Labor employees relations question

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1. In its recent decision in Nat’l Fedn. of Indep. Bus. v. Sebelius, 567 U.S. ___, 2012 U.S. LEXIS 4876 (June 28, 2012), the Supreme Court upheld the constitutionality of the Patient Protection and Affordable Care Act a/k/a “ObamaCare”. In its decision, the Court, at various points, cites to its 1937 decision in NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1, as useful precedent. Please explain what Jones & Laughlin Steel has to do with the ObamaCare decision.

2. Answer the PROBLEMS FOR DISCUSSION (#1 only) on page 281 of Labor Law.

3.

4. Answer the PROBLEM FOR DISCUSSION on pages 715 of Labor Law.

NATIONAL FEDERATION OF INDEPENDENT BUSINESS, ET AL.,
PETITIONERS v. KATHLEEN SEBELIUS, SECRETARY OF HEALTH AND

HUMAN SERVICES, ET AL. DEPARTMENT OF HEALTH AND HUMAN
SERVICES, ET AL., PETITIONERS v. FLORIDA ET AL. FLORIDA, ET AL.,

PETITIONERS v. DEPARTMENT OF HEALTH AND HUMAN SERVICES ET
AL.

Nos. 11-393, 11-398 and 11-400

SUPREME COURT OF THE UNITED STATES

132 S. Ct. 2566; 183 L. Ed. 2d 450; 2012 U.S. LEXIS 4876; 80 U.S.L.W. 4579; 2012-2
U.S. Tax Cas. (CCH) P50,423; 109 A.F.T.R.2d (RIA) 2563; 53 Employee Benefits

Cas. (BNA) 1513; 23 Fla. L. Weekly Fed. S 480

March 26, 2012, Argued. March 27, 2012, Argued. March 28, 2012, Argued
June 28, 2012, Decided

NOTICE:

The LEXIS pagination of this document is subject to
change pending release of the final published version.

PRIOR HISTORY: [***1]
ON WRITS OF CERTIORARI TO THE UNITED

STATES COURT OF APPEALS FOR THE
ELEVENTH CIRCUIT.
Florida v. United States HHS, 648 F.3d 1235, 2011 U.S.
App. LEXIS 16806 (11th Cir. Fla., 2011)

DISPOSITION: The court of appeals’ judgment was
reversed insofar as it struck down § 5000A and permitted
withdrawal of all Medicaid funding under § 1396c. The
judgment was otherwise affirmed. 5-4 Decision; 3
opinions; 1 concurrence in part and dissent in part; 2
dissents.

SYLLABUS

[*2571] [**460] 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,
[*2572] those who do not comply with the mandate must
make a “[s]hared responsibility payment” to the Federal
Government. §5000A(b)(1). The Act provides that this
“penalty” will be paid to the Internal Revenue Service
with an individual’s taxes, 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 [***2] 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 example, the Act
requires state programs to provide Medicaid coverage by

Page 1

2014 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.
§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 requirements, it may lose not
only the federal funding for those requirements, but all of
its federal Medicaid funds. §1396c.

Twenty-six States, several individuals, and the
National Federation 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
[***3] spending power, but concluded that Congress
lacked authority to enact the individual mandate. Finding
the mandate severable from the Act’s other provisions,
the Eleventh Circuit left the rest of the Act intact.

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 maintained in any court by any person,” 26
U.S.C. §7421(a), [**461] so that those subject to a tax
must first pay it and then sue for a refund. The present
challenge seeks to restrain the collection of the shared
responsibility 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
Constitution, but it does determine the application of the
[***4] 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 individual 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 regulated. This
Court’s precedent reflects this understanding: As
expansive as this Court’s cases construing the scope of
the commerce power have been, they uniformly describe
the power as reaching “activity.” [*2573] E.g., United
States v. Lopez, 514 U.S. 549, 560, 115 S. Ct. 1624, 131
L. Ed. 2d 626. The individual mandate, however, does
not regulate existing commercial activity. 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. Congress [***5] 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
principle that the Federal Government is a government of
limited and enumerated powers. The individual mandate
thus cannot be sustained under Congress’s power to
“regulate Commerce.” Pp. 16-27.

(b) Nor can the individual mandate be sustained
under the Necessary 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. ___, 130 S. Ct. 1949, 176 L. Ed. 2d
878. The individual mandate, by contrast, vests Congress
with the extraordinary ability to create the necessary
predicate to the exercise of an enumerated power and
draw within its regulatory scope those who would
otherwise be outside of it. Even [***6] 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 making those reforms effective. Pp.
27-30.

3. CHIEF JUSTICE ROBERTS concluded [**462]
in Part III-B that the individual mandate must be

Page 2
132 S. Ct. 2566, *2572; 183 L. Ed. 2d 450, **460;
2012 U.S. LEXIS 4876, ***2; 80 U.S.L.W. 4579

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
argument: 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 mandate as
imposing a tax on those who do not buy that product.
Because “every reasonable construction must be resorted
to, in order to save a statute from unconstitutionality,”
Hooper v. California, 155 U.S. 648, 657, 15 S. Ct. 207,
39 L. Ed. 297, the question is whether it is “fairly
possible” to interpret the mandate as imposing such a tax,
Crowell v. Benson, 285 U.S. 22, 62, 52 S. Ct. 285, 76 L.
Ed. 598. [***7] 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 application 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 substance and application.” United States
v. Constantine, [*2574] 296 U.S. 287, 294, 56 S. Ct.
223, 80 L. Ed. 233. 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 penalties
for unlawful acts often are; and the payment is collected
solely by the IRS through the normal means of taxation.
Cf. Child Labor Tax Case, 259 U.S. 20, 36-37, 42 S. Ct.
449, 66 L. Ed. 817 . [***8] None of this is to say that
payment 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 unlawful. 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 insurance. See
New York v. United States, 505 U.S. 144, 169-174, 112 S.
Ct. 2408, 120 L. Ed. 2d 120. 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 [**463] going without
health insurance is not like a capitation or other direct tax
under this Court’s precedents. It therefore need not be
apportioned so that each State pays in proportion to its
population. Pp. 40-41.

5. CHIEF JUSTICE [***9] 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.

(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, 101 S. Ct. 1531, 67 L. Ed.
2d 694. “[T]he Constitution simply does not give
Congress the authority to require the States to regulate.”
New York v. United States, 505 U.S. 144, 178, 112 S. Ct.
2408, 120 L. Ed. 2d 120. When Congress threatens to
terminate other grants as a means of pressuring 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, 107 S. Ct. 2793, 97
L. Ed. 2d 171. [***10] Pp. 45-51.

(b) Section 1396c gives the Secretary of Health and
Human Services the authority to penalize States that
choose not to participate in the Medicaid expansion by
taking away their existing Medicaid funding. 42 U.S.C.

Page 3
132 S. Ct. 2566, *2573; 183 L. Ed. 2d 450, **462;
2012 U.S. LEXIS 4876, ***6; 80 U.S.L.W. 4579

§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
[*2575] the expansion accomplishes a shift in kind, not
merely degree. The original program was designed to
cover medical services for particular categories of
vulnerable individuals. 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. 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
[***11] Medicaid expansion thus violates the
Constitution by threatening States with the loss of their
existing Medicaid funding if they decline to comply with
the expansion. 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 expansion. 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 [**464] 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 withholding
Medicaid funds based on a State’s refusal to comply with
the 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 withholding–not the granting–of federal funds
incompatible with the Spending Clause, Congress’
extension of Medicaid [***12] 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, 126 S. Ct.
961, 163 L. Ed. 2d 812. Pp. 60-61.

COUNSEL: Robert A. Long argued the cause, as
amicus curiae appointed by the court, in No. 11-398.

Donald B. Verrilli, Jr. argued the cause for petitioners in
No. 11-398 and respondents in No. 400.

Gregory G. Katsas argued the cause for respondents in
No. 11-398.

Paul D. Clement argued the cause for the petitioners in
Nos. 11-393 and 11-400 and respondents Florida, et al. in
No. 11-398.

Michael A. Carvin argued the cause for the respondents
National Federation of Independent Business, et al. in
No. 11-398.

Edwin S. Kneedler argued the cause for respondents in
Nos. 11-393 and 11-400.

H. Bartow Farr, III argued the cause, as amicus curiae
appointed by the court, in Nos. 11-393 and 11-400.

JUDGES: 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
[***13] as to Parts I, II, III, and IV. SCALIA,
KENNEDY, THOMAS, and ALITO, JJ., filed a
dissenting opinion. THOMAS, J., filed a dissenting
opinion.

OPINION BY: ROBERTS, GINSBURG

OPINION

[*2577] 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

Page 4
132 S. Ct. 2566, *2574; 183 L. Ed. 2d 450, **463;
2012 U.S. LEXIS 4876, ***10; 80 U.S.L.W. 4579

JUSTICE KAGAN join, and an opinion with respect to
Parts III-A, III-B, and III-D.

Today we resolve constitutional challenges to two
provisions of the Patient Protection and Affordable Care
Act of 2010: the individual mandate, which requires
individuals to purchase a health insurance policy
providing a minimum level of coverage; and the
Medicaid expansion, which gives funds to the States on
the condition that they provide 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
possesses only limited powers; the States and the people
retain the [***14] 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. [**465] Maryland, 17 U.S. 316, 4
Wheat. 316, 405, 4 L. Ed. 579 (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. Resolving 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 conceivable
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
powers, because “[t]he enumeration presupposes
something not enumerated.” Gibbons v. Ogden, 22 U.S.
1, 9 Wheat. 1, 195, 6 L. Ed. 23 (1824). [***15] The
Constitution’s express conferral of some powers makes
clear that it does not grant others. And the Federal
Government “can exercise only the powers granted to it.”
McCulloch,supra, at 405, 4 Wheat. 316, 4 L. Ed. 579 .

Today, the restrictions on government power
foremost in many Americans’ minds are likely to be

affirmative prohibitions, 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 [*2578] because the
Framers felt the enumeration 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. Rossiter ed. 1961). And
when the Bill of Rights was ratified, it made express what
the enumeration of powers necessarily implied: “The
powers [***16] 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 constitutional grant
of power authorizes each of its actions. See, e.g., United
States v.Comstock, 560 U.S. ___, 130 S. Ct. 1949, 176 L.
Ed. 2d 878 (2010).

The same does not apply to the States, because the
Constitution is not the source of their power. The
Constitution 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 authorization 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 the Constitution’s text does not
authorize any government to do so. Our cases refer to this
general power of governing, possessed by the States but
not by the Federal Government, as the “police power.”
See, e.g., United States v. Morrison, 529 U.S. 598,
618-619, 120 S. Ct. 1740, 146 L. Ed. 2d 658 (2000).

[**466] “State [***17] 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,
112 S. Ct. 2408, 120 L. Ed. 2d 120 (1992) (internal
quotation marks omitted). Because the police power is

Page 5
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2012 U.S. LEXIS 4876, ***13; 80 U.S.L.W. 4579

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 governments more local and more
accountable than a distant 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. ___, ___, 131 S. Ct. 2355, 2364, 180 L. Ed. 2d
269, 280 (2011) ).

This case concerns two powers that the Constitution
does grant [***18] 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 commerce,” “persons or things in interstate
commerce,” and “those activities that substantially affect
interstate commerce.” Morrison, supra, at 609, 120 S. Ct.
1740, 146 L. Ed. 2d 658 (internal quotation marks
omitted). The power over activities that substantially
affect interstate commerce can be expansive. That power
has been held to authorize federal regulation of such
seemingly local matters as a farmer’s decision to grow
wheat for himself and his [*2579] livestock, and a loan
shark’s extortionate collections from a neighborhood
butcher shop. See Wickard v. Filburn, 317 U.S. 111, 63
S. Ct. 82, 87 L. Ed. 122 (1942); Perez v. United States,
402 U.S. 146, 91 S. Ct. 1357, 28 L. Ed. 2d 686 (1971).

Congress may also “lay and collect Taxes, Duties,
Imposts and Excises, to pay the Debts and provide for the
common Defence and [***19] general Welfare of the
United States.” U.S. Const., Art. I, § 8, cl. 1. Put simply,
Congress 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, 72
U.S. 462, 5 Wall. 462, 471, 18 L. Ed. 497 (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 Postsecondary Ed.
Expense Bd., 527 U.S. 666, 686, 119 S. Ct. 2219, 144 L.
Ed. 2d 605 (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, 107 S. Ct. 2793, 97 L. Ed. 2d 171
(1987) (conditioning federal highway funds on States
raising their drinking age to 21).

The reach of the Federal Government’s enumerated
powers is broader [**467] still because the Constitution
authorizes Congress to “make all Laws which shall be
necessary and proper for carrying into Execution [***20]
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 constitution, 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 constitutional.” McCulloch,
at 421, 4 L. Ed. 579 .

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 coordinate
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
demonstrated.” United States v. Harris, 106 U.S. 629,
635, 1 S. Ct. 601, 27 L. Ed. 290, 4 Ky. L. Rptr. 739
(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 [***21] 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 limits
may not be mistaken, or forgotten, the constitution is
written.” Marbury v. Madison, 5 U.S. 137, 1 Cranch 137,
176, 2 L. Ed. 60 (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

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2012 U.S. LEXIS 4876, ***17; 80 U.S.L.W. 4579

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. Maryland 190-191 (G. Gunther
ed. 1969). And there can be no question that it is the
responsibility of this Court to enforce the limits on
federal power [*2580] by striking down acts of
Congress that transgress those limits. Marbury v.
Madison,supra, at 175-176, 2 L. Ed. 60.

The questions before us must be considered against
the background of these basic principles.

I

In 2010, Congress enacted the Patient Protection and
Affordable Care Act, 124 Stat. 119. [***22] The Act
aims to increase the number of Americans covered by
health insurance 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
coverage through their employer, or from a government
program such as Medicaid or Medicare. See §5000A(f).
But for individuals who are not exempt and do not
receive health insurance [**468] 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 [***23] and
a ceiling based on the average 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 individual’s household income,
but no less than $695 and no more than the average
yearly premium for insurance that covers 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” 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 normal
enforcement tools, such as criminal prosecutions and
levies. §5000A(g)(2). And some individuals who are
subject 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,
Florida and 12 other States filed a complaint in the
Federal District Court for the Northern District of
Florida. [***24] 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 Federation of
Independent Business. The plaintiffs alleged, among
other things, that the individual mandate provisions 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
mandate 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 [*2581] part. The court
affirmed the District 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 Congress’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 “regulate Commerce [***25] . . .
among the several States.” Id., cl. 3. According to the
majority, the Commerce Clause does not empower the
Federal Government to order individuals to engage in
commerce, and the Government’s efforts to cast the
individual mandate in a different light were unpersuasive.
Judge Marcus dissented, reasoning that the individual
mandate regulates economic activity that has a clear
effect on interstate commerce.

Having held the individual mandate to be
unconstitutional, the majority examined whether that

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provision [**469] could be severed from the remainder
of the Act. The majority determined that, contrary to the
District Court’s view, it could. The court thus struck
down only the individual 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
Congress’s commerce power. See Thomas More Law
Center v. Obama, 651 F.3d 529 (CA6 2011); Seven-Sky
v.Holder, 661 F.3d 1, 398 U.S. App. D.C. 134 (CADC
2011). The Fourth Circuit determined that the
Anti-Injunction Act prevents courts from considering the
merits of that question. [***26] 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 challenge 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 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).

The second [***27] 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 matters such as who receives
care and what services are provided 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
Medicaid program and increases the number of
individuals the States must cover. For example, the Act
[*2582] 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 [***28]
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 requirements, 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
powers. The [**470] 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 threatened 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. ___, 132 S. Ct. 603, 181 L. Ed. 2d 420 (2011).
Because no party supports the Eleventh Circuit’s holding
that the individual mandate can be completely severed
from the remainder of the Affordable [***29] 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 deprives us of
jurisdiction to hear challenges to the individual mandate,
but no party supports that proposition, we appointed an
amicus curiae to advance it. 2

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

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Anti-Injunction Act bars the current challenges to
the individual mandate. 565 U.S. ___, 132 S. Ct.
603, 181 L. Ed. 2d 420 (2011). Both amici have
ably discharged their assigned responsibilities.

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 person 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 litigation to enjoin or otherwise obstruct [***30]
the collection of taxes. Because of the Anti-Injunction
Act, taxes can ordinarily be challenged only after they are
paid, by suing for a refund. See Enochs v. Williams
Packing & Nav. Co., 370 U.S. 1, 7-8, 82 S. Ct. 1125, 8 L.
Ed. 2d 292 (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). [*2583] 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 [***31] 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 [**471]
generally presumed that Congress acts intentionally. See
Russello v. United States, 464 U.S. 16, 23, 104 S. Ct.
296, 78 L. Ed. 2d 17 (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 purposes 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 punishment a “tax.” See Child
Labor Tax Case, 259 U.S. 20, 36-37, 42 S. Ct. 449, 66 L.
Ed. 817 (1922); Department of Revenue v.Kurth Ranch,
511 U.S. 767, 779, 114 S. Ct. 1937, 128 L. Ed. 2d 767
(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 [***32] 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, 42 S.
Ct. 419, 66 L. Ed. 816, 1922-2 C.B. 342, T.D. 3347
(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 purposes 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, however, 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 [***33] route.
Section 5000A(g)(1) specifies that the penalty for not
complying with the mandate “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

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“assessed and collected in the same manner as taxes,”
§5000A(g)(1) made the Anti-Injunction Act applicable to
this penalty.

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 procedures'” to collect the penalty that
he uses to collect taxes. [*2584] 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
authority [**472] to assess and collect taxes, and
generally specifying the means by which he shall do so.
See §6201 (assessment authority); §6301 (collection
authority). Section 5000A(g)(1)’s command [***34] 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) (barring 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 [***35] and assessable penalties as distinct terms.
See, e.g., §§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 already included all such penalties
in the term “tax.” Indeed, 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
“assessable penalty,” we must accept the Government’s
interpretation: §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
penalty 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
proposition that Congress had constitutional authority to
enact the individual [***36] 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 undercut 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 individual mandate is to
raise taxes on those who do not do so, and thus the law
may be upheld as a tax.

[*2585] [**473] 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. Everyone will eventually need
health care at a time and to an extent they cannot predict,
but if they do not have insurance, they often will not be
able to pay for it. Because state and federal laws
nonetheless require hospitals [***37] 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
provide. To recoup the losses, hospitals pass on the cost
to insurers through higher rates, and insurers, in turn, pass

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on the cost to policy holders in the form of higher
premiums. Congress estimated that the cost of
uncompensated 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 insurance 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
[***38] 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, relying on the promise of guaranteed
and affordable coverage. 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 [***39] Government contends that the
individual mandate is within Congress’s power because
the failure to purchase insurance “has a substantial and
deleterious effect on interstate commerce” by creating the
cost-shifting problem. Brief for United States 34. The
path of our Commerce Clause decisions has not always

run [**474] smooth, see United States v. Lopez, 514
U.S. 549, 552-559, 115 S. Ct. 1624, 131 L. Ed. 2d 626
(1995), but it is now well established that Congress has
broad authority 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.” [*2586]
United States v. Darby, 312 U.S. 100, 118-119, 61 S. Ct.
451, 85 L. Ed. 609 (1941). Congress’s power, moreover,
is not limited to regulation of an activity that by itself
substantially affects interstate commerce, but also
extends to activities that do so only when aggregated with
similar activities of others. See Wickard, 317 U.S., at
127-128, 63 S. Ct. 82, 87 L. Ed. 122.

Given its expansive scope, it is no surprise that
Congress has employed the commerce power [***40] 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 necessarily fatal; there is a first
time for everything. But sometimes “the most telling
indication of [a] severe constitutional problem . . . is the
lack of historical precedent” for Congress’s action. Free
Enterprise Fund v. Public Company Accounting
Oversight Bd., 561 U.S. ___, ___, 130 S. Ct. 3138, 3159,
177 L. Ed. 2d 706, 731 (2010) (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, 115 S. Ct. 1624, 131 L. Ed. 2d 626.

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
[***41] 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 organizing,
arming, and disciplining, the Militia”); id., cl. 5
(to “coin Money”); id., cl. 1 (to “lay and collect

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Taxes”).

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 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 to “raise and support
Armies” and to “provide and maintain 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, [***42] the specific grant
of such powers would have been unnecessary. The
language of the Constitution reflects the natural
understanding that the power to regulate assumes there is
already something to be regulated. See Gibbons, 22 U.S.,
at 188, 9 Wheat., at 188, 6 L. Ed. 23 (“[T]he enlightened
patriots who framed our constitution, and the people who
adopted it, must be understood to have employed words
in their [**475] natural sense, and to have intended what
they have said”). 4

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, 398 U.S. App. D.C. 134 (CADC 2011);
brackets and some internal quotation marks
omitted). But to reach this conclusion, the case
cited by JUSTICE GINSBURG relied on a
dictionary in which “[t]o order; to command” was
the fifth-alternative definition of “to direct,”
which was itself the second-alternative definition
of “to regulate.” See Seven-Sky, supra, at 16
(citing S. Johnson, Dictionary 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 [***43]
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, 22
U.S., at 196, 9 Wheat., at 196, 6 L. Ed. 23
(defining the commerce power as the power “to

prescribe the rule by which commerce is to be
governed”).

[*2587] Our precedent also reflects this
understanding. As expansive as our cases construing the
scope of the commerce power have been, they all have
one thing in common: 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,
115 S. Ct. 1624, 131 L. Ed. 2d 626 (“Where economic
activity substantially affects interstate commerce,
legislation regulating that activity will be sustained”);
Perez, 402 U.S., at 154, 91 S. Ct. 1357, 28 L. Ed. 2d 686
(“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 trivial, individual instances of the
class” (emphasis in original; internal quotation marks
omitted)); Wickard, supra, at 125, 63 S. Ct. 82, 87 L. Ed.
122 (“[E]ven if appellee’s activity be local and though
[***44] it may not be regarded as commerce, it may still,
whatever its nature, be reached by Congress if it exerts a
substantial economic effect on interstate commerce”);
NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1, 37,
57 S. Ct. 615, 81 L. Ed. 893 (1937) (“Although activities
may be intrastate in character when separately
considered, if they have such a close and substantial
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

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, 13 S. Ct. 622, 37 L. Ed.
463 (1893), and Cherokee Nation v.Southern K.
R. Co., 135 U.S. 641, 657-659, 10 S. Ct. 965, 34
L. Ed. 295 (1890)). The fact that the Fifth
Amendment requires the payment of just
compensation when the Government exercises its
[***45] 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.

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The individual mandate, however, does not regulate
existing commercial activity. 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. Every day
individuals do not do an infinite number of things. In
some cases they decide not to do something; in [**476]
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 [***46] a government of
limited powers. In Wickard, the Court famously upheld a
federal penalty imposed on a farmer for growing wheat
for consumption on his own farm. 317 U.S., at 114-115,
128-129, 63 S. Ct. 82, 87 L. Ed. 122. That amount of
wheat caused the farmer to exceed his quota under a
[*2588] 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 allowed him to avoid purchasing wheat in the
market. That decision, when considered in the aggregate
along with similar decisions of others, would have had a
substantial effect on the interstate market for wheat. Id.,
at 127-129, 63 S. Ct. 82, 87 L. Ed. 122.

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, 115 S. Ct.
1624, 131 L. Ed. 2d 626, but the Government’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
[***47] 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 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
mandatory 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 service in interstate commerce that would be
unconstitutional” under its theory of the commerce
power) . To consider a different example in the health
care market, many Americans do not [***48] 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 Guidelines 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 purchase insurance. See, e.g.,
Finkelstein, Trogdon, Cohen, & Dietz, Annual Medical
Spending Attributable to Obesity: Payer – and [**477]
Service-Specific Estimates, 28 Health Affairs w822
(2009) (detailing the “undeniable link between rising
rates of obesity and rising medical spending,” and
estimating 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
increased 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)
(noting “overwhelming evidence that individuals with
unhealthy habits pay only a fraction of the costs
associated with their behaviors; most of the expense
[***49] 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 Government’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 [*2589] physical activity have tremendous
potential to . . . reduce health care costs”).

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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 [***50] 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, 88 S. Ct.
2017, 20 L. Ed. 2d 1020 (1968). The Government’s
theory would erode those limits, permitting Congress to
reach beyond the natural extent of its authority,
“everywhere extending the sphere of its activity and
drawing all power into its impetuous vortex.” The
Federalist 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 Government. 6

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 description of the failure to purchase
insurance. Individuals are no more “activ[e]
[***51] in the self-insurance market” when they
fail to purchase insurance, ibid., than they are
active in the “rest” market when doing nothing.

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 [**478] been lost on the Framers, who were
“practical statesmen,” not metaphysical philosophers.
Industrial Union Dept., AFL-CIO v. American Petroleum

Institute, 448 U.S. 607, 673, 100 S. Ct. 2844, 65 L. Ed.
2d 1010 (1980) (Rehnquist, J., concurring in judgment).
As we have explained, “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,
26 S. Ct. 110, 50 L. Ed. 261, 41 Ct. Cl. 503, T.D. 961
(1905). The Framers gave Congress the power to regulate
commerce, not to compel it, and for over 200 years both
our decisions and Congress’s [***52] actions have
reflected this understanding. There is no reason to depart
from that understanding now.

The Government sees things differently. It argues
that because sickness and injury are unpredictable but
unavoidable, “the uninsured as a class are active in the
market 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 active participation–requiring that they do so
through insurance, rather than through attempted
self-insurance with the [*2590] back-stop of shifting
costs to others.” Ibid.

The Government repeats the phrase “active in the
market 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. [***53]
Our precedents recognize Congress’s power to regulate
“class[es] of activities,” Gonzales v. Raich, 545 U.S. 1,
17, 125 S. Ct. 2195, 162 L. Ed. 2d 1 (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, 91 S. Ct. 1357, 28 L. Ed. 2d 686 (“Petitioner 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

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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
individuals, 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”). [***54] If the individual mandate
is targeted at a class, it is a class whose commercial
inactivity rather than activity is its defining feature.

The Government, however, claims that this does not
matter. The Government [**479] regards it as sufficient
to trigger Congress’s authority that almost all those who
are uninsured 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
Government 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 activity finds no support in our precedent. We have
said that Congress can anticipate the effects on commerce
of an economic activity. See, e.g., Consolidated Edison
Co. v. NLRB, 305 U.S. 197, 59 S. Ct. 206, 83 L. Ed. 126
(1938) (regulating the labor practices of utility
companies); Heart of Atlanta Motel, Inc. v. United States,
379 U.S. 241, 85 S. Ct. 348, 13 L. Ed. 2d 258 (1964)
(prohibiting discrimination by hotel operators);
Katzenbach v. McClung, 379 U.S. 294, 85 S. Ct. 377, 13
L. Ed. 2d 290 (1964) [***55] (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, 63 S. Ct. 82, 87 L. Ed. 122 (producing wheat);
Raich, supra, at 25, 125 S. Ct. 2195, 162 L. Ed. 2d 1
(growing marijuana).

Everyone will likely participate in the markets for
food, clothing, transportation, shelter, or energy; that

does not authorize [*2591] 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.

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 [***56] purchases of items
such as cars or broccoli because, as the Government puts
it, “[h]ealth insurance is not purchased for its own sake
like a car or broccoli; it is a means of financing
health-care consumption 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 lacking [**480] to justify an exception of
the sort urged by the Government. The individual
mandate forces individuals [***57] into commerce
precisely because they elected to refrain from commercial
activity. Such a law cannot be sustained 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”–the guaranteed-issue and community-rating
insurance reforms. Brief for United States 24. Under this
argument, it is not necessary to consider the effect that an

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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 enumerated in the Constitution, Art. I, § 8, cl. 18,
vests Congress with authority to enact provisions
“incidental to the [enumerated] power, and conducive to
its beneficial exercise,” McCulloch, 17 U.S., at 418, 4
Wheat., at 418, 4 L. Ed. 579. Although the Clause gives
Congress authority to “legislate on that vast mass of
incidental powers which must be involved in [***58] the
constitution,” it does not license the exercise of any
“great substantive and independent power[s]” beyond
those specifically enumerated. Id., 17 U.S., at 411, 421, 4
Wheat., at 411, 421, 4 L. Ed. 579. 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, 361 U.S. 234, 247, 80 S. Ct. 297, 4 L. Ed.
2d 268 (1960) (quoting VI Writings of James Madison
383 (G. Hunt ed. 1906)).

