-

ing—not the granting—of federal funds incompatible with the Spend-

ing Clause, Congress’ extension of Medicaid remains available to any

State that affirms its willingness to participate. Even absent §1303’s

command, the Court would have no warrant to invalidate the funding

offered by the Medicaid expansion, and surely no basis to tear down

the ACA in its entirety. When a court confronts an unconstitutional

statute, its endeavor must be to conserve, not destroy, the legislation.

See, e.g., Ayotte v. Planned Parenthood of Northern New Eng., 546

U. S. 320, 328–330. Pp. 60–61.

ROBERTS, C. J., announced the judgment of the Court and delivered

the opinion of the Court with respect to Parts I, II, and III–C, in which

GINSBURG, BREYER, SOTOMAYOR, and KAGAN, JJ., joined; an opinion with

respect to Part IV, in which BREYER and KAGAN, JJ., joined; and an

opinion with respect to Parts III–A, III–B, and III–D. GINSBURG, J.,

filed an opinion concurring in part, concurring in the judgment in part,

and dissenting in part, in which SOTOMAYOR, J., joined, and in which

BREYER and KAGAN, JJ., joined as to Parts I, II, III, and IV. SCALIA,

KENNEDY, THOMAS, and ALITO, JJ., filed a dissenting opinion. THOMAS,

J., filed a dissenting opinion.

Cite as: 567 U. S. ____ (2012) 1

Opinion of ROBERTS, C. J.

NOTICE: This opinion is subject to formal revision before publication in the

preliminary print of the United States Reports. Readers are requested to

notify the Reporter of Decisions, Supreme Court of the United States, Wash-

ington, D. C. 20543, of any typographical or other formal errors, in order

that corrections may be made before the preliminary print goes to press.

SUPREME COURT OF THE UNITED STATES

_________________

Nos. 11–393, 11–398 and 11–400

_________________

NATIONAL FEDERATION OF INDEPENDENT

BUSINESS, ET AL., PETITIONERS

11–393 v.

KATHLEEN SEBELIUS, SECRETARY OF HEALTH

AND HUMAN SERVICES, ET AL.

DEPARTMENT OF HEALTH AND HUMAN

SERVICES, ET AL., PETITIONERS

11–398 v.

FLORIDA ET AL.

FLORIDA, ET AL., PETITIONERS

11–400 v.

DEPARTMENT OF HEALTH AND

HUMAN SERVICES ET AL.

ON WRITS OF CERTIORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE ELEVENTH CIRCUIT

[June 28, 2012]

CHIEF JUSTICE ROBERTS announced the judgment of the

Court and delivered the opinion of the Court with respect

to Parts I, II, and III–C, an opinion with respect to Part

IV, in which JUSTICE BREYER and JUSTICE KAGAN join,

and an opinion with respect to Parts III–A, III–B, and

III–D.

Today we resolve constitutional challenges to two provi-

sions of the Patient Protection and Affordable Care Act of

2 NATIONAL FEDERATION OF INDEPENDENT

BUSINESS v. SEBELIUS

Opinion of ROBERTS, C. J.

2010: the individual mandate, which requires individuals

to purchase a health insurance policy providing a mini-

mum level of coverage; and the Medicaid expansion, which

gives funds to the States on the condition that they pro-

vide specified health care to all citizens whose income falls

below a certain threshold. We do not consider whether the

Act embodies sound policies. That judgment is entrusted

to the Nation’s elected leaders. We ask only whether

Congress has the power under the Constitution to enact

the challenged provisions.

In our federal system, the National Government pos-

sesses only limited powers; the States and the people

retain the remainder. Nearly two centuries ago, Chief

Justice Marshall observed that “the question respecting

the extent of the powers actually granted” to the Federal

Government “is perpetually arising, and will probably

continue to arise, as long as our system shall exist.”

McCulloch v. Maryland, 4 Wheat. 316, 405 (1819). In this

case we must again determine whether the Constitution

grants Congress powers it now asserts, but which many

States and individuals believe it does not possess. Resolv-

ing this controversy requires us to examine both the limits

of the Government’s power, and our own limited role in

policing those boundaries.

The Federal Government “is acknowledged by all to

be one of enumerated powers.” Ibid. That is, rather

than granting general authority to perform all the conceiv-

able functions of government, the Constitution lists, or

enumerates, the Federal Government’s powers. Congress

may, for example, “coin Money,” “establish Post Offices,”

and “raise and support Armies.” Art. I, §8, cls. 5, 7, 12.

The enumeration of powers is also a limitation of pow-

ers, because “[t]he enumeration presupposes something not

enumerated.” Gibbons v. Ogden, 9 Wheat. 1, 195 (1824).

The Constitution’s express conferral of some powers

makes clear that it does not grant others. And the Federal

Cite as: 567 U. S. ____ (2012) 3

Opinion of ROBERTS, C. J.

Government “can exercise only the powers granted to it.”

McCulloch, supra, at 405.

Today, the restrictions on government power foremost in

many Americans’ minds are likely to be affirmative pro-

hibitions, such as contained in the Bill of Rights. These

affirmative prohibitions come into play, however, only where

the Government possesses authority to act in the first

place. If no enumerated power authorizes Congress to

pass a certain law, that law may not be enacted, even if it

would not violate any of the express prohibitions in the

Bill of Rights or elsewhere in the Constitution.

Indeed, the Constitution did not initially include a Bill

of Rights at least partly because the Framers felt the enu-

meration of powers sufficed to restrain the Government.

As Alexander Hamilton put it, “the Constitution is itself,

in every rational sense, and to every useful purpose,

A BILL OF RIGHTS.” The Federalist No. 84, p. 515 (C. Ros-

siter ed. 1961). And when the Bill of Rights was ratified,

it made express what the enumeration of powers neces-

sarily implied: “The powers not delegated to the United

States by the Constitution . . . are reserved to the States

respectively, or to the people.” U. S. Const., Amdt. 10.

The Federal Government has expanded dramatically over

the past two centuries, but it still must show that a consti-

tutional grant of power authorizes each of its actions. See,

e.g., United States v. Comstock, 560 U. S. ___ (2010).

The same does not apply to the States, because the Con-

stitution is not the source of their power. The Consti-

tution may restrict state governments—as it does, for

example, by forbidding them to deny any person the equal

protection of the laws. But where such prohibitions do

not apply, state governments do not need constitutional au-

thorization to act. The States thus can and do perform

many of the vital functions of modern government—

punishing street crime, running public schools, and zoning

property for development, to name but a few—even though

4 NATIONAL FEDERATION OF INDEPENDENT

BUSINESS v. SEBELIUS

Opinion of ROBERTS, C. J.

the Constitution’s text does not authorize any government

to do so. Our cases refer to this general power of govern-

ing, possessed by the States but not by the Federal Gov-

ernment, as the “police power.” See, e.g., United States v.

Morrison, 529 U. S. 598, 618–619 (2000).

“State sovereignty is not just an end in itself: Rather,

federalism secures to citizens the liberties that derive from

the diffusion of sovereign power.” New York v. United

States, 505 U. S. 144, 181 (1992) (internal quotation

marks omitted). Because the police power is controlled by

50 different States instead of one national sovereign, the

facets of governing that touch on citizens’ daily lives are

normally administered by smaller governments closer to

the governed. The Framers thus ensured that powers

which “in the ordinary course of affairs, concern the lives,

liberties, and properties of the people” were held by gov-

ernments more local and more accountable than a dis-

tant federal bureaucracy. The Federalist No. 45, at 293

(J. Madison). The independent power of the States also

serves as a check on the power of the Federal Government:

“By denying any one government complete jurisdiction

over all the concerns of public life, federalism protects the

liberty of the individual from arbitrary power.” Bond v.

United States, 564 U. S. ___, ___ (2011) (slip op., at 9–10).

This case concerns two powers that the Constitution

does grant the Federal Government, but which must be

read carefully to avoid creating a general federal authority

akin to the police power. The Constitution authorizes

Congress to “regulate Commerce with foreign Nations, and

among the several States, and with the Indian Tribes.”

Art. I, §8, cl. 3. Our precedents read that to mean that

Congress may regulate “the channels of interstate com-

merce,” “persons or things in interstate commerce,” and

“those activities that substantially affect interstate com-

merce.” Morrison, supra, at 609 (internal quotation marks

omitted). The power over activities that substantially

Cite as: 567 U. S. ____ (2012) 5

Opinion of ROBERTS, C. J.

affect interstate commerce can be expansive. That power

has been held to authorize federal regulation of such seem-

ingly local matters as a farmer’s decision to grow wheat

for himself and his livestock, and a loan shark’s extor-

tionate collections from a neighborhood butcher shop.

See Wickard v. Filburn, 317 U. S. 111 (1942); Perez v.

United States, 402 U. S. 146 (1971).

Congress may also “lay and collect Taxes, Duties, Im-

posts and Excises, to pay the Debts and provide for the

common Defence and general Welfare of the United

States.” U. S. Const., Art. I, §8, cl. 1. Put simply, Con-

gress may tax and spend. This grant gives the Federal

Government considerable influence even in areas where

it cannot directly regulate. The Federal Government may

enact a tax on an activity that it cannot authorize, forbid,

or otherwise control. See, e.g., License Tax Cases, 5 Wall.

462, 471 (1867). And in exercising its spending power,

Congress may offer funds to the States, and may condition

those offers on compliance with specified conditions. See,

e.g., College Savings Bank v. Florida Prepaid Postsecond-

ary Ed. Expense Bd., 527 U. S. 666, 686 (1999). These

offers may well induce the States to adopt policies that

the Federal Government itself could not impose. See, e.g.,

South Dakota v. Dole, 483 U. S. 203, 205–206 (1987) (con-

ditioning federal highway funds on States raising their

drinking age to 21).

The reach of the Federal Government’s enumerated

powers is broader still because the Constitution authorizes

Congress to “make all Laws which shall be necessary and

proper for carrying into Execution the foregoing Powers.”

Art. I, §8, cl. 18. We have long read this provision to give

Congress great latitude in exercising its powers: “Let the

end be legitimate, let it be within the scope of the constitu-

tion, and all means which are appropriate, which are

plainly adapted to that end, which are not prohibited, but

consist with the letter and spirit of the constitution, are

6 NATIONAL FEDERATION OF INDEPENDENT

BUSINESS v. SEBELIUS

Opinion of ROBERTS, C. J.

constitutional.” McCulloch, 4 Wheat., at 421.

Our permissive reading of these powers is explained in

part by a general reticence to invalidate the acts of the

Nation’s elected leaders. “Proper respect for a co-ordinate

branch of the government” requires that we strike down

an Act of Congress only if “the lack of constitutional

authority to pass [the] act in question is clearly demon-

strated.” United States v. Harris, 106 U. S. 629, 635 (1883).

Members of this Court are vested with the authority to

interpret the law; we possess neither the expertise nor

the prerogative to make policy judgments. Those decisions

are entrusted to our Nation’s elected leaders, who can be

thrown out of office if the people disagree with them. It is

not our job to protect the people from the consequences of

their political choices.

Our deference in matters of policy cannot, however,

become abdication in matters of law. “The powers of the

legislature are defined and limited; and that those lim-

its may not be mistaken, or forgotten, the constitution is

written.” Marbury v. Madison, 1 Cranch 137, 176 (1803).

Our respect for Congress’s policy judgments thus can

never extend so far as to disavow restraints on federal

power that the Constitution carefully constructed. “The

peculiar circumstances of the moment may render a

measure more or less wise, but cannot render it more or

less constitutional.” Chief Justice John Marshall, A

Friend of the Constitution No. V, Alexandria Gazette, July

5, 1819, in John Marshall’s Defense of McCulloch v. Mary-

land 190–191 (G. Gunther ed. 1969). And there can be no

question that it is the responsibility of this Court to en-

force the limits on federal power by striking down acts of

Congress that transgress those limits. Marbury v. Madi-

son, supra, at 175–176.

The questions before us must be considered against the

background of these basic principles.

Cite as: 567 U. S. ____ (2012) 7

Opinion of ofOBERTS, C. J.

Opinion R the Court

I

In 2010, Congress enacted the Patient Protection and

Affordable Care Act, 124 Stat. 119. The Act aims to in-

crease the number of Americans covered by health in-

surance and decrease the cost of health care. The Act’s 10

titles stretch over 900 pages and contain hundreds of

provisions. This case concerns constitutional challenges to

two key provisions, commonly referred to as the individual

mandate and the Medicaid expansion.

The individual mandate requires most Americans to

maintain “minimum essential” health insurance coverage.

26 U. S. C. §5000A. The mandate does not apply to some

individuals, such as prisoners and undocumented aliens.

§5000A(d). Many individuals will receive the required cov-

erage through their employer, or from a government pro-

gram such as Medicaid or Medicare. See §5000A(f). But

for individuals who are not exempt and do not receive

health insurance through a third party, the means of

satisfying the requirement is to purchase insurance from a

private company.

Beginning in 2014, those who do not comply with the

mandate must make a “[s]hared responsibility payment”

to the Federal Government. §5000A(b)(1). That payment,

which the Act describes as a “penalty,” is calculated as a

percentage of household income, subject to a floor based on

a specified dollar amount and a ceiling based on the aver-

age annual premium the individual would have to pay for

qualifying private health insurance. §5000A(c). In 2016,

for example, the penalty will be 2.5 percent of an individ-

ual’s household income, but no less than $695 and no more

than the average yearly premium for insurance that co-

vers 60 percent of the cost of 10 specified services (e.g.,

prescription drugs and hospitalization). Ibid.; 42 U. S. C.

§18022. The Act provides that the penalty will be paid to

the Internal Revenue Service with an individual’s taxes,

and “shall be assessed and collected in the same manner”

8 NATIONAL FEDERATION OF INDEPENDENT

BUSINESS v. SEBELIUS

Opinion of ofOBERTS, C. J.

Opinion R the Court

as tax penalties, such as the penalty for claiming too

large an income tax refund. 26 U. S. C. §5000A(g)(1). The

Act, however, bars the IRS from using several of its nor-

mal enforcement tools, such as criminal prosecutions and

levies. §5000A(g)(2). And some individuals who are sub-

ject to the mandate are nonetheless exempt from the

penalty—for example, those with income below a certain

threshold and members of Indian tribes. §5000A(e).

On the day the President signed the Act into law, Flor-

ida and 12 other States filed a complaint in the Federal

District Court for the Northern District of Florida. Those

plaintiffs—who are both respondents and petitioners here,

depending on the issue—were subsequently joined by 13

more States, several individuals, and the National Fed-

eration of Independent Business. The plaintiffs alleged,

among other things, that the individual mandate provi-

sions of the Act exceeded Congress’s powers under Article

I of the Constitution. The District Court agreed, holding

that Congress lacked constitutional power to enact the

individual mandate. 780 F. Supp. 2d 1256 (ND Fla. 2011).

The District Court determined that the individual man-

date could not be severed from the remainder of the Act,

and therefore struck down the Act in its entirety. Id., at

1305–1306.

The Court of Appeals for the Eleventh Circuit affirmed

in part and reversed in part. The court affirmed the Dis-

trict Court’s holding that the individual mandate exceeds

Congress’s power. 648 F. 3d 1235 (2011). The panel

unanimously agreed that the individual mandate did not

impose a tax, and thus could not be authorized by Con-

gress’s power to “lay and collect Taxes.” U. S. Const.,

Art. I, §8, cl. 1. A majority also held that the individual

mandate was not supported by Congress’s power to “regu-

late Commerce . . . among the several States.” Id., cl. 3.

