NFIB v. Sebelius upheld the Affordable Care Act’s individual mandate by treating its financial consequence as a constitutional exercise of Congress’s taxing power.
The 2012 case combined challenges brought by the National Federation of Independent Business, 26 states, and several individuals. The challengers argued that Congress could not require people to buy health insurance under the Commerce Clause. Chief Justice John Roberts, joined on the judgment by the Court’s liberal justices, agreed that the mandate could not be sustained as a regulation of commerce because it addressed inactivity.
The decisive reasoning was that the law could reasonably be read as imposing a tax on people who chose not to obtain qualifying coverage. The payment was collected by the IRS, was not so high that it eliminated choice, and did not criminalize the decision to remain uninsured. The Court therefore upheld the mandate under Congress’s power to tax.
NFIB also limited the ACA’s Medicaid expansion by making the threatened loss of existing Medicaid funding unconstitutional coercion. Burwell v. Hobby Lobby concerned religious-liberty objections by closely held corporations, while King v. Burwell concerned ACA tax credits on federally facilitated exchanges.