As our jurisprudence under the Necessary and Proper
Clause has developed, we [*2592] have been very
deferential to Congress’s determination that a regulation
is “necessary.” We have thus upheld laws that are
“‘convenient, or useful’ or ‘conducive’ to the authority’s
‘beneficial exercise.'” Comstock, 560 U.S., at ___, 130 S.
Ct. 1949, 1956, 176 L. Ed. 2d 878, 888 (quoting
McCulloch, supra, 17 U.S., at 413, 418, 4 Wheat., at 413,
418, 4 L. Ed. 579). 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 [***59] spirit of the constitution,”
McCulloch, supra, 17 U.S., at 421, 4 Wheat., at 421, 4 L.
Ed. 579, are not “proper [means] for carrying into
Execution” Congress’s enumerated powers. Rather, they
are, “in 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, 117 S. Ct. 2365, 138
L. Ed. 2d 914 (1997) (alterations omitted) (quoting The
Federalist No. 33, at 204 (A. Hamilton)); see also New
York, 505 U.S., at 177, 112 S. Ct. 2408, 120 L. Ed. 2d
120; Comstock, supra, at ___, 130 S. Ct. 1949, 1967, 176
L. Ed. 2d 878, 902.

(KENNEDY, J., concurring in judgment) (“It is of

fundamental importance to consider whether essential
attributes of state sovereignty are compromised by the
assertion of federal power under the Necessary and
Proper Clause . . .”).

Applying these principles, the individual mandate
cannot be sustained under the Necessary and Proper
Clause as an essential component of [**481] the
insurance reforms. Each of our prior cases upholding
laws under that Clause involved exercises of authority
derivative of, and in service to, a granted power. For
example, we have upheld provisions permitting continued
confinement [***60] of those already in federal custody
when they could not be safely released, Comstock, supra,
at ___, 130 S. Ct. 1949, 176 L. Ed. 2d 878, 894;
criminalizing bribes involving organizations receiving
federal funds, Sabri v. United States, 541 U.S. 600, 602,
605, 124 S. Ct. 1941, 158 L. Ed. 2d 891 (2004); and
tolling state statutes of limitations while cases are
pending in federal court, Jinks v. Richland County, 538
U.S. 456, 459, 462, 123 S. Ct. 1667, 155 L. Ed. 2d 631
(2003). The individual mandate, by contrast, vests
Congress with the extraordinary ability to create the
necessary predicate to the exercise of an enumerated
power.

This is in no way an authority that is “narrow in
scope,” Comstock, supra, at ___, 130 S. Ct. 1949, 1964,
176 L. Ed. 2d 878, 898, or “incidental” to the exercise of
the commerce power, McCulloch, supra, 17 U.S., at 418,
4 Wheat., at 418, 4 L. Ed. 579 . 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 [***61] reach
beyond 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
“comprehensive legislation to regulate the interstate
market” in marijuana. 545 U.S., at 22, 125 S. Ct. 2195,
162 L. Ed. 2d 1. Certain individuals sought an exemption
from that regulation on the ground that they engaged in

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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 consumption. Id.,
at [*2593] 19, 125 S. Ct. 2195, 162 L. Ed. 2d 1.
Accordingly, we recognized that “Congress was acting
well within its authority” under the Necessary and Proper
Clause even though its “regulation ensnare[d] [***62]
some purely intrastate activity.” Id., at 22, 125 S. Ct.
2195, 162 L. Ed. 2d 1; see also Perez, 402 U.S., at 154,
91 S. Ct. 1357, 28 L. Ed. 2d 686. Raich thus did not
involve the exercise of any “great substantive and
independent power,” McCulloch, supra, at 411, 4 L. Ed.
579 , of the sort at issue here. Instead, it concerned only
the constitutionality of “individual applications of a
concededly valid statutory scheme.” Raich, supra, at
23,125 S. Ct. 2195, 162 L. Ed. 2d 1 (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
reforms. The commerce power thus does not authorize
the mandate. Accord, post, [**482] at 4-16 (joint
opinion of SCALIA, KENNEDY, THOMAS, and
ALITO, JJ., dissenting).

B

That is not the end of the matter. Because the
Commerce 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
[***63] view the statute differently than we did in
considering its commerce power theory. In making its
Commerce Clause argument, the Government defended
the mandate as a regulation requiring individuals to
purchase health insurance. 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 ordering 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 unavoidable, to give a construction to it which
should involve a violation, however unintentional, of the
constitution.” Parsons v. Bedford, 28 U.S. 433, 3 Pet.
433, 448-449, 7 L. Ed. 732 (1830). Justice Holmes made
the same point a century later: “[T]he rule is settled
[***64] 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, 48 S. Ct. 105, 72 L. Ed. 206, 1928-1 C.B. 324
(1927) (concurring opinion).

The most straightforward reading of the mandate is
that it commands individuals to purchase insurance. 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
Commerce 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 reasonable 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
[*2594] pays his taxes. See §5000A(b) . That, according
to the Government, means the mandate can be regarded
as establishing a condition-not [***65] 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 earning 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.

[**483] The question is not whether that is the most
natural interpretation of the mandate, but only whether it

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is a “fairly possible” one. Crowell v. Benson, 285 U.S.
22, 62, 52 S. Ct. 285, 76 L. Ed. 598 (1932). As we have
explained, “every reasonable construction must be
resorted to, in order to save a statute from
unconstitutionality.” Hooper v. California, 155 U.S. 648,
657, 15 S. Ct. 207, 39 L. Ed. 297 (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.

C

The exaction the Affordable Care Act imposes on
those without health insurance looks like a tax in many
respects. The [***66] “[s]hared responsibility payment,”
as the statute entitles it, is paid into the Treasury by
“taxpayer[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
payment, 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, 73 S. Ct. 510, 97 L. Ed. 754,
1953-1 C.B. 456 (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 Protection and Affordable
Care Act (Apr. 30, 2010), in Selected CBO Publications
Related to Health [***67] 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 Congress whether to apply the Anti-Injunction Act to
any particular statute, so it makes sense to be guided by
Congress’s choice of label on that question. That choice
does not, however, control whether an exaction is within

Congress’s constitutional power to tax.

Our precedent reflects this: In 1922, we decided two
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, 42 S. Ct. 419, 66 L. Ed. 816.
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 [*2595]
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 Congress’s
[***68] taxing power. Drexel Furniture, 259 U.S., at 38,
42 S. Ct. 449, 66 L. Ed. 817. That constitutional question
was not controlled by Congress’s choice of label.

We have similarly held that exactions [**484] 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, 18 L. Ed. 497. 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, 112 S. Ct. 2408, 120
L. Ed. 2d 120. We thus ask whether the shared
responsibility payment falls within Congress’s taxing
power, “[d]isregarding the designation of the exaction,
and viewing its substance and application.” United States
v. Constantine, 296 U.S. 287, 294, 56 S. Ct. 223, 80 L.
Ed. 233 (1935); cf. Quill Corp. v. North Dakota, 504
U.S. 298, 310, 112 S. Ct. 1904, 119 L. Ed. 2d 91 (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, 61 S. Ct. 586, 85 L. Ed. 888 (1941) [***69] (“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, 98 S. Ct.
1795, 56 L. Ed. 2d 275 (1978) (“That the funds due are
referred to as a ‘penalty’ . . . does not alter their essential
character as taxes”). 7

7 Sotelo, in particular, would seem to refute the
joint dissent’s contention that we have “never”
treated an exaction as a tax if it was denominated

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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, 116 S. Ct. 2106, 135 L. Ed. 2d 506 (1996)).

Our cases confirm this functional approach. For
example, in Drexel Furniture, we focused on three
practical characteristics of the so-called [***70] tax on
employing child laborers that convinced us the “tax” was
actually a penalty. First, the tax imposed an exceedingly
heavy burden–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 knowingly employed underage laborers. Such
scienter requirements 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 punishing violations of labor laws, not
collecting revenue. 259 U.S., at 36-37, 42 S. Ct. 449, 66
L. Ed. 817; see also, e.g., Kurth Ranch, 511 U.S., at
780-782, 114 S. Ct. 1937, 128 L. Ed. 2d 767
(considering, inter alia, the amount of the exaction, and
the fact that it was imposed for violation of a separate
criminal law); Constantine, supra, at 295, 56 S. Ct. 223,
80 L. Ed. 233 (same). The same analysis here suggests
that the shared responsibility payment may for
constitutional purposes be considered a tax, not a penalty:
First, for most Americans the amount due will be far
[**485] less than the price of insurance, and, by statute,
[***71] it [*2596] can never be more. 8 It may often 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, 42 S. Ct. 449, 66 L. Ed. 817. 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 suggestive of a punitive
sanction, such as criminal prosecution. See
§5000A(g)(2). The reasons the Court in Drexel Furniture
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

8 In 2016, for example, individuals making
$35,000 a year are expected 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 policy is
projected to be around $400 per month. See D.
Newman, CRS Report for Congress, Individual
Mandate and Related Information Requirements
Under PPACA 7, and n. 25 (2011).
9 We do not suggest that any exaction [***72]
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 criminal 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 Department of Labor
inspectors after ferreting out willful
malfeasance–suggests that this exaction may be
viewed as a tax.

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 expand 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 domestic 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, [***73] than
revenue”). Today, federal and state taxes can compose
more than half the retail price of cigarettes, not just to
raise more money, but to encourage people to quit
smoking. And we have upheld such obviously regulatory
measures as taxes on selling marijuana and sawed-off
shotguns. See United States v. Sanchez, 340 U.S. 42,
44-45, 71 S. Ct. 108, 95 L. Ed. 47, 1950-2 C.B. 139
(1950); Sonzinsky v. United States, 300 U.S. 506, 513, 57
S. Ct. 554, 81 L. Ed. 772, 1937-1 C.B. 351 (1937).
Indeed, “[e]very tax is in some measure regulatory. To
some extent it interposes an economic impediment to the
activity taxed as compared with others not taxed.”

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Sonzinsky, supra, at 513, 57 S. Ct. 554, 81 L. Ed. 772.
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, 116 S. Ct. 2106, 135 L. Ed. 2d
506 (1996); see also United States v.La Franca, 282 U.S.
568, 572, 51 S. Ct. 278, 75 L. Ed. 551 (1931) [***74]
(“[A] penalty, [**486] 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 [*2597] 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
insurance, beyond requiring a payment to the IRS. The
Government agrees with that reading, confirming that if
someone chooses to pay rather than obtain health
insurance, 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 [***75] 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 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 citizens may lawfully choose to pay in lieu
of buying health insurance.

The plaintiffs contend that Congress’s choice of
language–stating that individuals “shall” obtain insurance
or pay a “penalty”–requires reading §5000A as punishing
unlawful conduct, even if that interpretation would render
the law unconstitutional. We have rejected a similar
argument before. In New York v. United States we
examined a statute providing that “‘[e]ach State shall be
responsible for providing . . . for the disposal of . . .
low-level radioactive waste.'” 505 U.S., at 169, 112 S. Ct.
2408, 120 L. Ed. 2d 120 (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 [***76] faced “[p]enalties for
failure to comply,” including increases in the surcharge.
§2021e(e)(2); New York, 505 U.S., at 152-153, 112 S. Ct.
2408, 120 L. Ed. 2d 120. New York urged us to read the
statute as a federal command that the state legislature
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
incentives” 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, 112 S. Ct. 2408, 120 L. Ed. 2d 120. 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, 112 S. Ct. 2408, 120 L. Ed. 2d 120. Nor
could we have. While the Court quoted only the
broad statement that “[e]ach State shall be
responsible” for its waste, that language was
implemented through operative provisions
[***77] 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
following 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, 112 S. Ct. 2408, 120 L. Ed. 2d
120.

[**487] 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. Suppose Congress enacted a statute providing that
every taxpayer who owns a house without [*2598]
energy efficient windows must pay $50 to the IRS. The
amount due is adjusted based on factors such as taxable

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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 [***78] 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 payment.
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
“question of the constitutionality of action taken by
Congress does not depend on recitals of the power which
it undertakes to exercise.” Woods v. Cloyd W. Miller Co.,
333 U.S. 138, 144, 68 S. Ct. 421, 92 L. Ed. 596, 1948
U.S. LEXIS 2530 (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 [***79] 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, 26 L.
Ed. 253 (1881). Soon after the framing, Congress passed
a tax on ownership of carriages, over James Madison’s
objection that it was an unapportioned direct tax. Id., at
597, 26 L. Ed. 253. This Court upheld the tax, in part
reasoning that apportioning such a tax would make little
sense, because it would have required 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, 3 U.S. 171, 1 L. Ed. 556
(1796) (opinion of Chase, J.). The Court was unanimous,
[***80] 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, 1 L. Ed. 556; id., at 177, 1 L. Ed. [**488]
556 (opinion of Paterson, J.); id., at 183, 1 L. Ed. 556
(opinion of Iredell, J.).

That narrow view of what a direct tax might be
persisted 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, and taxes on real estate.” Springer,
supra, at 602, 26 L. Ed. 253. 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, 15 S. Ct.
912, 39 L. Ed. 1108 (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. Macomber, 252 U.S. 189, 218-219, 40 S. Ct.
189, 64 L. Ed. 521, 1920-3 C.B. 25, T.D. 3010 (1920).

[*2599] A tax on going without health insurance
does not fall within any recognized category of direct
[***81] tax. It is not a capitation. Capitations are taxes
paid by every person, “without regard to property,
profession, or any other circumstance.” Hylton, supra, at
175, 1 L. Ed. 556 (opinion of Chase, J.) (emphasis
altered). The whole point of the shared responsibility
payment is that it is triggered by specific
circumstances–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

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most importantly, it is abundantly clear the Constitution
does not guarantee that individuals may avoid taxation
[***82] through inactivity. A capitation, after all, is a tax
that everyone must pay simply for existing, and
capitations are expressly contemplated by the
Constitution. The Court today holds that our Constitution
protects us from federal regulation under the Commerce
Clause so long as we abstain 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
Commerce 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
educations. 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
purchasing health [***83] insurance, [**489] 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 otherwise regarded at the time as beyond federal
authority. See, e.g., United States v. Butler, 297 U.S. 1,
56 S. Ct. 312, 80 L. Ed. 477, 1936-1 C.B. 421 (1936);
Drexel Furniture, 259 U.S. 20, 42 S. Ct. 449, 66 L. Ed.
817. 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, 73 S. Ct. 510, 97 L. Ed. 754 (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 Ranch, 511 U.S., at 779, 114 S. Ct.
[*2600] 1937, 128 L. Ed. 2d 767 (quoting Drexel

Furniture, supra,at 38, 42 S. Ct. 449, 66 L. Ed. 817).

We [***84] have already explained that the shared
responsibility payment’s practical characteristics pass
muster as a tax under our narrowest interpretations of the
taxing power. Supra, at 35-36, 42 S. Ct. 449, 66 L. Ed.
817. 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, 69 S. Ct. 561, 93 L. Ed. 721 (1949) (quoting
Panhandle Oil Co. v. Mississippi ex rel. Knox, 277 U.S.
218, 223, 48 S. Ct. 451, 72 L. Ed. 857(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
Congress may regulate a particular decision under the
Commerce Clause, the Federal Government can bring its
full weight to bear. Congress may simply command
individuals to do as it directs. An individual who
disobeys may be subjected to criminal sanctions. [***85]
Those sanctions can include not only fines and
imprisonment, but all the attendant consequences of
being branded a criminal: deprivation of otherwise
protected civil rights, such as the right to bear arms or
vote in elections; loss of employment opportunities;
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
severe burden that taxation-especially taxation motivated
by a regulatory purpose–can impose. But imposition of a
tax nonetheless leaves an individual with a lawful choice
to do or not do a [**490] certain act, so long as he is
willing to pay a tax levied on that choice. 11

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

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choice [***86] 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.

The Affordable Care Act’s requirement that certain
individuals pay a financial penalty for not obtaining
health insurance may reasonably be characterized as a
tax. Because 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 command 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 statute to save it, if fairly possible, that
[*2601] §5000A can be interpreted as a tax. Without
deciding the Commerce Clause [***87] 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 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, 112 S. Ct. 2408, 120 L. Ed. 2d
120.

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,
children, [***88] needy families, the blind, the elderly,
and the disabled. 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 percent of the poverty [**491]
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
programs 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 “[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 mandate. §§1396a(k)(1),
1396u-7(b)(5), 18022(b). The Affordable Care Act
provides that the Federal Government will [***89] 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 decreases, 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 increase 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

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Congress could not require them to take.” College
Savings Bank, 527 U.S., at 686, 119 S. Ct. 2219, 144 L.
Ed. 2d 605. Such measures “encourage [*2602] a State
to regulate in a particular way, [and] influenc[e] a State’s
policy choices.” New York, supra, at 166, 112 S. Ct.
2408, 120 L. Ed. 2d 120. The conditions [***90]
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
repeatedly characterized . . . Spending Clause legislation
as ‘much in the nature of a contract.'” Barnes v. Gorman,
536 U.S. 181, 186, 122 S. Ct. 2097, 153 L. Ed. 2d 230
(2002) (quoting Pennhurst State School and Hospital v.
Halderman, 451 U.S. 1, 17, 101 S. Ct. 1531, 67 L. Ed. 2d
694 (1981)). The 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, 101 S. Ct. 1531, 67 L.
Ed. 2d 694. Respecting this limitation is critical to
ensuring that Spending Clause legislation does not
undermine the status of the States as independent
sovereigns in our federal 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 ___ , 131 S. Ct. 2355, 180
L. Ed. 2d 269 [***91] (quoting Alden v. Maine, 527 U.S.
706, 758, 119 S. Ct. 2240, 144 L. Ed. 2d 636 (1999)). For
this reason, “the Constitution has never been understood
to confer upon Congress the ability to require the States
to govern according to Congress’ instructions.” New York,
supra, at 162, 112 S. Ct. 2408, 120 L. Ed. 120. Otherwise
[**492] 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 federal
legislation that commandeers a State’s legislative or
administrative apparatus for federal purposes. See, e.g.,
Printz, 521 U.S., at 933, 117 S. Ct. 2365, 138 L. Ed. 2d
814 (striking down federal legislation compelling state
law enforcement officers to perform federally mandated
background checks on handgun purchasers); New York,
supra, at 174-175, 112 S. Ct. 2408, 120 L. Ed. 2d 120
(invalidating provisions 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 [***92] to
exert a “power akin to undue influence.” Steward
Machine Co. v. Davis, 301 U.S. 548, 590, 57 S. Ct. 883,
81 L. Ed. 1279, 1937-1 C.B. 444 (1937). Congress may
use its spending power to create 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, 505 U.S., at
178, 112 S. Ct. 2408, 120 L. Ed. 2d 120. 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
political 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 disapproval, while the federal officials who
devised the regulatory program may remain insulated
from the electoral ramifications of their decision.” Id., at
169, 112 S. Ct. 2408, 120 L. Ed. 2d 120. Spending
Clause programs do not pose this [***93] danger when a
State has a legitimate choice whether to accept the federal
conditions in exchange for federal [*2603] 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, 57 S. Ct. 883, 81 L. Ed.
1279. We acknowledged the danger that the Federal
Government might employ its taxing power to exert a

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“power akin to undue influence” [***94] upon the
States. Id., at 590, 57 S. Ct. 883, 81 L. Ed. 1279. But we
observed that Congress adopted the challenged tax and
abatement program to channel money to the States that
would [**493] otherwise have gone into the Federal
Treasury for use in providing national unemployment
services. Congress 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 unemployment legislation was therefore
a means to “safeguard [the Federal Government’s] own
treasury.” Id., at 591, 57 S. Ct. 883, 81 L. Ed. 1279. We
held that “[i]n such circumstances, if in no others,
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
autonomy 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, 57 S.
Ct. 883, 81 L. Ed. 1279. Indeed, the State itself did “not
[***95] offer a suggestion that in passing the
unemployment law she was affected by duress.” Id., at
589, 57 S. Ct. 883, 81 L. Ed. 1279.

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 expedient 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, 43 S. Ct. 597, 67 L. Ed. 1078 (1923).
The States are separate and independent sovereigns.
Sometimes 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,
112 S. Ct. 2408, 120 L. Ed. 2d 120, in the way it has
structured the funding: Instead of simply refusing to grant
the new funds to States that will not accept the new
conditions, Congress has also threatened to withhold
those States’ existing Medicaid funds. The States claim
that this threat serves no [***96] 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 [*2604]
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
basis. 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
pressuring 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, 107 S. Ct. 2793, 97 L.
Ed. 2d 171. At the same time, the condition [***97] was
not a restriction on how the highway funds-set [**494]
aside for specific highway improvement and maintenance
efforts-were to be used.

We accordingly asked whether “the financial
inducement offered by Congress” was “so coercive as to
pass the point at which ‘pressure turns into compulsion.'”
Id., at 211, 107 S. Ct. 2793, 97 L. Ed. 2d 171 (quoting
Steward Machine, supra, at 590, 57 S. Ct. 883, 81 L. Ed.
1279). By “financial 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, 107 S. Ct. 2793, 97 L. Ed. 2d 171. We
observed that “all South Dakota would lose if she adheres
to her chosen 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] [***98] that
[the] encouragement to state action [was] a valid use of
the spending power.” Dole, 483 U.S., at 212, 107 S. Ct.
2793, 97 L. Ed. 2d 171. Whether to accept the drinking

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age change “remain[ed] the prerogative of the States not
merely in theory but in fact.” Id., at 211-212, 107 S. Ct.
2793, 97 L. Ed. 2d 171.

In this case, the financial “inducement” Congress has
chosen is much more than “relatively mild
encouragement”–it is a gun to the head. Section 1396c of
the Medicaid 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 Medicaid funding, but all of it. Dole, supra, at
211, 107 S. Ct. 2793, 97 L. Ed. 2d 171. 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); [***99] 42 U.S.C. §1396d(b). The
Federal Government 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 conclude that the threatened loss of
less than half of one percent of South Dakota’s budget left
that State with [*2605] a “prerogative” to reject
Congress’s desired policy, “not merely in theory but in
fact.” 483 U.S., at 211-212, 107 S. Ct. 2793, 97 L. Ed. 2d
171. 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

12 JUSTICE GINSBURG observes that state
Medicaid spending will increase 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
[***100] 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.

[**495] 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 expansion 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

13 Nor, of course, can the number of pages the
amendment occupies, or the extent to which the
change preserves [***101] and works within the
existing program, be dispositive. Cf. post, at
49-50 (opinion of GINSBURG, J.). Take, for
example, the following hypothetical amendment:
“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.

Here, the Government claims that the Medicaid
expansion is properly viewed merely as a modification of
the existing 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 moneys, it must do so unambiguously.”
Pennhurst, 451 U.S., at 17, 101 S. Ct. 1531, 67 L. Ed. 2d
694. [***102] A State confronted with statutory
language reserving the right to “alter” or “amend” the
pertinent provisions of the Social Security Act might

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reasonably assume that Congress was entitled to make
adjustments to the Medicaid 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 Amendments of 1972, 86 Stat.
1381-1382, 1465 (extending Medicaid 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 designed to cover medical services for four particular
categories of the needy: the disabled, [*2606] 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 [***103] percent of [**496]
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 universal health
insurance coverage. 14

14 JUSTICE GINSBURG suggests that the
States can have no objection to the Medicaid
expansion, because “Congress could have
repealed Medicaid [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 “ritualistic.” Ibid.
The same is true of JUSTICE GINSBURG’s
suggestion that Congress could establish
Medicaid as an exclusively federal program. Post,
at 44.

Indeed, the manner in which the expansion is
structured indicates that while Congress may have styled
the expansion a mere alteration of existing Medicaid, it
recognized it was enlisting the States in a new health care

program. Congress [***104] 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 currently 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 conditions on use of the different
funds are also distinct. Congress 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
postacceptance or ‘retroactive’ conditions.” Pennhurst,
supra, at 25, 101 S. Ct. 1531, 67 L. Ed. 2d 694. 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.

JUSTICE GINSBURG claims that in fact this
expansion is no different from the previous changes to
Medicaid, such that “a State would be hard put to
complain [***105] that it lacked fair notice.” Post, at 56.
But the prior change she discusses–presumably the most
dramatic alteration she could find–does not come close to
working the transformation the expansion accomplishes.
She highlights an amendment requiring States to cover
pregnant women and increasing 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
coercion. 301 U.S., at 591, 57 S. Ct. 883, 81 L. Ed. 1279.
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 [*2607] “conscript
state [agencies] into the national bureaucratic army,”
FERC v. Mississippi, 456 U.S. 742, 775, 102 S. Ct. 2126,
72 L. Ed. 2d 532 (1982) (O’Connor, J., concurring
[**497] in judgment [***106] in part and dissenting in

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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 availability 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 do just that. It allows her to withhold all
“further [Medicaid] 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 [***107] 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
application of §1396c to the existing Medicaid program.
Nor does it affect the Secretary’s ability to withdraw
funds provided 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
unconstitutional 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 application of a statute because that
application is unconstitutional, we are not “rewriting” the
[***108] statute; we are merely enforcing the
Constitution.

The question remains whether today’s holding affects
other provisions of the Affordable Care Act. In
considering 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, 125 S. Ct. 738, 160 L. Ed. 2d 621 (2005)
(internal quotation marks omitted). Our “touchstone for
any decision about remedy is legislative intent, for a court
cannot use its remedial powers to circumvent the intent of
the legislature.” Ayotte v. Planned Parenthood of
Northern New Eng., 546 U.S. 320, 330, 126 S. Ct. 961,
163 L. Ed. 2d 812 (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 [**498] no, we must leave
the rest of the Act intact. Champlin Refining Co. v.
Corporation Comm’n of Okla., 286 U.S. 210, 234, 52 S.
Ct. 559, 76 L. Ed. 1062 (1932).

[*2608] We are confident that Congress would have
wanted to preserve the rest of the Act. It is fair to
[***109] say that Congress assumed that every State
would participate in the Medicaid 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
pressure the Secretary may apply to induce States to
accept the terms of the Medicaid expansion. As a
practical matter, that means States may now choose to
reject the expansion; 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
administrative 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
[***110] the Act offers at the outset.

We have no way of knowing how many States will

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accept 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, 52 S.
Ct. 559, 76 L. Ed. 1062, and will still function in a way
“consistent with Congress’ basic objectives in enacting
the statute,” Booker, supra, at 259, 125 S. Ct. 738, 160 L.
Ed. 2d 621. Confident that Congress would not have
intended anything 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
construe 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
[***111] Congress’s power to tax.

As for the Medicaid expansion, that portion of the
Affordable 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: They must either accept a basic
change in the nature of Medicaid, or risk losing all
Medicaid funding. The remedy for that constitutional
[**499] violation is to preclude the Federal Government
from imposing such a sanction. That remedy does not
require striking down other portions of the Affordable
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 reserved to the people.

[*2609] The judgment of the Court of Appeals for
the Eleventh Circuit is affirmed in part and reversed in
part.

It is so ordered.

CONCUR BY: GINSBURG [***112] (In Part)

DISSENT BY: THOMAS; GINSBURG (In Part)

DISSENT

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, alternatively, 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
national dimension, just as the provision of old-age and
survivors’ benefits was in the 1930’s. In the Social
Security 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 [***113]
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, 61 S. Ct. 451, 85 L. Ed. 609 (1941)
(overruling Hammer v. Dagenhart, 247 U.S. 251, 38 S.
Ct. 529, 62 L. Ed. 1101 (1918), and recognizing that
“regulations of commerce which do not infringe some
constitutional prohibition are within the plenary power
conferred on Congress by the Commerce Clause”); NLRB

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v. Jones & Laughlin Steel Corp., 301 U.S. 1, 37, 57 S. Ct.
615, 81 L. Ed. 893 (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, [***114] e.g.,

Railroad Retirement Bd. v. Alton R. Co., 295 U.S.
330, 362, 368, 55 S. Ct. 758, 79 L. Ed. 1468 [**500]
(1935) (invalidating compulsory retirement and pension
plan for employees of carriers subject to the Interstate
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 healthcare 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 double. Ibid.

[*2610] The healthcare 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. [***115] 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 Medicare and Medicaid Services, Historic National
Health Expenditure Data, National Health Expenditures:
Selected Calendar Years 1960-2010 (Table 1). Over a
lifetime, 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
upwards of $10,000. [***116] See Dept. of Health and
Human Services, 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 indicating 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 without warning. Inescapably, we are
all at peril of needing medical care without a moment’s
notice. See, e.g., Campbell, 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).

[**501] 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 [***117] 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 medical care
administered to U.S. residents. See Congressional 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

Page 30
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2012 U.S. LEXIS 4876, ***113; 80 U.S.L.W. 4579

could not afford private insurance and did not qualify for
government 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 individuals [*2611] 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), available at
http://www.familiesusa.org (all Internet material as
visited June 25, 2012, and included in Clerk of Court’s
case file). Over 60% of those without [***118] insurance
visit a doctor’s office or emergency room in a given year.
See Dept. of Health and Human Services, National
Center for Health Statistics, Health–United States–2010,
p. 282, Table 79 (Feb. 2011).

