Key Facts—The Affordable Care Act passed, establishing an individual mandate that required private individuals to purchase health insurance. The Affordable Care Act also created a Medicaid expansion, with strings attached. The National Federation of Independent Business sued on the constitutionality of these provisions.
Issue—Did Congress have the power to enact the disputed provisions of the Affordable Care Act?
Holding—Yes regarding the individual mandate, no regarding the strings attached to Medicaid.
Result—Law partially affirmed, partially overturned.
Reasoning—The individual mandate is enforced with a penalty. The Court does not recognize the power of Congress to create this new penalty under the Commerce Clause, but says that they can interpret the penalty as a tax, and that would make it constitutional. The Medicaid expansion, on the other hand, has strings attached to it that would prevent states from receiving Medicaid funding if they do not perform specific actions mandated by Congress. This is effectively coercion, and it threatens the states, taking away their options; the Court rules that the states must have a genuine choice about accepting congressional funding and adopting new programs.