According to the majority, the Commerce Clause does not

empower the Federal Government to order individuals to

Cite as: 567 U. S. ____ (2012) 9

Opinion of ofOBERTS, C. J.

Opinion R the Court

engage in commerce, and the Government’s efforts to cast

the individual mandate in a different light were unpersua-

sive. Judge Marcus dissented, reasoning that the individ-

ual mandate regulates economic activity that has a clear

effect on interstate commerce.

Having held the individual mandate to be unconstitu-

tional, the majority examined whether that provision

could be severed from the remainder of the Act. The ma-

jority determined that, contrary to the District Court’s

view, it could. The court thus struck down only the indi-

vidual mandate, leaving the Act’s other provisions intact.

648 F. 3d, at 1328.

Other Courts of Appeals have also heard challenges to

the individual mandate. The Sixth Circuit and the D. C.

Circuit upheld the mandate as a valid exercise of Con-

gress’s commerce power. See Thomas More Law Center v.

Obama, 651 F. 3d 529 (CA6 2011); Seven-Sky v. Holder,

661 F. 3d 1 (CADC 2011). The Fourth Circuit determined

that the Anti-Injunction Act prevents courts from consid-

ering the merits of that question. See Liberty Univ., Inc.

v. Geithner, 671 F. 3d 391 (2011). That statute bars suits

“for the purpose of restraining the assessment or collection

of any tax.” 26 U. S. C. §7421(a). A majority of the Fourth

Circuit panel reasoned that the individual mandate’s

penalty is a tax within the meaning of the Anti-Injunction

Act, because it is a financial assessment collected by the

IRS through the normal means of taxation. The majority

therefore determined that the plaintiffs could not chal-

lenge the individual mandate until after they paid the

penalty.1

——————

1 The Eleventh Circuit did not consider whether the Anti-Injunction

Act bars challenges to the individual mandate. The District Court had

determined that it did not, and neither side challenged that holding on

appeal. The same was true in the Fourth Circuit, but that court

examined the question sua sponte because it viewed the Anti-Injunction

Act as a limit on its subject matter jurisdiction. See Liberty Univ., 671

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The second provision of the Affordable Care Act directly

challenged here is the Medicaid expansion. Enacted in

1965, Medicaid offers federal funding to States to assist

pregnant women, children, needy families, the blind, the

elderly, and the disabled in obtaining medical care. See 42

U. S. C. §1396a(a)(10). In order to receive that funding,

States must comply with federal criteria governing mat-

ters such as who receives care and what services are pro-

vided at what cost. By 1982 every State had chosen to

participate in Medicaid. Federal funds received through

the Medicaid program have become a substantial part of

state budgets, now constituting over 10 percent of most

States’ total revenue.

The Affordable Care Act expands the scope of the Medi-

caid program and increases the number of individuals the

States must cover. For example, the Act requires state

programs to provide Medicaid coverage to adults with

incomes up to 133 percent of the federal poverty level,

whereas many States now cover adults with children only

if their income is considerably lower, and do not cover

childless adults at all. See §1396a(a)(10)(A)(i)(VIII). The

Act increases federal funding to cover the States’ costs in

expanding Medicaid coverage, although States will bear a

portion of the costs on their own. §1396d(y)(1). If a State

does not comply with the Act’s new coverage require-

ments, it may lose not only the federal funding for those

requirements, but all of its federal Medicaid funds. See

§1396c.

Along with their challenge to the individual mandate,

the state plaintiffs in the Eleventh Circuit argued that the

Medicaid expansion exceeds Congress’s constitutional

——————

F. 3d, at 400–401. The Sixth Circuit and the D. C. Circuit considered

the question but determined that the Anti-Injunction Act did not apply.

See Thomas More, 651 F. 3d, at 539–540 (CA6); Seven-Sky, 661 F. 3d,

at 5–14 (CADC).

Cite as: 567 U. S. ____ (2012) 11

Opinion of ofOBERTS, C. J.

Opinion R the Court

powers. The Court of Appeals unanimously held that the

Medicaid expansion is a valid exercise of Congress’s power

under the Spending Clause. U. S. Const., Art. I, §8, cl. 1.

And the court rejected the States’ claim that the threat-

ened loss of all federal Medicaid funding violates the

Tenth Amendment by coercing them into complying with

the Medicaid expansion. 648 F. 3d, at 1264, 1268.

We granted certiorari to review the judgment of the

Court of Appeals for the Eleventh Circuit with respect to

both the individual mandate and the Medicaid expansion.

565 U. S. ___ (2011). Because no party supports the Elev-

enth Circuit’s holding that the individual mandate can

be completely severed from the remainder of the Affordable

Care Act, we appointed an amicus curiae to defend that

aspect of the judgment below. And because there is a

reasonable argument that the Anti-Injunction Act de-

prives us of jurisdiction to hear challenges to the individ-

ual mandate, but no party supports that proposition, we

appointed an amicus curiae to advance it.2

II

Before turning to the merits, we need to be sure we have

the authority to do so. The Anti-Injunction Act provides

that “no suit for the purpose of restraining the assessment

or collection of any tax shall be maintained in any court

by any person, whether or not such person is the per-

son against whom such tax was assessed.” 26 U. S. C.

§7421(a). This statute protects the Government’s ability

to collect a consistent stream of revenue, by barring litiga-

tion to enjoin or otherwise obstruct the collection of taxes.

Because of the Anti-Injunction Act, taxes can ordinarily be

——————

2 We appointed H. Bartow Farr III to brief and argue in support of the

Eleventh Circuit’s judgment with respect to severability, and Robert A.

Long to brief and argue the proposition that the Anti-Injunction Act

bars the current challenges to the individual mandate. 565 U. S. ___

(2011). Both amici have ably discharged their assigned responsibilities.

12 NATIONAL FEDERATION OF INDEPENDENT

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Opinion R the Court

challenged only after they are paid, by suing for a refund.

See Enochs v. Williams Packing & Nav. Co., 370 U. S. 1,

7–8 (1962).

The penalty for not complying with the Affordable Care

Act’s individual mandate first becomes enforceable in

2014. The present challenge to the mandate thus seeks to

restrain the penalty’s future collection. Amicus contends

that the Internal Revenue Code treats the penalty as a

tax, and that the Anti-Injunction Act therefore bars this

suit.

The text of the pertinent statutes suggests otherwise.

The Anti-Injunction Act applies to suits “for the purpose

of restraining the assessment or collection of any tax.”

§7421(a) (emphasis added). Congress, however, chose to

describe the “[s]hared responsibility payment” imposed on

those who forgo health insurance not as a “tax,” but as a

“penalty.” §§5000A(b), (g)(2). There is no immediate

reason to think that a statute applying to “any tax” would

apply to a “penalty.”

Congress’s decision to label this exaction a “penalty”

rather than a “tax” is significant because the Affordable

Care Act describes many other exactions it creates as

“taxes.” See Thomas More, 651 F. 3d, at 551. Where

Congress uses certain language in one part of a statute

and different language in another, it is generally pre-

sumed that Congress acts intentionally. See Russello v.

United States, 464 U. S. 16, 23 (1983).

Amicus argues that even though Congress did not label

the shared responsibility payment a tax, we should treat it

as such under the Anti-Injunction Act because it functions

like a tax. It is true that Congress cannot change whether

an exaction is a tax or a penalty for constitutional pur-

poses simply by describing it as one or the other. Congress

may not, for example, expand its power under the Taxing

Clause, or escape the Double Jeopardy Clause’s constraint

on criminal sanctions, by labeling a severe financial pun-

Cite as: 567 U. S. ____ (2012) 13

Opinion of ofOBERTS, C. J.

Opinion R the Court

ishment a “tax.” See Bailey v. Drexel Furniture Co., 259

U. S. 20, 36–37 (1922); Department of Revenue of Mont. v.

Kurth Ranch, 511 U. S. 767, 779 (1994).

The Anti-Injunction Act and the Affordable Care Act,

however, are creatures of Congress’s own creation. How

they relate to each other is up to Congress, and the best

evidence of Congress’s intent is the statutory text. We

have thus applied the Anti-Injunction Act to statutorily

described “taxes” even where that label was inaccurate.

See Bailey v. George, 259 U. S. 16 (1922) (Anti-Injunction

Act applies to “Child Labor Tax” struck down as exceeding

Congress’s taxing power in Drexel Furniture).

Congress can, of course, describe something as a penalty

but direct that it nonetheless be treated as a tax for pur-

poses of the Anti-Injunction Act. For example, 26 U. S. C.

§6671(a) provides that “any reference in this title to ‘tax’

imposed by this title shall be deemed also to refer to the

penalties and liabilities provided by” subchapter 68B of

the Internal Revenue Code. Penalties in subchapter 68B

are thus treated as taxes under Title 26, which includes

the Anti-Injunction Act. The individual mandate, how-

ever, is not in subchapter 68B of the Code. Nor does any

other provision state that references to taxes in Title 26

shall also be “deemed” to apply to the individual mandate.

Amicus attempts to show that Congress did render the

Anti-Injunction Act applicable to the individual mandate,

albeit by a more circuitous route. Section 5000A(g)(1) spec-

ifies that the penalty for not complying with the man-

date “shall be assessed and collected in the same manner

as an assessable penalty under subchapter B of chapter

68.” Assessable penalties in subchapter 68B, in turn,

“shall be assessed and collected in the same manner as

taxes.” §6671(a). According to amicus, by directing that

the penalty be “assessed and collected in the same man-

ner as taxes,” §5000A(g)(1) made the Anti-Injunction Act

applicable to this penalty.

14 NATIONAL FEDERATION OF INDEPENDENT

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The Government disagrees. It argues that §5000A(g)(1)

does not direct courts to apply the Anti-Injunction Act,

because §5000A(g) is a directive only to the Secretary of

the Treasury to use the same “ ‘methodology and proce-

dures’ ” to collect the penalty that he uses to collect taxes.

Brief for United States 32–33 (quoting Seven-Sky, 661

F. 3d, at 11).

We think the Government has the better reading. As

it observes, “Assessment” and “Collection” are chapters of

the Internal Revenue Code providing the Secretary author-

ity to assess and collect taxes, and generally specifying

the means by which he shall do so. See §6201 (assess-

ment authority); §6301 (collection authority). Section

5000A(g)(1)’s command that the penalty be “assessed and

collected in the same manner” as taxes is best read as

referring to those chapters and giving the Secretary the

same authority and guidance with respect to the penalty.

That interpretation is consistent with the remainder of

§5000A(g), which instructs the Secretary on the tools he

may use to collect the penalty. See §5000A(g)(2)(A) (bar-

ring criminal prosecutions); §5000A(g)(2)(B) (prohibiting

the Secretary from using notices of lien and levies). The

Anti-Injunction Act, by contrast, says nothing about the

procedures to be used in assessing and collecting taxes.

Amicus argues in the alternative that a different section

of the Internal Revenue Code requires courts to treat the

penalty as a tax under the Anti-Injunction Act. Section

6201(a) authorizes the Secretary to make “assessments of

all taxes (including interest, additional amounts, additions

to the tax, and assessable penalties).” (Emphasis added.)

Amicus contends that the penalty must be a tax, because

it is an assessable penalty and §6201(a) says that taxes

include assessable penalties.

That argument has force only if §6201(a) is read in

isolation. The Code contains many provisions treating

taxes and assessable penalties as distinct terms. See, e.g.,

Cite as: 567 U. S. ____ (2012) 15

Opinion of ROBERTS, C. J.

§§860(h)(1), 6324A(a), 6601(e)(1)–(2), 6602, 7122(b). There

would, for example, be no need for §6671(a) to deem “tax”

to refer to certain assessable penalties if the Code al-

ready included all such penalties in the term “tax.” In-

deed, amicus’s earlier observation that the Code requires

assessable penalties to be assessed and collected “in the

same manner as taxes” makes little sense if assessable

penalties are themselves taxes. In light of the Code’s

consistent distinction between the terms “tax” and “as-

sessable penalty,” we must accept the Government’s in-

terpretation: §6201(a) instructs the Secretary that his

authority to assess taxes includes the authority to assess

penalties, but it does not equate assessable penalties to

taxes for other purposes.

The Affordable Care Act does not require that the pen-

alty for failing to comply with the individual mandate be

treated as a tax for purposes of the Anti-Injunction Act.

The Anti-Injunction Act therefore does not apply to this

suit, and we may proceed to the merits.

III

The Government advances two theories for the proposi-

tion that Congress had constitutional authority to enact

the individual mandate. First, the Government argues

that Congress had the power to enact the mandate under

the Commerce Clause. Under that theory, Congress may

order individuals to buy health insurance because the

failure to do so affects interstate commerce, and could un-

dercut the Affordable Care Act’s other reforms. Second,

the Government argues that if the commerce power does

not support the mandate, we should nonetheless uphold it

as an exercise of Congress’s power to tax. According to the

Government, even if Congress lacks the power to direct

individuals to buy insurance, the only effect of the indi-

vidual mandate is to raise taxes on those who do not do so,

and thus the law may be upheld as a tax.

16 NATIONAL FEDERATION OF INDEPENDENT

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A

The Government’s first argument is that the individual

mandate is a valid exercise of Congress’s power under the

Commerce Clause and the Necessary and Proper Clause.

According to the Government, the health care market is

characterized by a significant cost-shifting problem. Every-

one will eventually need health care at a time and to an

extent they cannot predict, but if they do not have insur-

ance, they often will not be able to pay for it. Because

state and federal laws nonetheless require hospitals to

provide a certain degree of care to individuals without

regard to their ability to pay, see, e.g., 42 U. S. C. §1395dd;

Fla. Stat. Ann. §395.1041, hospitals end up receiving

compensation for only a portion of the services they pro-

vide. To recoup the losses, hospitals pass on the cost to

insurers through higher rates, and insurers, in turn, pass

on the cost to policy holders in the form of higher pre-

miums. Congress estimated that the cost of uncompen-

sated care raises family health insurance premiums, on

average, by over $1,000 per year. 42 U. S. C. §18091(2)(F).

In the Affordable Care Act, Congress addressed the

problem of those who cannot obtain insurance coverage

because of preexisting conditions or other health issues. It

did so through the Act’s “guaranteed-issue” and “community-

rating” provisions. These provisions together prohibit in-

surance companies from denying coverage to those with

such conditions or charging unhealthy individuals higher

premiums than healthy individuals. See §§300gg, 300gg–1,

300gg–3, 300gg–4.

The guaranteed-issue and community-rating reforms do

not, however, address the issue of healthy individuals who

choose not to purchase insurance to cover potential health

care needs. In fact, the reforms sharply exacerbate that

problem, by providing an incentive for individuals to delay

purchasing health insurance until they become sick, rely-

ing on the promise of guaranteed and affordable coverage.

Cite as: 567 U. S. ____ (2012) 17

Opinion of ROBERTS, C. J.

The reforms also threaten to impose massive new costs on

insurers, who are required to accept unhealthy individuals

but prohibited from charging them rates necessary to pay

for their coverage. This will lead insurers to significantly

increase premiums on everyone. See Brief for America’s

Health Insurance Plans et al. as Amici Curiae in No. 11–

393 etc. 8–9.

The individual mandate was Congress’s solution to

these problems. By requiring that individuals purchase

health insurance, the mandate prevents cost-shifting by

those who would otherwise go without it. In addition, the

mandate forces into the insurance risk pool more healthy

individuals, whose premiums on average will be higher

than their health care expenses. This allows insurers to

subsidize the costs of covering the unhealthy individuals

the reforms require them to accept. The Government

claims that Congress has power under the Commerce and

Necessary and Proper Clauses to enact this solution.