B

The large number of individuals without health
insurance, 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
serious 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 embedded 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 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
significant [***119] amounts of care to the uninsured for
which the providers receive no payment. In 2008, for
example, hospitals, physicians, and other health-care
professionals received no compensation for $43 billion
worth of the $116 billion in care they administered to
those without insurance. 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 insurance subsidize the medical care of those
[**502] 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 insurance and leading to further cost-shifting.

And [***120] 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 inability to pay. In anticipation of this
uncompensated care, health-care companies raise their
prices, and insurers their premiums. In other words,
because any uninsured 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
[*2612] preventative 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 [***121] conditions have
escalated into grave health problems, requiring more
costly and extensive intervention. Id., at 43-44. The extra
time and resources providers 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), available at

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2012 U.S. LEXIS 4876, ***117; 80 U.S.L.W. 4579

http://www.washingtonpost.com/blogs/ezra klein/post/
high-uninsured-rates-can-kill-you-even-i
f-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, 57 S. Ct. 904, 81
L. Ed. 1307, 1937-1 C.B. 360 (1937). See also Brief for
Commonwealth of Massachusetts as Amicus Curiae in
No. 11-398, [***122] p. 15 (noting that, in 2009,
Massachusetts’ 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 increase premiums. Higher taxes and [**503]
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, 57 S. Ct. 904, 81
L. Ed. 1307. 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 [***123] 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 private enterprise or the States. Instead of going this

route, Congress enacted the ACA, a solution that retains a
robust role for private insurers and state governments. To
make its chosen approach work, however, Congress had
to 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) [*2613] (the
minimum coverage provision). As explained below, by
employing these tools, Congress was able to achieve a
practical, altogether 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
recipients [***124] of health care a financial incentive to
acquire insurance. 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
purpose vital to Congress’ plan to reduce the number of
uninsured. 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
companies took an applicant’s medical history into
account [**504] when setting insurance rates or
deciding whether to insure an individual. Because
individuals with preexisting medical conditions cost
insurance companies significantly more than those
without such conditions, insurers routinely refused to
insure these individuals, charged them substantially
higher premiums, or offered only limited coverage that
did not include the preexisting illness. See Dept. of
Health and Human Services, Coverage [***125] Denied:
How the Current Health Insurance System Leaves
Millions Behind 1 (2009) (Over the past three years, 12.6
million nonelderly adults were denied insurance coverage
or charged higher premiums due to a preexisting
condition.).

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

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2012 U.S. LEXIS 4876, ***121; 80 U.S.L.W. 4579

insurance or an insurers’ unwillingness to cover
those with preexisting medical conditions, and
loss of Medicaid coverage. 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 responses to warrant its own
category. See ibid., n. 2. 10 NATIONAL
FEDERATION OF INDEPENDENT BUSINESS
v. SEBELIUS

To ensure that individuals with medical histories
have access to affordable insurance, Congress devised a
three-part solution. First, Congress imposed a
“guaranteed issue” requirement, which bars insurers from
denying coverage to any [***126] 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).
Second, Congress required insurers to use “community
rating” to price their insurance policies. See §300gg.
Community rating, in effect, bars insurance companies
from charging higher premiums to those with preexisting
conditions.

But these two provisions, Congress comprehended,
could not work effectively unless individuals were given
a powerful incentive to obtain insurance. See Hearings
before the House Ways and Means Committee, 111th
Cong., 1st Sess., 10, 13 (2009) (statement of Uwe
Reinhardt) (“[I]mposition of community-rated premiums
and guaranteed issue on a market of competing private
health insurers will inexorably drive that market into
extinction, unless these two features are coupled with . . .
a [*2614] mandate on individual[s] to be insured.”
(emphasis in original)).

In the 1990’s, several States-including New York,
New Jersey, Washington, Kentucky, Maine, New
Hampshire, and Vermont-enacted guaranteed-issue and
community- rating laws without requiring universal
acquisition of insurance coverage. The results were
disastrous. “All seven states suffered [***127] from
skyrocketing insurance premium costs, reductions in
individuals with coverage, and reductions in insurance
products and providers.” Brief for American Association
of People with Disabilities et al. as Amici Curiae in No.
11-398, p. 9 (hereinafter AAPD Brief). See also Brief for
Governor of Washington Christine Gregoire as Amicus

Curiae in No. 11-398, pp. 11-14 (describing the “death
spiral” in the insurance market Washington experienced
when the State passed a law requiring coverage for
preexisting conditions).

Congress comprehended that guaranteed-issue and
community-rating laws alone will not work. When
insurance companies are required to insure the sick at
affordable prices, individuals can wait until they become
ill to buy insurance. Pretty soon, those in need of
immediate medical care-i.e., those who cost insurers the
most-become the insurance companies’ main customers.
This “adverse selection” problem leaves insurers with
two choices: They can either raise premiums dramatically
to cover their ever-increasing costs or they can exit the
market. In the seven States that tried guaranteed-issue
and community- rating requirements without a minimum
coverage provision, that is precisely [***128] what
insurance companies [**505] did. See, e.g., AAPD Brief
10 (“[In Maine,] [m]any insurance providers doubled
their premiums in just three years or less.”); id., at 12
(“Like New York, Vermont saw substantial increases in
premiums after its . . . insurance reform measures took
effect in 1993.”); Hall, An Evaluation of New York’s
Reform Law, 25 J. Health Pol. Pol’y & L. 71, 91-92
(2000) (Guaranteed- issue and community-rating laws
resulted in a “dramatic exodus of indemnity insurers from
New York’s individual [insurance] market.”); Brief for
Barry Friedman et al. as Amici Curiae in No. 11-398, p.
17 (“In Kentucky, all but two insurers (one State-run)
abandoned the State.”).

Massachusetts, Congress was told, cracked the
adverse selection problem. By requiring most residents to
obtain insurance, see Mass. Gen. Laws, ch. 111M, §2
(West 2011), the Commonwealth ensured that insurers
would not be left with only the sick as customers. As a
result, federal lawmakers observed, Massachusetts
succeeded where other States had failed. See Brief for
Commonwealth of Massachusetts as Amicus Curiae in
No. 11-398, p. 3 (noting that the Commonwealth’s
reforms reduced the number of uninsured residents to less
[***129] than 2%, the lowest rate in the Nation, and cut
the amount of uncompensated care by a third); 42 U.S.C.
§18091(2)(D) (2006 ed., Supp. IV) (noting the success of
Massachusetts’ reforms). 2 In coupling the minimum
coverage provision with guaranteed-issue and
community-rating prescriptions, Congress followed
Massachusetts’ lead.

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2 Despite its success, Massachusetts’
medical-care providers still administer substantial
amounts of uncompensated care, much of that to
uninsured patients from out-of-state. See supra, at
7-8.

* * *

In sum, Congress passed the minimum coverage
provision as a key component of the ACA to address an
economic and social problem that has plagued the Nation
for decades: the large number of U.S. residents [*2615]
who are unable or unwilling to obtain health insurance.
Whatever one thinks of the policy decision Congress
made, it was Congress’ prerogative to make it. Reviewed
with appropriate deference, the minimum coverage
provision, allied to the guaranteed-issue and
community-rating prescriptions, should survive
measurement under the Commerce and Necessary and
Proper Clauses.

II

A

The Commerce Clause, it is widely acknowledged,
“was the Framers’ response to the central problem
[***130] that gave rise to the Constitution itself.” EEOC
v. Wyoming, 460 U.S. 226, 244, 245, n. 1, 103 S. Ct.
1054, 75 L. Ed. 2d 18 (1983) (Stevens, J., concurring)
(citing sources). Under the Articles of Confederation, the
Constitution’s precursor, the regulation of commerce was
left to the States. This scheme proved unworkable,
because the individual States, understandably focused on
their own economic interests, often failed to take actions
critical to the success of the Nation as a whole. See Vices
of the Political System of the United States, in James
Madison: Writings 69, 71, P5 (J. Rakove ed. 1999) (As a
result of the “want of concert in matters where common
[**506] interest requires it,” the “national dignity,
interest, and revenue [have] suffered.”). 3

3 Alexander Hamilton described the problem
this way: “[Often] it would be beneficial to all the
states to encourage, or suppress[,] a particular
branch of trade, while it would be detrimental . . .
to attempt it without the concurrence of the rest.”
The Continentalist No. V, in 3 Papers of
Alexander Hamilton 75, 78 (H. Syrett ed. 1962).
Because the concurrence of all States was
exceedingly difficult to obtain, Hamilton

observed, “the experiment [***131] would
probably be left untried.” Ibid.

What was needed was a “national Government . .
.armed with a positive & compleat authority in all cases
where uniform measures are necessary.” See Letter from
James Madison to Edmund Randolph (Apr. 8, 1787), in 9
Papers of James Madison 368, 370 (R. Rutland ed. 1975).
See also Letter from George Washington to James
Madison (Nov. 30, 1785), in 8 id., at 428, 429 (“We are
either a United people, or we are not. If the former, let us,
in all matters of general concern act as a nation, which
ha[s] national objects to promote, and a national character
to support.”). The Framers’ solution was the Commerce
Clause, which, as they perceived it, granted Congress the
authority to enact economic legislation “in all Cases for
the general Interests of the Union, and also in those Cases
to which the States are separately incompetent.” 2
Records of the Federal Convention of 1787, pp. 131-132,
P8 (M. Farrand rev. 1966). See also North American Co.
v. SEC, 327 U.S. 686, 705, 66 S. Ct. 785, 90 L. Ed. 945
(1946) (“[The commerce power] is an affirmative power
commensurate with the national needs.”).

The Framers understood that the “general Interests of
the Union” would [***132] change over time, in ways
they could not anticipate. Accordingly, they recognized
that the Constitution was of necessity a “great outlin[e],”
not a detailed blueprint, see McCulloch v. Maryland, 17
U.S. 316, 4 Wheat. 316, 407, 4 L. Ed. 579 (1819), and
that its provisions included broad concepts, to be
“explained by the context or by the facts of the case,”
Letter from James Madison to N. P. Trist (Dec. 1831), in
9 Writings of James Madison 471, 475 (G. Hunt ed.
1910). “Nothing . . . can be more fallacious,” Alexander
Hamilton emphasized, “than to infer the extent of any
power, proper to be lodged in the national government,
from . . . its immediate necessities. [*2616] There ought
to be a CAPACITY to provide for future contingencies[,]
as they may happen; and as these are illimitable in their
nature, it is impossible safely to limit that capacity.” The
Federalist No. 34, pp. 205, 206 (John Harvard Library ed.
2009). See also McCulloch, 4 Wheat., at 415, 4 L. Ed.
579 (The Necessary and Proper Clause is lodged “in a
constitution[,] intended to endure for ages to come, and
consequently, to be adapted to the various crises of
human affairs.”).

B

Consistent with the Framers’ intent, we have

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2012 U.S. LEXIS 4876, ***129; 80 U.S.L.W. 4579

repeatedly [***133] emphasized that Congress’ authority
under the Commerce Clause is dependent upon
“practical” considerations, including “actual experience.”
Jones & Laughlin Steel Corp., 301 U.S., at 41-42, 57 S.
Ct. 615, 81 L. Ed. 893; see Wickard v. Filburn, 317 U.S.
111, 122, 63 S. Ct. 82, 87 L. Ed. 122 (1942); United
States v. Lopez, 514 U.S. 549, 573, 115 S. Ct. 1624, 131
L. Ed. 2d 626 (1995) (KENNEDY, J., concurring)
(emphasizing “the Court’s definitive commitment to the
practical conception of the commerce power”). See also
North American [**507] Co., 327 U.S., at 705, 66 S. Ct.
785, 90 L. Ed. 945 (“Commerce itself is an intensely
practical matter. To deal with it effectively, Congress
must be able to act in terms of economic and financial
realities.” (citation omitted)). We afford Congress the
leeway “to undertake to solve national problems directly
and realistically.” American Power & Light Co. v. SEC,
329 U.S. 90, 103, 67 S. Ct. 133, 91 L. Ed. 103 (1946).

Until today, this Court’s pragmatic approach to
judging whether Congress validly exercised its commerce
power was guided by two familiar principles. First,
Congress has the power to regulate economic activities
“that substantially affect interstate [***134] commerce.”
Gonzales v. Raich, 545 U.S. 1, 17, 125 S. Ct. 2195, 162
L. Ed. 2d 1 (2005). This capacious power extends even to
local activities that, viewed in the aggregate, have a
substantial impact on interstate commerce. See ibid. See
also Wickard, 317 U.S., at 125, 63 S. Ct. 82, 87 L. Ed.
122 (“[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
substantial economic effect on interstate commerce.”
(emphasis added)); Jones & Laughlin Steel Corp., 301
U.S., at 37, 57 S. Ct. 615, 81 L. Ed. 893.

Second, we owe a large measure of respect to
Congress when it frames and enacts economic and social
legislation. See Raich, 545 U.S., at 17, 125 S. Ct. 2195,
162 L. Ed. 2d 1. See also Pension Benefit Guaranty
Corporation v. R. A. Gray & Co., 467 U.S. 717, 729, 104
S. Ct. 2709, 81 L. Ed. 2d 601 (1984) (“[S]trong deference
[is] accorded legislation in the field of national economic
policy.”); Hodel v. Indiana, 452 U.S. 314, 326, 101 S. Ct.
2376, 69 L. Ed. 2d 40 (1981) (“This [C]ourt will certainly
not substitute its judgment for that of Congress unless the
relation of the subject to [***135] interstate commerce
and its effect upon it are clearly non-existent.” (internal
quotation marks omitted)). When appraising such
legislation, we ask only (1) whether Congress had a

“rational basis” for concluding that the regulated activity
substantially affects interstate commerce, and (2) whether
there is a “reasonable connection between the regulatory
means selected and the asserted ends.” Id., at 323-324,
101 S. Ct. 2376, 69 L. Ed. 2d 40. See also Raich, 545
U.S., at 22, 125 S. Ct. 2195, 162 L. Ed. 2d 1; Lopez, 514
U.S., at 557, 115 S. Ct. 1624, 131 L. Ed. 2d 626; Hodel v.
Virginia Surface Mining & Reclamation Assn., Inc., 452
U.S. 264, 277, 101 S. Ct. 2352, 69 L. Ed. 2d 1 (1981);
Katzenbach v. McClung, 379 U.S. 294, 303, 85 S. Ct.
377, 13 L. Ed. 2d 290 (1964); Heart of Atlanta Motel,
Inc. v. United States, 379 U.S. 241, 258, 85 S. Ct. 348, 13
L. Ed. 2d 258 [*2617] (1964); United States v. Carolene
Products Co., 304 U.S. 144, 152-153, 58 S. Ct. 778, 82
L. Ed. 1234 (1938). In answering these questions, we
presume the statute under review is constitutional and
may strike it down only on a “plain showing” that
Congress acted irrationally. United States v. Morrison,
529 U.S. 598, 607, 120 S. Ct. 1740, 146 L. Ed. 2d 658
(2000).

C

Straightforward [***136] application of these
principles would require the Court to hold that the
minimum coverage provision is proper Commerce Clause
legislation. Beyond dispute, Congress had a rational basis
for concluding that the uninsured, as a class, substantially
affect interstate commerce. Those without insurance
consume billions [**508] of dollars of health-care
products and services each year. See supra, at 5. Those
goods are produced, sold, and delivered largely by
national and regional companies who routinely transact
business across state lines. The uninsured also cross state
lines to receive care. Some have medical emergencies
while away from home. Others, when sick, go to a
neighboring State that provides better care for those who
have not prepaid for care. See supra, at 7-8.

Not only do those without insurance consume a large
amount of health care each year; critically, as earlier
explained, their inability to pay for a significant portion
of that consumption drives up market prices, foists costs
on other consumers, and reduces market efficiency and
stability. See supra, at 5-7. Given these far-reaching
effects on interstate commerce, the decision to forgo
insurance is hardly inconsequential or equivalent
[***137] to “doing nothing,” ante, at 20; it is, instead, an
economic decision Congress has the authority to address
under the Commerce Clause. See supra, at 14-16. See

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2012 U.S. LEXIS 4876, ***132; 80 U.S.L.W. 4579

also Wickard, 317 U.S., at 128, 63 S. Ct. 82, 87 L. Ed.
122 (“It is well established by decisions of this Court that
the power to regulate commerce includes the power to
regulate the prices at which commodities in that
commerce are dealt in and practices affecting such
prices.” (emphasis added)).

The minimum coverage provision, furthermore,
bears a “reasonable connection” to Congress’ goal of
protecting the health-care market from the disruption
caused by individuals who fail to obtain insurance. By
requiring those who do not carry insurance to pay a toll,
the minimum coverage provision gives individuals a
strong incentive to insure. This incentive, Congress had
good reason to believe, would reduce the number of
uninsured and, correspondingly, mitigate the adverse
impact the uninsured have on the national health-care
market.

Congress also acted reasonably in requiring
uninsured individuals, whether sick or healthy, either to
obtain insurance or to pay the specified penalty. As
earlier observed, because every person is at risk
[***138] of needing care at any moment, all those who
lack insurance, regardless of their current health status,
adversely affect the price of health care and health
insurance. See supra, at 6-7. Moreover, an
insurance-purchase requirement limited to those in need
of immediate care simply could not work. Insurance
companies would either charge these individuals
prohibitively expensive premiums, or, if
community-rating regulations were in place, close up
shop. See supra, at 9-11. See also Brief for State of
Maryland and 10 Other States et al. as Amici Curiae in
No. 11-398, p. 28 (hereinafter Maryland Brief) (“No
insurance regime can survive if people can opt out when
the risk insured against is only a risk, but opt in when the
risk materializes.”).

[*2618] “[W]here we find that the legislators . . .
have a rational basis for finding a chosen regulatory
scheme necessary to the protection of commerce, our
investigation is at an end.” Katzenbach, 379 U.S., at
303-304, 85 S. Ct. 377, 13 L. Ed. 2d 290. Congress’
enactment of the minimum coverage provision, which
addresses a specific [**509] interstate problem in a
practical, experience-informed manner, easily meets this
criterion.

D

Rather than evaluating the constitutionality of the
minimum coverage [***139] provision in the manner
established by our precedents, THE CHIEF JUSTICE
relies on a newly minted constitutional doctrine. The
commerce power does not, THE CHIEF JUSTICE
announces, permit Congress to “compe[l] individuals to
become active in commerce by purchasing a product.”
Ante, at 20 (emphasis deleted).

1

a

THE CHIEF JUSTICE’s novel constraint on
Congress’ commerce power gains no force from our
precedent and for that reason alone warrants
disapprobation. See infra, at 23-27. But even assuming,
for the moment, that Congress lacks authority under the
Commerce Clause to “compel individuals not engaged in
commerce to purchase an unwanted product,” ante, at 18,
such a limitation would be inapplicable here. Everyone
will, at some point, consume health-care products and
services. See supra, at 3. Thus, if THE CHIEF JUSTICE
is correct that an insurance-purchase requirement can be
applied only to those who “actively” consume health
care, the minimum coverage provision fits the bill.

THE CHIEF JUSTICE does not dispute that all U.S.
residents participate in the market for health services over
the course of their lives. See ante, at 16 (“Everyone will
eventually need health care at a time and [***140] to an
extent they cannot predict.”). But, THE CHIEF JUSTICE
insists, the uninsured cannot be considered active in the
market for health care, because “[t]he proximity and
degree of connection between the [uninsured today] and
[their] subsequent commercial activity is too lacking.”
Ante, at 27.

This argument has multiple flaws. First, more than
60% of those without insurance visit a hospital or doctor’s
office each year. See supra, at 5. Nearly 90% will within
five years. 4 An uninsured’s consumption of health care is
thus quite proximate: It is virtually certain to occur in the
next five years and more likely than not to occur this
year.

Equally evident, Congress has no way of separating
those uninsured individuals who will need emergency
medial care today (surely their consumption of medical
care is sufficiently imminent) from those who will not
need medical services for years to come. No one knows

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when an emergency will occur, yet emergencies
involving the uninsured arise daily. To capture
individuals who unexpectedly will obtain medical care in
the very near future, then, Congress needed to include
individuals who will not go to a doctor anytime soon.
Congress, our decisions instruct, [***141] has authority
to cast its net that wide. See Perez v. United States, 402
U.S. 146, 154, 91 S. Ct. 1357, 28 L. Ed. 2d 686 (1971)
(“[W]hen it is necessary in order to [**510] prevent an
evil to make the law embrace more than the precise
[*2619] thing to be prevented it may do so.” (internal
quotation marks omitted)). 5

4 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).
5 Echoing THE CHIEF JUSTICE, the joint
dissenters urge that the minimum coverage
provision impermissibly regulates young people
who “have no intention of purchasing [medical
care]” and are too far “removed from the
[health-care] market.” See post, at 8, 11. This
criticism ignores the reality that a healthy young
person may be a day away from needing health
care. See supra, at 4. A victim of an accident or
unforeseen illness will consume extensive
medical care immediately, though scarcely
expecting to do so.

Second, it is Congress’ role, not the Court’s, to
delineate the boundaries of the market the Legislature
seeks to regulate. THE CHIEF JUSTICE defines the
health-care market as [***142] including only those
transactions that will occur either in the next instant or
within some (unspecified) proximity to the next instant.
But Congress could reasonably have viewed the market
from a long- term perspective, encompassing all
transactions virtually certain to occur over the next
decade, see supra, at 19, not just those occurring here and
now.

Third, contrary to THE CHIEF JUSTICE’s
contention, our precedent does indeed support “[t]he
proposition that Congress may dictate the conduct of an
individual today because of prophesied future activity.”
Ante, at 26. In Wickard, the Court upheld a penalty the
Federal Government imposed on a farmer who grew
more wheat than he was permitted to grow under the

Agricultural Adjustment Act of 1938 (AAA). 317 U.S., at
114-115, 63 S. Ct. 82, 87 L. Ed. 122. He could not be
penalized, the farmer argued, as he was growing the
wheat for home consumption, not for sale on the open
market. Id., 317 U.S. at 119, 63 S. Ct. 82, 87 L. Ed. 122.
The Court rejected this argument. Id., 317 U.S. at
127-129, 63 S. Ct. 82, 87 L. Ed. 122. Wheat intended for
home consumption, the Court noted, “overhangs the
market, and if induced by rising prices, tends to flow
[***143] into the market and check price increases
[intended by the AAA].” Id., 317 U.S. at 128, 63 S. Ct.
82, 87 L. Ed. 122.

Similar reasoning supported the Court’s judgment in
Raich, which upheld Congress’ authority to regulate
marijuana grown for personal use. 545 U.S., at 19, 125 S.
Ct. 2195, 16 L. Ed. 2d 1. Home-grown marijuana
substantially affects the interstate market for marijuana,
we observed, for “the high demand in the interstate
market will [likely] draw such marijuana into that
market.” Ibid.

Our decisions thus acknowledge Congress’ authority,
under the Commerce Clause, to direct the conduct of an
individual today (the farmer in Wickard, stopped from
growing excess wheat; the plaintiff in Raich, ordered to
cease cultivating marijuana) because of a prophesied
future transaction (the eventual sale of that wheat or
marijuana in the interstate market). Congress’ actions are
even more rational in this case, where the future activity
(the consumption of medical care) is certain to occur, the
sole uncertainty being the time the activity will take
place.

Maintaining that the uninsured are not active in the
health-care market, THE CHIEF JUSTICE draws an
analogy to the car market. An individual [***144] “is not
‘active in the car market,'” THE CHIEF JUSTICE
observes, simply because he or she may someday buy a
car. Ante, at 25. The analogy is inapt. The inevitable yet
unpredictable need for medical care and the [**511]
guarantee that emergency care will be provided when
required are conditions nonexistent in other markets. That
is so of the market for cars, and of the market for broccoli
as well. Although an individual might buy a car or a
crown of broccoli one day, there is no certainty she
[*2620] will ever do so. And if she eventually wants a
car or has a craving for broccoli, she will be obliged to
pay at the counter before receiving the vehicle or
nourishment. She will get no free ride or food, at the

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expense of another consumer forced to pay an inflated
price. See Thomas More Law Center v. Obama, 651 F.3d
529, 565 (CA6 2011) (Sutton, J., concurring in part)
(“Regulating how citizens pay for what they already
receive (health care), never quite know when they will
need, and in the case of severe illnesses or emergencies
generally will not be able to afford, has few (if any)
parallels in modern life.”). Upholding the minimum
coverage provision on the ground that all are participants
or will be [***145] participants in the health-care market
would therefore carry no implication that Congress may
justify under the Commerce Clause a mandate to buy
other products and services.

Nor is it accurate to say that the minimum coverage
provision “compel[s] individuals . . . to purchase an
unwanted product,” ante, at 18, or “suite of products,”
post, at 11, n. 2 (joint opinion of SCALIA, KENNEDY,
THOMAS, and ALITO, JJ.). If unwanted today, medical
service secured by insurance may be desperately needed
tomorrow. Virtually everyone, I reiterate, consumes
health care at some point in his or her life. See supra, at
3. Health insurance is a means of paying for this care,
nothing more. In requiring individuals to obtain
insurance, Congress is therefore not mandating the
purchase of a discrete, unwanted product. Rather,
Congress is merely defining the terms on which
individuals pay for an interstate good they consume:
Persons subject to the mandate must now pay for medical
care in advance (instead of at the point of service) and
through insurance (instead of out of pocket). Establishing
payment terms for goods in or affecting interstate
commerce is quintessential economic regulation well
within Congress’ [***146] domain. See, e.g., United
States v. Wrightwood Dairy Co., 315 U.S. 110, 118, 62 S.
Ct. 523, 86 L. Ed. 726 (1942). Cf. post, at 13 (joint
opinion of SCALIA, KENNEDY, THOMAS, and
ALITO, JJ.) (recognizing that “the Federal Government
can prescribe [a commodity’s] quality . . . and even [its
price]”).

THE CHIEF JUSTICE also calls the minimum
coverage provision an illegitimate effort to make young,
healthy individuals subsidize insurance premiums paid by
the less hale and hardy. See ante, at 17, 25-26. This
complaint, too, is spurious. Under the current health-care
system, healthy persons who lack insurance receive a
benefit for which they do not pay: They are assured that,
if they need it, emergency medical care will be available,
although they cannot afford it. See supra, at 5-6. Those

who have insurance bear the cost of this guarantee. See
ibid. By requiring the healthy uninsured to obtain
insurance or pay a penalty structured as a tax, the
minimum coverage provision ends the free ride these
individuals currently enjoy.

In the fullness of time, moreover, [**512] today’s
young and healthy will become society’s old and infirm.
Viewed over a lifespan, the costs and benefits even out:
The young who [***147] pay more than their fair share
currently will pay less than their fair share when they
become senior citizens. And even if, as undoubtedly will
be the case, some individuals, over their lifespans, will
pay more for health insurance than they receive in health
services, they have little to complain about, for that is
how insurance works. Every insured person receives
protection against a catastrophic loss, even though only a
subset of the covered class will ultimately need that
protection.

[*2621] b

In any event, THE CHIEF JUSTICE’s limitation of
the commerce power to the regulation of those actively
engaged in commerce finds no home in the text of the
Constitution or our decisions. Article I, § 8, of the
Constitution grants Congress the power “[t]o regulate
Commerce . . .among the several States.” Nothing in this
language implies that Congress’ commerce power is
limited to regulating those actively engaged in
commercial transactions. Indeed, as the D. C. Circuit
observed, “[a]t the time the Constitution was [framed], to
‘regulate’ meant,” among other things, “to require action.”
See Seven-Sky v. Holder, 661 F.3d 1, 16, 398 U.S. App.
D.C. 134 (2011).

Arguing to the contrary, THE CHIEF JUSTICE
notes [***148] that “the Constitution gives Congress the
power to ‘coin Money,’ in addition to the power to
‘regulate the Value thereof,'” and similarly “gives
Congress the power to ‘raise and support Armies’ and to
‘provide and maintain a Navy,’ in addition to the power to
‘make Rules for the Government and Regulation of the
land and naval Forces.'” Ante, at 18-19 (citing Art. I, § 8,
cls. 5, 12-14). In separating the power to regulate from
the power to bring the subject of the regulation into
existence, THE CHIEF JUSTICE asserts, “[t]he language
of the Constitution reflects the natural understanding that
the power to regulate assumes there is already something
to be regulated.” Ante, at 19.

