SCOTUS Briefs: Is the minimum coverage provision a tax?

If the MCP (individual mandate) is a tax described in the Constitution, then Congress had authority to enact it, without regard to the Commerce Clause.  A related but distinct argument is whether it is a tax for purposes of the Anti-Injunction Act; if it satisfies this second definition, then injunctions are improper and this litigation will be delayed until after the first person pays the MCP penalty in 2015 and sues for a refund. (prior TIE coverage here and discussion of the 4th Circuit opinion agreeing with this argument here)

Nevertheless, the Government and the plaintiffs have all agreed that the MCP isn’t a tax under the Anti-Injunction Act. The Obama Justice Department isn’t running from this fight; nor are they willing to simply kick the can down the road a couple years. Health care markets need to know the constitutional landscape now, not in 2015.  (Court-appointed amici argue otherwise, saying the Court doesn’t have jurisdiction over the MCP in this brief)

On the Constitutional issue, in addition to the Commerce Clause, the Taxing Power is an independent source of Congressional power under Article I, Section 8. If it is a constitutional tax, forget about broccoli and inactivity – the MCP is constitutional.

So the Supreme Court asked for briefing on whether the MCP is constitutional under Article I.  Yesterday, I posted on the Commerce Clause sections of the US Government merits brief. Today, let’s look at the tax issue.

The brief takes a strong stance on the tax issue, starting with the sacred ground of the Question Presented at the beginning of the brief, where they describe the MCP thusly:

“…nonexempted federal income taxpayers who fail to maintain a minimum level of health insurance for themselves or their dependents will owe a penalty, calculated in part on the basis of the taxpayer’s household income and reported on the taxpayer’s federal income tax return, for each month in which coverage is not maintained in the taxable year. 26 USCA 5000a.”

The brief sets the MCP in the larger context of the many special tax breaks given to health insurance, especially employer-provided health insurance and the new tax credits under the ACA. The brief does a particularly good job of describing the negative tax consequences imposed on people who self-insure, a point that will be developed further in an amicus brief that will be filed on Friday by Prescription Policy Choices.

The USG brief proclaims that the MCP “is fully integrated into the tax system, will raise substantial revenue, and triggers only tax consequences for non-compliance.” While Plaintiffs have made much of President Obama’s attempts to hide from the tax label, the brief reminds the Court that in the Congress it was clearly understood as derived under the Taxing Power.  In short:

“The Court has never held that a revenue-raising provision bearing so many indicia of taxation was beyond Congress’s taxing power, and it should not do so here.”

For more, see Tim Jost in Health Affairs blog and Brad at ACALitigationBlog


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