1

The Government contends that the individual mandate

is within Congress’s power because the failure to pur-

chase insurance “has a substantial and deleterious effect

on interstate commerce” by creating the cost-shifting prob-

lem. Brief for United States 34. The path of our Com-

merce Clause decisions has not always run smooth, see

United States v. Lopez, 514 U. S. 549, 552–559 (1995), but

it is now well established that Congress has broad author-

ity under the Clause. We have recognized, for example,

that “[t]he power of Congress over interstate commerce is

not confined to the regulation of commerce among the

states,” but extends to activities that “have a substantial

effect on interstate commerce.” United States v. Darby,

312 U. S. 100, 118–119 (1941). Congress’s power, more-

over, is not limited to regulation of an activity that by itself

substantially affects interstate commerce, but also extends

18 NATIONAL FEDERATION OF INDEPENDENT

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Opinion of ROBERTS, C. J.

to activities that do so only when aggregated with similar

activities of others. See Wickard, 317 U. S., at 127–128.

Given its expansive scope, it is no surprise that Con-

gress has employed the commerce power in a wide variety

of ways to address the pressing needs of the time. But

Congress has never attempted to rely on that power to

compel individuals not engaged in commerce to purchase

an unwanted product.3 Legislative novelty is not nec-

essarily fatal; there is a first time for everything. But

sometimes “the most telling indication of [a] severe con-

stitutional problem . . . is the lack of historical precedent”

for Congress’s action. Free Enterprise Fund v. Public Com-

pany Accounting Oversight Bd., 561 U. S. ___, ___ (2010)

(slip op., at 25) (internal quotation marks omitted). At the

very least, we should “pause to consider the implications of

the Government’s arguments” when confronted with such

new conceptions of federal power. Lopez, supra, at 564.

The Constitution grants Congress the power to “regulate

Commerce.” Art. I, §8, cl. 3 (emphasis added). The power

to regulate commerce presupposes the existence of com-

mercial activity to be regulated. If the power to “regulate”

something included the power to create it, many of the

provisions in the Constitution would be superfluous. For

example, the Constitution gives Congress the power to

“coin Money,” in addition to the power to “regulate the

Value thereof.” Id., cl. 5. And it gives Congress the power

——————

3 The examples of other congressional mandates cited by JUSTICE

GINSBURG, post, at 35, n. 10 (opinion concurring in part, concurring in

judgment in part, and dissenting in part), are not to the contrary. Each

of those mandates—to report for jury duty, to register for the draft, to

purchase firearms in anticipation of militia service, to exchange gold

currency for paper currency, and to file a tax return—are based on

constitutional provisions other than the Commerce Clause. See Art. I,

§8, cl. 9 (to “constitute Tribunals inferior to the supreme Court”); id.,

cl. 12 (to “raise and support Armies”); id., cl. 16 (to “provide for organiz-

ing, arming, and disciplining, the Militia”); id., cl. 5 (to “coin Money”);

id., cl. 1 (to “lay and collect Taxes”).

Cite as: 567 U. S. ____ (2012) 19

Opinion of ROBERTS, C. J.

to “raise and support Armies” and to “provide and main-

tain a Navy,” in addition to the power to “make Rules

for the Government and Regulation of the land and naval

Forces.” Id., cls. 12–14. If the power to regulate the

armed forces or the value of money included the power to

bring the subject of the regulation into existence, the

specific grant of such powers would have been unneces-

sary. The language of the Constitution reflects the natu-

ral understanding that the power to regulate assumes

there is already something to be regulated. See Gibbons, 9

Wheat., at 188 (“[T]he enlightened patriots who framed

our constitution, and the people who adopted it, must be

understood to have employed words in their natural sense,

and to have intended what they have said”).4

Our precedent also reflects this understanding. As

expansive as our cases construing the scope of the com-

merce power have been, they all have one thing in com-

mon: They uniformly describe the power as reaching

“activity.” It is nearly impossible to avoid the word when

quoting them. See, e.g., Lopez, supra, at 560 (“Where

economic activity substantially affects interstate com-

merce, legislation regulating that activity will be sus-

——————

4 JUSTICE GINSBURG suggests that “at the time the Constitution was

framed, to ‘regulate’ meant, among other things, to require action.”

Post, at 23 (citing Seven-Sky v. Holder, 661 F. 3d 1, 16 (CADC 2011);

brackets and some internal quotation marks omitted). But to reach

this conclusion, the case cited by JUSTICE GINSBURG relied on a diction-

ary in which “[t]o order; to command” was the fifth-alternative defini-

tion of “to direct,” which was itself the second-alternative definition of

“to regulate.” See Seven-Sky, supra, at 16 (citing S. Johnson, Diction-

ary of the English Language (4th ed. 1773) (reprinted 1978)). It is

unlikely that the Framers had such an obscure meaning in mind when

they used the word “regulate.” Far more commonly, “[t]o regulate”

meant “[t]o adjust by rule or method,” which presupposes something to

adjust. 2 Johnson, supra, at 1619; see also Gibbons, 9 Wheat., at 196

(defining the commerce power as the power “to prescribe the rule by

which commerce is to be governed”).

20 NATIONAL FEDERATION OF INDEPENDENT

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Opinion of ROBERTS, C. J.

tained”); Perez, 402 U. S., at 154 (“Where the class of

activities is regulated and that class is within the reach of

federal power, the courts have no power to excise, as triv-

ial, individual instances of the class” (emphasis in original;

internal quotation marks omitted)); Wickard, supra, at

125 (“[E]ven if appellee’s activity be local and though it

may not be regarded as commerce, it may still, whatever

its nature, be reached by Congress if it exerts a substan-

tial economic effect on interstate commerce”); NLRB v.

Jones & Laughlin Steel Corp., 301 U. S. 1, 37 (1937) (“Al-

though activities may be intrastate in character when

separately considered, if they have such a close and sub-

stantial relation to interstate commerce that their control

is essential or appropriate to protect that commerce from

burdens and obstructions, Congress cannot be denied the

power to exercise that control”); see also post, at 15, 25–26,

28, 32 (GINSBURG, J., concurring in part, concurring in

judgment in part, and dissenting in part).5

The individual mandate, however, does not regulate

existing commercial activity. It instead compels individ-

uals to become active in commerce by purchasing a product,

on the ground that their failure to do so affects interstate

commerce. Construing the Commerce Clause to permit Con-

gress to regulate individuals precisely because they are

doing nothing would open a new and potentially vast do-

main to congressional authority. Every day individuals do

not do an infinite number of things. In some cases they

——————

5 JUSTICE GINSBURG cites two eminent domain cases from the 1890s to

support the proposition that our case law does not “toe the activity

versus inactivity line.” Post, at 24–25 (citing Monongahela Nav. Co. v.

United States, 148 U. S. 312, 335–337 (1893), and Cherokee Nation v.

Southern Kansas R. Co., 135 U. S. 641, 657–659 (1890)). The fact that

the Fifth Amendment requires the payment of just compensation

when the Government exercises its power of eminent domain does not

turn the taking into a commercial transaction between the landowner

and the Government, let alone a government-compelled transaction

between the landowner and a third party.

Cite as: 567 U. S. ____ (2012) 21

Opinion of ROBERTS, C. J.

decide not to do something; in others they simply fail to

do it. Allowing Congress to justify federal regulation by

pointing to the effect of inaction on commerce would bring

countless decisions an individual could potentially make

within the scope of federal regulation, and—under the

Government’s theory—empower Congress to make those

decisions for him.

Applying the Government’s logic to the familiar case of

Wickard v. Filburn shows how far that logic would carry

us from the notion of a government of limited powers. In

Wickard, the Court famously upheld a federal penalty im-

posed on a farmer for growing wheat for consumption

on his own farm. 317 U. S., at 114–115, 128–129. That

amount of wheat caused the farmer to exceed his quota

under a program designed to support the price of wheat by

limiting supply. The Court rejected the farmer’s argument

that growing wheat for home consumption was beyond the

reach of the commerce power. It did so on the ground that

the farmer’s decision to grow wheat for his own use al-

lowed him to avoid purchasing wheat in the market. That

decision, when considered in the aggregate along with sim-

ilar decisions of others, would have had a substantial ef-

fect on the interstate market for wheat. Id., at 127–129.

Wickard has long been regarded as “perhaps the most

far reaching example of Commerce Clause authority over

intrastate activity,” Lopez, 514 U. S., at 560, but the Gov-

ernment’s theory in this case would go much further.

Under Wickard it is within Congress’s power to regulate

the market for wheat by supporting its price. But price

can be supported by increasing demand as well as by

decreasing supply. The aggregated decisions of some

consumers not to purchase wheat have a substantial effect

on the price of wheat, just as decisions not to purchase

health insurance have on the price of insurance. Congress

can therefore command that those not buying wheat do so,

just as it argues here that it may command that those not

22 NATIONAL FEDERATION OF INDEPENDENT

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Opinion of ROBERTS, C. J.

buying health insurance do so. The farmer in Wickard

was at least actively engaged in the production of wheat,

and the Government could regulate that activity because

of its effect on commerce. The Government’s theory here

would effectively override that limitation, by establishing

that individuals may be regulated under the Commerce

Clause whenever enough of them are not doing something

the Government would have them do.

Indeed, the Government’s logic would justify a manda-

tory purchase to solve almost any problem. See Seven-Sky,

661 F. 3d, at 14–15 (noting the Government’s inability

to “identify any mandate to purchase a product or ser-

vice in interstate commerce that would be unconstitu-

tional” under its theory of the commerce power). To

consider a different example in the health care market, many

Americans do not eat a balanced diet. That group makes

up a larger percentage of the total population than those

without health insurance. See, e.g., Dept. of Agriculture

and Dept. of Health and Human Services, Dietary Guide-

lines for Americans 1 (2010). The failure of that group

to have a healthy diet increases health care costs, to a

greater extent than the failure of the uninsured to pur-

chase insurance. See, e.g., Finkelstein, Trogdon, Cohen, &

Dietz, Annual Medical Spending Attributable to Obesity:

Payer- and Service-Specific Estimates, 28 Health Affairs

w822 (2009) (detailing the “undeniable link between ris-

ing rates of obesity and rising medical spending,” and esti-

mating that “the annual medical burden of obesity has

risen to almost 10 percent of all medical spending and

could amount to $147 billion per year in 2008”). Those in-

creased costs are borne in part by other Americans who

must pay more, just as the uninsured shift costs to the

insured. See Center for Applied Ethics, Voluntary Health

Risks: Who Should Pay?, 6 Issues in Ethics 6 (1993) (not-

ing “overwhelming evidence that individuals with un-

healthy habits pay only a fraction of the costs associated

Cite as: 567 U. S. ____ (2012) 23

Opinion of ROBERTS, C. J.

with their behaviors; most of the expense is borne by the

rest of society in the form of higher insurance premiums,

government expenditures for health care, and disability

benefits”). Congress addressed the insurance problem by

ordering everyone to buy insurance. Under the Gov-

ernment’s theory, Congress could address the diet problem

by ordering everyone to buy vegetables. See Dietary

Guidelines, supra, at 19 (“Improved nutrition, appropriate

eating behaviors, and increased physical activity have tre-

mendous potential to . . . reduce health care costs”).

People, for reasons of their own, often fail to do things

that would be good for them or good for society. Those

failures—joined with the similar failures of others—can

readily have a substantial effect on interstate commerce.

Under the Government’s logic, that authorizes Congress to

use its commerce power to compel citizens to act as the

Government would have them act.

That is not the country the Framers of our Constitution

envisioned. James Madison explained that the Commerce

Clause was “an addition which few oppose and from which

no apprehensions are entertained.” The Federalist No. 45,

at 293. While Congress’s authority under the Commerce

Clause has of course expanded with the growth of the

national economy, our cases have “always recognized that

the power to regulate commerce, though broad indeed, has

limits.” Maryland v. Wirtz, 392 U. S. 183, 196 (1968). The

Government’s theory would erode those limits, permitting

Congress to reach beyond the natural extent of its author-

ity, “everywhere extending the sphere of its activity and

drawing all power into its impetuous vortex.” The Feder-

alist No. 48, at 309 (J. Madison). Congress already enjoys

vast power to regulate much of what we do. Accepting

the Government’s theory would give Congress the same

license to regulate what we do not do, fundamentally

changing the relation between the citizen and the Federal

24 NATIONAL FEDERATION OF INDEPENDENT

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Government.6

To an economist, perhaps, there is no difference between

activity and inactivity; both have measurable economic

effects on commerce. But the distinction between doing

something and doing nothing would not have been lost on

the Framers, who were “practical statesmen,” not meta-

physical philosophers. Industrial Union Dept., AFL–CIO

v. American Petroleum Institute, 448 U. S. 607, 673 (1980)

(Rehnquist, J., concurring in judgment). As we have ex-

plained, “the framers of the Constitution were not mere

visionaries, toying with speculations or theories, but

practical men, dealing with the facts of political life as

they understood them, putting into form the government

they were creating, and prescribing in language clear

and intelligible the powers that government was to take.”

South Carolina v. United States, 199 U. S. 437, 449 (1905).

The Framers gave Congress the power to regulate com-

merce, not to compel it, and for over 200 years both our

decisions and Congress’s actions have reflected this un-

derstanding. There is no reason to depart from that un-

derstanding now.

The Government sees things differently. It argues that

because sickness and injury are unpredictable but una-

voidable, “the uninsured as a class are active in the mar-

ket for health care, which they regularly seek and obtain.”

Brief for United States 50. The individual mandate

“merely regulates how individuals finance and pay for that

——————

6 In an attempt to recast the individual mandate as a regulation of

commercial activity, JUSTICE GINSBURG suggests that “[a]n individual

who opts not to purchase insurance from a private insurer can be seen

as actively selecting another form of insurance: self-insurance.” Post, at

26. But “self-insurance” is, in this context, nothing more than a de-

scription of the failure to purchase insurance. Individuals are no more

“activ[e] in the self-insurance market” when they fail to purchase

insurance, ibid., than they are active in the “rest” market when doing

nothing.

Cite as: 567 U. S. ____ (2012) 25

Opinion of ROBERTS, C. J.

active participation—requiring that they do so through

insurance, rather than through attempted self-insurance

with the back-stop of shifting costs to others.” Ibid.

The Government repeats the phrase “active in the mar-

ket for health care” throughout its brief, see id., at 7, 18,

34, 50, but that concept has no constitutional significance.

An individual who bought a car two years ago and may

buy another in the future is not “active in the car market”

in any pertinent sense. The phrase “active in the market”

cannot obscure the fact that most of those regulated by

the individual mandate are not currently engaged in any

commercial activity involving health care, and that fact is

fatal to the Government’s effort to “regulate the uninsured

as a class.” Id., at 42. Our precedents recognize Con-

gress’s power to regulate “class[es] of activities,” Gonzales

v. Raich, 545 U. S. 1, 17 (2005) (emphasis added), not

classes of individuals, apart from any activity in which

they are engaged, see, e.g., Perez, 402 U. S., at 153 (“Peti-

tioner is clearly a member of the class which engages in

‘extortionate credit transactions’ . . .” (emphasis deleted)).