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This argument is difficult to fathom. Requiring
individuals to obtain insurance unquestionably regulates
the interstate health-insurance and health-care markets,
both of them in existence well before the enactment of
the ACA. See Wickard, 317 U.S., at 128, 63 S. Ct. 82, 87
L. Ed. 122 (“The stimulation of commerce is a use of the
regulatory function quite as definitely as prohibitions or
restrictions thereon.”). Thus, the “something to be
regulated” was surely there when Congress created the
minimum coverage provision. [***149] 6

6 THE CHIEF JUSTICE’s reliance on the quoted
passages of the Constitution, see ante, at 18-19, is
also dubious on other grounds. The power to
“regulate the Value” of the national currency
presumably includes the power to increase the
currency’s worth-i.e., to create value where none
previously existed. And if the power to
“[r]egulat[e] . . . the land and naval Forces”
presupposes “there is already [in existence] some-
thing to be regulated,” i.e., an Army and a Navy,
does Congress lack authority to create an Air
Force?

Nor does our case law toe the activity versus
inactivity line. In Wickard, for example, we upheld the
penalty imposed on a farmer who grew too much wheat,
even though the regulation had the effect of compelling
farmers to purchase wheat in the open market. Id., at
127-129, 63 S. Ct. 82, 87 L. Ed. 122. “[F]orcing some
farmers [**513] into the market to buy what they could
provide for themselves” was, the Court held, a valid
means of regulating commerce. Id., at 128-129, 63 S. Ct.
82, 87 L. Ed. 122. In another context, this Court similarly
upheld Congress’ authority under the commerce power to
compel an “inactive” land-holder to submit to an
unwanted sale. See Monongahela Nav. Co. v. United
States, 148 U.S. 312, 335-337, 13 S. Ct. 622, 37 L. Ed.
463 (1893) [***150] (“[U]pon the [great] power to
regulate commerce[,]” Congress has the authority to
mandate the sale of real property to the Government,
where the sale is essential to the improvement of a
navigable waterway (emphasis added)); Cherokee Nation
v.Southern Kansas R. Co., 135 U.S. 641,657-659, 10 S.
Ct. 965, 34 L. Ed. 295 (1890) (similar reliance on the
commerce power regarding mandated sale of private
property for railroad construction).

[*2622] In concluding that the Commerce Clause
does not permit Congress to regulate commercial

“inactivity,” and therefore does not allow Congress to
adopt the practical solution it devised for the health-care
problem, THE CHIEF JUSTICE views the Clause as a
“technical legal conception,” precisely what our case law
tells us not to do. Wickard, 317 U.S., at 122, 63 S. Ct. 82,
87 L. Ed. 122 (internal quotation marks omitted). See
also supra, at 14-16. This Court’s former endeavors to
impose categorical limits on the commerce power have
not fared well. In several pre-New Deal cases, the Court
attempted to cabin Congress’ Commerce Clause authority
by distinguishing “commerce” from activity once
conceived to be noncommercial, notably, “production,”
“mining,” and “manufacturing.” [***151] See, e.g.,
United States v. E. C. Knight Co., 156 U.S. 1, 12, 15 S.
Ct. 249, 39 L. Ed. 325 (1895) (“Commerce succeeds to
manufacture, and is not a part of it.”); Carter v. Carter
Coal Co., 298 U.S. 238, 304, 56 S. Ct. 855, 80 L. Ed.
1160 (1936) (“Mining brings the subject matter of
commerce into existence. Commerce disposes of it.”) .
The Court also sought to distinguish activities having a
“direct” effect on interstate commerce, and for that
reason, subject to federal regulation, from those having
only an “indirect” effect, and therefore not amenable to
federal control. See, e.g., A. L. A. Schechter Poultry
Corp. v. United States, 295 U.S. 495, 548, 55 S. Ct. 837,
79 L. Ed. 1570 (1935) (“[T]he distinction between direct
and indirect effects of intrastate transactions upon
interstate commerce must be recognized as a fundamental
one.”).

These line-drawing exercises were untenable, and the
Court long ago abandoned them. “[Q]uestions of the
power of Congress [under the Commerce Clause],” we
held in Wickard, “are not to be decided by reference to
any formula which would give controlling force to
nomenclature such as ‘production’ and ‘indirect’ and
foreclose consideration of the actual [***152] effects of
the activity in question upon interstate commerce.” 317
U.S., at 120, 63 S. Ct. 82, 87 L. Ed. 122. See also
Morrison, 529 U.S., at 641-644, 120 S. Ct. 1740, 146 L.
Ed. 658 (Souter, J., dissenting) (recounting the Court’s
“nearly disastrous experiment” with formalistic limits on
Congress’ commerce power). Failing to learn from this
history, THE CHIEF JUSTICE plows ahead with his
formalistic distinction between those who are “active in
commerce,” ante, at 20, and those who are not.

[**514] It is not hard to show the difficulty courts
(and Congress) would encounter in distinguishing
statutes that regulate “activity” from those that regulate

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“inactivity.” As Judge Easterbrook noted, “it is possible
to restate most actions as corresponding inactions with
the same effect.” Archie v. Racine, 847 F.2d 1211, 1213
(CA7 1988) (en banc). Take this case as an example. An
individual who opts not to purchase insurance from a
private insurer can be seen as actively selecting another
form of insurance: self-insurance. See Thomas More Law
Center, 651 F. 3d, at 561 (Sutton, J., concurring in part)
(“No one is inactive when deciding how to pay for health
care, as self-insurance and private insurance [***153]
are two forms of action for addressing the same risk.”).
The minimum coverage provision could therefore be
described as regulating activists in the self-insurance
market. 7 Wickard is another example. Did the statute
there at issue [*2623] target activity (the growing of too
much wheat) or inactivity (the farmer’s failure to
purchase wheat in the marketplace)? If anything, the
Court’s analysis suggested the latter. See 317 U.S., at
127-129, 63 S. Ct. 82, 87 L. Ed. 122.

7 THE CHIEF JUSTICE’s characterization of
individuals who choose not to purchase private
insurance as “doing nothing,” ante, at 20, is
similarly questionable. A person who self-insures
opts against prepayment for a product the person
will in time consume. When aggregated, exercise
of that option has a substantial impact on the
health-care market. See supra, at 5-7, 16-17.

At bottom, THE CHIEF JUSTICE’s and the joint
dissenters ‘”view that an individual cannot be subject to
Commerce Clause regulation absent voluntary,
affirmative acts that enter him or her into, or affect, the
interstate market expresses a concern for individual
liberty that [is] more redolent of Due Process Clause
arguments.” Seven-Sky, 661 F. 3d, at 19. See also
[***154] Troxel v.Granville, 530 U.S. 57, 65, 120 S. Ct.
2054, 147 L. Ed. 2d 49 (2000) (plurality opinion) (“The
[Due Process] Clause also includes a substantive
component that provides heightened protection against
government interference with certain fundamental rights
and liberty interests.” (internal quotation marks omitted)).
Plaintiffs have abandoned any argument pinned to
substantive due process, however, see 648 F.3d 1235,
1291, n. 93 (CA11 2011), and now concede that the
provisions here at issue do not offend the Due Process
Clause. 8

8 Some adherents to the joint dissent have
questioned the existence of substantive due

process rights. See McDonald v. City of Chicago,
561 U.S. ___, ___, 130 S. Ct. 3020, 3062, 177 L.
Ed. 2d 894, 941 (2010) (THOMAS, J.,
concurring) (The notion that the Due Process
Clause “could define the substance of th[e] righ[t
to liberty] strains credulity.”); Albright v. Oliver,
510 U.S. 266, 275, 114 S. Ct. 807, 127 L. Ed. 2d
114 (1994) (SCALIA, J., concurring) (“I reject the
proposition that the Due Process Clause
guarantees certain (unspecified) liberties[.]”).
Given these Justices’ reluctance to interpret the
Due Process Clause as guaranteeing liberty
[***155] interests, their willingness to plant such
protections in the Commerce Clause is striking.

2

Underlying THE CHIEF JUSTICE’s view that the
Commerce Clause must be confined to the regulation of
active participants in a commercial market is a fear that
the commerce power would otherwise know no limits.
See, e.g., ante, at 23 (Allowing Congress to compel an
individual not engaged in commerce to purchase a
product would “permi[t] Congress to reach beyond the
natural extent of its authority, everywhere extending the
sphere of its activity, [**515] and drawing all power
into its impetuous vortex.” (internal quotation marks
omitted)). The joint dissenters express a similar
apprehension. See post, at 8 (If the minimum coverage
provision is upheld under the commerce power then “the
Commerce Clause becomes a font of unlimited power, . .
. the hideous monster whose devouring jaws . . . spare
neither sex nor age, nor high nor low, nor sacred nor
profane.” (internal quotation marks omitted)). This
concern is unfounded.

First, THE CHIEF JUSTICE could certainly uphold
the individual mandate without giving Congress carte
blanche to enact any and all purchase mandates. As
several times noted, the unique attributes [***156] of the
health-care market render everyone active in that market
and give rise to a significant free-riding problem that
does not occur in other markets. See supra, at 3-7, 16-18,
21.

Nor would the commerce power be unbridled, absent
THE CHIEF JUSTICE’s “activity” limitation. Congress
would remain unable to regulate noneconomic conduct
that has only an attenuated effect on interstate commerce
and is traditionally left to state law. See Lopez, 514 U.S.,
at 567, 115 S. Ct. 1624, 131 L. Ed. 2d 626; Morrison,

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529 U.S., at 617-619, 120 S. Ct. 1740, 146 L. Ed. 2d 658.
In Lopez, for example, the Court held that the Federal
Government lacked power, under the Commerce Clause,
to criminalize the possession of a gun in a local school
zone. Possessing [*2624] a gun near a school, the Court
reasoned, “is in no sense an economic activity that might,
through repetition else–where, substantially affect any
sort of interstate commerce.” 514 U.S., at 567, 115 S. Ct.
1624, 131 L. Ed. 2d 626; ibid. (noting that the Court
would have “to pile inference upon inference” to
conclude that gun possession has a substantial effect on
commerce). Relying on similar logic, the Court
concluded in Morrison that Congress [***157] could not
regulate gender-motivated violence, which the Court
deemed to have too “attenuated [an] effect upon interstate
commerce.” 529 U.S., at 615, 120 S. Ct. 1740, 146 L. Ed.
658.

An individual’s decision to self-insure, I have
explained, is an economic act with the requisite
connection to interstate commerce. See supra, at 16-17.
Other choices individuals make are unlikely to fit the
same or similar description. As an example of the type of
regulation he fears, THE CHIEF JUSTICE cites a
Government mandate to purchase green vegetables. Ante,
at 22-23. One could call this concern “the broccoli
horrible.” Congress, THE CHIEF JUSTICE posits, might
adopt such a mandate, reasoning that an individual’s
failure to eat a healthy diet, like the failure to purchase
health insurance, imposes costs on others. See ibid.

Consider the chain of inferences the Court would
have to accept to conclude that a vegetable-purchase
mandate was likely to have a substantial effect on the
health-care costs borne by lithe Americans. The Court
would have to believe that individuals forced to buy
vegetables would then eat them (instead of throwing or
giving them away), would prepare the vegetables in a
healthy [***158] way (steamed or raw, not deep-fried),
would cut back on unhealthy foods, and would not allow
other factors (such as lack of exercise or little sleep) to
trump the [**516] improved diet. 9 Such “pil[ing of]
inference upon inference” is just what the Court refused
to do in Lopez and Morrison.

9 The failure to purchase vegetables in THE
CHIEF JUSTICE’s hypothetical, then, is not what
leads to higher health-care costs for others; rather,
it is the failure of individuals to maintain a
healthy diet, and the resulting obesity, that creates

the cost-shifting problem. See ante, at 22-23.
Requiring individuals to purchase vegetables is
thus several steps removed from solving the
problem. The failure to obtain health insurance,
by contrast, is the immediate cause of the
cost-shifting Congress sought to address through
the ACA. See supra, at 5-7. Requiring individuals
to obtain insurance attacks the source of the
problem directly, in a single step.

Other provisions of the Constitution also check
congressional overreaching. A mandate to purchase a
particular product would be unconstitutional if, for
example, the edict impermissibly abridged the freedom of
speech, interfered with the free exercise of religion,
[***159] or infringed on a liberty interest protected by
the Due Process Clause.

Supplementing these legal restraints is a formidable
check on congressional power: the democratic process.
See Raich, 545 U.S., at 33, 125 S. Ct. 2195, 162 L. Ed.
2d 1; Wickard, 317 U.S., at 120, 63 S. Ct. 82, 87 L. Ed.
122 (repeating Chief Justice Marshall’s “warning that
effective restraints on [the commerce power’s] exercise
must proceed from political rather than judicial
processes” (citing Gibbons v. Ogden, 9 Wheat. 1, 197, 6
L. Ed. 23 (1824)). As the controversy surrounding the
passage of the Affordable Care Act attests, purchase
mandates are likely to engender political resistance. This
prospect is borne out by the behavior of state legislators.
Despite their possession of unquestioned authority to
impose mandates, state governments have rarely done so.
See Hall, Commerce Clause Challenges to Health
[*2625] Care Reform, 159 U. Pa. L. Rev. 1825, 1838
(2011).

When contemplated in its extreme, almost any power
looks dangerous. The commerce power, hypothetically,
would enable Congress to prohibit the purchase and home
production of all meat, fish, and dairy goods, effectively
compelling Americans to eat only vegetables. [***160]
Cf. Raich, 545 U.S., at 9, 125 S. Ct. 2195, 162 L. Ed. 2d
1; Wickard, 317 U.S., at 127-129, 63 S. Ct. 82, 87 L. Ed.
122. Yet no one would offer the “hypothetical and unreal
possibilit[y],” Pullman Co. v. Knott, 235 U.S. 23, 26, 35
S. Ct. 2, 59 L. Ed. 105 (1914), of a vegetarian state as a
credible reason to deny Congress the authority ever to
ban the possession and sale of goods. THE CHIEF
JUSTICE accepts just such specious logic when he cites
the broccoli horrible as a reason to deny Congress the

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power to pass the individual mandate. Cf. R. Bork, The
Tempting of America 169 (1990) (“Judges and lawyers
live on the slippery slope of analogies; they are not
supposed to ski it to the bottom.”). But see, e.g., post, at 3
(joint opinion of SCALIA, KENNEDY, THOMAS, and
ALITO, JJ.) (asserting, outlandishly, that if the minimum
coverage provision is sustained, then Congress could
make “breathing in and out the basis for federal
prescription”).

3

To bolster his argument that the minimum coverage
provision is not valid Commerce Clause legislation, THE
CHIEF JUSTICE emphasizes the provision’s novelty. See
ante, at 18 (asserting that [**517] “sometimes the most
telling indication of [a] severe constitutional [***161]
problem . . . is the lack of historical precedent for
Congress’s action” (internal quotation marks omitted)).
While an insurance-purchase mandate may be novel,
THE CHIEF JUSTICE ‘s argument certainly is not. “[I]n
almost every instance of the exercise of the [commerce]
power differences are asserted from previous exercises of
it and made a ground of attack.” Hoke v. United States,
227 U.S. 308, 320, 33 S. Ct. 281, 57 L. Ed. 523 (1913).
See, e.g., Brief for Petitioner in Perez v. United States, O.
T. 1970, No. 600, p. 5 (“unprecedented exercise of
power”); Supplemental Brief for Appellees in
Katzenbach v. McClung, O. T. 1964, No. 543, p. 40
(“novel assertion of federal power”); Brief for Appellee
in Wickard v. Filburn, O. T. 1941, No. 59, p. 6
(“complete departure”). For decades, the Court has
declined to override legislation because of its novelty,
and for good reason. As our national economy grows and
changes, we have recognized, Congress must adapt to the
changing “economic and financial realities.” See supra, at
14-15. Hindering Congress’ ability to do so is
shortsighted; if history is any guide, today’s constriction
of the Commerce Clause will not endure. See supra, at
25-26.

III

A

For [***162] the reasons explained above, the
minimum coverage provision is valid Commerce Clause
legislation. See supra, Part II. When viewed as a
component of the entire ACA, the provision’s
constitutionality becomes even plainer.

The Necessary and Proper Clause “empowers
Congress to enact laws in effectuation of its [commerce]
powe[r] that are not within its authority to enact in
isolation.” Raich, 545 U.S., at 39, 125 S. Ct. 2195, 162 L.
Ed. 2d 1 (SCALIA, J., concurring in judgment). Hence,
“[a] complex regulatory program . . . can survive a
Commerce Clause challenge without a showing that
every single facet of the program is independently and
directly related to a valid congressional goal.” Indiana,
452 U.S., at 329, n. 17, [*2626] 101 S. Ct. 2376, 69 L.
Ed. 2d 40. “It is enough that the challenged provisions are
an integral part of the regulatory program and that the
regulatory scheme when considered as a whole satisfies
this test.” Ibid. (collecting cases). See also Raich, 545
U.S., at 24-25, 125 S. Ct. 2195, 162 L. Ed. 2d 1 (A
challenged statutory provision fits within Congress’
commerce authority if it is an “essential par[t] of a larger
regulation of economic activity,” such that, in the absence
[***163] of the provision, “the regulatory scheme could
be undercut.” (quoting Lopez, 514 U.S., at 561, 115 S. Ct.
1624, 131 L. Ed. 2d 626)); Raich, 545 U.S., at 37, 125 S.
Ct. 2195, 162 L. Ed. 2d 1 (SCALIA, J., concurring in
judgment) (“Congress may regulate even noneconomic
local activity if that regulation is a necessary part of a
more general regulation of interstate commerce. The
relevant question is simply whether the means chosen are
‘reasonably adapted’ to the attainment of a legitimate end
under the commerce power.” (citation omitted)).

Recall that one of Congress’ goals in enacting the
Affordable Care Act was to eliminate the insurance
industry’s practice of charging higher prices or denying
coverage to individuals with preexisting medical
conditions. See supra, at 9-10. The commerce power
allows [**518] Congress to ban this practice, a point no
one disputes. See United States v. SouthEastern
Underwriters Assn., 322 U.S. 533, 545, 552-553, 64 S.
Ct. 1162, 88 L. Ed. 1440 (1944) (Congress may regulate
“the methods by which interstate insurance companies do
business.”).

Congress knew, however, that simply barring
insurance companies from relying on an applicant’s
medical history would not work [***164] in practice.
Without the individual mandate, Congress learned,
guaranteed-issue and community-rating requirements
would trigger an adverse-selection death-spiral in the
health-insurance market: Insurance premiums would
skyrocket, the number of uninsured would increase, and
insurance companies would exit the market. See supra, at

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10-11. When complemented by an insurance mandate, on
the other hand, guaranteed issue and community rating
would work as intended, increasing access to insurance
and reducing uncompensated care. See supra, at 11-12.
The minimum coverage provision is thus an “essential
par[t] of a larger regulation of economic activity”;
without the provision, “the regulatory scheme [w]ould be
undercut.” Raich, 545 U.S., at 24-25, 125 S. Ct. 2195,
162 L. Ed. 2d 1 (internal quotation marks omitted). Put
differently, the minimum coverage provision, together
with the guaranteed- issue and community-rating
requirements, is “‘reasonably adapted’ to the attainment of
a legitimate end under the commerce power”: the
elimination of pricing and sales practices that take an
applicant’s medical history into account. See id., 545 U.S.
at 37, 125 S. Ct. 2195, 162 L. Ed. 2d 1 (SCALIA, J.,
[***165] concurring in judgment).

B

Asserting that the Necessary and Proper Clause does
not authorize the minimum coverage provision, THE
CHIEF JUSTICE focuses on the word “proper.” A
mandate to purchase health insurance is not “proper”
legislation, THE CHIEF JUSTICE urges, because the
command “undermine[s] the structure of government
established by the Constitution.” Ante, at 28. If long on
rhetoric, THE CHIEF JUSTICE’s argument is short on
substance.

THE CHIEF JUSTICE cites only two cases in which
this Court concluded that a federal statute impermissibly
transgressed the Constitution’s boundary between state
and federal authority: Printz v. United States, 521 U.S.
898, 117 S. Ct. 2365, 138 L. Ed. 2d 914 (1997), and New
York v. United States, 505 U.S. 144, 112 S. Ct. 2408, 120
[*2627] L. Ed. 2d 120 (1992). See ante, at 29. The
statutes at issue in both cases, however, compelled state
officials to act on the Federal Government’s behalf. 521
U.S., at 925-933, 117 S. Ct. 2365, 138 L. Ed. 2d 914
(holding unconstitutional a statute obligating state law
enforcement officers to implement a federal gun-control
law); New York, 505 U.S., at 176-177, 112 S. Ct. 2408,
120 L. Ed. 2d 120 (striking down a statute [***166]
requiring state legislators to pass regulations pursuant to
Congress’ instructions). “[Federal] laws conscripting state
officers,” the Court reasoned, “violate state sovereignty
and are thus not in accord with the Constitution.” Printz,
521 U.S., at 925, 935, 117 S. Ct. 2365, 138 L. Ed. 2d
914; New York, 505 U.S., at 176, 112 S. Ct. 2408, 120 L.

Ed. 2d 120.

The minimum coverage provision, in contrast, acts
“directly upon individuals, [**519] without employing
the States as intermediaries.” New York, 505 U.S., at 164,
112 S. Ct. 2408, 120 L. Ed. 2d 120. The provision is thus
entirely consistent with the Constitution’s design. See
Printz, 521 U.S., at 920, 117 S. Ct. 2365, 138 L. Ed. 914
(“[T]he Framers explicitly chose a Constitution that
confers upon Congress the power to regulate individuals,
not States.” (internal quotation marks omitted)).

Lacking case law support for his holding, THE
CHIEF JUSTICE nevertheless declares the minimum
coverage provision not “proper” because it is less “narrow
in scope” than other laws this Court has upheld under the
Necessary and Proper Clause. Ante, at 29 (citing United
States v. Comstock, 560 U.S. ___, 130 S. Ct. 1949, 176
L. Ed. 2d 878 (2010); Sabri v. United States, 541 U.S.
600, 124 S. Ct. 1941, 158 L. Ed. 2d 891 (2004);
[***167] Jinks v. Richland County, 538 U.S. 456, 123 S.
Ct. 1667, 155 L. Ed. 2d 631 (2003)). THE CHIEF
JUSTICE’s reliance on cases in which this Court has
affirmed Congress’ “broad authority to enact federal
legislation” under the Necessary and Proper Clause,
Comstock, 560 U.S., at ___, 130 S. Ct. 1949, 1956, 176
L. Ed. 2d 878, 888, is underwhelming.

Nor does THE CHIEF JUSTICE pause to explain
why the power to direct either the purchase of health
insurance or, alternatively, the payment of a penalty
collectible as a tax is more far-reaching than other
implied powers this Court has found meet under the
Necessary and Proper Clause. These powers include the
power to enact criminal laws, see, e.g., United States v.
Fox, 95 U.S. 670, 672, 24 L. Ed. 538 (1878); the power
to imprison, including civil imprisonment, see, e.g.,
Comstock, 560 U.S., at ___, 130 S. Ct. 1949, 176 L. Ed.
2d 878; and the power to create a national bank, see
McCulloch, 4 Wheat., at 425, 4 L. Ed. 579. See also
Jinks, 538 U.S., at 463, 123 S. Ct. 1667, 155 L. Ed. 2d
631 (affirming Congress’ power to alter the way a state
law is applied in state court, where the alteration
“promotes fair and efficient operation [***168] of the
federal courts”). 10

10 Indeed, Congress regularly and
uncontroversially requires individuals who are
“doing nothing,” see ante, at 20, to take action.
Examples include federal requirements to report
for jury duty, 28 U.S.C. §1866(g) (2006 ed.,

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Supp. IV); to register for selective service, 50
U.S.C. App. §453; to purchase firearms and gear
in anticipation of service in the Militia, 1 Stat. 271
(Uniform Militia Act of 1792); to turn gold
currency over to the Federal Government in
exchange for paper currency, see Nortz v. United
States, 294 U.S. 317, 328, 55 S. Ct. 428, 79 L. Ed.
907, 80 Ct. Cl. 859 (1935); and to file a tax return,
26 U.S.C. §6012 (2006 ed., Supp. IV).

In failing to explain why the individual mandate
threatens our constitutional order, THE CHIEF JUSTICE
deserves future courts. How is a judge to decide, when
ruling on the constitutionality of a federal statute,
whether Congress employed an “independent power,”
ante, at 28, or merely a “derivative” one, ante, at 29.
Whether the power used is “substantive,” ante, at 30, or
just “incidental,” [*2628] ante, at 29? The instruction
THE CHIEF JUSTICE, in effect, provides lower courts:
You will know it when you see it.

It [***169] is more than exaggeration to suggest that
the minimum coverage provision improperly intrudes on
“essential attributes of state sovereignty.” Ibid. (internal
quotation marks omitted) . First, the Affordable Care Act
does not operate “in [an] are[a] such [**520] as criminal
law enforcement or education where States historically
have been sovereign.” Lopez, 514 U.S., at 564, 115 S. Ct.
1624, 131 L. Ed. 2d 626. As evidenced by Medicare,
Medicaid, the Employee Retirement Income Security Act
of 1974 (ERISA), and the Health Insurance Portability
and Accountability Act of 1996 (HIPAA), the Federal
Government plays a lead role in the health-care sector,
both as a direct payer and as a regulator.

Second, and perhaps most important, the minimum
coverage provision, along with other provisions of the
ACA, addresses the very sort of interstate problem that
made the commerce power essential in our federal
system. See supra, at 12-14. The crisis created by the
large number of U.S. residents who lack health insurance
is one of national dimension that States are “separately
incompetent” to handle. See supra, at 7-8, 13. See also
Maryland Brief 15-26 (describing “the impediments to
effective state policymaking [***170] that flow from the
interconnectedness of each state’s healthcare economy”
and emphasizing that “state-level reforms cannot fully
address the problems associated with uncompensated
care”). Far from trampling on States’ sovereignty, the
ACA attempts a federal solution for the very reason that

the States, acting separately, cannot meet the need.
Notably, the ACA serves the general welfare of the
people of the United States while retaining a prominent
role for the States. See id., at 31-36 (explaining and
illustrating how the ACA affords States wide latitude in
implementing key elements of the Act’s reforms). 11

11 In a separate argument, the joint dissenters
contend that the minimum coverage provision is
not necessary and proper because it was not the
“only . . . way” Congress could have made the
guaranteed-issue and community-rating reforms
work. Post, at 9-10. Congress could also have
avoided an insurance-market death spiral, the
dissenters maintain, by imposing a surcharge on
those who did not previously purchase insurance
when those individuals eventually enter the
health-insurance system. Post, at 10. Or Congress
could “den[y] a full income tax credit” to those
who do not purchase [***171] insurance. Ibid.

Neither a surcharge on those who purchase
insurance nor the denial of a tax credit to those
who do not would solve the problem created by
guaranteed-issue and community-rating
requirements. Neither would prompt the purchase
of insurance before sickness or injury occurred.

But even assuming there were “practicable”
alternatives to the minimum coverage provision,
“we long ago rejected the view that the Necessary
and Proper Clause demands that an Act of
Congress be ‘absolutely necessary’ to the exercise
of an enumerated power.” Jinks v. Richland
County, 538 U.S. 456, 462, 123 S. Ct. 1667, 155
L. Ed. 2d 631 (2003) (quoting McCulloch v.
Maryland, 17 U.S. 316, 4 Wheat. 316, 414-415, 4
L. Ed. 579 (1819)). Rather, the statutory provision
at issue need only be “conducive” and
“[reasonably] adapted” to the goal Congress seeks
to achieve. Jinks, 538 U.S., at 462, 123 S. Ct.
1667, 155 L. Ed. 2d 631 (internal quotation marks
omitted). The minimum coverage provision meets
this requirement. See supra, at 31-33.

IV

In the early 20th century, this Court regularly struck
down economic regulation enacted by the peoples’
representatives in both the States and the Federal
Government. See, [***172] e.g., Carter Coal Co., 298

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U.S., at 303-304, 309-310, 56 S. Ct. 855, 80 L. Ed. 1160;
Dagenhart, 247 U.S., at 276-277, 38 S. Ct. 529, 62 L. Ed.
1101; [*2629] Lochner v. New York, 198 U.S. 45, 64,
25 S. Ct. 539, 49 L. Ed. 937 (1905). THE CHIEF
JUSTICE’s Commerce Clause opinion, and even more so
the joint dissenters’ reasoning, see post, at 4-16, [**521]
bear a disquieting resemblance to those long-overruled
decisions.

Ultimately, the Court upholds the individual mandate
as a proper exercise of Congress’ power to tax and spend
“for the . . . general Welfare of the United States.” Art. I,
§ 8, cl. 1; ante, at 43-44. I concur in that determination,
which makes THE CHIEF JUSTICE’s Commerce Clause
essay all the more puzzling. Why should THE CHIEF
JUSTICE strive so mightily to hem in Congress’ capacity
to meet the new problems arising constantly in our
everdeveloping modern economy? I find no satisfying
response to that question in his opinion. 12

12 THE CHIEF JUSTICE states that he must
evaluate the constitutionality of the minimum
coverage provision under the Commerce Clause
because the provision “reads more naturally as a
command to buy insurance than as a tax.” Ante, at
44. THE CHIEF JUSTICE ultimately [***173]
concludes, however, that interpreting the
provision as a tax is a “fairly possible”
construction. Ante, at 32 (internal quotation marks
omitted). That being so, I see no reason to
undertake a Commerce Clause analysis that is not
outcome determinative. 38 NATIONAL
FEDERATION OF INDEPENDENT BUSINESS
v. SEBELIUS

V

Through Medicaid, Congress has offered the States
an opportunity to furnish health care to the poor with the
aid of federal financing. To receive federal Medicaid
funds, States must provide health benefits to specified
categories of needy persons, including pregnant women,
children, parents, and adults with disabilities. Guaranteed
eligibility varies by category: for some it is tied to the
federal poverty level (incomes up to 100% or 133%); for
others it depends on criteria such as eligibility for
designated state or federal assistance programs. The ACA
enlarges the population of needy people States must
cover to include adults under age 65 with incomes up to
133% of the federal poverty level. The spending power
conferred by the Constitution, the Court has never

doubted, permits Congress to define the contours of
programs financed with federal funds. See, e.g.,
Pennhurst State School and Hospital v. Halderman, 451
U.S. 1, 17, 101 S. Ct. 1531, 67 L. Ed. 2d 694 (1981).
[***174] And to expand coverage, Congress could have
recalled the existing legislation, and replaced it with a
new law making Medicaid as embracive of the poor as
Congress chose.

The question posed by the 2010 Medicaid expansion,
then, is essentially this: To cover a notably larger
population, must Congress take the repeal/reenact route,
or may it achieve the same result by amending existing
law? The answer should be that Congress may expand by
amendment the classes of needy persons entitled to
Medicaid benefits. A ritualistic requirement that
Congress repeal and reenact spending legislation in order
to enlarge the population served by a federally funded
program would advance no constitutional principle and
would scarcely serve the interests of federalism. To the
contrary, such a requirement would rigidify Congress’
efforts to empower States by partnering with them in the
implementation of federal programs.

Medicaid is a prototypical example of federal-state
cooperation in serving the Nation’s general welfare.
Rather than authorizing a federal agency to administer a
uniform national health-care system for the poor,
Congress offered States the opportunity to tailor
Medicaid grants to their particular [***175] needs, so
long as they remain within bounds set by federal law. In
shaping [*2630] Medicaid, Congress did not endeavor
[**522] to fix permanently the terms participating states
must meet; instead, Congress reserved the “right to alter,
amend, or repeal” any provision of the Medicaid Act. 42
U.S.C. §1304. States, for their part, agreed to amend their
own Medicaid plans consistent with changes from time to
time made in the federal law. See 42 CFR
§430.12(c)(1)(i) (2011) . And from 1965 to the present,
States have regularly conformed to Congress’ alterations
of the Medicaid Act.

THE CHIEF JUSTICE acknowledges that Congress
may “condition the receipt of [federal] funds on the
States’ complying with restrictions on the use of those
funds,” ante, at 50, but nevertheless concludes that the
2010 expansion is unduly coercive. His conclusion rests
on three premises, each of them essential to his theory.
First, the Medicaid expansion is, in THE CHIEF
JUSTICE’s view, a new grant program, not an addition to

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the Medicaid program existing before the ACA’s
enactment. Congress, THE CHIEF JUSTICE maintains,
has threatened States with the loss of funds from an old
program in an effort to get them to adopt a new one.
Second, [***176] the expansion was unforeseeable by
the States when they first signed on to Medicaid. Third,
the threatened loss of funding is so large that the States
have no real choice but to participate in the Medicaid
expansion. THE CHIEF JUSTICE therefore-for the first
time ever-finds an exercise of Congress’ spending power
unconstitutionally coercive.

Medicaid, as amended by the ACA, however, is not
two spending programs; it is a single program with a
constant aim-to enable poor persons to receive basic
health care when they need it. Given past expansions,
plus express statutory warning that Congress may change
the requirements participating States must meet, there can
be no tenable claim that the ACA fails for lack of notice.
Moreover, States have no entitlement to receive any
Medicaid funds; they enjoy only the opportunity to accept
funds on Congress’ terms. Future Congresses are not
bound by their predecessors’ dispositions; they have
authority to spend federal revenue as they see fit. The
Federal Government, therefore, is not, as THE CHIEF
JUSTICE charges, threatening States with the loss of
“existing” funds from one spending program in order to
induce them to opt into another program. Congress
[***177] is simply requiring States to do what States
have long been required to do to receive Medicaid
funding: comply with the conditions Congress prescribes
for participation.

A majority of the Court, however, buys the argument
that prospective withholding of funds formerly available
exceeds Congress’ spending power. Given that holding, I
entirely agree with THE CHIEF JUSTICE as to the
appropriate remedy. It is to bar the withholding found
impermissible-not, as the joint dissenters would have it,
to scrap the expansion altogether, see post, at 46-48. The
dissenters’ view that the ACA must fall in its entirety is a
radical departure from the Court’s normal course. When a
constitutional infirmity mars a statute, the Court
ordinarily removes the infirmity. It undertakes a salvage
operation; it does not demolish the legislation. See, e.g.,
Brockett v. Spokane Arcades, Inc., 472 U.S. 491, 504,
105 S. Ct. 2794, 86 L. Ed. 2d 394 (1985) (Court’s normal
course is to declare a statute invalid “to the extent that it
reaches too far, but otherwise [to leave the statute]
intact”). That course is [**523] plainly in order where,

as in this case, Congress has expressly instructed courts
to leave untouched every [***178] provision not found
invalid. See 42 U.S.C. §1303. Because THE CHIEF
JUSTICE finds the withholding- [*2631] not the
granting-of federal funds incompatible with the Spending
Clause, Congress’ extension of Medicaid remains
available to any State that affirms its willingness to
participate.

A

Expansion has been characteristic of the Medicaid
program. Akin to the ACA in 2010, the Medicaid Act as
passed in 1965 augmented existing federal grant
programs jointly administered with the States. 13 States
were not required to participate in Medicaid. But if they
did, the Federal Government paid at least half the costs.
To qualify for these grants, States had to offer a
minimum level of health coverage to beneficiaries of four
federally funded, state-administered welfare programs:
Aid to Families with Dependent Children; Old Age
Assistance; Aid to the Blind; and Aid to the Permanently
and Totally Disabled. See Social Security Amendments
of 1965, §121(a), 79 Stat. 343; Schweiker v. Gray
Panthers, 453 U.S. 34, 37, 101 S. Ct. 2633, 69 L. Ed. 2d
460 (1981). At their option, States could enroll additional
“medically needy” individuals; these costs, too, were
partially borne by the Federal Government at the
[***179] same, at least 50%, rate. Ibid.

13 Medicaid was “plainly an extension of the
existing Kerr-Mills” grant program. Huberfeld,
Federalizing Medicaid, 14 U. Pa. J. Const. L. 431,
444-445 (2011). Indeed, the “section of the Senate
report dealing with Title XIX”-the title
establishing Medicaid-“was entitled,
‘Improvement and Extension of Kerr-Mills
Medical Assistance Program.'” Stevens &
Stevens, Welfare Medicine in America 51 (1974)
(quoting S. Rep. No. 404, 89th Cong., 1st Sess.,
pt. 1, p. 9 (1965)). Setting the pattern for
Medicaid, Kerr-Mills reimbursed States for a
portion of the cost of health care provided to
welfare recipients if States met conditions
specified in the federal law, e.g., participating
States were obliged to offer minimum coverage
for hospitalization and physician services. See
Huberfeld, supra, at 443-444.

Since 1965, Congress has amended the Medicaid
program on more than 50 occasions, sometimes quite

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sizably. Most relevant here, between 1988 and 1990,
Congress required participating States to include among
their beneficiaries pregnant women with family incomes
up to 133% of the federal poverty level, children up to
age 6 at the same income levels, and children ages
[***180] 6 to 18 with family incomes up to 100% of the
poverty level. See 42 U.S.C. §§1396a(a)(10)(A)(i),
1396a(l); Medicare Catastrophic Coverage Act of 1988,
§302, 102 Stat. 750; Omnibus Budget Reconciliation Act
of 1989, §6401, 103 Stat. 2258; Omnibus Budget
Reconciliation Act of 1990, §4601, 104 Stat. 1388-166.
These amendments added millions to the
Medicaid-eligible population. Dubay & Kenney, Lessons
from the Medicaid Expansions for Children and Pregnant
Women 5 (Apr. 1997).

Between 1966 and 1990, annual federal Medicaid
spending grew from $631.6 million to $42.6 billion; state
spending rose to $31 billion over the same period. See
Dept. of Health and Human Services, National Health
Expenditures by Type of Service and Source of Funds:
Calendar Years 1960 to 2010 (table). 14 And between
1990 and 2010, federal spending increased to $ 269.5
billion. Ibid. Enlargement of [**524] the population and
services covered by Medicaid, in short, has been the
trend.

14 Available online at
http://www.cms.gov/Research-Statistics-D
ata-and-Systems/Statistics-Trends-and-Re
ports/NationalHealthExpendData/
NationalHealthAccountsHistorical.html.

Compared to past alterations, the ACA is notable for
the extent to which [***181] the Federal Government
will pick up the tab. Medicaid’s 2010 expansion is
financed [*2632] largely by federal outlays. In 2014,
federal funds will cover 100% of the costs for newly
eligible beneficiaries; that rate will gradually decrease
before settling at 90% in 2020. 42 U.S.C. §1396d(y)
(2006 ed., Supp. IV). By comparison, federal
contributions toward the care of beneficiaries eligible
pre-ACA range from 50% to 83%, and averaged 57%
between 2005 and 2008. §1396d(b) (2006 ed., Supp. IV);
Dept. of Health and Human Services, Centers for
Medicare and Medicaid Services, C. Truffer et al., 2010
Actuarial Report on the Financial Outlook for Medicaid,
p. 20.

Nor will the expansion exorbitantly increase state
Medicaid spending. The Congressional Budget Office

(CBO) projects that States will spend 0.8% more than
they would have, absent the ACA. See CBO, Spending &
Enrollment Detail for CBO’s March 2009 Baseline. But
see ante, at 44-45 (“[T]he Act dramatically increases state
obligations under Medicaid.”); post, at 45 (joint opinion
of SCALIA, KENNEDY, THOMAS, and ALITO, JJ.)
(“[A]cceptance of the [ACA expansion] will impose very
substantial costs on participating States.”). Whatever the
increase [***182] in state obligations after the ACA, it
will pale in comparison to the increase in federal funding.
15

15 Even the study on which the plaintiffs rely,
see Brief for Petitioners 10, concludes that
“[w]hile most states will experience some
increase in spending, this is quite small relative to
the federal matching payments and low relative to
the costs of uncompensated care that [the states]
would bear if the[re] were no health reform.” See
Kaiser Commission on Medicaid & the
Uninsured, Medicaid Coverage & Spending in
Health Reform 16 (May 2010). Thus there can be
no objection to the ACA’s expansion of Medicaid
as an “unfunded mandate.” Quite the contrary, the
program is impressively well funded.

Finally, any fair appraisal of Medicaid would require
acknowledgment of the considerable autonomy States
enjoy under the Act. Far from “conscript[ing] state
agencies into the national bureaucratic army,” ante, at 55
(citing FERC v. Mississippi, 456 U.S. 742, 775, 102 S.
Ct. 2126, 72 L. Ed. 2d 532 (1982) (O’Connor, J.,
concurring in judgment in part and dissenting in part)
(brackets in original and internal quotation marks
omitted)), Medicaid “is designed to advance cooperative
federalism.” Wis. Dep’t of Health & Family Servs.
v.Blumer, 534 U.S. 473, 495 (2002), 122 S. Ct. 962, 151
L. Ed. 2d 935 [***183] (citing Harris v. McRae, 448
U.S. 297, 308, 100 S. Ct. 2671, 65 L. Ed. 2d 784 (1980)).
Subject to its basic requirements, the Medicaid Act
empowers States to “select dramatically different levels
of funding and coverage, alter and experiment with
different financing and delivery modes, and opt to cover
(or not to cover) a range of particular procedures and
therapies. States have leveraged this policy discretion to
generate a myriad of dramatically different Medicaid
programs over the past several decades.” Ruger, Of
Icebergs and Glaciers, 75 Law & Contemp. Probs. 215,
233 (2012) (footnote omitted). The ACA does not jettison
this approach. States, as first-line administrators, will

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continue to guide the distribution of substantial resources
among their needy populations.

[**525] The alternative to conditional federal
spending, it bears emphasis, is not state autonomy but
state marginalization. 16 In 1965, Congress elected to
nationalize health coverage for seniors through Medicare.
[*2633] It could similarly have established Medicaid as
an exclusively federal program. Instead, Congress gave
the States the opportunity to partner in the program’s
administration and development. Absent from the
nationalized [***184] model, of course, is the state-level
policy discretion and experimentation that is Medicaid’s
hallmark; undoubtedly the interests of federalism are
better served when States retain a meaningful role in the
implementation of a program of such importance. See
Caminker, State Sovereignty and Subordinacy, 95
Colum. L. Rev. 1001, 1002-1003 (1995) (cooperative
federalism can preserve “a significant role for state
discretion in achieving specified federal goals, where the
alternative is complete federal preemption of any state
regulatory role”); Rose-Ackerman, Cooperative
Federalism and Co-optation, 92 Yale L. J. 1344, 1346
(1983) (“If the federal government begins to take full
responsibility for social welfare spending and preempts
the states, the result is likely to be weaker . . . state
governments.”). 17

16 In 1972, for example, Congress ended the
federal cash-assistance program for the aged,
blind, and disabled. That program previously had
been operated jointly by the Federal and State
Governments, as is the case with Medicaid today.
Congress replaced the cooperative federal
program with the nationalized Supplemental
Security Income (SSI) program. See Schweiker v.
Gray Panthers, 453 U.S. 34, 38, 101 S. Ct. 2633,
69 L. Ed. 2d 460 (1981). [***185]
17 THE CHIEF JUSTICE and the joint
dissenters perceive in cooperative federalism a
“threa[t]” to “political accountability.” Ante, at 48;
see post, at 34-35. By that, they mean voter
confusion: Citizens upset by unpopular
government action, they posit, may ascribe to
state officials blame more appropriately laid at
Congress’ door. But no such confusion is apparent
in this case: Medicaid’s status as a federally
funded, state-administered program is hardly
hidden from view.

Although Congress “has no obligation to use its
Spending Clause power to disburse funds to the States,”
College Sav. Bank v. Florida Prepaid Postsecondary Ed.
Expense Bd., 527 U.S. 666, 686 (1999), 119 S. Ct. 2219,
144 L. Ed. 2d 605, it has provided Medicaid grants
notable for their generosity and flexibility. “[S]uch
funds,” we once observed, “are gifts,” id., 527 U.S. at
686-687, 119 S. Ct. 2219, 144 L. Ed. 2d 605, and so they
have remained through decades of expansion in their size
and scope.

B

The Spending Clause authorizes Congress “to pay
the Debts and provide for the . . . general Welfare of the
United States.” Art. I, § 8, cl. 1. To ensure that federal
funds granted to the States are spent “to ‘provide for the
[***186] . . .general Welfare’ in the manner Congress
intended,” ante, at 46, Congress must of course have
authority to impose limitations on the States’ use of the
federal dollars. This Court, time and again, has respected
Congress’ prescription of spending conditions, and has
required States to abide by them. See, e.g., Pennhurst,
451 U.S., at 17, 101 S. Ct. 1531, 67 L. Ed. 2d 694 (“[O]ur
cases have long recognized that Congress may fix the
terms on which it shall disburse federal money to the
States.”). In particular, we have recognized Congress’
prerogative to condition a State’s receipt of Medicaid
funding on compliance with the terms Congress set for
participation in the program. See, e.g., Harris, 448 U.S.,
at 301, 100 S. Ct. 2671, 65 L. Ed. 2d [**526] 784
(“[O]nce a State elects to participate [in Medicaid], it
must comply with the requirements of [the Medicaid
Act].”); Arkansas Dept. of Health and Human Servs. v.
Ahlborn, 547 U.S. 268, 275, 126 S. Ct. 1752, 164 L. Ed.
2d 459 (2006); Frew v. Hawkins, 540 U.S. 431, 433, 124
S. Ct. 899, 157 L. Ed. 2d 855 (2004); Atkins v. Rivera,
477 U.S. 154, 156-157, 106 S. Ct. 2456, 91 L. Ed. 2d 131
(1986).

Congress’ authority to condition the use of federal
[***187] funds is not confined to spending programs as
first launched. The legislature may, and often does,
amend the law, imposing new conditions grant recipients
henceforth must meet in order to continue receiving
funds. See infra, at 54 (describing Bennett v. Kentucky
Dep’t of Education, [*2634] 470 U.S. 656, 659-660, 105
S. Ct. 1544, 84 L. Ed. 2d 590 (1985) (enforcing
restriction added five years after adoption of educational
program)).

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Yes, there are federalism-based limits on the use of
Congress’ conditional spending power. In the leading
decision in this area, South Dakota v. Dole, 483 U.S. 203,
107 S. Ct. 2793, 97 L. Ed. 2d 171 (1987), the Court
identified four criteria. The conditions placed on federal
grants to States must (a) promote the “general welfare,”
(b) “unambiguously” inform States what is demanded of
them, (c) be germane “to the federal interest in particular
national projects or programs,” and (d) not “induce the
States to engage in activities that would themselves be
unconstitutional.” Id., at 207-208, 210, 107 S. Ct. 2793,
97 L. Ed. 2d 171 (internal quotation marks omitted). 18

18 Although the plaintiffs, in the proceedings
below, did not contest the ACA’s satisfaction of
these [***188] criteria, see 648 F.3d 1235, 1263
(CA11 2011), THE CHIEF JUSTICE appears to
rely heavily on the second criterion. Compare
ante, at 52, 54, with infra, at 52-54.

The Court in Dole mentioned, but did not adopt, a
further limitation, one hypothetically raised a
half-century earlier: In “some circumstances,” Congress
might be prohibited from offering a “financial
inducement . . . so coercive as to pass the point at which
‘pressure turns into compulsion.'” Id., 483 U.S. at 211,
107 S. Ct. 2793, 97 L. Ed. 2d 171 (quoting Steward
Machine Co. v. Davis, 301 U.S. 548, 590, 57 S. Ct. 883,
81 L. Ed. 1279, 1937-1 C.B. 444 (1937)). Prior to today’s
decision, however, the Court has never ruled that the
terms of any grant crossed the indistinct line between
temptation and coercion.

Dole involved the National Minimum Drinking Age
Act, 23 U.S.C. §158, enacted in 1984. That Act directed
the Secretary of Transportation to withhold 5% of the
federal highway funds otherwise payable to a State if the
State permitted purchase of alcoholic beverages by
persons less than 21 years old. Drinking age was not
within the authority of Congress to regulate, South
Dakota argued, because the Twenty-First Amendment
[***189] gave the States exclusive power to control the
manufacture, transportation, and consumption of
alcoholic beverages. The small percentage of
highway-construction funds South Dakota stood to lose
by adhering to 19 as the age of eligibility to purchase
3.2% beer, however, was not enough to qualify as
coercion, the Court concluded.

[**527] This case does not present the concerns
that led the Court in Dole even to consider the prospect of

coercion. In Dole, the condition-set 21 as the minimum
drinking age- did not tell the States how to use funds
Congress provided for highway construction. Further, in
view of the Twenty-First Amendment, it was an open
question whether Congress could directly impose a
national minimum drinking age.

The ACA, in contrast, relates solely to the federally
funded Medicaid program; if States choose not to
comply, Congress has not threatened to withhold funds
earmarked for any other program. Nor does the ACA use
Medicaid funding to induce States to take action
Congress itself could not undertake. The Federal
Government undoubtedly could operate its own
health-care program for poor persons, just as it operates
Medicare for seniors’ health care. See supra, at 44.

That is what [***190] makes this such a simple
case, and the Court’s decision so unsettling. Congress,
aiming to assist the needy, has appropriated federal
money to subsidize state health-insurance programs that
meet federal standards. The principal standard the ACA
sets is that the state program cover adults earning no
more [*2635] than 133% of the federal poverty line.
Enforcing that prescription ensures that federal funds will
be spent on health care for the poor in furtherance of
Congress’ present perception of the general welfare.

C

THE CHIEF JUSTICE asserts that the Medicaid
expansion creates a “new health care program.” Ante, at
54. Moreover, States could “hardly anticipate” that
Congress would “transform [the program] so
dramatically.” Ante, at 55. Therefore, THE CHIEF
JUSTICE maintains, Congress’ threat to withhold “old”
Medicaid funds based on a State’s refusal to participate in
the “new” program is a “threa[t] to terminate [an]other . .
. independent gran[t].” Ante, at 50, 52-53. And because
the threat to withhold a large amount of funds from one
program “leaves the States with no real option but to
acquiesce [in a newly created program],” THE CHIEF
JUSTICE concludes, the Medicaid expansion is
unconstitutionally [***191] coercive. Ante, at 52.

1

The starting premise on which THE CHIEF
JUSTICE’s coercion analysis rests is that the ACA did
not really “extend” Medicaid; instead, Congress created
an entirely new program to co-exist with the old. THE

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CHIEF JUSTICE calls the ACA new, but in truth, it
simply reaches more of America’s poor than Congress
originally covered.

Medicaid was created to enable States to provide
medical assistance to “needy persons.” See S. Rep. No.
404, 89th Cong., 1st Sess., pt. 1, p. 9 (1965) . See also
§121(a), 79 Stat. 343 (The purpose of Medicaid is to
enable States “to furnish . . . medical assistance on behalf
of [certain persons] whose income and resources are
insufficient to meet the costs of necessary medical
services.”). By bringing health care within the reach of a
larger population of Americans unable to afford it, the
Medicaid expansion is an extension of that basic aim.

The Medicaid Act contains hundreds of provisions
governing operation [**528] of the program, setting
conditions ranging from “Limitation on payments to
States for expenditures attributable to taxes,” 42 U.S.C.
§1396a(t) (2006 ed.), to “Medical assistance to aliens not
lawfully admitted for permanent residence,” [***192]
§1396b(v) (2006 ed. and Supp. IV). The Medicaid
expansion leaves unchanged the vast majority of these
provisions; it adds beneficiaries to the existing program
and specifies the rate at which States will be reimbursed
for services provided to the added beneficiaries. See
ACA §§2001(a)(1), 124 Stat. 271-272 , (3). The ACA
does not describe operational aspects of the program for
these newly eligible persons; for that information, one
must read the existing Medicaid Act. See 42 U.S.C.
§§1396-1396v(b) (2006 ed. and Supp. IV).

Congress styled and clearly viewed the Medicaid
expansion as an amendment to the Medicaid Act, not as a
“new” health-care program. To the four categories of
beneficiaries for whom coverage became mandatory in
1965, and the three mandatory classes added in the late
1980’s, see supra, at 41-42, the ACA adds an eighth:
individuals under 65 with incomes not exceeding 133%
of the federal poverty level. The expansion is effectuated
by §2001 of the ACA, aptly titled: “Medicaid Coverage
for the Lowest Income Populations.” 124 Stat. 271. That
section amends Title 42, Chapter 7, Subchapter XIX:
Grants to States for Medical Assistance Programs.
Commonly known as the Medicaid [***193] Act,
Subchapter XIX filled some 278 pages in 2006. Section
2001 of the [*2636] ACA would add approximately
three pages. 19

19 Compare Subchapter XIX, 42 U.S.C.
§§1396-1396v(b) (2006 ed. and Supp. IV) with

§§1396a(a) (10)(A)(i)(VIII) (2006 ed. and Supp.
IV); 1396a(a)(10)(A)(ii)(XX), 1396a(a)(75),
1396a(k), 1396a(gg) to (hh), 1396d(y),
1396r-1(e), 1396u-7(b)(5) to (6).

Congress has broad authority to construct or adjust
spending programs to meet its contemporary
understanding of “the general Welfare.” Helvering v.
Davis, 301 U.S. 619, 640-641, 57 S. Ct. 904, 81 L. Ed.
1307, 1937-1 C.B. 360 (1937). Courts owe a large
measure of respect to Congress’ characterization of the
grant programs it establishes. See Steward Machine, 301
U.S., at 594, 57 S. Ct. 883, 81 L. Ed. 1279. Even if courts
were inclined to second-guess Congress’ conception of
the character of its legislation, how would reviewing
judges divine whether an Act of Congress, purporting to
amend a law, is in reality not an amendment, but a new
creation? At what point does an extension become so
large that it “transforms” the basic law?

Endeavoring to show that Congress created a new
program, THE CHIEF JUSTICE cites three aspects of the
[***194] expansion. First, he asserts that, in covering
those earning no more than 133% of the federal poverty
line, the Medicaid expansion, unlike pre-ACA Medicaid,
does not “care for the neediest among us.” Ante, at 53.
What makes that so? Single adults earning no more than
$14,856 per year–133% of the current federal poverty
level-surely rank among the Nation’s poor. Second,
according to THE CHIEF JUSTICE, “Congress mandated
that newly eligible persons receive a level of coverage
that is less comprehensive than the traditional Medicaid
benefit package.” Ibid. That less comprehensive benefit
package, however, is not an [**529] innovation
introduced by the ACA; since 2006, States have been free
to use it for many of their Medicaid beneficiaries. 20 The
level of benefits offered therefore does not set apart post
-ACA Medicaid recipients from all those entitled to
benefits pre-ACA.

20 The Deficit Reduction Act of 2005 authorized
States to provide “benchmark coverage” or
“benchmark equivalent coverage” to certain
Medicaid populations. See §6044, 120 Stat. 88, 42
U.S.C. §1396u-7 (2006 ed. and Supp. IV). States
may offer the same level of coverage to persons
newly eligible under the ACA. See §1396a(k).

Third, [***195] THE CHIEF JUSTICE correctly
notes that the reimbursement rate for participating States
is different regarding individuals who became

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Medicaid-eligible through the ACA. Ibid. But the rate
differs only in its generosity to participating States.
Under pre -ACA Medicaid, the Federal Government pays
up to 83% of the costs of coverage for current enrollees,
§1396d(b) (2006 ed. and Supp. IV); under the ACA, the
federal contribution starts at 100% and will eventually
settle at 90%, §1396d(y). Even if one agreed that a
change of as little as 7 percentage points carries
constitutional significance, is it not passing strange to
suggest that the purported incursion on state sovereignty
might have been averted, or at least mitigated, had
Congress offered States less money to carry out the same
obligations?

Consider also that Congress could have repealed
Medicaid. See supra, at 38-39 (citing 42 U.S.C. §1304);
Brief for Petitioners in No. 11-400, p. 41. Thereafter,
Congress could have enacted Medicaid II, a new program
combining the pre -2010 coverage with the expanded
coverage required by the ACA. By what right does a
court stop Congress from building up without first tearing
down?

2

THE CHIEF JUSTICE [***196] finds the Medicaid
expansion vulnerable because it took [*2637]
participating States by surprise. Ante, at 54. “A State
could hardly anticipate that Congres[s]” would endeavor
to “transform [the Medicaid program] so dramatically,”
he states. Ante, at 54-55. For the notion that States must
be able to foresee, when they sign up, alterations
Congress might make later on, THE CHIEF JUSTICE
cites only one case: Pennhurst State School and Hospital
v. Halderman, 451 U.S. 1, 101 S. Ct. 1531, 67 L. Ed. 2d
694.

In Pennhurst, residents of a state-run, federally
funded institution for the mentally disabled complained
of abusive treatment and inhumane conditions in alleged
violation of the Developmentally Disabled Assistance
and Bill of RightsAct. 451 U.S., at 5-6, 101 S. Ct. 1531,
67 L. Ed. 2d 694. We held that the State was not
answerable in damages for violating conditions it did not
“voluntarily and knowingly accep[t].” Id., 451 U.S. at 17,
27, 101 S. Ct. 1531, 67 L. Ed. 2d 694. Inspecting the
statutory language and legislative history, we found that
the Act did not “unambiguously” impose the requirement
on which the plaintiffs relied: that they receive
appropriate treatment in the least restrictive [***197]
environment. Id., 451 U.S. at 17-18, 101 S. Ct. 1531, 67

L. Ed. 2d 694. Satisfied that Congress had not clearly
conditioned the States’ receipt of federal funds on the
States’ provision of such treatment, we declined to read
such a requirement into the Act. Congress’ spending
power, we concluded, “does [**530] not include
surprising participating States with postacceptance or
‘retroactive’ conditions.” Id., 451 U.S. at 24-25, 101 S. Ct.
1531, 67 L. Ed. 2d 694.