The individual mandate’s regulation of the uninsured as

a class is, in fact, particularly divorced from any link to

existing commercial activity. The mandate primarily

affects healthy, often young adults who are less likely to

need significant health care and have other priorities for

spending their money. It is precisely because these indi-

viduals, as an actuarial class, incur relatively low health

care costs that the mandate helps counter the effect of

forcing insurance companies to cover others who impose

greater costs than their premiums are allowed to reflect.

See 42 U. S. C. §18091(2)(I) (recognizing that the mandate

would “broaden the health insurance risk pool to include

healthy individuals, which will lower health insurance

premiums”). If the individual mandate is targeted at a

class, it is a class whose commercial inactivity rather than

activity is its defining feature.

26 NATIONAL FEDERATION OF INDEPENDENT

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The Government, however, claims that this does not

matter. The Government regards it as sufficient to trigger

Congress’s authority that almost all those who are unin-

sured will, at some unknown point in the future, engage

in a health care transaction. Asserting that “[t]here is no

temporal limitation in the Commerce Clause,” the Gov-

ernment argues that because “[e]veryone subject to this

regulation is in or will be in the health care market,” they

can be “regulated in advance.” Tr. of Oral Arg. 109 (Mar.

27, 2012).

The proposition that Congress may dictate the conduct

of an individual today because of prophesied future ac-

tivity finds no support in our precedent. We have said that

Congress can anticipate the effects on commerce of an eco-

nomic activity. See, e.g., Consolidated Edison Co. v. NLRB,

305 U. S. 197 (1938) (regulating the labor practices of

utility companies); Heart of Atlanta Motel, Inc. v. United

States, 379 U. S. 241 (1964) (prohibiting discrimination by

hotel operators); Katzenbach v. McClung, 379 U. S. 294

(1964) (prohibiting discrimination by restaurant owners).

But we have never permitted Congress to anticipate that

activity itself in order to regulate individuals not currently

engaged in commerce. Each one of our cases, including

those cited by JUSTICE GINSBURG, post, at 20–21, involved

preexisting economic activity. See, e.g., Wickard, 317

U. S., at 127–129 (producing wheat); Raich, supra, at 25

(growing marijuana).

Everyone will likely participate in the markets for food,

clothing, transportation, shelter, or energy; that does not

authorize Congress to direct them to purchase particular

products in those or other markets today. The Commerce

Clause is not a general license to regulate an individual

from cradle to grave, simply because he will predictably

engage in particular transactions. Any police power to

regulate individuals as such, as opposed to their activities,

remains vested in the States.

Cite as: 567 U. S. ____ (2012) 27

Opinion of ROBERTS, C. J.

The Government argues that the individual mandate

can be sustained as a sort of exception to this rule, because

health insurance is a unique product. According to the

Government, upholding the individual mandate would

not justify mandatory purchases of items such as cars or

broccoli because, as the Government puts it, “[h]ealth in-

surance is not purchased for its own sake like a car or

broccoli; it is a means of financing health-care consump-

tion and covering universal risks.” Reply Brief for United

States 19. But cars and broccoli are no more purchased

for their “own sake” than health insurance. They are

purchased to cover the need for transportation and food.

The Government says that health insurance and health

care financing are “inherently integrated.” Brief for United

States 41. But that does not mean the compelled purchase

of the first is properly regarded as a regulation of the

second. No matter how “inherently integrated” health

insurance and health care consumption may be, they are

not the same thing: They involve different transactions,

entered into at different times, with different providers.

And for most of those targeted by the mandate, significant

health care needs will be years, or even decades, away.

The proximity and degree of connection between the

mandate and the subsequent commercial activity is too lack-

ing to justify an exception of the sort urged by the Gov-

ernment. The individual mandate forces individuals

into commerce precisely because they elected to refrain

from commercial activity. Such a law cannot be sus-

tained under a clause authorizing Congress to “regulate

Commerce.”

2

The Government next contends that Congress has the

power under the Necessary and Proper Clause to enact the

individual mandate because the mandate is an “integral

part of a comprehensive scheme of economic regulation”—

28 NATIONAL FEDERATION OF INDEPENDENT

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the guaranteed-issue and community-rating insurance

reforms. Brief for United States 24. Under this argu-

ment, it is not necessary to consider the effect that an

individual’s inactivity may have on interstate commerce; it

is enough that Congress regulate commercial activity in a

way that requires regulation of inactivity to be effective.

The power to “make all Laws which shall be necessary

and proper for carrying into Execution” the powers enu-

merated in the Constitution, Art. I, §8, cl. 18, vests Con-

gress with authority to enact provisions “incidental to the

[enumerated] power, and conducive to its beneficial exer-

cise,” McCulloch, 4 Wheat., at 418. Although the Clause

gives Congress authority to “legislate on that vast mass

of incidental powers which must be involved in the con-

stitution,” it does not license the exercise of any “great

substantive and independent power[s]” beyond those specifi-

cally enumerated. Id., at 411, 421. Instead, the Clause is

“ ‘merely a declaration, for the removal of all uncertainty,

that the means of carrying into execution those [powers]

otherwise granted are included in the grant.’ ” Kinsella v.

United States ex rel. Singleton, 361 U. S. 234, 247 (1960)

(quoting VI Writings of James Madison 383 (G. Hunt ed.

1906)).

As our jurisprudence under the Necessary and Proper

Clause has developed, we have been very deferential to

Congress’s determination that a regulation is “necessary.”

We have thus upheld laws that are “ ‘convenient, or use-

ful’ or ‘conducive’ to the authority’s ‘beneficial exercise.’ ”

Comstock, 560 U. S., at ___ (slip op., at 5) (quoting McCul-

loch, supra, at 413, 418). But we have also carried out our

responsibility to declare unconstitutional those laws that

undermine the structure of government established by the

Constitution. Such laws, which are not “consist[ent] with

the letter and spirit of the constitution,” McCulloch, supra,

at 421, are not “proper [means] for carrying into Execu-

tion” Congress’s enumerated powers. Rather, they are, “in

Cite as: 567 U. S. ____ (2012) 29

Opinion of ROBERTS, C. J.

the words of The Federalist, ‘merely acts of usurpation’

which ‘deserve to be treated as such.’ ” Printz v. United

States, 521 U. S. 898, 924 (1997) (alterations omitted)

(quoting The Federalist No. 33, at 204 (A. Hamilton)); see

also New York, 505 U. S., at 177; Comstock, supra, at ___

(slip op., at 5) (KENNEDY, J., concurring in judgment) (“It

is of fundamental importance to consider whether essen-

tial attributes of state sovereignty are compromised by the

assertion of federal power under the Necessary and Proper

Clause . . .”).

Applying these principles, the individual mandate can-

not be sustained under the Necessary and Proper Clause

as an essential component of the insurance reforms. Each

of our prior cases upholding laws under that Clause in-

volved exercises of authority derivative of, and in service

to, a granted power. For example, we have upheld provi-

sions permitting continued confinement of those already

in federal custody when they could not be safely released,

Comstock, supra, at ___ (slip op., at 1–2); criminaliz-

ing bribes involving organizations receiving federal funds,

Sabri v. United States, 541 U. S. 600, 602, 605 (2004); and

tolling state statutes of limitations while cases are pend-

ing in federal court, Jinks v. Richland County, 538

U. S. 456, 459, 462 (2003). The individual mandate, by con-

trast, vests Congress with the extraordinary ability to

create the necessary predicate to the exercise of an enu-

merated power.

This is in no way an authority that is “narrow in scope,”

Comstock, supra, at ___ (slip op., at 20), or “incidental” to

the exercise of the commerce power, McCulloch, supra, at

418. Rather, such a conception of the Necessary and

Proper Clause would work a substantial expansion of

federal authority. No longer would Congress be limited to

regulating under the Commerce Clause those who by some

preexisting activity bring themselves within the sphere of

federal regulation. Instead, Congress could reach beyond

30 NATIONAL FEDERATION OF INDEPENDENT

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the natural limit of its authority and draw within its

regulatory scope those who otherwise would be outside of

it. Even if the individual mandate is “necessary” to the

Act’s insurance reforms, such an expansion of federal

power is not a “proper” means for making those reforms

effective.

The Government relies primarily on our decision in

Gonzales v. Raich. In Raich, we considered “comprehen-

sive legislation to regulate the interstate market” in mari-

juana. 545 U. S., at 22. Certain individuals sought an

exemption from that regulation on the ground that they

engaged in only intrastate possession and consumption.

We denied any exemption, on the ground that marijuana

is a fungible commodity, so that any marijuana could

be readily diverted into the interstate market. Congress’s

attempt to regulate the interstate market for marijuana

would therefore have been substantially undercut if it

could not also regulate intrastate possession and con-

sumption. Id., at 19. Accordingly, we recognized that

“Congress was acting well within its authority” under the

Necessary and Proper Clause even though its “regulation

ensnare[d] some purely intrastate activity.” Id., at 22; see

also Perez, 402 U. S., at 154. Raich thus did not involve

the exercise of any “great substantive and independent

power,” McCulloch, supra, at 411, of the sort at issue here.

Instead, it concerned only the constitutionality of “indi-

vidual applications of a concededly valid statutory

scheme.” Raich, supra, at 23 (emphasis added).

Just as the individual mandate cannot be sustained as

a law regulating the substantial effects of the failure to

purchase health insurance, neither can it be upheld as

a “necessary and proper” component of the insurance re-

forms. The commerce power thus does not authorize the

mandate. Accord, post, at 4–16 (joint opinion of SCALIA,

KENNEDY, THOMAS, and ALITO, JJ., dissenting).

Cite as: 567 U. S. ____ (2012) 31

Opinion of ROBERTS, C. J.

B

That is not the end of the matter. Because the Com-

merce Clause does not support the individual mandate, it

is necessary to turn to the Government’s second argument:

that the mandate may be upheld as within Congress’s

enumerated power to “lay and collect Taxes.” Art. I, §8,

cl. 1.

The Government’s tax power argument asks us to view

the statute differently than we did in considering its com-

merce power theory. In making its Commerce Clause

argument, the Government defended the mandate as a

regulation requiring individuals to purchase health in-

surance. The Government does not claim that the taxing

power allows Congress to issue such a command. Instead,

the Government asks us to read the mandate not as order-

ing individuals to buy insurance, but rather as imposing a

tax on those who do not buy that product.

The text of a statute can sometimes have more than one

possible meaning. To take a familiar example, a law that

reads “no vehicles in the park” might, or might not, ban

bicycles in the park. And it is well established that if

a statute has two possible meanings, one of which violates

the Constitution, courts should adopt the meaning that

does not do so. Justice Story said that 180 years ago: “No

court ought, unless the terms of an act rendered it una-

voidable, to give a construction to it which should involve

a violation, however unintentional, of the constitution.”

Parsons v. Bedford, 3 Pet. 433, 448–449 (1830). Justice

Holmes made the same point a century later: “[T]he rule is

settled that as between two possible interpretations of a

statute, by one of which it would be unconstitutional and

by the other valid, our plain duty is to adopt that which

will save the Act.” Blodgett v. Holden, 275 U. S. 142, 148

(1927) (concurring opinion).

The most straightforward reading of the mandate is

that it commands individuals to purchase insurance.

32 NATIONAL FEDERATION OF INDEPENDENT

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After all, it states that individuals “shall” maintain health

insurance. 26 U. S. C. §5000A(a). Congress thought it

could enact such a command under the Commerce Clause,

and the Government primarily defended the law on that

basis. But, for the reasons explained above, the Com-

merce Clause does not give Congress that power. Under

our precedent, it is therefore necessary to ask whether the

Government’s alternative reading of the statute—that it

only imposes a tax on those without insurance—is a rea-

sonable one.

Under the mandate, if an individual does not maintain

health insurance, the only consequence is that he must

make an additional payment to the IRS when he pays his

taxes. See §5000A(b). That, according to the Government,

means the mandate can be regarded as establishing a

condition—not owning health insurance—that triggers a

tax—the required payment to the IRS. Under that theory,

the mandate is not a legal command to buy insurance.

Rather, it makes going without insurance just another

thing the Government taxes, like buying gasoline or earn-

ing income. And if the mandate is in effect just a tax hike

on certain taxpayers who do not have health insurance, it

may be within Congress’s constitutional power to tax.

The question is not whether that is the most natural

interpretation of the mandate, but only whether it is a

“fairly possible” one. Crowell v. Benson, 285 U. S. 22, 62

(1932). As we have explained, “every reasonable construc-

tion must be resorted to, in order to save a statute from

unconstitutionality.” Hooper v. California, 155 U. S. 648,

657 (1895). The Government asks us to interpret the

mandate as imposing a tax, if it would otherwise violate

the Constitution. Granting the Act the full measure of

deference owed to federal statutes, it can be so read, for

the reasons set forth below.

Cite as: 567 U. S. ____ (2012) 33

Opinion of ofOBERTS, C. J.

Opinion R the Court

C

The exaction the Affordable Care Act imposes on those

without health insurance looks like a tax in many re-

spects. The “[s]hared responsibility payment,” as the

statute entitles it, is paid into the Treasury by “tax-

payer[s]” when they file their tax returns. 26 U. S. C.

§5000A(b). It does not apply to individuals who do not

pay federal income taxes because their household income

is less than the filing threshold in the Internal Revenue

Code. §5000A(e)(2). For taxpayers who do owe the pay-

ment, its amount is determined by such familiar factors as

taxable income, number of dependents, and joint filing

status. §§5000A(b)(3), (c)(2), (c)(4). The requirement to

pay is found in the Internal Revenue Code and enforced by

the IRS, which—as we previously explained—must assess

and collect it “in the same manner as taxes.” Supra, at

13–14. This process yields the essential feature of any tax:

it produces at least some revenue for the Government.

United States v. Kahriger, 345 U. S. 22, 28, n. 4 (1953).

Indeed, the payment is expected to raise about $4 billion

per year by 2017. Congressional Budget Office, Payments

of Penalties for Being Uninsured Under the Patient Pro-

tection and Affordable Care Act (Apr. 30, 2010), in Selected

CBO Publications Related to Health Care Legislation,

2009–2010, p. 71 (rev. 2010).

It is of course true that the Act describes the payment as

a “penalty,” not a “tax.” But while that label is fatal to the

application of the Anti-Injunction Act, supra, at 12–13, it

does not determine whether the payment may be viewed

as an exercise of Congress’s taxing power. It is up to Con-

gress whether to apply the Anti-Injunction Act to any

particular statute, so it makes sense to be guided by Con-

gress’s choice of label on that question. That choice does

not, however, control whether an exaction is within Con-

gress’s constitutional power to tax.

Our precedent reflects this: In 1922, we decided two

34 NATIONAL FEDERATION OF INDEPENDENT

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Opinion R the Court

challenges to the “Child Labor Tax” on the same day. In

the first, we held that a suit to enjoin collection of the so-

called tax was barred by the Anti-Injunction Act. George,

259 U. S., at 20. Congress knew that suits to obstruct

taxes had to await payment under the Anti-Injunction

Act; Congress called the child labor tax a tax; Congress

therefore intended the Anti-Injunction Act to apply. In

the second case, however, we held that the same exaction,

although labeled a tax, was not in fact authorized by Con-

gress’s taxing power. Drexel Furniture, 259 U. S., at 38.

That constitutional question was not controlled by Con-

gress’s choice of label.

We have similarly held that exactions not labeled taxes

nonetheless were authorized by Congress’s power to tax.

In the License Tax Cases, for example, we held that federal

licenses to sell liquor and lottery tickets—for which the

licensee had to pay a fee—could be sustained as exercises

of the taxing power. 5 Wall., at 471. And in New York v.