Pennhurst thus instructs that “if Congress intends to
impose a condition on the grant of federal moneys, it
must do so unambiguously.” Ante, at 53 (quoting
Pennhurst, 451 U.S., at 17, 101 S. Ct. 1531, 67 L. Ed. 2d
694). That requirement is met in this case. Section 2001
does not take effect until 2014. The ACA makes perfectly
clear what will be required of States that accept Medicaid
funding after that date: They must extend eligibility to
adults with incomes no more than 133% of the federal
poverty line. See 42 U.S.C. §1396a(a)(10)(A) (i)(VIII)
(2006 ed. and Supp. IV).

THE CHIEF JUSTICE appears to find in Pennhurst
a requirement that, when spending legislation is first
passed, or when States first enlist in the federal program,
Congress [***198] must provide clear notice of
conditions it might later impose. If I understand his point
correctly, it was incumbent on Congress, in 1965, to warn
the States clearly of the size and shape potential changes
to Medicaid might take. And absent such notice, sizable
changes could not be made mandatory. Our decisions do
not support such a requirement. 21

21 THE CHIEF JUSTICE observes that
“Spending Clause legislation [i]s much in the
nature of a contract.” Ante, at 46 (internal
quotation marks omitted). See also post, at 33
(joint opinion of SCALIA, KENNEDY,
THOMAS, and ALITO, JJ.) (same). But the Court
previously has recognized that “[u]nlike normal
contractual undertakings, federal grant programs
originate in and remain governed by statutory
provisions expressing the judgment of Congress
concerning desirable public policy.” Bennett v.
Kentucky Dep’t of Education, 470 U.S. 656, 669,
105 S. Ct. 1544, 84 L. Ed. 2d 590 (1985).

In Bennett v. New Jersey, 470 U.S. 632, 105 S. Ct.
1555, 84 L. Ed. 2d 572 (1985), the Secretary of
Education sought to recoup Title I funds 22 based on the
State’s noncompliance, from 1970 to 1972, with a 1978
amendment to Title I. Relying on Pennhurst, [*2638]

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we rejected the [***199] Secretary’s attempt to recover
funds based on the States’ alleged violation of a rule that
did not exist when the State accepted and spent the funds.
See 470 U.S., at 640, 105 S. Ct. 1555, 84 L. Ed. 2d 572
(“New Jersey[,] when it applied for and received Title I
funds for the years 1970-1972[,] had no basis to believe
that the propriety of the expenditures would be judged by
any standards other than the ones in effect at the time.”
(citing Pennhurst, 451 U.S., at 17, 24-25, 101 S. Ct.
1531, 67 L. Ed. 2d 694; emphasis added)).

22 Title I of the Elementary and Secondary
Education Act of 1965 provided federal grants to
finance supplemental educational programs in
school districts with high concentrations of
children from low-income families. See Bennett v.
New Jersey, 470 U.S. 632, 634-635, 105 S. Ct.
1555, 84 L. Ed. 2d 572 (1985) (citing Pub. L. No.
89-10, 79 Stat. 27).

When amendment of an existing grant program has
no such retroactive effect, however, we have upheld
Congress’ instruction. In Bennett v. Kentucky Dep’t of
Education, 470 U.S. 656, 105 S. Ct. 1544, 84 L. Ed. 2d
590 (1985), the Secretary sued to recapture Title I funds
based on the Commonwealth’s 1974 violation of a
spending [***200] condition Congress added to Title I in
1970. Rejecting Kentucky’s argument pinned to
Pennhurst, we held that the Commonwealth suffered no
surprise after accepting the federal funds. Kentucky was
therefore obliged to return the money. 470 U.S., at
665-666, 673-674, 105 S. Ct. 1544, 84 L. Ed. 2d 590. The
conditions imposed [**531] were to be assessed as of
1974, in light of “the legal requirements in place when
the grants were made,” id., 470 U.S., at 670, 105 S. Ct.
1544, 84 L. Ed. 2d 590, not as of 1965, when Title I was
originally enacted.

As these decisions show, Pennhurst’s rule demands
that conditions on federal funds be unambiguously clear
at the time a State receives and uses the money-not at the
time, perhaps years earlier, when Congress passed the
law establishing the program. See also Dole, 483 U.S., at
208, 107 S. Ct. 2793, 97 L. Ed. 2d 171 (finding
Pennhurst satisfied based on the clarity of the Federal
Aid Highway Act as amended in 1984, without looking
back to 1956, the year of the Act’s adoption).

In any event, from the start, the Medicaid Act put
States on notice that the program could be changed: “The
right to alter, amend, or repeal any provision of

[Medicaid],” the statute [***201] has read since 1965,
“is hereby reserved to the Congress.” 42 U.S.C. §1304.
The “effect of these few simple words” has long been
settled. See National Railroad Passenger Corporation v.
Atchison, T. & S. F. R. Co., 470 U.S. 451, 467-468, n. 22,
105 S. Ct. 1441, 84 L. Ed. 2d 432 (1985) (citing Sinking
Fund Cases, 99 U.S. 700, 720, 25 L. Ed. 496, 25 L. Ed.
504, 14 Ct. Cl. 594 (1879)). By reserving the right to
“alter, amend, [or] repeal” a spending program, Congress
“has given special notice of its intention to retain. . . full
and complete power to make such alterations and
amendments . . . as come within the just scope of
legislative power.” Id., at 720, 25 L. Ed. 504, 14 Ct. Cl.
594.

Our decision in Bowen v. Public Agencies Opposed
to Social Security Entrapment, 477 U.S. 41, 51-52, 106 S.
Ct. 2390, 91 L. Ed. 2d 35 (1986), is guiding here. As
enacted in 1935, the Social Security Act did not cover
state employees. Id., at 44, 106 S. Ct. 2390, 91 L. Ed. 2d
35. In response to pressure from States that wanted
coverage for their employees, Congress, in 1950,
amended the Act to allow States to opt into the program.
Id., at 45, 106 S. Ct. 2390, 91 L. Ed. 2d 35. The statutory
provision [***202] giving States this option expressly
permitted them to withdraw from the program. Ibid.

Beginning in the late 1970’s, States increasingly
exercised the option to withdraw. Id., at 46, 106 S. Ct.
2390, 91 L. Ed. 2d 35. Concerned that withdrawals were
threatening the integrity of Social Security, Congress
repealed the termination provision. Congress thereby
changed Social Security from a program voluntary for the
States to one from which they could not escape. Id., at 48,
106 S. Ct. 2390, 91 L. Ed. 2d 35. California objected,
arguing that the change impermissibly deprived it of a
right to withdraw [*2639] from Social Security. Id., at
49-50, 106 S. Ct. 2390, 91 L. Ed. 2d 35. We unanimously
rejected California’s argument. Id., at 51-53, 106 S. Ct.
2390, 91 L. Ed. 2d 35. By including in the Act “a clause
expressly reserving to it ‘[t]he right to alter, amend, or
repeal any provision’ of the Act,” we held, Congress put
States on notice that the Act “created no contractual
rights.” Id., at 51-52, 106 S. Ct. 2390, 91 L. Ed. 2d 35.
The States therefore had no law-based ground on which
to complain about the amendment, despite the significant
character of the change.

THE CHIEF JUSTICE nevertheless would [***203]
rewrite §1304 to countenance only the “right to alter

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somewhat,” or “amend, but not too much.” Congress,
however, did not so qualify §1304. [**532] Indeed,
Congress retained discretion to “repeal” Medicaid,
wiping it out entirely. Cf. Delta Air Lines, Inc. v. August,
450 U.S. 346, 368, 101 S. Ct. 1146, 67 L. Ed. 2d 287
(1981) (Rehnquist, J., dissenting) (invoking “the
common-sense maxim that the greater includes the
lesser”). As Bowen indicates, no State could reasonably
have read §1304 as reserving to Congress authority to
make adjustments only if modestly sized.

In fact, no State proceeded on that understanding. In
compliance with Medicaid regulations, each State
expressly undertook to abide by future Medicaid changes.
See 42 CFR §430.12(c)(1) (2011) (“The [state Medicaid]
plan must provide that it will be amended whenever
necessary to reflect . . . [c]hanges in Federal law,
regulations, policy interpretations, or court decisions.”).
Whenever a State notifies the Federal Government of a
change in its own Medicaid program, the State certifies
both that it knows the federally set terms of participation
may change, and that it will abide by those changes as a
condition of continued participation. [***204] See, e.g.,
Florida Agency for Health Care Admin., State Plan
Under Title XIX of the Social Security Act Medical
Assistance Program §7.1, p. 86 (Oct. 6, 1992).

THE CHIEF JUSTICE insists that the most recent
expansion, in contrast to its predecessors, “accomplishes
a shift in kind, not merely degree.” Ante, at 53. But why
was Medicaid altered only in degree, not in kind, when
Congress required States to cover millions of children
and pregnant women? See supra, at 41-42. Congress did
not “merely alte[r] and expan[d] the boundaries of ” the
Aid to Families with Dependent Children program. But
see ante, at 53-55. Rather, Congress required
participating States to provide coverage tied to the federal
poverty level (as it later did in the ACA), rather than to
the AFDC program. See Brief for National Health Law
Program et al. as Amici Curiae 16-18. In short, given
§1304, this Court’s construction of §1304’s language in
Bowen, and the enlargement of Medicaid in the years
since 1965, 23 a State would be hard put to complain that
it lacked fair notice when, in 2010, Congress altered
Medicaid to embrace a larger portion of the Nation’s
poor.

23 Note, in this regard, the extension of Social
Security, [***205] which began in 1935 as an
old-age pension program, then expanded to

include survivor benefits in 1939 and disability
benefits in 1956. See Social Security Act, ch. 531,
49 Stat. 622-625; Social Security Act
Amendments of 1939, 53 Stat. 1364-1365; Social
Security Amendments of 1956, ch. 836, §103, 70
Stat. 815-816.

3

THE CHIEF JUSTICE ultimately asks whether “the
financial inducement offered by Congress . . . pass[ed]
the point at which pressure turns into compulsion.” Ante,
at 50 (internal quotation marks omitted). The financial
inducement Congress employed here, he concludes,
crosses [*2640] that threshold: The threatened
withholding of “existing Medicaid funds” is “a gun to the
head” that forces States to acquiesce. Ante, at 50-51
(citing 42 U.S.C. §1396c). 24

24 The joint dissenters, for their part, would
make this the entire inquiry. “[I]f States really
have no choice other than to accept the package,”
they assert, “the offer is coercive.” Post, at 35.
THE CHIEF JUSTICE recognizes Congress’
authority to construct a single federal program
and “condition the receipt of funds on the States’
complying with restrictions on the use of those
funds.” Ante, at 50. For the joint dissenters,
however, [***206] all that matters, it appears, is
whether States can resist the temptation of a given
federal grant. Post, at 35. On this logic, any
federal spending program, sufficiently large and
well-funded, would be unconstitutional. The joint
dissenters point to smaller programs States might
have the will to refuse. See post, at 40-41
(elementary and secondary education). But how is
a court to judge whether “only 6.6% of all state
expenditures,” post, at 41, is an amount States
could or would do without?

Speculations of this genre are characteristic
of the joint dissent. See, e.g., post, at 35 (“it may
be state officials who will bear the brunt of public
disapproval” for joint federal-state endeavors);
ibid., (“federal officials . . . may remain insulated
from the electoral ramifications of their
decision”); post, at 37 (“a heavy federal tax . . .
levied to support a federal program that offers
large grants to the States . . . may, as a practical
matter, [leave States] unable to refuse to
participate”); ibid. (withdrawal from a federal

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program “would likely force the State to impose a
huge tax increase”); post, at 46 (state share of
ACA expansion costs “may increase in the
future”) (all emphasis [***207] added; some
internal quotation marks omitted). The joint
dissenters are long on conjecture and short on
real-world examples.

[**533] THE CHIEF JUSTICE sees no need to “fix
the outermost line,” Steward Machine, 301 U.S., at 591,
57 S. Ct. 883, 81 L. Ed. 1279, “where persuasion gives
way to coercion,” ante, at 55. Neither do the joint
dissenters. See post, at 36, 38. 25 Notably, the decision on
which they rely, Steward Machine, found the statute at
issue inside the line, “wherever the line may be.” 301
U.S., at 591, 57 S. Ct. 883, 81 L. Ed. 1279.

25 The joint dissenters also rely heavily on
Congress’ perceived intent to coerce the States.
Post, at 42-46; see, e.g., post, at 42 (“In crafting
the ACA, Congress clearly expressed its informed
view that no State could possibly refuse the offer
that the ACA extends.”). We should not lightly
ascribe to Congress an intent to violate the
Constitution (at least as my colleagues read it).
This is particularly true when the ACA could just
as well be comprehended as demonstrating
Congress’ mere expectation, in light of the
uniformity of past participation and the generosity
of the federal contribution, that States would not
withdraw. Cf. South Dakota v. Dole, 483 U.S.
203, 211, 107 S. Ct. 2793, 97 L. Ed. 2d 171
[***208] (1987) (“We cannot conclude . . . that a
conditional grant of federal money . . . is
unconstitutional simply by reason of its success in
achieving the congressional objective.”).

When future Spending Clause challenges arrive, as
they likely will in the wake of today’s decision, how will
litigants and judges assess whether “a State has a
legitimate choice whether to accept the federal conditions
in exchange for federal funds”? Ante, at 48. Are courts to
measure the number of dollars the Federal Government
might withhold for noncompliance? The portion of the
State’s budget at stake? And which State’s-or States’-
budget is determinative: the lead plaintiff, all challenging
States (26 in this case, many with quite different fiscal
situations), or some national median? Does it matter that
Florida, unlike most States, imposes no state income tax,
and therefore might be able to replace foregone federal

funds with new state revenue? 26 Or that the [*2641]
coercion state officials in fact fear is punishment at
[**534] the ballot box for turning down a politically
popular federal grant?

26 Federal taxation of a State’s citizens,
according to the joint dissenters, may diminish a
State’s ability to raise new revenue. [***209]
This, in turn, could limit a State’s capacity to
replace a federal program with an “equivalent”
state-funded analog. Post, at 40. But it cannot be
true that “the amount of the federal taxes
extracted from the taxpayers of a State to pay for
the program in question is relevant in determining
whether there is impermissible coercion.” Post, at
37. When the United States Government taxes
United States citizens, it taxes them “in their
individual capacities” as “the people of
America”-not as residents of a particular State.
See U.S. Term Limits, Inc. v. Thornton, 514 U.S.
779, 839, 115 S. Ct. 1842, 131 L. Ed. 2d 881
(1995) (KENNEDY, J., concurring). That is
because the “Framers split the atom of
sovereignty[,] . . . establishing two orders of
government”-“one state and one federal”-“each
with its own direct relationship” to the people. Id.,
at 838, 115 S. Ct. 1842, 131 L. Ed. 2d 881.

A State therefore has no claim on the money
its residents pay in federal taxes, and federal
“spending programs need not help people in all
states in the same measure.” See Brief for David
Satcher et al. as Amici Curiae 19. In 2004, for
example, New Jersey received 55 cents in federal
spending for every dollar [***210] its residents
paid to the Federal Government in taxes, while
Mississippi received $1.77 per tax dollar paid. C.
Dubay, Tax Foundation, Federal Tax Burdens and
Expenditures by State: Which States Gain Most
from Federal Fiscal Operations? 2 (Mar. 2006).
Thus no constitutional problem was created when
Arizona declined for 16 years to participate in
Medicaid, even though its residents’ tax dollars
financed Medicaid programs in every other State.

The coercion inquiry, therefore, appears to involve
political judgments that defy judicial calculation. See
Baker v. Carr, 369 U.S. 186, 217, 82 S. Ct. 691, 7 L. Ed.
2d 663 (1962). Even commentators sympathetic to robust
enforcement of Dole’s limitations, see supra, at 46, have

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concluded that conceptions of “impermissible coercion”
premised on States’ perceived inability to decline federal
funds “are just too amorphous to be judicially
administrable.” Baker & Berman, Getting off the Dole,
78 Ind. L. J. 459, 521, 522, n. 307 (2003) (citing, e.g.,
Scalia, The Rule of Law as a Law of Rules, 56 U. Chi. L.
Rev. 1175 (1989)).

At bottom, my colleagues’ position is that the States’
reliance on federal funds limits Congress’ authority to
alter its spending [***211] programs. This gets things
backwards: Congress, not the States, is tasked with
spending federal money in service of the general welfare.
And each successive Congress is empowered to
appropriate funds as it sees fit. When the 110th Congress
reached a conclusion about Medicaid funds that differed
from its predecessors’ view, it abridged no State’s right to
“existing,” or “pre-existing,” funds. But see ante, at
51-52; post, at 47-48 (joint opinion of SCALIA,
KENNEDY, THOMAS, and ALITO, JJ.). For, in fact,
there are no such funds. There is only money States
anticipate receiving from future Congresses.

D

Congress has delegated to the Secretary of Health
and Human Services the authority to withhold, in whole
or in part, federal Medicaid funds from States that fail to
comply with the Medicaid Act as originally composed
and as subsequently amended. 42 U.S.C. §1396c. 27 THE
CHIEF JUSTICE, however, holds that the Constitution
precludes the Secretary from withholding “existing”
Medicaid funds based on [*2642] States’ refusal to
comply with the expanded Medicaid program. Ante, at
55. For the foregoing reasons, I disagree that any such
withholding would violate the Spending Clause.
Accordingly, I would [***212] affirm the decision of
[**535] the Court of Appeals for the Eleventh Circuit in
this regard.

But in view of THE CHIEF JUSTICE’s disposition, I
agree with him that the Medicaid Act’s severability clause
determines the appropriate remedy. That clause provides
that “[i]f any provision of [the Medicaid Act], 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.” 42 U.S.C. §1303.

The Court does not strike down any provision of the
ACA. It prohibits only the “application” of the Secretary’s

authority to withhold Medicaid funds from States that
decline to conform their Medicaid plans to the ACA’s
requirements. Thus the ACA’s authorization of funds to
finance the expansion remains intact, and the Secretary’s
authority to withhold funds for reasons other than
noncompliance with the expansion remains unaffected.

27 As THE CHIEF JUSTICE observes, the
Secretary is authorized to withhold all of a State’s
Medicaid funding. See ante, at 51. But total
withdrawal is what the Secretary may, not must,
do. She has discretion to withhold only a portion
of the Medicaid [***213] funds otherwise due a
noncompliant State. See §1396c; cf. 45 CFR
§80.10(f) (2011) (Secretary may enforce Title
VI’s nondiscrimination requirement through
“refusal to grant or continue Federal financial
assistance, in whole or in part.” (emphasis
added)). The Secretary, it is worth noting, may
herself experience political pressures, which
would make her all the more reluctant to cut off
funds Congress has appropriated for a State’s
needy citizens.

Even absent §1303’s command, we would have no
warrant to invalidate the Medicaid expansion, contra
post, at 46-48 (joint opinion of SCALIA, KENNEDY,
THOMAS, and ALITO, JJ.), not to mention the entire
ACA, post, at 49-64 (same). For when a court confronts
an unconstitutional statute, its endeavor must be to
conserve, not destroy, the legislature’s dominant
objective. See, e.g., Ayotte v. Planned Parenthood of
Northern New Eng., 546 U.S. 320, 328-330, 126 S. Ct.
961, 163 L. Ed. 2d 812 (2006). In this case, that objective
was to increase access to health care for the poor by
increasing the States’ access to federal funds. THE
CHIEF JUSTICE is undoubtedly right to conclude that
Congress may offer States funds “to expand the
availability of health [***214] care, and requir[e] that
States accepting such funds comply with the conditions
on their use.” Ante, at 55. I therefore concur in the
judgment with respect to Part IV-B of THE CHIEF
JUSTICE’s opinion.

* * *

For the reasons stated, I agree with THE CHIEF
JUSTICE that, as to the validity of the minimum
coverage provision, the judgment of the Court of Appeals
for the Eleventh Circuit should be reversed. In my view,
the provision encounters no constitutional obstruction.

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Further, I would uphold the Eleventh Circuit’s decision
that the Medicaid expansion is within Congress’ spending
power.

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

JUSTICE SCALIA, JUSTICE KENNEDY,
JUSTICE THOMAS, and JUSTICE ALITO, dissenting.

Congress has set out to remedy the problem that the
best health care is beyond the reach of many Americans
who cannot afford it. It can assuredly do that, by
exercising the powers accorded to it under the
Constitution. The question in this case, however, is
whether the complex structures and provisions of the
Patient Protection and Affordable Care Act (Affordable
Care Act or ACA) go beyond those powers. We conclude
that they do.

This case is in one respect difficult: it presents
[***215] two questions of first impression. The first of
those is whether failure to engage in economic activity
(the purchase of health insurance) is subject to regulation
under the Commerce Clause. Failure to act does result in
an effect on commerce, and hence might be said to come
under [**536] this Court’s “affecting commerce”
criterion of Commerce Clause jurisprudence. But in none
of its decisions has this Court extended the Clause that
far. [*2643] The second question is whether the
congressional power to tax and spend, U.S. Const., Art. I,
§ 8, cl. 1, permits the conditioning of a State’s continued
receipt of all funds under a massive state-administered
federal welfare program upon its acceptance of an
expansion to that program. Several of our opinions have
suggested that the power to tax and spend cannot be used
to coerce state administration of a federal program, but
we have never found a law enacted under the spending
power to be coercive. Those questions are difficult.

The case is easy and straightforward, however, in
another respect. What is absolutely clear, affirmed by the
text of the 1789 Constitution, by the Tenth Amendment
ratified in 1791, and by innumerable cases of ours in the
220 years [***216] since, is that there are structural
limits upon federal power-upon what it can prescribe with
respect to private conduct, and upon what it can impose
upon the sovereign States. Whatever may be the
conceptual limits upon the Commerce Clause and upon
the power to tax and spend, they cannot be such as will
enable the Federal Government to regulate all private

conduct and to compel the States to function as
administrators of federal programs.

That clear principle carries the day here. The striking
case of Wickard v. Filburn, 317 U.S. 111, 63 S. Ct. 82,
87 L. Ed. 122 (1942), which held that the economic
activity of growing wheat, even for one’s own
consumption, affected commerce sufficiently that it could
be regulated, always has been regarded as the ne plus
ultra of expansive Commerce Clause jurisprudence. To
go beyond that, and to say the failure to grow wheat
(which is not an economic activity, or any activity at all)
nonetheless affects commerce and therefore can be
federally regulated, is to make mere breathing in and out
the basis for federal prescription and to extend federal
power to virtually all human activity.

As for the constitutional power to tax and spend for
the general welfare: [***217] The Court has long since
expanded that beyond (what Madison thought it meant)
taxing and spending for those aspects of the general
welfare that were within the Federal Government’s
enumerated powers, see United States v. Butler, 297 U.S.
1, 65-66, 56 S. Ct. 312, 80 L. Ed. 477, 1936-1 C.B. 421
(1936). Thus, we now have sizable federal Departments
devoted to subjects not mentioned among Congress’
enumerated powers, and only marginally related to
commerce: the Department of Education, the Department
of Health and Human Services, the Department of
Housing and Urban Development. The principal practical
obstacle that prevents Congress from using the
tax-and-spend power to assume all the general-welfare
responsibilities traditionally exercised by the States is the
sheer impossibility of managing a Federal Government
large enough to administer such a system. That obstacle
can be overcome by granting funds to the States, allowing
them to administer the program. That is fair and
constitutional enough when the States freely agree to
have their powers employed and their employees enlisted
in the federal scheme. But it is a blatant violation of the
constitutional structure when the States have [***218]
no choice.

The Act before us here exceeds federal power both in
mandating the purchase of health insurance and in
[**537] denying nonconsenting States all Medicaid
funding. These parts of the Act are central to its design
and operation, and all the Act’s other provisions would
not have been enacted without them. In our view it must
follow that the entire statute is inoperative.

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[*2644] I

The Individual Mandate

Article I, § 8, of the Constitution gives Congress the
power to “regulate Commerce . . . among the several
States.” The Individual Mandate in the Act commands
that every “applicable individual shall for each month
beginning after 2013 ensure that the individual, and any
dependent of the individual who is an applicable
individual, is covered under minimum essential
coverage.” 26 U.S.C. §5000A(a) (2006 ed., Supp. IV). If
this provision “regulates” anything, it is the failure to
maintain minimum essential coverage. One might argue
that it regulates that failure by requiring it to be
accompanied by payment of a penalty. But that
failure-that abstention from commerce-is not
“Commerce.” To be sure, purchasing insurance is
“Commerce”; but one does not regulate commerce that
does not exist by compelling [***219] its existence.

In Gibbons v. Ogden, 22 U.S. 1, 9 Wheat. 1, 196, 6
L. Ed. 23 (1824), Chief Justice Marshall wrote that the
power to regulate commerce is the power “to prescribe
the rule by which commerce is to be governed.” That
understanding is consistent with the original meaning of
“regulate” at the time of the Constitution’s ratification,
when “to regulate” meant “[t]o adjust by rule, method or
established mode,” 2 N. Webster, An American
Dictionary of the English Language (1828); “[t]o adjust
by rule or method,” 2 S. Johnson, A Dictionary of the
English Language (7th ed. 1785); “[t]o adjust, to direct
according to rule,” 2 J. Ash, New and Complete
Dictionary of the English Language (1775); “to put in
order, set to rights, govern or keep in order,” T. Dyche &
W. Pardon, A New General English Dictionary (16th ed.
1777). 1 It can mean to direct the manner of something
but not to direct that something come into being. There is
no instance in which this Court or Congress (or anyone
else, to our knowledge) has used “regulate” in that
peculiar fashion. If the word bore that meaning,
Congress’ authority “[t]o make Rules for the Government
and Regulation of the land and naval Forces,” U.S.
Const., Art. I, § 8, cl. 14, [***220] would have made
superfluous the later provision for authority “[t]o raise
and support Armies,” id., § 8, cl. 12, and “[t]o provide
and maintain a Navy,” id., § 8, cl. 13.

1 The most authoritative legal dictionaries of the
founding era lack any definition for “regulate” or
“regulation,” suggesting that the term bears its

ordinary meaning (rather than some specialized
legal meaning) in the constitutional text. See R.
Burn, A New Law Dictionary 281 (1792); G.
Jacob, A New Law Dictionary (10th ed. 1782); 2
T. Cunningham, A New and Complete Law
Dictionary (2d ed. 1771).

We do not doubt that the buying and selling of health
insurance contracts is commerce generally subject to
federal regulation. But when Congress provides that
(nearly) all citizens must buy an insurance contract, it
goes beyond “adjust[ing] by rule or method,” Johnson,
supra, or “direct[ing] according to rule,” Ash, supra; it
directs the creation of commerce.

In response, the Government offers two theories as to
why the Individual [**538] Mandate is nevertheless
constitutional. Neither theory suffices to sustain its
validity.

A

First, the Government submits that §5000A is
“integral to the Affordable Care Act’s insurance reforms”
and “necessary [***221] to make effective the Act’s core
reforms.” Brief for Petitioners in No. 11-398 (Minimum
Coverage Provision) 24 (hereinafter Petitioners’
Minimum Coverage Brief). Congress included a
“finding” to similar effect in the Act itself. See 42 U.S.C.
§18091(2)(H).

[*2645] As discussed in more detail in Part V,
infra, the Act contains numerous health insurance
reforms, but most notable for present purposes are the
“guaranteed issue” and “community rating” provisions,
§§300gg to 300gg-4. The former provides that, with a
few exceptions, “each health insurance issuer that offers
health insurance coverage in the individual or group
market in a State must accept every employer and
individual in the State that applies for such coverage.”
§300gg-1(a). That is, an insurer may not deny coverage
on the basis of, among other things, any pre-existing
medical condition that the applicant may have, and the
resulting insurance must cover that condition. See
§300gg-3.

Under ordinary circumstances, of course, insurers
would respond by charging high premiums to individuals
with pre-existing conditions. The Act seeks to prevent
this through the community-rating provision. Simply put,
the community-rating provision requires [***222]

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insurers to calculate an individual’s insurance premium
based on only four factors: (i) whether the individual’s
plan covers just the individual or his family also, (ii) the
“rating area” in which the individual lives, (iii) the
individual’s age, and (iv) whether the individual uses
tobacco. §300gg(a)(1)(A). Aside from the rough proxies
of age and tobacco use (and possibly rating area), the Act
does not allow an insurer to factor the individual’s health
characteristics into the price of his insurance premium.
This creates a new incentive for young and healthy
individuals without pre- existing conditions. The
insurance premiums for those in this group will not
reflect their own low actuarial risks but will subsidize
insurance for others in the pool. Many of them may
decide that purchasing health insurance is not an
economically sound decision-especially since the
guaranteed-issue provision will enable them to purchase
it at the same cost in later years and even if they have
developed a pre-existing condition. But without the
contribution of above-risk premiums from the young and
healthy, the community-rating provision will not enable
insurers to take on high-risk individuals without
[***223] a massive increase in premiums.

The Government presents the Individual Mandate as
a unique feature of a complicated regulatory scheme
governing many parties with countervailing incentives
that must be carefully balanced. Congress has imposed an
extensive set of regulations on the health insurance
industry, and compliance with those regulations will
likely cost the industry a great deal. If the industry does
not respond by increasing premiums, it is not likely to
survive. And if the industry does increase premiums, then
there is a serious risk that its products-insurance
plans-will become economically [**539] undesirable for
many and prohibitively expensive for the rest.

This is not a dilemma unique to regulation of the
health-insurance industry. Government regulation
typically imposes costs on the regulated
industry-especially regulation that prohibits economic
behavior in which most market participants are already
engaging, such as “piecing out” the market by selling the
product to different classes of people at different prices
(in the present context, providing much lower insurance
rates to young and healthy buyers). And many industries
so regulated face the reality that, without an artificial
[***224] increase in demand, they cannot continue on.
When Congress is regulating these industries directly, it
enjoys the broad power to enact “‘all appropriate

legislation'” to “‘protec[t]'” and “‘advanc[e]'” commerce,
NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1,
36-37, 57 S. Ct. 615, 81 L. Ed. 893 (1937) (quoting The
Daniel Ball, 77 U.S. 557, 10 Wall. 557, 564, 19 L. Ed.
999 (1871)) . Thus, Congress might protect the [*2646]
imperiled industry by prohibiting low-cost competition,
or by according it preferential tax treatment, or even by
granting it a direct subsidy.

Here, however, Congress has impressed into service
third parties, healthy individuals who could be but are not
customers of the relevant industry, to offset the
undesirable consequences of the regulation. Congress’
desire to force these individuals to purchase insurance is
motivated by the fact that they are further removed from
the market than unhealthy individuals with pre-existing
conditions, because they are less likely to need extensive
care in the near future. If Congress can reach out and
command even those furthest removed from an interstate
market to participate in the market, then the Commerce
Clause becomes a font of unlimited [***225] power, or
in Hamilton’s words, “the hideous monster whose
devouring jaws . . . spare neither sex nor age, nor high
nor low, nor sacred nor profane.” The Federalist No. 33,
p. 202 (C. Rossiter ed. 1961).

At the outer edge of the commerce power, this Court
has insisted on careful scrutiny of regulations that do not
act directly on an interstate market or its participants. In
New York v. United States, 505 U.S. 144, 112 S. Ct.
2408, 120 L. Ed. 2d 120 (1992), we held that Congress
could not, in an effort to regulate the disposal of
radioactive waste produced in several different industries,
order the States to take title to that waste. Id., at 174-177,
112 S. Ct. 2408, 120 L. Ed. 2d 120. In Printz v. United
States, 521 U.S. 898, 117 S. Ct. 2365, 138 L. Ed. 2d 914
(1997), we held that Congress could not, in an effort to
regulate the distribution of firearms in the interstate
market, compel state law-enforcement officials to
perform background checks. Id., at 933-935, 117 S. Ct.
2365, 138 L. Ed. 2d 914. In United States v. Lopez, 514
U.S. 549, 115 S. Ct. 1624, 131 L. Ed. 2d 626 (1995), we
held that Congress could not, as a means of fostering an
educated interstate labor market through the [***226]
protection of schools, ban the possession of a firearm
within a school zone. Id., at 559-563, 115 S. Ct. 1624,
131 L. Ed. 2d 626. And in United States v. Morrison, 529
U.S. 598, 120 S. Ct. 1740, 146 L. Ed. 2d 658 (2000), we
held that Congress could not, in an effort to ensure the
full participation of women in the interstate economy,

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subject private individuals and companies to suit for
gender-motivated violent torts. Id., at 609-619, 120 S. Ct.
1740, 146 L. Ed. 2d 658. The lesson of these [**540]
cases is that the Commerce Clause, even when
supplemented by the Necessary and Proper Clause, is not
carte blanche for doing whatever will help achieve the
ends Congress seeks by the regulation of commerce. And
the last two of these cases show that the scope of the
Necessary and Proper Clause is exceeded not only when
the congressional action directly violates the sovereignty
of the States but also when it violates the background
principle of enumerated (and hence limited) federal
power.

The case upon which the Government principally
relies to sustain the Individual Mandate under the
Necessary and Proper Clause is Gonzales v. Raich, 545
U.S. 1, 125 S. Ct. 2195, 162 L. Ed. 2d 1 (2005). That
case [***227] held that Congress could, in an effort to
restrain the interstate market in marijuana, ban the local
cultivation and possession of that drug. Id., at 15-22, 125
S. Ct. 2195, 162 L. Ed. 2d 1. Raich is no precedent for
what Congress has done here. That case’s prohibition of
growing (cf. Wickard, 317 U.S. 111, 63 S. Ct. 82, 87 L.
Ed. 122), and of possession (cf. innumerable federal
statutes) did not represent the expansion of the federal
power to direct into a broad new field. The mandating of
economic activity does, and since it is a field so limitless
that it converts the Commerce Clause into a general
authority to direct the economy, that mandating is not
“consist[ent] with the letter and spirit of the [*2647]
constitution.” McCulloch v. Maryland, 17 U.S. 316, 4
Wheat. 316, 421, 4 L. Ed. 579 (1819).

Moreover, Raich is far different from the Individual
Mandate in another respect. The Court’s opinion in Raich
pointed out that the growing and possession prohibitions
were the only practicable way of enabling the prohibition
of interstate traffic in marijuana to be effectively
enforced. 545 U.S., at 22, 125 S. Ct. 2195, 162 L. Ed. 2d
1. See also Shreveport Rate Cases, 234 U.S. 342, 34 S.
Ct. 833, 58 L. Ed. 1341 (1914) [***228] (Necessary and
Proper Clause allows regulations of intrastate transactions
if necessary to the regulation of an interstate market).
Intrastate marijuana could no more be distinguished from
interstate marijuana than, for example,
endangered-species trophies obtained before the species
was federally protected can be distinguished from
trophies obtained afterwards-which made it necessary and
proper to prohibit the sale of all such trophies, see Andrus

v. Allard, 444 U.S. 51, 100 S. Ct. 318, 62 L. Ed. 2d 210
(1979).

With the present statute, by contrast, there are many
ways other than this unprecedented Individual Mandate
by which the regulatory scheme’s goals of reducing
insurance premiums and ensuring the profitability of
insurers could be achieved. For instance, those who did
not purchase insurance could be subjected to a surcharge
when they do enter the health insurance system. Or they
could be denied a full income tax credit given to those
who do purchase the insurance.

The Government was invited, at oral argument, to
suggest what federal controls over private conduct (other
than those explicitly prohibited by the Bill of Rights or
other constitutional controls) could not be justified
[***229] as necessary and proper for the carrying out of a
general regulatory scheme. See Tr. of Oral Arg. 27-30,
43-45 (Mar. 27, 2012). It was unable to name any. As we
said at the outset, whereas the precise scope of the
Commerce Clause and the Necessary and Proper Clause
is uncertain, the proposition that the Federal Government
[**541] cannot do everything is a fundamental precept.
See Lopez, 514 U.S., at 564, 115 S. Ct. 1624, 131 L. Ed.
2d 626 (“[I]f we were to accept the Government’s
arguments, we are hard pressed to posit any activity by an
individual that Congress is without power to regulate”).
Section 5000A is defeated by that proposition.

B

The Government’s second theory in support of the
Individual Mandate is that §5000A is valid because it is
actually a “regulat[ion of] activities having a substantial
relation to interstate commerce, . . . i.e., . . . activities that
substantially affect interstate commerce.” Id., at 558-559,
115 S. Ct. 1624, 131 L. Ed. 2d 626. See also Shreveport
Rate Cases, supra. This argument takes a few different
forms, but the basic idea is that §5000A regulates “the
way in which individuals finance their participation in the
health-care market.” Petitioners’ Minimum [***230]
Coverage Brief 33 (emphasis added). That is, the
provision directs the manner in which individuals
purchase health care services and related goods (directing
that they be purchased through insurance) and is therefore
a straightforward exercise of the commerce power.

The primary problem with this argument is that
§5000A does not apply only to persons who purchase all,
or most, or even any, of the health care services or goods

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that the mandated insurance covers. Indeed, the main
objection many have to the Mandate is that they have no
intention of purchasing most or even any of such goods
or services and thus no need to buy insurance for those
purchases. The Government responds that the health-care
market involves “essentially universal participation,”
[*2648] id., at 35. The principal difficulty with this
response is that it is, in the only relevant sense, not true.
It is true enough that everyone consumes “health care,” if
the term is taken to include the purchase of a bottle of
aspirin. But the health care “market” that is the object of
the Individual Mandate not only includes but principally
consists of goods and services that the young people
primarily affected by the Mandate do [***231] not
purchase. They are quite simply not participants in that
market, and cannot be made so (and thereby subjected to
regulation) by the simple device of defining participants
to include all those who will, later in their lifetime,
probably purchase the goods or services covered by the
mandated insurance. 2 Such a definition of market
participants is unprecedented, and were it to be a premise
for the exercise of national power, it would have no
principled limits.

2 JUSTICE GINSBURG is therefore right to
note that Congress is “not mandating the purchase
of a discrete, unwanted product.” Ante, at 22
(opinion concurring in part, concurring in
judgment in part, and dissenting in part). Instead,
it is mandating the purchase of an unwanted suite
of products-e.g., physician office visits,
emergency room visits, hospital room and board,
physical therapy, durable medical equipment,
mental health care, and substance abuse
detoxification. See Selected Medical Benefits: A
Report from the Dept. of Labor to the Dept. of
Health & Human Services (April 15, 2011)
(reporting that over two-thirds of private industry
health plans cover these goods and services),
online at
http://www.bls.gov/ncs/ebs/sp/selmedbens
report.pdf [***232] (all Internet materials as
visited June 26, 2012, and available in Clerk of
Court’s case file).

In a variation on this attempted exercise of federal
power, the Government points out that Congress in this
Act has purported to regulate “economic and financial
decision[s] to [**542] forego [sic] health insurance
coverage and [to] attempt to self-insure,” 42 U.S.C.

§18091(2)(A), since those decisions have “a substantial
and deleterious effect on interstate commerce,”
Petitioners’ Minimum Coverage Brief 34. But as the
discussion above makes clear, the decision to forgo
participation in an interstate market is not itself
commercial activity (or indeed any activity at all) within
Congress’ power to regulate. It is true that, at the end of
the day, it is inevitable that each American will affect
commerce and become a part of it, even if not by choice.
But if every person comes within the Commerce Clause
power of Congress to regulate by the simple reason that
he will one day engage in commerce, the idea of a limited
Government power is at an end.

Wickard v. Filburn has been regarded as the most
expansive assertion of the commerce power in our
history. A close second is Perez v. United States, 402
U.S. 146, 91 S. Ct. 1357, 28 L. Ed. 2d 686 (1971),
[***233] which upheld a statute criminalizing the
eminently local activity of loan-sharking. Both of those
cases, however, involved commercial activity. To go
beyond that, and to say that the failure to grow wheat or
the refusal to make loans affects commerce, so that
growing and lending can be federally compelled, is to
extend federal power to virtually everything. All of us
consume food, and when we do so the Federal
Government can prescribe what its quality must be and
even how much we must pay. But the mere fact that we
all consume food and are thus, sooner or later,
participants in the “market” for food, does not empower
the Government to say when and what we will buy. That
is essentially what this Act seeks to do with respect to the
purchase of health care. It exceeds federal power.

C

A few respectful responses to JUSTICE
GINSBURG’s dissent on the issue of the Mandate are in
order. That dissent duly [*2649] recites the test of
Commerce Clause power that our opinions have applied,
but disregards the premise the test contains. It is true
enough that Congress needs only a “‘rational basis’ for
concluding that the regulated activity substantially affects
interstate commerce,” ante, at 15 (emphasis [***234]
added). But it must be activity affecting commerce that is
regulated, and not merely the failure to engage in
commerce. And one is not now purchasing the health care
covered by the insurance mandate simply because one is
likely to be purchasing it in the future. Our test’s premise
of regulated activity is not invented out of whole cloth,

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but rests upon the Constitution’s requirement that it be
commerce which is regulated. If all inactivity affecting
commerce is commerce, commerce is everything.
Ultimately the dissent is driven to saying that there is
really no difference between action and inaction, ante, at
26, a proposition that has never recommended itself,
neither to the law nor to common sense. To say, for
example, that the inaction here consists of activity in “the
self-insurance market,” ibid., seems to us wordplay. By
parity of reasoning the failure to buy a car can be called
participation in the non-private-car-transportation market.
Commerce becomes everything.

The dissent claims that we “fai[l] to explain why the
individual mandate threatens our constitutional order.”
Ante, at 35. [**543] But we have done so. It threatens
that order because it gives such an expansive meaning to
the [***235] Commerce Clause that all private conduct
(including failure to act) becomes subject to federal
control, effectively destroying the Constitution’s division
of governmental powers. Thus the dissent, on the theories
proposed for the validity of the Mandate, would alter the
accepted constitutional relation between the individual
and the National Government. The dissent protests that
the Necessary and Proper Clause has been held to include
“the power to enact criminal laws, . . . the power to
imprison, . . . and the power to create a national bank,”
ante, at 34-35. Is not the power to compel purchase of
health insurance much lesser? No, not if (unlike those
other dispositions) its application rests upon a theory that
everything is within federal control simply because it
exists.

The dissent’s exposition of the wonderful things the
Federal Government has achieved through exercise of its
assigned powers, such as “the provision of old-age and
survivors’ benefits” in the Social Security Act, ante, at 2,
is quite beside the point. The issue here is whether the
federal government can impose the Individual Mandate
through the Commerce Clause. And the relevant history
is not that Congress has achieved [***236] wide and
wonderful results through the proper exercise of its
assigned powers in the past, but that it has never before
used the Commerce Clause to compel entry into
commerce. 3 The dissent [*2650] treats the Constitution
as though it is an enumeration of those problems that the
Federal Government can address-among which, it finds,
is “the Nation’s course in the economic and social welfare
realm,” ibid., and more specifically “the problem of the
uninsured,” ante, at 7. The Constitution is not that. It

enumerates not federally soluble problems, but federally
available powers. The Federal Government can address
whatever problems it wants but can bring to their solution
only those powers that the Constitution confers, among
which is the power to regulate commerce. None of our
cases say anything else. Article I contains no
whatever-it-takes-to-solve-a-national-pr oblem power.

3 In its effort to show the contrary, JUSTICE
GINSBURG’S dissent comes up with nothing
more than two condemnation cases, which it says
demonstrate “Congress’ authority under the
commerce power to compel an ‘inactive’
landholder to submit to an unwanted sale.” Ante,
at 24. Wrong on both scores. As its name
suggests, the condemnation [***237] power does
not “compel” anyone to do anything. It acts in
rem, against the property that is condemned, and
is effective with or without a transfer of title from
the former owner. More important, the power to
condemn for public use is a separate sovereign
power, explicitly acknowledged in the Fifth
Amendment, which provides that “private
property [shall not] be taken for public use,
without just compensation.”

Thus, the power to condemn tends to refute
rather than support the power to compel purchase
of unwanted goods at a prescribed price: The
latter is rather like the power to condemn cash for
public use. If it existed, why would it not (like the
condemnation power) be accompanied by a
requirement of fair compensation for the portion
of the exacted price that exceeds the goods’ fair
market value (here, the difference between what
the free market would charge for a
health-insurance policy on a young, healthy
person with no pre-existing conditions, and the
government-exacted community-rated premium)?

The dissent dismisses the conclusion that the power
to compel entry into the health-insurance market would
include the power to compel entry into the new-car or
broccoli markets. The latter [***238] purchasers, it says,
“will be obliged to pay at the [**544] counter before
receiving the vehicle or nourishment,” whereas those
refusing to purchase health- insurance will ultimately get
treated anyway, at others’ expense. Ante, at 21. “[T]he
unique attributes of the health-care market . . . give rise to
a significant free-riding problem that does not occur in

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other markets.” Ante, at 28. And “a vegetable-purchase
mandate” (or a car-purchase mandate) is not “likely to
have a substantial effect on the health-care costs” borne
by other Americans. Ante, at 29. Those differences make
a very good argument by the dissent’s own lights, since
they show that the failure to purchase health insurance,
unlike the failure to purchase cars or broccoli, creates a
national, social-welfare problem that is (in the dissent’s
view) included among the unenumerated “problems” that
the Constitution authorizes the Federal Government to
solve. But those differences do not show that the failure
to enter the health-insurance market, unlike the failure to
buy cars and broccoli, is an activity that Congress can
“regulate.” (Of course one day the failure of some of the
public to purchase American cars may endanger the
[***239] existence of domestic automobile
manufacturers; or the failure of some to eat broccoli may
be found to deprive them of a newly discovered
cancer-fighting chemical which only that food contains,
producing health-care costs that are a burden on the rest
of us-in which case, under the theory of JUSTICE
GINSBURG’s dissent, moving against those inactivities
will also come within the Federal Government’s
unenumerated problem-solving powers.)

II

The Taxing Power

As far as §5000A is concerned, we would stop there.
Congress has attempted to regulate beyond the scope of
its Commerce Clause authority, 4 and §5000A is
therefore invalid. The Government contends, however, as
expressed in the caption to Part II of its brief, that “THE
MINIMUM COVERAGE PROVISION IS
INDEPENDENTLY AUTHORIZED BY CONGRESS’S
TAXING POWER.” Petitioners’ Minimum Coverage
Brief 52. The phrase “independently authorized” suggests
the existence of a creature never hitherto seen in the
United States Reports: [*2651] A penalty for
constitutional purposes that is also a tax for constitutional
purposes. In all our cases the two are mutually exclusive.
The provision challenged under the Constitution is either
a penalty or else a tax. Of course [***240] in many cases
what was a regulatory mandate enforced by a penalty
could have been imposed as a tax upon permissible
action; or what was imposed as a tax upon permissible
action could have been a regulatory mandate enforced by
a penalty. But we know of no case, and the Government
cites none, in which the imposition was, for constitutional

purposes, both. 5 The two are mutually exclusive. Thus,
what the [**545] Government’s caption should have
read was “ALTERNATIVELY, THE MINIMUM
COVERAGE PROVISION IS NOT A
MANDATE-WITH-PENALTY BUT A TAX.” It is
important to bear this in mind in evaluating the tax
argument of the Government and of those who support it:
The issue is not whether Congress had the power to frame
the minimum-coverage provision as a tax, but whether it
did so.

4 No one seriously contends that any of
Congress’ other enumerated powers gives it the
authority to enact §5000A as a regulation.
5 Of course it can be both for statutory purposes,
since Congress can define “tax” and “penalty” in
its enactments any way it wishes. That is why
United States v. Sotelo, 436 U.S. 268, 98 S. Ct.
1795, 56 L. Ed. 2d 275 (1978), does not disprove
our statement. That case held that a “penalty” for
willful [***241] failure to pay one’s taxes was
included among the “taxes” made
non-dischargeable under the Bankruptcy Code.
436 U.S., at 273-275, 98 S. Ct. 1795, 56 L. Ed. 2d
275. Whether the “penalty” was a “tax” within the
meaning of the Bankruptcy Code had absolutely
no bearing on whether it escaped the
constitutional limitations on penalties.

In answering that question we must, if “fairly
possible,” Crowell v. Benson, 285 U.S. 22, 62, 52 S. Ct.
285, 76 L. Ed. 598 (1932), construe the provision to be a
tax rather than a mandate-with-penalty, since that would
render it constitutional rather than unconstitutional (ut res
magis valeat quam pereat). But we cannot rewrite the
statute to be what it is not. “‘”[A]ll-though this Court will
often strain to construe legislation so as to save it against
constitutional attack, it must not and will not carry this to
the point of perverting the purpose of a statute . . .” or
judicially rewriting it.'”Commodity Futures Trading
Comm’n v. Schor, 478 U.S. 833, 841, 106 S. Ct. 3245, 92
L. Ed. 2d 675 (1986) (quoting Aptheker v. Secretary of
State, 378 U.S. 500, 515, 84 S. Ct. 1659, 12 L. Ed. 2d
992 (1964), in turn quoting Scales v. United States, 367
U.S. 203, 211, 81 S. Ct. 1469, 6 L. Ed. 2d 782 (1961)).
[***242] In this case, there is simply no way, “without
doing violence to the fair meaning of the words used,”
Grenada County Supervisors v. Brogden, 112 U.S. 261,
269, 5 S. Ct. 125, 28 L. Ed. 704 (1884), to escape what
Congress enacted: a mandate that individuals maintain

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minimum essential coverage, enforced by a penalty.

Our cases establish a clear line between a tax and a
penalty: “‘[A] tax is an enforced contribution to provide
for the support of government; a penalty . . . is an
exaction imposed by statute as punishment for an
unlawful act.'” United States v. Reorganized CF&I
Fabricators of Utah, Inc., 518 U.S. 213, 224, 116 S. Ct.
2106, 135 L. Ed. 2d 506 (1996) (quoting United States v.
La Franca, 282 U.S. 568, 572, 51 S. Ct. 278, 75 L. Ed.
551 (1931)). In a few cases, this Court has held that a
“tax” imposed upon private conduct was so onerous as to
be in effect a penalty. But we have never held- never-that
a penalty imposed for violation of the law was so trivial
as to be in effect a tax. We have never held that any
exaction imposed for violation of the law is an exercise of
Congress’ taxing power-even when the statute calls it a
tax, much less when (as here) the statute repeatedly
[***243] calls it a penalty. When an act “adopt[s] the
criteria of wrongdoing” and then imposes a monetary
penalty as the “principal consequence on those who
transgress [*2652] its standard,” it creates a regulatory
penalty, not a tax. Child Labor Tax Case, 259 U.S. 20,
38, 42 S. Ct. 449, 66 L. Ed. 817, 1922-2 C.B. 337, T.D.
3346 (1922).

So the question is, quite simply, whether the exaction
here is imposed for violation of the law. It unquestionably
is. The minimum-coverage provision is found in 26
U.S.C. §5000A, entitled “Requirement to maintain
minimum essential coverage.” (Emphasis added.) It
commands that every “applicable individual shall . . .
ensure that the individual . . . is covered under minimum
essential coverage.” Ibid. (emphasis added). And the
immediately following provision [**546] states that,
“[i]f . . . an applicable individual . . . fails to meet the
requirement of subsection (a) . . . there is hereby imposed
. . . a penalty.” §5000A(b) (emphasis added). And several
of Congress’ legislative “findings” with regard to §5000A
confirm that it sets forth a legal requirement and
constitutes the assertion of regulatory power, not mere
taxing power. See 42 U.S.C. §18091(2)(A) (“The
requirement [***244] regulates activity . . .”);
§18091(2)(C) (“The requirement . . . will add millions of
new consumers to the health insurance market . . .”);
§18091(2)(D) (“The requirement achieves near-universal
coverage”); §18091(2)(H) (“The requirement is an
essential part of this larger regulation of economic
activity, and the absence of the requirement would
undercut Federal regulation of the health insurance

market”); §18091(3) (“[T]he Supreme Court of the
United States ruled that insurance is interstate commerce
subject to Federal regulation”).

The Government and those who support its view on
the tax point rely on New York v. United States, 505 U.S.
144, 112 S. Ct. 2408, 120 L. Ed. 2d 120, to justify
reading “shall” to mean “may.” The “shall” in that case
was contained in an introductory provision-a recital that
provided for no legal consequences-which said that
“[e]ach State shall be responsible for providing. . . for the
disposal of . . . low-level radioactive waste.” 42 U.S.C.
§2021c(a)(1)(A). The Court did not hold that “shall”
could be construed to mean “may,” but rather that this
preliminary provision could not impose upon the
operative provisions of the Act a mandate that they did
not [***245] contain: “We . . . decline petitioners’
invitation to construe §2021c(a)(1)(A), alone and in
isolation, as a command to the States independent of the
remainder of the Act.” New York, 505 U.S., at 170, 112 S.
Ct. 2408, 120 L. Ed. 2d 120. Our opinion then proceeded
to “consider each [of the three operative provisions] in
turn.” Ibid. Here the mandate-the “shall”-is contained not
in an inoperative preliminary recital, but in the
dispositive operative provision itself. New York provides
no support for reading it to be permissive.

Quite separately, the fact that Congress (in its own
words) “imposed . . . a penalty,” 26 U.S.C. §5000A(b)(1),
for failure to buy insurance is alone sufficient to render
that failure unlawful. It is one of the canons of
interpretation that a statute that penalizes an act makes it
unlawful: “[W]here the statute inflicts a penalty for doing
an act, although the act itself is not expressly prohibited,
yet to do the act is unlawful, because it cannot be
supposed that the Legislature intended that a penalty
should be inflicted for a lawful act.” Powhatan Steamboat
Co. v. Appomattox R. Co., 65 U.S. 247, 24 How. 247,
252, 16 L. Ed. 682 (1861). Or in the words of Chancellor
[***246] Kent: “If a statute inflicts a penalty for doing an
act, the penalty implies a prohibition, and the thing is
unlawful, though there be no prohibitory words in the
statute.” 1 J. Kent, Commentaries on American Law 436
(1826).

[*2653] We never have classified as a tax an
exaction imposed for violation of the law, and so too, we
never have classified as a tax an exaction described in the
legislation itself as a penalty. To be sure, we have
sometimes treated as a tax a statutory exaction (imposed

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for something other than a violation of law) which bore
an agnostic label that does not entail the significant
constitutional consequences of a penalty-such as
“license” (License Tax [**547] Cases, 72 U.S. 462, 5
Wall. 462, 18 L. Ed. 497 (1867)) or “surcharge” (New
York v. United States, supra.). But we have never-
never-treated as a tax an exaction which faces up to the
critical difference between a tax and a penalty, and
explicitly denominates the exaction a “penalty.” Eighteen
times in §5000A itself and elsewhere throughout the Act,
Congress called the exaction in §5000A(b) a “penalty.”

That §5000A imposes not a simple tax but a mandate
to which a penalty is attached is demonstrated by the fact
that some are [***247] exempt from the tax who are not
exempt from the mandate-a distinction that would make
no sense if the mandate were not a mandate. Section
5000A(d) exempts three classes of people from the
definition of “applicable individual” subject to the
minimum coverage requirement: Those with religious
objections or who participate in a “health care sharing
ministry,” §5000A(d)(2); those who are “not lawfully
present” in the United States, §5000A(d)(3); and those
who are incarcerated, §5000A(d)(4). Section 5000A(e)
then creates a separate set of exemptions, excusing from
liability for the penalty certain individuals who are
subject to the minimum coverage requirement: Those
who cannot afford coverage, §5000A(e)(1); who earn too
little income to require filing a tax return, §5000A(e)(2);
who are members of an Indian tribe, §5000A(e)(3); who
experience only short gaps in coverage, §5000A(e)(4);
and who, in the judgment of the Secretary of Health and
Human Services, “have suffered a hardship with respect
to the capability to obtain coverage,” §5000A(e)(5). If
§5000A were a tax, these two classes of exemption would
make no sense; there being no requirement, all the
exemptions would attach to the penalty [***248]
(renamed tax) alone.

In the face of all these indications of a regulatory
requirement accompanied by a penalty, the Solicitor
General assures us that “neither the Treasury Department
nor the Department of Health and Human Services
interprets Section 5000A as imposing a legal obligation,”
Petitioners’ Minimum Coverage Brief 61, and that “[i]f
[those subject to the Act] pay the tax penalty, they’re in
compliance with the law,” Tr. of Oral Arg. 50 (Mar. 26,
2012). These self-serving litigating positions are entitled
to no weight. What counts is what the statute says, and
that is entirely clear. It is worth noting, moreover, that

these assurances contradict the Government’s position in
related litigation. Shortly before the Affordable Care Act
was passed, the Commonwealth of Virginia enacted Va.
Code Ann. §38.2-3430.1:1 (Lexis Supp. 2011), which
states, “No resident of [the] Commonwealth . . . shall be
required to obtain or maintain a policy of individual
insurance coverage except as required by a court or the
Department of Social Services . . . . ” In opposing
Virginia’s assertion of standing to challenge §5000A
based on this statute, the Government said that “if the
minimum coverage provision [***249] is
unconstitutional, the [Virginia] statute is unnecessary,
and if the minimum coverage provision is upheld, the
state statute is void under the Supremacy Clause.” Brief
for Appellant in No. 11-1057 etc. (CA4), p. 29. But it
would be void under the Supremacy Clause only if it was
contradicted by a federal “require[ment] [*2654] to
obtain or maintain a policy of individual insurance
coverage.”