United States we upheld as a tax a “surcharge” on out-of-

state nuclear waste shipments, a portion of which was

paid to the Federal Treasury. 505 U. S., at 171. We thus

ask whether the shared responsibility payment falls

within Congress’s taxing power, “[d]isregarding the designa-

tion of the exaction, and viewing its substance and appli-

cation.” United States v. Constantine, 296 U. S. 287, 294

(1935); cf. Quill Corp. v. North Dakota, 504 U. S. 298, 310

(1992) (“[M]agic words or labels” should not “disable an

otherwise constitutional levy” (internal quotation marks

omitted)); Nelson v. Sears, Roebuck & Co., 312 U. S. 359,

363 (1941) (“In passing on the constitutionality of a tax

law, we are concerned only with its practical operation,

not its definition or the precise form of descriptive words

which may be applied to it” (internal quotation marks

omitted)); United States v. Sotelo, 436 U. S. 268, 275

(1978) (“That the funds due are referred to as a ‘penalty’

Cite as: 567 U. S. ____ (2012) 35

Opinion of ofOBERTS, C. J.

Opinion R the Court

. . . does not alter their essential character as taxes”).7

Our cases confirm this functional approach. For ex-

ample, in Drexel Furniture, we focused on three practical

characteristics of the so-called tax on employing child

laborers that convinced us the “tax” was actually a pen-

alty. First, the tax imposed an exceedingly heavy bur-

den—10 percent of a company’s net income—on those who

employed children, no matter how small their infraction.

Second, it imposed that exaction only on those who know-

ingly employed underage laborers. Such scienter require-

ments are typical of punitive statutes, because Congress

often wishes to punish only those who intentionally break

the law. Third, this “tax” was enforced in part by the

Department of Labor, an agency responsible for pun-

ishing violations of labor laws, not collecting revenue. 259

U. S., at 36–37; see also, e.g., Kurth Ranch, 511 U. S., at

780–782 (considering, inter alia, the amount of the exac-

tion, and the fact that it was imposed for violation of a

separate criminal law); Constantine, supra, at 295 (same).

The same analysis here suggests that the shared re-

sponsibility payment may for constitutional purposes be

considered a tax, not a penalty: First, for most Americans

the amount due will be far less than the price of insur-

ance, and, by statute, it can never be more.8 It may often

——————

7 Sotelo, in particular, would seem to refute the joint dissent’s conten-

tion that we have “never” treated an exaction as a tax if it was denomi-

nated a penalty. Post, at 20. We are not persuaded by the dissent’s

attempt to distinguish Sotelo as a statutory construction case from the

bankruptcy context. Post, at 17, n. 5. The dissent itself treats the

question here as one of statutory interpretation, and indeed also relies

on a statutory interpretation case from the bankruptcy context. Post,

at 23 (citing United States v. Reorganized CF&I Fabricators of Utah,

Inc., 518 U. S. 213, 224 (1996)).

8 In 2016, for example, individuals making $35,000 a year are ex-

pected to owe the IRS about $60 for any month in which they do not

have health insurance. Someone with an annual income of $100,000 a

year would likely owe about $200. The price of a qualifying insurance

36 NATIONAL FEDERATION OF INDEPENDENT

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Opinion R the Court

be a reasonable financial decision to make the payment

rather than purchase insurance, unlike the “prohibitory”

financial punishment in Drexel Furniture. 259 U. S., at

37. Second, the individual mandate contains no scienter

requirement. Third, the payment is collected solely by the

IRS through the normal means of taxation—except that

the Service is not allowed to use those means most sugges-

tive of a punitive sanction, such as criminal prosecution.

See §5000A(g)(2). The reasons the Court in Drexel Furni-

ture held that what was called a “tax” there was a penalty

support the conclusion that what is called a “penalty” here

may be viewed as a tax.9

None of this is to say that the payment is not intended

to affect individual conduct. Although the payment will

raise considerable revenue, it is plainly designed to ex-

pand health insurance coverage. But taxes that seek to

influence conduct are nothing new. Some of our earliest

federal taxes sought to deter the purchase of imported

manufactured goods in order to foster the growth of do-

mestic industry. See W. Brownlee, Federal Taxation in

America 22 (2d ed. 2004); cf. 2 J. Story, Commentaries on

the Constitution of the United States §962, p. 434 (1833)

(“the taxing power is often, very often, applied for other

purposes, than revenue”). Today, federal and state taxes

can compose more than half the retail price of cigarettes,

——————

policy is projected to be around $400 per month. See D. Newman, CRS

Report for Congress, Individual Mandate and Related Information Re-

quirements Under PPACA 7, and n. 25 (2011).

9 We do not suggest that any exaction lacking a scienter requirement

and enforced by the IRS is within the taxing power. See post, at 23–24

(joint opinion of SCALIA, KENNEDY, THOMAS, and ALITO, JJ., dissenting).

Congress could not, for example, expand its authority to impose crimi-

nal fines by creating strict liability offenses enforced by the IRS rather

than the FBI. But the fact the exaction here is paid like a tax, to the

agency that collects taxes—rather than, for example, exacted by De-

partment of Labor inspectors after ferreting out willful malfeasance—

suggests that this exaction may be viewed as a tax.

Cite as: 567 U. S. ____ (2012) 37

Opinion of ofOBERTS, C. J.

Opinion R the Court

not just to raise more money, but to encourage people to

quit smoking. And we have upheld such obviously regula-

tory measures as taxes on selling marijuana and sawed-off

shotguns. See United States v. Sanchez, 340 U. S. 42, 44–

45 (1950); Sonzinsky v. United States, 300 U. S. 506, 513

(1937). Indeed, “[e]very tax is in some measure regula-

tory. To some extent it interposes an economic impediment

to the activity taxed as compared with others not taxed.”

Sonzinsky, supra, at 513. That §5000A seeks to shape

decisions about whether to buy health insurance does not

mean that it cannot be a valid exercise of the taxing

power.

In distinguishing penalties from taxes, this Court has

explained that “if the concept of penalty means anything,

it means punishment for an unlawful act or omission.”

United States v. Reorganized CF&I Fabricators of Utah,

Inc., 518 U. S. 213, 224 (1996); see also United States v. La

Franca, 282 U. S. 568, 572 (1931) (“[A] penalty, as the

word is here used, is an exaction imposed by statute as

punishment for an unlawful act”). While the individual

mandate clearly aims to induce the purchase of health

insurance, it need not be read to declare that failing to do

so is unlawful. Neither the Act nor any other law attaches

negative legal consequences to not buying health insur-

ance, beyond requiring a payment to the IRS. The Gov-

ernment agrees with that reading, confirming that if

someone chooses to pay rather than obtain health insur-

ance, they have fully complied with the law. Brief for

United States 60–61; Tr. of Oral Arg. 49–50 (Mar. 26,

2012).

Indeed, it is estimated that four million people each year

will choose to pay the IRS rather than buy insurance. See

Congressional Budget Office, supra, at 71. We would

expect Congress to be troubled by that prospect if such

conduct were unlawful. That Congress apparently regards

such extensive failure to comply with the mandate as

38 NATIONAL FEDERATION OF INDEPENDENT

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tolerable suggests that Congress did not think it was

creating four million outlaws. It suggests instead that the

shared responsibility payment merely imposes a tax citi-

zens may lawfully choose to pay in lieu of buying health

insurance.

The plaintiffs contend that Congress’s choice of lan-

guage—stating that individuals “shall” obtain insurance

or pay a “penalty”—requires reading §5000A as punishing

unlawful conduct, even if that interpretation would ren-

der the law unconstitutional. We have rejected a similar

argument before. In New York v. United States we exam-

ined a statute providing that “ ‘[e]ach State shall be re-

sponsible for providing . . . for the disposal of . . . low-level

radioactive waste.’ ” 505 U. S., at 169 (quoting 42 U. S. C.

§2021c(a)(1)(A)). A State that shipped its waste to another

State was exposed to surcharges by the receiving State,

a portion of which would be paid over to the Federal

Government. And a State that did not adhere to the

statutory scheme faced “[p]enalties for failure to comply,”

including increases in the surcharge. §2021e(e)(2); New

York, 505 U. S., at 152–153. New York urged us to read

the statute as a federal command that the state legisla-

ture enact legislation to dispose of its waste, which would

have violated the Constitution. To avoid that outcome, we

interpreted the statute to impose only “a series of incen-

tives” for the State to take responsibility for its waste. We

then sustained the charge paid to the Federal Government

as an exercise of the taxing power. Id., at 169–174. We

see no insurmountable obstacle to a similar approach

here.10

——————

10 The joint dissent attempts to distinguish New York v. United States

on the ground that the seemingly imperative language in that case was

in an “introductory provision” that had “no legal consequences.” Post,

at 19. We did not rely on that reasoning in New York. See 505 U. S., at

169–170. Nor could we have. While the Court quoted only the broad

statement that “[e]ach State shall be responsible” for its waste, that

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Opinion R the Court

The joint dissenters argue that we cannot uphold

§5000A as a tax because Congress did not “frame” it as

such. Post, at 17. In effect, they contend that even if

the Constitution permits Congress to do exactly what we

interpret this statute to do, the law must be struck down

because Congress used the wrong labels. An example may

help illustrate why labels should not control here. Sup-

pose Congress enacted a statute providing that every

taxpayer who owns a house without energy efficient win-

dows must pay $50 to the IRS. The amount due is adjusted

based on factors such as taxable income and joint filing

status, and is paid along with the taxpayer’s income tax

return. Those whose income is below the filing threshold

need not pay. The required payment is not called a “tax,”

a “penalty,” or anything else. No one would doubt that

this law imposed a tax, and was within Congress’s power

to tax. That conclusion should not change simply because

Congress used the word “penalty” to describe the pay-

ment. Interpreting such a law to be a tax would hardly

“[i]mpos[e] a tax through judicial legislation.” Post, at 25.

Rather, it would give practical effect to the Legislature’s

enactment.

Our precedent demonstrates that Congress had the

power to impose the exaction in §5000A under the taxing

power, and that §5000A need not be read to do more than

impose a tax. That is sufficient to sustain it. The “ques-

tion of the constitutionality of action taken by Congress

does not depend on recitals of the power which it under-

takes to exercise.” Woods v. Cloyd W. Miller Co., 333 U. S.

——————

language was implemented through operative provisions that also use

the words on which the dissent relies. See 42 U. S. C. §2021e(e)(1)

(entitled “Requirements for non-sited compact regions and non-member

States” and directing that those entities “shall comply with the follow-

ing requirements”); §2021e(e)(2) (describing “Penalties for failure to

comply”). The Court upheld those provisions not as lawful commands,

but as “incentives.” See 505 U. S., at 152–153, 171–173.

40 NATIONAL FEDERATION OF INDEPENDENT

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138, 144 (1948).

Even if the taxing power enables Congress to impose

a tax on not obtaining health insurance, any tax must

still comply with other requirements in the Constitution.

Plaintiffs argue that the shared responsibility payment

does not do so, citing Article I, §9, clause 4. That clause

provides: “No Capitation, or other direct, Tax shall be laid,

unless in Proportion to the Census or Enumeration herein

before directed to be taken.” This requirement means that

any “direct Tax” must be apportioned so that each State

pays in proportion to its population. According to the

plaintiffs, if the individual mandate imposes a tax, it is a

direct tax, and it is unconstitutional because Congress

made no effort to apportion it among the States.

Even when the Direct Tax Clause was written it was

unclear what else, other than a capitation (also known as

a “head tax” or a “poll tax”), might be a direct tax. See

Springer v. United States, 102 U. S. 586, 596–598 (1881).

Soon after the framing, Congress passed a tax on owner-

ship of carriages, over James Madison’s objection that it

was an unapportioned direct tax. Id., at 597. This Court

upheld the tax, in part reasoning that apportioning such

a tax would make little sense, because it would have re-

quired taxing carriage owners at dramatically different

rates depending on how many carriages were in their

home State. See Hylton v. United States, 3 Dall. 171, 174

(1796) (opinion of Chase, J.). The Court was unanimous,

and those Justices who wrote opinions either directly

asserted or strongly suggested that only two forms of

taxation were direct: capitations and land taxes. See id.,

at 175; id., at 177 (opinion of Paterson, J.); id., at 183

(opinion of Iredell, J.).

That narrow view of what a direct tax might be per-

sisted for a century. In 1880, for example, we explained that

“direct taxes, within the meaning of the Constitution, are

only capitation taxes, as expressed in that instrument,

Cite as: 567 U. S. ____ (2012) 41

Opinion of ofOBERTS, C. J.

Opinion R the Court

and taxes on real estate.” Springer, supra, at 602. In

1895, we expanded our interpretation to include taxes on

personal property and income from personal property, in

the course of striking down aspects of the federal income

tax. Pollock v. Farmers’ Loan & Trust Co., 158 U. S. 601,

618 (1895). That result was overturned by the Sixteenth

Amendment, although we continued to consider taxes on

personal property to be direct taxes. See Eisner v. Macom-

ber, 252 U. S. 189, 218–219 (1920).

A tax on going without health insurance does not fall

within any recognized category of direct tax. It is not a

capitation. Capitations are taxes paid by every person,

“without regard to property, profession, or any other cir-

cumstance.” Hylton, supra, at 175 (opinion of Chase, J.)

(emphasis altered). The whole point of the shared respon-

sibility payment is that it is triggered by specific cir-

cumstances—earning a certain amount of income but not

obtaining health insurance. The payment is also plainly

not a tax on the ownership of land or personal property.

The shared responsibility payment is thus not a direct tax

that must be apportioned among the several States.

There may, however, be a more fundamental objection

to a tax on those who lack health insurance. Even if only

a tax, the payment under §5000A(b) remains a burden

that the Federal Government imposes for an omission, not

an act. If it is troubling to interpret the Commerce Clause

as authorizing Congress to regulate those who abstain

from commerce, perhaps it should be similarly troubling to

permit Congress to impose a tax for not doing something.

Three considerations allay this concern. First, and most

importantly, it is abundantly clear the Constitution does

not guarantee that individuals may avoid taxation through

inactivity. A capitation, after all, is a tax that every-

one must pay simply for existing, and capitations are

expressly contemplated by the Constitution. The Court

today holds that our Constitution protects us from federal

42 NATIONAL FEDERATION OF INDEPENDENT

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Opinion R the Court

regulation under the Commerce Clause so long as we ab-

stain from the regulated activity. But from its creation,

the Constitution has made no such promise with respect to

taxes. See Letter from Benjamin Franklin to M. Le Roy

(Nov. 13, 1789) (“Our new Constitution is now established

. . . but in this world nothing can be said to be certain,

except death and taxes”).

Whether the mandate can be upheld under the Com-

merce Clause is a question about the scope of federal

authority. Its answer depends on whether Congress can

exercise what all acknowledge to be the novel course of

directing individuals to purchase insurance. Congress’s

use of the Taxing Clause to encourage buying something

is, by contrast, not new. Tax incentives already promote,

for example, purchasing homes and professional educa-

tions. See 26 U. S. C. §§163(h), 25A. Sustaining the

mandate as a tax depends only on whether Congress has

properly exercised its taxing power to encourage purchas-

ing health insurance, not whether it can. Upholding the

individual mandate under the Taxing Clause thus does

not recognize any new federal power. It determines that

Congress has used an existing one.

Second, Congress’s ability to use its taxing power to

influence conduct is not without limits. A few of our cases

policed these limits aggressively, invalidating punitive

exactions obviously designed to regulate behavior other-

wise regarded at the time as beyond federal authority.

See, e.g., United States v. Butler, 297 U. S. 1 (1936); Drexel

Furniture, 259 U. S. 20. More often and more recently

we have declined to closely examine the regulatory motive

or effect of revenue-raising measures. See Kahriger, 345

U. S., at 27–31 (collecting cases). We have nonetheless

maintained that “ ‘there comes a time in the extension of

the penalizing features of the so-called tax when it loses

its character as such and becomes a mere penalty with the

characteristics of regulation and punishment.’ ” Kurth

Cite as: 567 U. S. ____ (2012) 43

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Opinion R the Court

Ranch, 511 U. S., at 779 (quoting Drexel Furniture, supra,

at 38).

We have already explained that the shared responsibil-

ity payment’s practical characteristics pass muster as a

tax under our narrowest interpretations of the taxing

power. Supra, at 35–36. Because the tax at hand is

within even those strict limits, we need not here decide the

precise point at which an exaction becomes so punitive

that the taxing power does not authorize it. It remains

true, however, that the “ ‘power to tax is not the power to

destroy while this Court sits.’ ” Oklahoma Tax Comm’n v.

Texas Co., 336 U. S. 342, 364 (1949) (quoting Panhandle

Oil Co. v. Mississippi ex rel. Knox, 277 U. S. 218, 223

(1928) (Holmes, J., dissenting)).

Third, although the breadth of Congress’s power to tax

is greater than its power to regulate commerce, the taxing

power does not give Congress the same degree of control

over individual behavior. Once we recognize that Con-

gress may regulate a particular decision under the Com-

merce Clause, the Federal Government can bring its full

weight to bear. Congress may simply command individ-

uals to do as it directs. An individual who disobeys may

be subjected to criminal sanctions. Those sanctions can

include not only fines and imprisonment, but all the at-

tendant consequences of being branded a criminal: depri-

vation of otherwise protected civil rights, such as the right

to bear arms or vote in elections; loss of employment op-

portunities; social stigma; and severe disabilities in other

controversies, such as custody or immigration disputes.

By contrast, Congress’s authority under the taxing

power is limited to requiring an individual to pay money

into the Federal Treasury, no more. If a tax is properly

paid, the Government has no power to compel or punish

individuals subject to it. We do not make light of the se-

vere burden that taxation—especially taxation motivated

by a regulatory purpose—can impose. But imposition

44 NATIONAL FEDERATION OF INDEPENDENT

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Opinion of ROBERTS, C. J.

of a tax nonetheless leaves an individual with a lawful

choice to do or not do a certain act, so long as he is willing

to pay a tax levied on that choice.11

The Affordable Care Act’s requirement that certain in-

dividuals pay a financial penalty for not obtaining health

insurance may reasonably be characterized as a tax. Be-

cause the Constitution permits such a tax, it is not our role

to forbid it, or to pass upon its wisdom or fairness.

D

JUSTICE GINSBURG questions the necessity of rejecting

the Government’s commerce power argument, given that

§5000A can be upheld under the taxing power. Post, at 37.

But the statute reads more naturally as a command to buy

insurance than as a tax, and I would uphold it as a com-

mand if the Constitution allowed it. It is only because the

Commerce Clause does not authorize such a command

that it is necessary to reach the taxing power question.

And it is only because we have a duty to construe a stat-

ute to save it, if fairly possible, that §5000A can be inter-

preted as a tax. Without deciding the Commerce Clause

question, I would find no basis to adopt such a saving

construction.

The Federal Government does not have the power to

order people to buy health insurance. Section 5000A

would therefore be unconstitutional if read as a command.

The Federal Government does have the power to impose a

tax on those without health insurance. Section 5000A is

——————

11 Of course, individuals do not have a lawful choice not to pay a tax

due, and may sometimes face prosecution for failing to do so (although

not for declining to make the shared responsibility payment, see 26

U. S. C. §5000A(g)(2)). But that does not show that the tax restricts the

lawful choice whether to undertake or forgo the activity on which the tax

is predicated. Those subject to the individual mandate may lawfully

forgo health insurance and pay higher taxes, or buy health insurance

and pay lower taxes. The only thing they may not lawfully do is not

buy health insurance and not pay the resulting tax.

Cite as: 567 U. S. ____ (2012) 45

Opinion of ROBERTS, C. J.

therefore constitutional, because it can reasonably be read

as a tax.

IV

A

The States also contend that the Medicaid expansion

exceeds Congress’s authority under the Spending Clause.

They claim that Congress is coercing the States to adopt

the changes it wants by threatening to withhold all of a

State’s Medicaid grants, unless the State accepts the new

expanded funding and complies with the conditions that

come with it. This, they argue, violates the basic principle

that the “Federal Government may not compel the States

to enact or administer a federal regulatory program.” New

York, 505 U. S., at 188.

There is no doubt that the Act dramatically increases

state obligations under Medicaid. The current Medicaid

program requires States to cover only certain discrete

categories of needy individuals—pregnant women, chil-

dren, needy families, the blind, the elderly, and the dis-

abled. 42 U. S. C. §1396a(a)(10). There is no mandatory

coverage for most childless adults, and the States typically

do not offer any such coverage. The States also enjoy

considerable flexibility with respect to the coverage levels

for parents of needy families. §1396a(a)(10)(A)(ii). On

average States cover only those unemployed parents who

make less than 37 percent of the federal poverty level, and

only those employed parents who make less than 63 per-

cent of the poverty line. Kaiser Comm’n on Medicaid and

the Uninsured, Performing Under Pressure 11, and fig. 11

(2012).

The Medicaid provisions of the Affordable Care Act, in

contrast, require States to expand their Medicaid pro-

grams by 2014 to cover all individuals under the age of 65

with incomes below 133 percent of the federal poverty line.

§1396a(a)(10)(A)(i)(VIII). The Act also establishes a new

46 NATIONAL FEDERATION OF INDEPENDENT

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“[e]ssential health benefits” package, which States must

provide to all new Medicaid recipients—a level sufficient

to satisfy a recipient’s obligations under the individual man-

date. §§1396a(k)(1), 1396u–7(b)(5), 18022(b). The Af-

fordable Care Act provides that the Federal Government

will pay 100 percent of the costs of covering these newly

eligible individuals through 2016. §1396d(y)(1). In the

following years, the federal payment level gradually de-

creases, to a minimum of 90 percent. Ibid. In light of

the expansion in coverage mandated by the Act, the Federal

Government estimates that its Medicaid spending will in-

crease by approximately $100 billion per year, nearly 40

percent above current levels. Statement of Douglas W.

Elmendorf, CBO’s Analysis of the Major Health Care

Legislation Enacted in March 2010, p. 14, Table 2 (Mar.

30, 2011).

The Spending Clause grants Congress the power “to pay

the Debts and provide for the . . . general Welfare of the

United States.” U. S. Const., Art. I, §8, cl. 1. We have

long recognized that Congress may use this power to grant

federal funds to the States, and may condition such a

grant upon the States’ “taking certain actions that Con-

gress could not require them to take.” College Savings Bank,

527 U. S., at 686. Such measures “encourage a State

to regulate in a particular way, [and] influenc[e] a State’s

policy choices.” New York, supra, at 166. The con-

ditions imposed by Congress ensure that the funds are

used by the States to “provide for the . . . general Welfare”

in the manner Congress intended.

At the same time, our cases have recognized limits on

Congress’s power under the Spending Clause to secure

state compliance with federal objectives. “We have re-

peatedly characterized . . . Spending Clause legislation as

‘much in the nature of a contract.’ ” Barnes v. Gorman,

536 U. S. 181, 186 (2002) (quoting Pennhurst State School

and Hospital v. Halderman, 451 U. S. 1, 17 (1981)). The

Cite as: 567 U. S. ____ (2012) 47

Opinion of ROBERTS, C. J.

legitimacy of Congress’s exercise of the spending power

“thus rests on whether the State voluntarily and knowingly

accepts the terms of the ‘contract.’ ” Pennhurst, supra,

at 17. Respecting this limitation is critical to ensuring

that Spending Clause legislation does not undermine the

status of the States as independent sovereigns in our fed-

eral system. That system “rests on what might at first

seem a counterintuitive insight, that ‘freedom is enhanced

by the creation of two governments, not one.’ ” Bond, 564

U. S., at ___ (slip op., at 8) (quoting Alden v. Maine, 527

U. S. 706, 758 (1999)). For this reason, “the Constitution

has never been understood to confer upon Congress the

ability to require the States to govern according to Con-

gress’ instructions.” New York, supra, at 162. Otherwise

the two-government system established by the Framers

would give way to a system that vests power in one central

government, and individual liberty would suffer.

That insight has led this Court to strike down fed-

eral legislation that commandeers a State’s legislative or

administrative apparatus for federal purposes. See, e.g.,

Printz, 521 U. S., at 933 (striking down federal legisla-

tion compelling state law enforcement officers to perform

federally mandated background checks on handgun pur-

chasers); New York, supra, at 174–175 (invalidating provi-

sions of an Act that would compel a State to either take

title to nuclear waste or enact particular state waste

regulations). It has also led us to scrutinize Spending

Clause legislation to ensure that Congress is not using

financial inducements to exert a “power akin to undue

influence.” Steward Machine Co. v. Davis, 301 U. S. 548,

590 (1937). Congress may use its spending power to cre-

ate incentives for States to act in accordance with federal

policies. But when “pressure turns into compulsion,” ibid.,

the legislation runs contrary to our system of federalism.

“[T]he Constitution simply does not give Congress the

authority to require the States to regulate.” New York,

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505 U. S., at 178. That is true whether Congress directly

commands a State to regulate or indirectly coerces a State

to adopt a federal regulatory system as its own.

Permitting the Federal Government to force the States

to implement a federal program would threaten the politi-

cal accountability key to our federal system. “[W]here the

Federal Government directs the States to regulate, it may

be state officials who will bear the brunt of public disap-

proval, while the federal officials who devised the regu-

latory program may remain insulated from the electoral

ramifications of their decision.” Id., at 169. Spending

Clause programs do not pose this danger when a State has

a legitimate choice whether to accept the federal condi-

tions in exchange for federal funds. In such a situation,

state officials can fairly be held politically accountable for

choosing to accept or refuse the federal offer. But when

the State has no choice, the Federal Government can

achieve its objectives without accountability, just as in

New York and Printz. Indeed, this danger is heightened

when Congress acts under the Spending Clause, because

Congress can use that power to implement federal policy it

could not impose directly under its enumerated powers.

We addressed such concerns in Steward Machine. That

case involved a federal tax on employers that was abated

if the businesses paid into a state unemployment plan that

met certain federally specified conditions. An employer

sued, alleging that the tax was impermissibly “driv[ing]

the state legislatures under the whip of economic pressure

into the enactment of unemployment compensation laws

at the bidding of the central government.” 301 U. S., at

587. We acknowledged the danger that the Federal Gov-

ernment might employ its taxing power to exert a “power

akin to undue influence” upon the States. Id., at 590. But

we observed that Congress adopted the challenged tax and

abatement program to channel money to the States that

would otherwise have gone into the Federal Treasury for

Cite as: 567 U. S. ____ (2012) 49

Opinion of ROBERTS, C. J.

use in providing national unemployment services. Con-

gress was willing to direct businesses to instead pay the

money into state programs only on the condition that the

money be used for the same purposes. Predicating tax

abatement on a State’s adoption of a particular type of un-

employment legislation was therefore a means to “safe-

guard [the Federal Government’s] own treasury.” Id., at

591. We held that “[i]n such circumstances, if in no oth-

ers, inducement or persuasion does not go beyond the

bounds of power.” Ibid.

In rejecting the argument that the federal law was a

“weapon[ ] of coercion, destroying or impairing the auton-

omy of the states,” the Court noted that there was no

reason to suppose that the State in that case acted other

than through “her unfettered will.” Id., at 586, 590.

Indeed, the State itself did “not offer a suggestion that in

passing the unemployment law she was affected by du-

ress.” Id., at 589.

As our decision in Steward Machine confirms, Congress

may attach appropriate conditions to federal taxing and

spending programs to preserve its control over the use of

federal funds. In the typical case we look to the States to

defend their prerogatives by adopting “the simple expedi-

ent of not yielding” to federal blandishments when they

do not want to embrace the federal policies as their own.

Massachusetts v. Mellon, 262 U. S. 447, 482 (1923). The

States are separate and independent sovereigns. Some-

times they have to act like it.

The States, however, argue that the Medicaid expansion

is far from the typical case. They object that Congress has

“crossed the line distinguishing encouragement from

coercion,” New York, supra, at 175, in the way it has struc-

tured the funding: Instead of simply refusing to grant the

new funds to States that will not accept the new condi-

tions, Congress has also threatened to withhold those

States’ existing Medicaid funds. The States claim that

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this threat serves no purpose other than to force unwilling

States to sign up for the dramatic expansion in health care

coverage effected by the Act.

Given the nature of the threat and the programs at

issue here, we must agree. We have upheld Congress’s

authority to condition the receipt of funds on the States’

complying with restrictions on the use of those funds,

because that is the means by which Congress ensures that

the funds are spent according to its view of the “general

Welfare.” Conditions that do not here govern the use

of the funds, however, cannot be justified on that ba-

sis. When, for example, such conditions take the form of

threats to terminate other significant independent grants,

the conditions are properly viewed as a means of pressur-

ing the States to accept policy changes.

In South Dakota v. Dole, we considered a challenge to a

federal law that threatened to withhold five percent of a

State’s federal highway funds if the State did not raise its

drinking age to 21. The Court found that the condition

was “directly related to one of the main purposes for which

highway funds are expended—safe interstate travel.” 483

U. S., at 208. At the same time, the condition was not a

restriction on how the highway funds—set aside for spec-

ific highway improvement and maintenance efforts—were

to be used.

We accordingly asked whether “the financial induce-

ment offered by Congress” was “so coercive as to pass the

point at which ‘pressure turns into compulsion.’ ” Id., at

211 (quoting Steward Machine, supra, at 590). By “finan-

cial inducement” the Court meant the threat of losing five

percent of highway funds; no new money was offered to

the States to raise their drinking ages. We found that the

inducement was not impermissibly coercive, because

Congress was offering only “relatively mild encouragement

to the States.” Dole, 483 U. S., at 211. We observed that

“all South Dakota would lose if she adheres to her chosen

Cite as: 567 U. S. ____ (2012) 51

Opinion of ROBERTS, C. J.

course as to a suitable minimum drinking age is 5%” of

her highway funds. Ibid. In fact, the federal funds at

stake constituted less than half of one percent of South

Dakota’s budget at the time. See Nat. Assn. of State

Budget Officers, The State Expenditure Report 59 (1987);

South Dakota v. Dole, 791 F. 2d 628, 630 (CA8 1986). In

consequence, “we conclude[d] that [the] encouragement

to state action [was] a valid use of the spending power.”

Dole, 483 U. S., at 212. Whether to accept the drinking

age change “remain[ed] the prerogative of the States not

merely in theory but in fact.” Id., at 211–212.

In this case, the financial “inducement” Congress has

chosen is much more than “relatively mild encourage-

ment”—it is a gun to the head. Section 1396c of the Medi-

caid Act provides that if a State’s Medicaid plan does

not comply with the Act’s requirements, the Secretary of

Health and Human Services may declare that “further

payments will not be made to the State.” 42 U. S. C.

§1396c. A State that opts out of the Affordable Care Act’s

expansion in health care coverage thus stands to lose not

merely “a relatively small percentage” of its existing Medi-

caid funding, but all of it. Dole, supra, at 211. Medicaid

spending accounts for over 20 percent of the average

State’s total budget, with federal funds covering 50 to 83

percent of those costs. See Nat. Assn. of State Budget

Officers, Fiscal Year 2010 State Expenditure Report, p. 11,

Table 5 (2011); 42 U. S. C. §1396d(b). The Federal Gov-

ernment estimates that it will pay out approximately $3.3

trillion between 2010 and 2019 in order to cover the costs

of pre-expansion Medicaid. Brief for United States 10,

n. 6. In addition, the States have developed intricate

statutory and administrative regimes over the course of

many decades to implement their objectives under existing

Medicaid. It is easy to see how the Dole Court could con-

clude that the threatened loss of less than half of one

percent of South Dakota’s budget left that State with a

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“prerogative” to reject Congress’s desired policy, “not

merely in theory but in fact.” 483 U. S., at 211–212. The

threatened loss of over 10 percent of a State’s overall

budget, in contrast, is economic dragooning that leaves the

States with no real option but to acquiesce in the Medicaid

expansion.12

JUSTICE GINSBURG claims that Dole is distinguishable

because here “Congress has not threatened to withhold

funds earmarked for any other program.” Post, at 47. But

that begs the question: The States contend that the ex-

pansion is in reality a new program and that Congress is

forcing them to accept it by threatening the funds for the

existing Medicaid program. We cannot agree that existing

Medicaid and the expansion dictated by the Affordable

Care Act are all one program simply because “Congress

styled” them as such. Post, at 49. If the expansion is not

properly viewed as a modification of the existing Medicaid

program, Congress’s decision to so title it is irrelevant.13

——————

12 JUSTICE GINSBURG observes that state Medicaid spending will in-

crease by only 0.8 percent after the expansion. Post, at 43. That not

only ignores increased state administrative expenses, but also assumes

that the Federal Government will continue to fund the expansion at the

current statutorily specified levels. It is not unheard of, however, for

the Federal Government to increase requirements in such a manner as

to impose unfunded mandates on the States. More importantly, the

size of the new financial burden imposed on a State is irrelevant in

analyzing whether the State has been coerced into accepting that

burden. “Your money or your life” is a coercive proposition, whether

you have a single dollar in your pocket or $500.

13 Nor, of course, can the number of pages the amendment occu-

pies, or the extent to which the change preserves and works within

the existing program, be dispositive. Cf. post, at 49–50 (opinion of

GINSBURG, J.). Take, for example, the following hypothetical amend-

ment: “All of a State’s citizens are now eligible for Medicaid.” That

change would take up a single line and would not alter any “operational

aspect[ ] of the program” beyond the eligibility requirements. Post, at

49. Yet it could hardly be argued that such an amendment was a

permissible modification of Medicaid, rather than an attempt to foist an

entirely new health care system upon the States.

Cite as: 567 U. S. ____ (2012) 53

Opinion of ROBERTS, C. J.

Here, the Government claims that the Medicaid expan-

sion is properly viewed merely as a modification of the ex-

isting program because the States agreed that Congress

could change the terms of Medicaid when they signed on

in the first place. The Government observes that the

Social Security Act, which includes the original Medicaid

provisions, contains a clause expressly reserving “[t]he

right to alter, amend, or repeal any provision” of that

statute. 42 U. S. C. §1304. So it does. But “if Congress

intends to impose a condition on the grant of federal mon-

eys, it must do so unambiguously.” Pennhurst, 451 U. S.,

at 17. A State confronted with statutory language reserv-

ing the right to “alter” or “amend” the pertinent provisions

of the Social Security Act might reasonably assume that

Congress was entitled to make adjustments to the Medi-

caid program as it developed. Congress has in fact done

so, sometimes conditioning only the new funding, other

times both old and new. See, e.g., Social Security Amend-

ments of 1972, 86 Stat. 1381–1382, 1465 (extending Med-

icaid eligibility, but partly conditioning only the new

funding); Omnibus Budget Reconciliation Act of 1990,

§4601, 104 Stat. 1388–166 (extending eligibility, and

conditioning old and new funds).

The Medicaid expansion, however, accomplishes a shift

in kind, not merely degree. The original program was de-

signed to cover medical services for four particular cat-

egories of the needy: the disabled, the blind, the elderly,

and needy families with dependent children. See 42

U. S. C. §1396a(a)(10). Previous amendments to Medicaid

eligibility merely altered and expanded the boundaries of

these categories. Under the Affordable Care Act, Medicaid

is transformed into a program to meet the health care

needs of the entire nonelderly population with income

below 133 percent of the poverty level. It is no longer a

program to care for the neediest among us, but rather an

element of a comprehensive national plan to provide uni-

54 NATIONAL FEDERATION OF INDEPENDENT

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Opinion of ROBERTS, C. J.

versal health insurance coverage.14

Indeed, the manner in which the expansion is struc-

tured indicates that while Congress may have styled the

expansion a mere alteration of existing Medicaid, it recog-

nized it was enlisting the States in a new health care

program. Congress created a separate funding provision

to cover the costs of providing services to any person

made newly eligible by the expansion. While Congress pays

50 to 83 percent of the costs of covering individuals cur-

rently enrolled in Medicaid, §1396d(b), once the expansion is

fully implemented Congress will pay 90 percent of the

costs for newly eligible persons, §1396d(y)(1). The condi-

tions on use of the different funds are also distinct. Con-

gress mandated that newly eligible persons receive a level

of coverage that is less comprehensive than the traditional

Medicaid benefit package. §1396a(k)(1); see Brief for

United States 9.

As we have explained, “[t]hough Congress’ power to

legislate under the spending power is broad, it does not

include surprising participating States with postac-

ceptance or ‘retroactive’ conditions.” Pennhurst, supra, at

25. A State could hardly anticipate that Congress’s reser-

vation of the right to “alter” or “amend” the Medicaid

program included the power to transform it so dramatically.

JUSTICE GINSBURG claims that in fact this expansion is

——————

14 JUSTICE GINSBURG suggests that the States can have no objection to

the Medicaid expansion, because “Congress could have repealed Medi-

caid [and,] [t]hereafter, . . . could have enacted Medicaid II, a new

program combining the pre-2010 coverage with the expanded coverage

required by the ACA.” Post, at 51; see also post, at 38. But it would

certainly not be that easy. Practical constraints would plainly inhibit,

if not preclude, the Federal Government from repealing the existing

program and putting every feature of Medicaid on the table for political

reconsideration. Such a massive undertaking would hardly be “ritual-

istic.” Ibid. The same is true of JUSTICE GINSBURG’s suggestion that

Congress could establish Medicaid as an exclusively federal program.

Post, at 44.

Cite as: 567 U. S. ____ (2012) 55

Opinion of ROBERTS, C. J.

no different from the previous changes to Medicaid, such

that “a State would be hard put to complain that it lacked

fair notice.” Post, at 56. But the prior change she dis-

cusses—presumably the most dramatic alteration she could

find—does not come close to working the transformation

the expansion accomplishes. She highlights an amend-

ment requiring States to cover pregnant women and in-

creasing the number of eligible children. Ibid. But this

modification can hardly be described as a major change in

a program that—from its inception—provided health care

for “families with dependent children.” Previous Medicaid

amendments simply do not fall into the same category as

the one at stake here.

The Court in Steward Machine did not attempt to “fix

the outermost line” where persuasion gives way to coer-

cion. 301 U. S., at 591. The Court found it “[e]nough for

present purposes that wherever the line may be, this

statute is within it.” Ibid. We have no need to fix a line

either. It is enough for today that wherever that line may

be, this statute is surely beyond it. Congress may not

simply “conscript state [agencies] into the national bu-

reaucratic army,” FERC v. Mississippi, 456 U. S. 742, 775

(1982) (O’Connor, J., concurring in judgment in part and

dissenting in part), and that is what it is attempting to do

with the Medicaid expansion.

B

Nothing in our opinion precludes Congress from offering

funds under the Affordable Care Act to expand the availa-

bility of health care, and requiring that States accepting

such funds comply with the conditions on their use. What

Congress is not free to do is to penalize States that choose

not to participate in that new program by taking away

their existing Medicaid funding. Section 1396c gives the

Secretary of Health and Human Services the authority to

56 NATIONAL FEDERATION OF INDEPENDENT

BUSINESS v. SEBELIUS

Opinion of ROBERTS, C. J.

do just that. It allows her to withhold all “further [Medi-

caid] payments . . . to the State” if she determines that the

State is out of compliance with any Medicaid requirement,

including those contained in the expansion. 42 U. S. C.

§1396c. In light of the Court’s holding, the Secretary

cannot apply §1396c to withdraw existing Medicaid funds

for failure to comply with the requirements set out in the

expansion.

That fully remedies the constitutional violation we have

identified. The chapter of the United States Code that

contains §1396c includes a severability clause confirming

that we need go no further. That clause specifies that “[i]f

any provision of this chapter, or the application thereof to

any person or circumstance, is held invalid, the remainder

of the chapter, and the application of such provision to

other persons or circumstances shall not be affected thereby.”

§1303. Today’s holding does not affect the continued ap-

plication of §1396c to the existing Medicaid program. Nor

does it affect the Secretary’s ability to withdraw funds pro-

vided under the Affordable Care Act if a State that has

chosen to participate in the expansion fails to comply with

the requirements of that Act.

This is not to say, as the joint dissent suggests, that we

are “rewriting the Medicaid Expansion.” Post, at 48.

Instead, we determine, first, that §1396c is unconstitu-

tional when applied to withdraw existing Medicaid funds

from States that decline to comply with the expansion.

We then follow Congress’s explicit textual instruction to

leave unaffected “the remainder of the chapter, and the

application of [the challenged] provision to other persons

or circumstances.” §1303. When we invalidate an applica-

tion of a statute because that application is unconstitu-

tional, we are not “rewriting” the statute; we are merely

enforcing the Constitution.

The question remains whether today’s holding affects

other provisions of the Affordable Care Act. In considering

Cite as: 567 U. S. ____ (2012) 57

Opinion of ROBERTS, C. J.

that question, “[w]e seek to determine what Congress

would have intended in light of the Court’s constitutional

holding.” United States v. Booker, 543 U. S. 220, 246

(2005) (internal quotation marks omitted). Our “touch-

stone for any decision about remedy is legislative intent,

for a court cannot use its remedial powers to circum-

vent the intent of the legislature.” Ayotte v. Planned

Parenthood of Northern New Eng., 546 U. S. 320, 330

(2006) (internal quotation marks omitted). The question

here is whether Congress would have wanted the rest of

the Act to stand, had it known that States would have a

genuine choice whether to participate in the new Medicaid

expansion. Unless it is “evident” that the answer is no, we

must leave the rest of the Act intact. Champlin Refining

Co. v. Corporation Comm’n of Okla., 286 U. S. 210, 234

(1932).

We are confident that Congress would have wanted to

preserve the rest of the Act. It is fair to say that Congress

assumed that every State would participate in the Medi-

caid expansion, given that States had no real choice but to

do so. The States contend that Congress enacted the rest

of the Act with such full participation in mind; they point

out that Congress made Medicaid a means for satisfying

the mandate, 26 U. S. C. §5000A(f)(1)(A)(ii), and enacted

no other plan for providing coverage to many low-income

individuals. According to the States, this means that the

entire Act must fall.

We disagree. The Court today limits the financial pres-

sure the Secretary may apply to induce States to accept

the terms of the Medicaid expansion. As a practical mat-

ter, that means States may now choose to reject the ex-

pansion; that is the whole point. But that does not mean

all or even any will. Some States may indeed decline to

participate, either because they are unsure they will be

able to afford their share of the new funding obligations,

or because they are unwilling to commit the administra-

58 NATIONAL FEDERATION OF INDEPENDENT

BUSINESS v. SEBELIUS

Opinion of ROBERTS, C. J.

tive resources necessary to support the expansion. Other

States, however, may voluntarily sign up, finding the idea

of expanding Medicaid coverage attractive, particularly

given the level of federal funding the Act offers at the

outset.

We have no way of knowing how many States will ac-

cept the terms of the expansion, but we do not believe

Congress would have wanted the whole Act to fall, simply

because some may choose not to participate. The other

reforms Congress enacted, after all, will remain “fully

operative as a law,” Champlin, supra, at 234, and will still

function in a way “consistent with Congress’ basic objec-

tives in enacting the statute,” Booker, supra, at 259.

Confident that Congress would not have intended any-

thing different, we conclude that the rest of the Act need

not fall in light of our constitutional holding.

* * *

The Affordable Care Act is constitutional in part and

unconstitutional in part. The individual mandate cannot

be upheld as an exercise of Congress’s power under the

Commerce Clause. That Clause authorizes Congress to

regulate interstate commerce, not to order individuals to

engage in it. In this case, however, it is reasonable to con-

strue what Congress has done as increasing taxes on those

who have a certain amount of income, but choose to go

without health insurance. Such legislation is within Con-

gress’s power to tax.

As for the Medicaid expansion, that portion of the Af-

fordable Care Act violates the Constitution by threatening

existing Medicaid funding. Congress has no authority to

order the States to regulate according to its instructions.

Congress may offer the States grants and require the

States to comply with accompanying conditions, but the

States must have a genuine choice whether to accept the

offer. The States are given no such choice in this case:

Cite as: 567 U. S. ____ (2012) 59

Opinion of ROBERTS, C. J.

They must either accept a basic change in the nature of

Medicaid, or risk losing all Medicaid funding. The remedy

for that constitutional violation is to preclude the Federal

Government from imposing such a sanction. That remedy

does not require striking down other portions of the Af-

fordable Care Act.

The Framers created a Federal Government of limited

powers, and assigned to this Court the duty of enforcing

those limits. The Court does so today. But the Court does

not express any opinion on the wisdom of the Affordable

Care Act. Under the Constitution, that judgment is re-

served to the people.

The judgment of the Court of Appeals for the Eleventh

Circuit is affirmed in part and reversed in part.

It is so ordered.

Cite as: 567 U. S. ____ (2012) 1

Opinion of GINSBURG, J.

SUPREME COURT OF THE UNITED STATES

_________________

Nos. 11–393, 11–398 and 11–400

_________________

NATIONAL FEDERATION OF INDEPENDENT

BUSINESS, ET AL., PETITIONERS

11–393 v.

KATHLEEN SEBELIUS, SECRETARY OF HEALTH

AND HUMAN SERVICES, ET AL.

DEPARTMENT OF HEALTH AND HUMAN

SERVICES, ET AL., PETITIONERS

11–398 v.

FLORIDA ET AL.

FLORIDA, ET AL., PETITIONERS

11–400 v.

DEPARTMENT OF HEALTH AND

HUMAN SERVICES ET AL.

ON WRITS OF CERTIORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE ELEVENTH CIRCUIT

[June 28, 2012]

JUSTICE GINSBURG, with whom JUSTICE SOTOMAYOR

joins, and with whom JUSTICE BREYER and JUSTICE

KAGAN join as to Parts I, II, III, and IV, concurring in

part, concurring in the judgment in part, and dissenting in

part.

I agree with THE CHIEF JUSTICE that the Anti-Injunction

Act does not bar the Court’s consideration of this case,

and that the minimum coverage provision is a proper

exercise of Congress’ taxing power. I therefore join Parts

I, II, and III–C of THE CHIEF JUSTICE’s opinion.

Unlike THE CHIEF JUSTICE, however, I would hold, alterna­

2 NATIONAL FEDERATION OF INDEPENDENT

BUSINESS v. SEBELIUS

Opinion of GINSBURG, J.

tively, that the Commerce Clause authorizes Congress to

enact the minimum coverage provision. I would also hold

that the Spending Clause permits the Medicaid expansion

exactly as Congress enacted it.

I

The provision of health care is today a concern of na­

tional dimension, just as the provision of old-age and

survivors’ benefits was in the 1930’s. In the Social Secu-

rity Act, Congress installed a federal system to provide

monthly benefits to retired wage earners and, eventually,

to their survivors. Beyond question, Congress could have

adopted a similar scheme for health care. Congress chose,

instead, to preserve a central role for private insurers and

state governments. According to THE CHIEF JUSTICE, the

Commerce Clause does not permit that preservation. This

rigid reading of the Clause makes scant sense and is

stunningly retrogressive.

Since 1937, our precedent has recognized Congress’

large authority to set the Nation’s course in the economic

and social welfare realm. See United States v. Darby, 312

U. S. 100, 115 (1941) (overruling Hammer v. Dagenhart,

247 U. S. 251 (1918), and recognizing that “regulations of

commerce which do not infringe some constitutional prohibi-

tion are within the plenary power conferred on Congress

by the Commerce Clause”); NLRB v. Jones & Laughlin

Steel Corp., 301 U. S. 1, 37 (1937) (“[The commerce]

power is plenary and may be exerted to protect interstate

commerce no matter what the source of the dangers which

threaten it.” (internal quotation marks omitted)). THE

CHIEF JUSTICE’s crabbed reading of the Commerce Clause

harks back to the era in which the Court routinely thwarted

Congress’ efforts to regulate the national economy in

the interest of those who labor to sustain it. See, e.g.,

Railroad Retirement Bd. v. Alton R. Co., 295 U. S. 330,

362, 368 (1935) (invalidating compulsory retirement and

Cite as: 567 U. S. ____ (2012) 3

Opinion of GINSBURG, J.

pension plan for employees of carriers subject to the Inter­

state Commerce Act; Court found law related essentially

“to the social welfare of the worker, and therefore remote

from any regulation of commerce as such”). It is a reading

that should not have staying power.

A

In enacting the Patient Protection and Affordable Care

Act (ACA), Congress comprehensively reformed the

national market for health-care products and services.

By any measure, that market is immense. Collectively,

Americans spent $2.5 trillion on health care in 2009,

accounting for 17.6% of our Nation’s economy. 42 U. S. C.

§18091(2)(B) (2006 ed., Supp. IV). Within the next decade,

it is anticipated, spending on health care will nearly dou­

ble. Ibid.

The health-care market’s size is not its only distinctive

feature. Unlike the market for almost any other product

or service, the market for medical care is one in which all

individuals inevitably participate. Virtually every person

residing in the United States, sooner or later, will visit

a doctor or other health-care professional. See Dept. of

Health and Human Services, National Center for Health

Statistics, Summary Health Statistics for U. S. Adults:

National Health Interview Survey 2009, Ser. 10, No. 249,

p. 124, Table 37 (Dec. 2010) (Over 99.5% of adults above

65 have visited a health-care professional.). Most people

will do so repeatedly. See id., at 115, Table 34 (In 2009

alone, 64% of adults made two or more visits to a doctor’s

office.).

When individuals make those visits, they face another

reality of the current market for medical care: its high

cost. In 2010, on average, an individual in the United

States incurred over $7,000 in health-care expenses.

Dept. of Health and Human Services, Centers for Medi­

care and Medicaid Services, Historic National Health

4 NATIONAL FEDERATION OF INDEPENDENT

BUSINESS v. SEBELIUS

Opinion of GINSBURG, J.

Expenditure Data, National Health Expenditures: Se-

lected Calendar Years 1960–2010 (Table 1). Over a life­

time, costs mount to hundreds of thousands of dollars. See

Alemayahu & Warner, The Lifetime Distribution of

Health Care Costs, in 39 Health Service Research 627, 635

(June 2004). When a person requires nonroutine care, the

cost will generally exceed what he or she can afford to pay.

A single hospital stay, for instance, typically costs up­

wards of $10,000. See Dept. of Health and Human Ser­

vices, Office of Health Policy, ASPE Research Brief: The

Value of Health Insurance 5 (May 2011). Treatments for

many serious, though not uncommon, conditions similarly

cost a substantial sum. Brief for Economic Scholars as

Amici Curiae in No. 11–398, p. 10 (citing a study indicat­

ing that, in 1998, the cost of treating a heart attack for the

first 90 days exceeded $20,000, while the annual cost of

treating certain cancers was more than $50,000).

Although every U. S. domiciliary will incur significant

medical expenses during his or her lifetime, the time when

care will be needed is often unpredictable. An accident, a

heart attack, or a cancer diagnosis commonly occurs with­

out warning. Inescapably, we are all at peril of needing

medical care without a moment’s notice. See, e.g., Camp­

bell, Down the Insurance Rabbit Hole, N. Y. Times, Apr. 5,

2012, p. A23 (telling of an uninsured 32-year-old woman

who, healthy one day, became a quadriplegic the next due

to an auto accident).

To manage the risks associated with medical care—

its high cost, its unpredictability, and its inevitability—

most people in the United States obtain health insurance.

Many (approximately 170 million in 2009) are insured by

private insurance companies. Others, including those

over 65 and certain poor and disabled persons, rely on

government-funded insurance programs, notably Medicare

and Medicaid. Combined, private health insurers and

State and Federal Governments finance almost 85% of the

Cite as: 567 U. S. ____ (2012) 5

Opinion of GINSBURG, J.

medical care administered to U. S. residents. See Con­

gressional Budget Office, CBO’s 2011 Long-Term Budget

Outlook 37 (June 2011).

Not all U. S. residents, however, have health insurance.

In 2009, approximately 50 million people were uninsured,

either by choice or, more likely, because they could not

afford private insurance and did not qualify for govern­

ment aid. See Dept. of Commerce, Census Bureau, C.

DeNavas-Walt, B. Proctor, & J. Smith, Income, Poverty,

and Health Insurance Coverage in the United States: 2009,

p. 23, Table 8 (Sept. 2010). As a group, uninsured individ­

uals annually consume more than $100 billion in health-

care services, nearly 5% of the Nation’s total. Hidden

Health Tax: Americans Pay a Premium 2 (2009), avail-

able at http://www.familiesusa.org (all Internet mate-

rial as visited June 25, 2012, and included in Clerk of

Court’s case file). Over 60% of those without insurance

visit a doctor’s office or emergency room in a given year.

See Dept. of Health and Human Services, National Cen-

ter for Health Statistics, Health—United States—2010,

p. 282, Table 79 (Feb. 2011).

B

The large number of individuals without health insur­

ance, Congress found, heavily burdens the national

health-care market. See 42 U. S. C. §18091(2). As just

noted, the cost of emergency care or treatment for a seri­

ous illness generally exceeds what an individual can afford

to pay on her own. Unlike markets for most products,

however, the inability to pay for care does not mean that

an uninsured individual will receive no care. Federal and

state law, as well as professional obligations and embed­

ded social norms, require hospitals and physicians to

provide care when it is most needed, regardless of the

patient’s ability to pay. See, e.g., 42 U. S. C. §1395dd; Fla.

Stat. §395.1041(3)(f) (2010); Tex. Health & Safety Code

6 NATIONAL FEDERATION OF INDEPENDENT

BUSINESS v. SEBELIUS

Opinion of GINSBURG, J.

Ann. §§311.022(a) and (b) (West 2010); American Medical

Association, Council on Ethical and Judicial Affairs,

Code of Medical Ethics, Current Opinions: Opinion 8.11—

Neglect of Patient, p. 70 (1998–1999 ed.).

As a consequence, medical-care providers deliver sig-

nificant amounts of care to the uninsured for which the

providers receive no payment. In 2008, for example, hospi-

tals, physicians, and other health-care professionals

received no compensation for $43 billion worth of the $116

billion in care they administered to those without insur­

ance. 42 U. S. C. §18091(2)(F) (2006 ed., Supp. IV).

Health-care providers do not absorb these bad debts.

Instead, they raise their prices, passing along the cost

of uncompensated care to those who do pay reliably: the

government and private insurance companies. In response,

private insurers increase their premiums, shifting the

cost of the elevated bills from providers onto those who

carry insurance. The net result: Those with health insur­

ance subsidize the medical care of those without it. As

economists would describe what happens, the uninsured

“free ride” on those who pay for health insurance.

The size of this subsidy is considerable. Congress found

that the cost-shifting just described “increases family

[insurance] premiums by on average over $1,000 a year.”

Ibid. Higher premiums, in turn, render health insurance

less affordable, forcing more people to go without insur­

ance and leading to further cost-shifting.

And it is hardly just the currently sick or injured among

the uninsured who prompt elevation of the price of health

care and health insurance. Insurance companies and

health-care providers know that some percentage of

healthy, uninsured people will suffer sickness or injury

each year and will receive medical care despite their ina­

bility to pay. In anticipation of this uncompensated care,

health-care companies raise their prices, and insurers

their premiums. In other words, because any uninsured

Cite as: 567 U. S. ____ (2012) 7

Opinion of GINSBURG, J.

person may need medical care at any moment and because

health-care companies must account for that risk, every

uninsured person impacts the market price of medical care

and medical insurance.

The failure of individuals to acquire insurance has other

deleterious effects on the health-care market. Because

those without insurance generally lack access to preventa­

tive care, they do not receive treatment for conditions—

like hypertension and diabetes—that can be successfully

and affordably treated if diagnosed early on. See Institute

of Medicine, National Academies, Insuring America’s

Health: Principles and Recommendations 43 (2004). When

sickness finally drives the uninsured to seek care, once

treatable conditions have escalated into grave health

problems, requiring more costly and extensive interven­

tion. Id., at 43–44. The extra time and resources provid­

ers spend serving the uninsured lessens the providers’

ability to care for those who do have insurance. See Kliff,

High Uninsured Rates Can Kill You—Even if You Have

Coverage, Washington Post (May 7, 2012) (describing a

study of California’s health-care market which found

that, when hospitals divert time and resources to provide

uncompensated care, the quality of care the hospitals

deliver to those with insurance drops significantly), availa-

ble at http://www.washingtonpost.com/blogs/ezra-klein/post/

high-uninsured-rates-can-kill-you-even-if-you-have-coverage/2012/

05/07/gIQALNHN8T_print.html.

C

States cannot resolve the problem of the uninsured on

their own. Like Social Security benefits, a universal

health-care system, if adopted by an individual State,

would be “bait to the needy and dependent elsewhere,

encouraging them to migrate and seek a haven of repose.”

Helvering v. Davis, 301 U. S. 619, 644 (1937). See also

Brief for Commonwealth of Massachusetts as Amicus

8 NATIONAL FEDERATION OF INDEPENDENT

BUSINESS v. SEBELIUS

Opinion of GINSBURG, J.

Curiae in No. 11–398, p. 15 (noting that, in 2009, Massa­

chusetts’ emergency rooms served thousands of uninsured,

out-of-state residents). An influx of unhealthy individuals

into a State with universal health care would result in

increased spending on medical services. To cover the

increased costs, a State would have to raise taxes, and

private health-insurance companies would have to in­

crease premiums. Higher taxes and increased insurance

costs would, in turn, encourage businesses and healthy

individuals to leave the State.

States that undertake health-care reforms on their own

thus risk “placing themselves in a position of economic

disadvantage as compared with neighbors or competitors.”

Davis, 301 U. S., at 644. See also Brief for Health Care for

All, Inc., et al. as Amici Curiae in No. 11–398, p. 4 (“[O]ut­

of-state residents continue to seek and receive millions of

dollars in uncompensated care in Massachusetts hospitals,

limiting the State’s efforts to improve its health care

system through the elimination of uncompensated care.”).

Facing that risk, individual States are unlikely to take the

initiative in addressing the problem of the uninsured, even

though solving that problem is in all States’ best interests.

Congress’ intervention was needed to overcome this collective­

action impasse.

D

Aware that a national solution was required, Congress

could have taken over the health-insurance market by

establishing a tax-and-spend federal program like Social

Security. Such a program, commonly referred to as a

single-payer system (where the sole payer is the Federal

Government), would have left little, if any, room for pri­

vate enterprise or the States. Instead of going this route,

Congress enacted the ACA, a solution that retains a ro­

bust role for private insurers and state governments. To

make its chosen approach work, however, Congress had to

Cite as: 567 U. S. ____ (2012) 9

Opinion of GINSBURG, J.

use some new tools, including a requirement that most

individuals obtain private health insurance coverage. See

26 U. S. C. §5000A (2006 ed., Supp. IV) (the minimum

coverage provision). As explained below, by employing

these tools, Congress was able to achieve a practical, alto­

gether reasonable, solution.

A central aim of the ACA is to reduce the number of

uninsured U. S. residents. See 42 U. S. C. §18091(2)(C)

and (I) (2006 ed., Supp. IV). The minimum coverage

provision advances this objective by giving potential recip­

ients of health care a financial incentive to acquire insur­

ance. Per the minimum coverage provision, an individual

must either obtain insurance or pay a toll constructed as a

tax penalty. See 26 U. S. C. §5000A.

The minimum coverage provision serves a further pur­

pose vital to Congress’ plan to reduce the number of unin­

sured. Congress knew that encouraging individuals to

purchase insurance would not suffice to solve the problem,

because most of the uninsured are not uninsured by

choice.1 Of particular concern to Congress were people

who, though desperately in need of insurance, often cannot

acquire it: persons who suffer from preexisting medical

conditions.

Before the ACA’s enactment, private insurance compa­

nies took an applicant’s medical history into account when

setting insurance rates or deciding whether to insure an

individual. Because individuals with preexisting med-

——————

1 According to one study conducted by the National Center for Health

Statistics, the high cost of insurance is the most common reason why

individuals lack coverage, followed by loss of one’s job, an employer’s

unwillingness to offer insurance or an insurers’ unwillingness to cover

those with preexisting medical conditions, and loss of Medicaid cover­

age. See Dept. of Health and Human Services, National Center for

Health Statistics, Summary Health Statistics for the U. S. Population:

National Health Interview Survey—2009, Ser. 10, No. 248, p. 71, Table

25 (Dec. 2010). “[D]id not want or need coverage” received too few re-

sponses to warrant its own category. See ibid., n. 2.

10 NATIONAL FEDERATION OF INDEPENDENT

BUSINESS v. SEBELIUS

Opinion of GINSBURG, J.

ical conditions cost insurance companies significantly more

than those without such conditions, insurers routinely re-

fused to insure these individuals, charged them substan­

tially higher premiums, or offered only limited coverage

that did not include the preexisting illness. See Dept. of

Health and Human Services, Coverage Denied: How the

Current Health Insurance System Leaves Millions Behind

1 (2009) (Over the past three years, 12.6 million non­

elderly adults were denied insurance coverage or charged

higher premiums due to a preexisting condition.).

To ensure that individuals with medical histories have

access to affordable insurance, Congress devised a three­

part solution. First, Congress imposed a “guaranteed is­

sue” requirement, which bars insurers from denying

coverage to any person on account of that person’s medical

condition or history. See 42 U. S. C. §§300gg–1, 300gg–3,

300gg–4(a) (2006 ed., Supp. IV). Seco

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