[**548] Against the mountain of evidence that the
minimum coverage requirement is what the statute calls
it-a requirement-and that the penalty for its violation is
what the statute calls it-a penalty-the Government brings
forward the flimsiest of indications to the contrary. It
notes that “[t]he minimum coverage provision amends the
Internal Revenue Code to provide that a non-exempted
individual . . . will owe a monetary penalty, in addition to
the income tax itself,” and that “[t]he [Internal Revenue
Service (IRS)] will assess and collect the penalty in the
same manner as assessable penalties under the Internal
Revenue Code.” Petitioners’ Minimum Coverage Brief
53. The manner of collection could perhaps suggest a tax
if IRS penalty-collection were unheard-of or rare. It is
not. See, e.g., 26 U.S.C. §527(j) (2006 ed.) [***250]
(IRS-collectible penalty for failure to make campaign
finance disclosures); §5761(c) (IRS-collectible penalty
for domestic sales of tobacco products labeled for
export); §9707 (IRS-collectible penalty for failure to
make required health-insurance premium payments on
behalf of mining employees). In Reorganized CF&I
Fabricators of Utah, Inc., 518 U.S. 213, 116 S. Ct. 2106,
135 L. Ed. 2d 506, we held that an exaction not only
enforced by the Commissioner of Internal Revenue but
even called a “tax” was in fact a penalty. “[I]f the concept
of penalty means anything,” we said, “it means
punishment for an unlawful act or omission.” Id., at 224,
116 S. Ct. 2106, 135 L. Ed. 2d 506. See also Lipke v.
Lederer, 259 U.S. 557, 42 S. Ct. 549, 66 L. Ed. 1061,
T.D. 3354 (1922) (same). Moreover, while the penalty is

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assessed and collected by the IRS, §5000A is
administered both by that agency and by the Department
of Health and Human Services (and also the Secretary of
Veteran Affairs), see §5000A(e)(1)(D), (e)(5),
(f)(1)(A)(v), (f)(1)(E) (2006 ed., Supp. IV), which is
responsible for defining its substantive scope-a feature
that would be quite extraordinary for taxes.

The Government points out that [***251] “[t]he
amount of the penalty will be calculated as a percentage
of household income for federal income tax purposes,
subject to a floor and [a] ca[p],” and that individuals who
earn so little money that they “are not required to file
income tax returns for the taxable year are not subject to
the penalty” (though they are, as we discussed earlier,
subject to the mandate). Petitioners’ Minimum Coverage
Brief 12, 53. But varying a penalty according to ability to
pay is an utterly familiar practice. See, e.g., 33 U.S.C.
§1319(d) (2006 ed., Supp. IV) (“In determining the
amount of a civil penalty the court shall consider . . . the
economic impact of the penalty on the violator”); see also
6 U.S.C. §488e(c); 7 U.S.C. §§7734(b)(2), 8313(b)(2); 12
U.S.C. §§1701q-1(d)(3), 1723i(c)(3), 1735f-14(c)(3),
1735f-15(d)(3), 4585(c)(2); 15 U.S.C. §§45(m)(1)(C),
77h-1(g)(3), 78u-2(d), 80a-9(d)(4), 80b-3(i)(4),
1681s(a)(2)(B), 1717a(b)(3), 1825(b)(1), 2615(a) (2)(B),
5408(b)(2); 33 U.S.C. §2716a(a).

The last of the feeble arguments in favor of
petitioners that we will address is the contention that
what this statute repeatedly calls a penalty is in fact a tax
because it contains no scienter [***252] requirement.
The presence of such a requirement suggests a
penalty-though one can imagine a tax imposed only on
willful action; but the absence of such a requirement does
not suggest a tax. Penalties for absolute-liability offenses
are commonplace. [**549] And where a statute is silent
as to scienter, we traditionally presume a mens rea
requirement if the statute imposes a “severe penalty.”
Staples v. United States, 511 U.S. 600, 618, 114 S. Ct.
1793, 128 L. Ed. 2d 608 [*2655] (1994). Since we have
an entire jurisprudence addressing when it is that a
scienter requirement should be inferred from a penalty, it
is quite illogical to suggest that a penalty is not a penalty
for want of an express scienter requirement.

And the nail in the coffin is that the mandate and
penalty are located in Title I of the Act, its operative core,
rather than where a tax would be found-in Title IX,
containing the Act’s “Revenue Provisions.” In sum, “the

terms of [the] act rende[r] it unavoidable,” Parsons v.
Bedford, 28 U.S. 433, 3 Pet. 433, 448, 7 L. Ed. 732
(1830), that Congress imposed a regulatory penalty, not a
tax.

For all these reasons, to say that the Individual
Mandate merely imposes a tax is not to interpret the
[***253] statute but to rewrite it. Judicial tax-writing is
particularly troubling. Taxes have never been popular,
see, e.g., Stamp Act of 1765, and in part for that reason,
the Constitution requires tax increases to originate in the
House of Representatives. See Art. I, § 7, cl. 1. That is to
say, they must originate in the legislative body most
accountable to the people, where legislators must weigh
the need for the tax against the terrible price they might
pay at their next election, which is never more than two
years off. The Federalist No. 58 “defend[ed] the decision
to give the origination power to the House on the ground
that the Chamber that is more accountable to the people
should have the primary role in raising revenue.” United
States v. Munoz-Flores, 495 U.S. 385, 395, 110 S. Ct.
1964, 109 L. Ed. 2d 384 (1990). We have no doubt that
Congress knew precisely what it was doing when it
rejected an earlier version of this legislation that imposed
a tax instead of a requirement-with-penalty. See
Affordable Health Care for America Act, H. R. 3962,
111th Cong., 1st Sess., §501 (2009); America’s Healthy
Future Act of 2009, S. 1796, 111th Cong., 1st Sess.,
§1301. Imposing a tax through judicial [***254]
legislation inverts the constitutional scheme, and places
the power to tax in the branch of government least
accountable to the citizenry.

Finally, we must observe that rewriting §5000A as a
tax in order to sustain its constitutionality would force us
to confront a difficult constitutional question: whether
this is a direct tax that must be apportioned among the
States according to their population. Art. I, § 9, cl. 4.
Perhaps it is not (we have no need to address the point);
but the meaning of the Direct Tax Clause is famously
unclear, and its application here is a question of first
impression that deserves more thoughtful consideration
than the lick-and-a-promise accorded by the Government
and its supporters. The Government’s opening brief did
not even address the question-perhaps because, until
today, no federal court has accepted the implausible
argument that §5000A is an exercise of the tax power.
And once respondents raised the issue, the Government
devoted a mere 21 lines of its reply brief to the issue.
Petitioners’ Minimum Coverage Reply Brief 25. At oral

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argument, the most prolonged statement about the issue
was just over 50 words. Tr. of Oral Arg. 79 (Mar. 27,
2012). One would [***255] expect this Court to demand
more than fly-by-night briefing [**550] and argument
before deciding a difficult constitutional question of first
impression.

III

The Anti-Injunction Act

There is another point related to the Individual
Mandate that we must discuss-a point that logically
should have been discussed first: Whether jurisdiction
over the challenges to the minimum-coverage provision
is precluded by the Anti-Injunction Act, which provides
that “no suit for the purpose of restraining the assessment
or collection of any tax shall be [*2656] maintained in
any court by any person,” 26 U.S.C. §7421(a) (2006 ed.).

We have left the question to this point because it
seemed to us that the dispositive question whether the
minimum-coverage provision is a tax is more
appropriately addressed in the significant constitutional
context of whether it is an exercise of Congress’ taxing
power. Having found that it is not, we have no difficulty
in deciding that these suits do not have “the purpose of
restraining the assessment or collection of any tax.” 6

6 The amicus appointed to defend the
proposition that the Anti-Injunction Act deprives
us of jurisdiction stresses that the penalty for
failing to comply with the [***256] mandate
“shall be assessed and collected in the same
manner as an assessable penalty under subchapter
B of chapter 68,” 26 U.S.C. §5000A(g)(1) (2006
ed., Supp. IV), and that such penalties “shall be
assessed and collected in the same manner as
taxes,” §6671(a) (2006 ed.). But that point seems
to us to confirm the inapplicability of the
Anti-Injunction Act. That the penalty is to be
“assessed and collected in the same manner as
taxes” refutes the proposition that it is a tax for all
statutory purposes, including with respect to the
Anti-Injunction Act. Moreover, elsewhere in the
Internal Revenue Code, Congress has provided
both that a particular payment shall be “assessed
and collected” in the same manner as a tax and
that no suit shall be maintained to restrain the
assessment or collection of the payment. See, e.g.,
§§7421(b)(1), §6901(a); §6305(a), (b). The latter

directive would be superfluous if the former
invoked the Anti-Injunction Act.

Amicus also suggests that the penalty should
be treated as a tax because it is an assessable
penalty, and the Code’s assessment provision
authorizes the Secretary of the Treasury to assess
“all taxes (including interest, additional amounts,
additions [***257] to the tax, and assessable
penalties) imposed by this title.” §6201(a) (2006
ed., Supp. IV). But the fact that such items are
included as “taxes” for purposes of assessment
does not establish that they are included as “taxes”
for purposes of other sections of the Code, such as
the Anti-Injunction Act, that do not contain
similar “including” language.

The Government and those who support its position
on this point make the remarkable argument that §5000A
is not a tax for purposes of the Anti-Injunction Act, see
Brief for Petitioners in No. 11-398 (Anti-Injunction Act),
but is a tax for constitutional purposes, see Petitioners’
Minimum Coverage Brief 52-62. The rhetorical device
that tries to cloak this argument in superficial plausibility
is the same device employed in arguing that for
constitutional purposes the minimum-coverage provision
is a tax: confusing the question of what Congress did
with the question of what Congress could have done.
What qualifies as a tax for purposes of the
Anti-Injunction Act, unlike what qualifies as a tax for
purposes of the Constitution, is entirely within the control
of Congress. Compare Bailey v. George, 259 U.S. 16, 20,
42 S. Ct. 419, 66 L. Ed. 816, 1922-2 C.B. 342, T.D. 3347
(1922) [***258] (Anti-Injunction Act barred suit to
restrain collections under the Child Labor Tax Law), with
Child Labor Tax Case, 259 U.S., at 36-41, 42 S. Ct. 449,
66 L. Ed. 817 (holding the same law unconstitutional as
exceeding Congress’ taxing power) . Congress could have
defined “tax” for purposes of that statute in such fashion
as to exclude some exactions that in fact are “taxes.” It
[**551] might have prescribed, for example, that a
particular exercise of the taxing power “shall not be
regarded as a tax for purposes of the Anti-Injunction
Act.” But there is no such prescription here. What the
Government would have us believe in these cases is that
the very same textual indications that show this is not a
tax under the Anti-Injunction Act show that it is a tax
under the Constitution. That carries verbal wizardry too
far, deep into the forbidden land of the sophists.

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IV

The Medicaid Expansion

We now consider respondents’ second challenge to
the constitutionality of the [*2657] ACA, namely, that
the Act’s dramatic expansion of the Medicaid program
exceeds Congress’ power to attach conditions to federal
grants to the States.

The ACA does not legally compel the States to
participate in the expanded Medicaid program, [***259]
but the Act authorizes a severe sanction for any State that
refuses to go along: termination of all the State’s
Medicaid funding. For the average State, the annual
federal Medicaid subsidy is equal to more than one-fifth
of the State’s expenditures. 7 A State forced out of the
program would not only lose this huge sum but would
almost certainly find it necessary to increase its own
health-care expenditures substantially, requiring either a
drastic reduction in funding for other programs or a large
increase in state taxes. And these new taxes would come
on top of the federal taxes already paid by the State’s
citizens to fund the Medicaid program in other States.

The States challenging the constitutionality of the
ACA’s Medicaid Expansion contend that, for these
practical reasons, the Act really does not give them any
choice at all. As proof of this, they point to the goal and
the structure of the ACA. The goal of the Act is to
provide near-universal medical coverage, 42 U.S.C.
§18091(2)(D), and without 100% State participation in
the Medicaid program, attainment of this goal would be
thwarted. Even if States could elect to remain in the old
Medicaid program, while declining to participate
[***260] in the Expansion, there would be a gaping hole
in coverage. And if a substantial number of States were
entirely expelled from the program, the number of
persons without coverage would be even higher.

7 “State expenditures” is used here to mean
annual expenditures from the States’ own funding
sources, and it excludes federal grants unless
otherwise noted.

In light of the ACA’s goal of near-universal
coverage, petitioners argue, if Congress had thought that
anything less than 100% state participation was a realistic
possibility, Congress would have provided a backup
scheme. But no such scheme is to be found anywhere in
the more than 900 pages of the Act. This shows, they

maintain, that Congress was certain that the ACA’s
Medicaid offer was one that no State could refuse.

In response to this argument, the Government
contends that any congressional assumption about
uniform state participation was based on the simple fact
that the offer of federal funds associated with the
expanded coverage is such a generous gift that no State
would want to turn it down.

To evaluate these arguments, we consider the extent
of the Federal Government’s power to spend money and
to attach conditions to money granted [***261] to the
States.

[**552] A

No one has ever doubted that the Constitution
authorizes the Federal Government to spend money, but
for many years the scope of this power was unsettled.
The Constitution grants Congress the power to collect
taxes “to. . . provide for the . . . general Welfare of the
United States,” Art. I, § 8, cl. 1, and from “the foundation
of the Nation sharp differences of opinion have persisted
as to the true interpretation of the phrase” “the general
welfare.” Butler, 297 U.S., at 65, 56 S. Ct. 312, 80 L. Ed.
477. Madison, it has been said, thought that the phrase
“amounted to no more than a reference to the other
powers enumerated in the subsequent clauses of the same
section,” while Hamilton “maintained the clause confers a
power separate and distinct from those later enumerated
[and] [*2658] is not restricted in meaning by the grant
of them.” Ibid.

The Court resolved this dispute in Butler. Writing for
the Court, Justice Roberts opined that the Madisonian
view would make Article I’s grant of the spending power
a “mere tautology.” Ibid. To avoid that, he adopted
Hamilton’s approach and found that “the power of
Congress to authorize expenditure of public moneys for
public purposes is [***262] not limited by the direct
grants of legislative power found in the Constitution.” Id.,
at 66. Instead, he wrote, the spending power’s “confines
are set in the clause which confers it, and not in those of
section 8 which bestow and define the legislative powers
of the Congress.” Ibid.; see also Steward Machine Co. v.
Davis, 301 U.S.548, 586-587, 57 S. Ct. 883, 81 L. Ed.
1279, 1937-1 C.B. 444 (1937); Helvering v. Davis, 301
U.S. 619, 640, 57 S. Ct. 904, 81 L. Ed. 1307, 1937-1 C.B.
360 (1937).

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The power to make any expenditure that furthers “the
general welfare” is obviously very broad, and shortly
after Butler was decided the Court gave Congress wide
leeway to decide whether an expenditure qualifies. See
Helvering, 301 U.S., at 640-641, 57 S. Ct. 904, 81 L. Ed.
1307. “The discretion belongs to Congress,” the Court
wrote, “unless the choice is clearly wrong, a display of
arbitrary power, not an exercise of judgment.” Id., at 640,
57 S. Ct. 904, 81 L. Ed. 1307. Since that time, the Court
has never held that a federal expenditure was not for “the
general welfare.”

B

One way in which Congress may spend to promote
the general welfare is by making grants to the States.
Monetary grants, so-called [***263] grants-in-aid,
became more frequent during the 1930’s, G. Stephens &
N. Wikstrom, American Intergovernmental Relations-A
Fragmented Federal Polity 83 (2007), and by 1950 they
had reached $20 billion 8 or 11.6% of state and local
government expenditures from their own sources. 9 By
1970 this number had grown to $123.7 billion 10 or
29.1% of state and local government expenditures from
their own [**553] sources. 11 As of 2010, federal
outlays to state and local governments came to over $608
billion or 37.5% of state and local government
expenditures. 12

8 This number is expressed in billions of Fiscal
Year 2005 dollars.
9 See Office of Management and Budget,
Historical Tables, Budget of the U.S.
Government, Fiscal Year 2013, Table
12.1-Summary Comparison of Total Outlays for
Grants to State and Local Governments:
1940-2017 (hereinafter Table 12.1),
http://www.whitehouse.gov/omb/
budget/Historicals; id., Table 15.2-Total
Government Expenditures: 1948-2011
(hereinafter Table 15.2).
10 This number is expressed in billions of Fiscal
Year 2005 dollars.
11 See Table 12.1; Dept. of Commerce, Bureau
of Census, Statistical Abstract of the United
States: 2001, p. 262 (Table 419, Federal
Grants-in-Aid Summary: [***264] 1970 to
2001).
12 See Statistical Abstract of the United States:
2012, p. 268 (Table 431, Federal Grants-in-Aid to

State and Local Governments: 1990 to 2011).

When Congress makes grants to the States, it
customarily attaches conditions, and this Court has long
held that the Constitution generally permits Congress to
do this. See Pennhurst State School and Hospital v.
Halderman, 451 U.S. 1, 17, 101 S. Ct. 1531, 67 L. Ed. 2d
694 (1981); South Dakota v. Dole, 483 U.S. 203, 206,
107 S. Ct. 2793, 97 L. Ed. 2d 171 (1987); Fullilove v.
Klutznick, 448 U.S. 448, 474, 100 S. Ct. 2758, 65 L. Ed.
2d 902 (1980) (opinion of Burger, C. J.); Steward
Machine, supra, at 593, 57 S. Ct. 883, 81 L. Ed. 1279.

[*2659] C

This practice of attaching conditions to federal funds
greatly increases federal power. “[O]bjectives not thought
to be within Article I’s enumerated legislative fields, may
nevertheless be attained through the use of the spending
power and the conditional grant of federal funds.” Dole,
supra, at 207, 107 S. Ct. 2793, 97 L. Ed. 2d 171 (internal
quotation marks and citation omitted); see also College
Savings Bank v. Florida Prepaid Postsecondary Ed.
Expense Bd., 527 U.S. 666, 686, 119 S. Ct. 2219, 144 L.
Ed. 2d 605 (1999) [***265] (by attaching conditions to
federal funds, Congress may induce the States to “tak[e]
certain actions that Congress could not require them to
take”).

This formidable power, if not checked in any way,
would present a grave threat to the system of federalism
created by our Constitution. If Congress’ “Spending
Clause power to pursue objectives outside of Article I’s
enumerated legislative fields,” Davis v. Monroe County
Bd. of Ed., 526 U.S. 629, 654, 119 S. Ct. 1661, 143 L.
Ed. 2d 839 (1999) (KENNEDY, J., dissenting) (internal
quotation marks omitted), is “limited only by Congress’
notion of the general welfare, the reality, given the vast
financial resources of the Federal Government, is that the
Spending Clause gives ‘power to the Congress to tear
down the barriers, to invade the states’ jurisdiction, and to
become a parliament of the whole people, subject to no
restrictions save such as are self-imposed,'” Dole, supra,
at 217, 107 S. Ct. 2793, 97 L. Ed. 2d 171 (O’Connor, J.,
dissenting) (quoting Butler, 297 U.S., at 78, 56 S. Ct.
312, 80 L. Ed. 477). “[T]he Spending Clause power, if
wielded without concern for the federal balance, has the
potential to obliterate distinctions between [***266]
national and local spheres of interest and power by
permitting the Federal Government to set policy in the
most sensitive areas of traditional state concern, areas

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which otherwise would lie outside its reach.” Davis,
supra, at 654-655, 119 S. Ct. 1661, 143 L. Ed. 2d 839
(KENNEDY, J., dissenting).

Recognizing this potential for abuse, our cases have
long held that the power to attach conditions to grants to
the States has limits. See, e.g., Dole, supra, at 207-208,
107 S. Ct. 2793, 97 L. Ed. 2d 171; id., at 207, 107 S. Ct.
2793, 97 L. Ed. 2d 171 (spending power is “subject to
several general restrictions articulated in our cases”). For
one thing, any such conditions [**554] must be
unambiguous so that a State at least knows what it is
getting into. See Pennhurst, supra, at 17, 101 S. Ct. 1531,
67 L. Ed. 2d 694. Conditions must also be related “to the
federal interest in particular national projects or
programs,” Massachusetts v. United States, 435 U.S. 444,
461, 98 S. Ct. 1153, 55 L. Ed. 2d 403 (1978), and the
conditional grant of federal funds may not “induce the
States to engage in activities that would themselves be
unconstitutional,” Dole, supra, at 210, 107 S. Ct. 2793,
97 L. Ed. 2d 171; [***267] see Lawrence County v.
Lead-Deadwood School Dist. No. 40-1, 469 U.S. 256,
269-270, 105 S. Ct. 695, 83 L. Ed. 2d 635 (1985).
Finally, while Congress may seek to induce States to
accept conditional grants, Congress may not cross the
“point at which pressure turns into compulsion, and
ceases to be inducement.” Steward Machine, 301 U.S., at
590, 57 S. Ct. 883, 81 L. Ed. 1279. Accord, College
Savings Bank, supra, at 687, 119 S. Ct. 2219, 144 L. Ed.
2d 605; Metropolitan Washington Airports Authority v.
Citizens for Abatement of Aircraft Noise, Inc., 501 U.S.
252, 285, 111 S. Ct. 2298, 115 L. Ed. 2d 236 (1991)
(White, J., dissenting); Dole, supra, at 211, 107 S. Ct.
2793, 97 L. Ed. 2d 171.

When federal legislation gives the States a real
choice whether to accept or decline a federal aid package,
the federal-state relationship is in the nature of a
contractual relationship. See Barnes v. Gorman, 536 U.S.
181, 186, 122 S. Ct. 2097, 153 L. Ed. 2d [*2660] 230
(2002); Pennhurst, 451 U.S., at 17, 101 S. Ct. 1531, 67 L.
Ed. 2d 694. And just as a contract is voidable if coerced,
“[t]he legitimacy of Congress’ power to legislate under
the spending power . . . rests on whether the State
voluntarily and [***268] knowingly accepts the terms of
the ‘contract.'” Ibid. (emphasis added). If a federal
spending program coerces participation the States have
not “exercise[d] their choice”-let alone made an
“informed choice.” Id., at 17, 25, 101 S. Ct. 1531, 67 L.
Ed. 2d 694.

Coercing States to accept conditions risks the
destruction of the “unique role of the States in our
system.” Davis, supra, at 685, 119 S. Ct. 1661, 143 L.
Ed. 2d 839 (KENNEDY, J., dissenting). “[T]he
Constitution has never been understood to confer upon
Congress the ability to require the States to govern
according to Congress’ instructions.” New York, 505 U.S.,
at 162, 112 S. Ct. 2408, 120 L. Ed. 2d 120. Congress may
not “simply commandeer the legislative processes of the
States by directly compelling them to enact and enforce a
federal regulatory program.” Id., at 161, 112 S. Ct. 2408,
120 L. Ed. 2d 120 (internal quotation marks and brackets
omitted). Congress effectively engages in this
impermissible compulsion when state participation in a
federal spending program is coerced, so that the States’
choice whether to enact or administer a federal regulatory
program is rendered illusory.

Where all Congress has done is to “encourag[e]
[***269] state regulation rather than compe[l] it, state
governments remain responsive to the local electorate’s
preferences; state officials remain accountable to the
people. [But] where the Federal Government compels
States to regulate, the accountability of both state and
federal officials is diminished.” New York, supra, at 168,
112 S. Ct. 2408, 120 L. Ed. 2d 120.

Amici who support the Government argue that
forcing state employees to implement a federal program
is more [**555] respectful of federalism than using
federal workers to implement that program. See, e.g.,
Brief for Service Employees International Union et al. as
Amici Curiae in No. 11-398, pp. 25-26. They note that
Congress, instead of expanding Medicaid, could have
established an entirely federal program to provide
coverage for the same group of people. By choosing to
structure Medicaid as a cooperative federal-state
program, they contend, Congress allows for more state
control. Ibid.

This argument reflects a view of federalism that our
cases have rejected-and with good reason. When
Congress compels the States to do its bidding, it blurs the
lines of political accountability. If the Federal
Government makes a controversial decision while
[***270] acting on its own, “it is the Federal Government
that makes the decision in full view of the public, and it
will be federal officials that suffer the consequences if the
decision turns out to be detrimental or unpopular.” New
York, 505 U.S., at 168, 112 S. Ct. 2408, 120 L. Ed. 2d

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120. But when the Federal Government compels the
States to take unpopular actions, “it may be state officials
who will bear the brunt of public disapproval, while the
federal officials who devised the regulatory program may
remain insulated from the electoral ramifications of their
decision.” Id., at 169, 112 S. Ct. 2408, 120 L. Ed. 2d 120;
see Printz, supra, at 930, 117 S. Ct. 2365, 138 L. Ed. 2d
914. For this reason, federal officeholders may view this
“departur[e] from the federal structure to be in their
personal interests. . . as a means of shifting responsibility
for the eventual decision.” New York, 505 U.S., at
182-183, 112 S. Ct. 2408, 120 L. Ed. 2d 120. And even
state officials may favor such a “departure from the
constitutional plan,” since uncertainty concerning
responsibility may also permit them to escape
accountability. Id., at 182, 112 S. Ct. 2408, 120 L. Ed. 2d
120. If a program is popular, [***271] state officials may
claim credit; if it is unpopular, [*2661] they may protest
that they were merely responding to a federal directive.

Once it is recognized that spending-power legislation
cannot coerce state participation, two questions remain:
(1) What is the meaning of coercion in this context? (2) Is
the ACA’s expanded Medicaid coverage coercive? We
now turn to those questions.

D

1

The answer to the first of these questions-the
meaning of coercion in the present context-is
straightforward. As we have explained, the legitimacy of
attaching conditions to federal grants to the States
depends on the voluntariness of the States’ choice to
accept or decline the offered package. Therefore, if States
really have no choice other than to accept the package,
the offer is coercive, and the conditions cannot be
sustained under the spending power. And as our decision
in South Dakota v. Dole makes clear, theoretical
voluntariness is not enough.

In South Dakota v. Dole, we considered whether the
spending power permitted Congress to condition 5% of
the State’s federal highway funds on the State’s adoption
of a minimum drinking age of 21 years. South Dakota
argued that the program was impermissibly coercive,
[***272] but we disagreed, reasoning that “Congress
ha[d] directed only that a State desiring to establish a
minimum drinking age lower than 21 lose a relatively
[**556] small percentage of certain federal highway

funds.” 483 U.S., at 211, 107 S. Ct. 2793, 97 L. Ed. 2d
171. Because “all South Dakota would lose if she
adhere[d] to her chosen course as to a suitable minimum
drinking age [was] 5% of the funds otherwise obtainable
under specified highway grant programs,” we found that
“Congress ha[d] offered relatively mild encouragement to
the States to enact higher minimum drinking ages than
they would otherwise choose.” Ibid. Thus, the decision
whether to comply with the federal condition “remain[ed]
the prerogative of the States not merely in theory but in
fact,” and so the program at issue did not exceed
Congress’ power. Id., at 211-212, 107 S. Ct. 2793, 97 L.
Ed. 2d 171 (emphasis added).

The question whether a law enacted under the
spending power is coercive in fact will sometimes be
difficult, but where Congress has plainly “crossed the line
distinguishing encouragement from coercion,” New York,
supra, at 175, 112 S. Ct. 2408, 120 L. Ed. 2d 120, a
federal program that coopts the States’ political [***273]
processes must be declared unconstitutional. “[T]he
federal balance is too essential a part of our constitutional
structure and plays too vital a role in securing freedom
for us to admit inability to intervene.” Lopez, 514 U.S., at
578,115 S. Ct. 1624, 131 L. Ed. 2d 626 (KENNEDY, J.,
concurring).

2

The Federal Government’s argument in this case at
best pays lip service to the anticoercion principle. The
Federal Government suggests that it is sufficient if States
are “free, as a matter of law, to turn down” federal funds.
Brief for Respondents in No. 11-400, p. 17 (emphasis
added); see also id., at 25. According to the Federal
Government, neither the amount of the offered federal
funds nor the amount of the federal taxes extracted from
the taxpayers of a State to pay for the program in
question is relevant in determining whether there is
impermissible coercion. Id., at 41-46.

This argument ignores reality. When a heavy federal
tax is levied to support a federal program that offers large
grants to the States, States may, as a practical matter, be
unable to refuse to participate in the federal program and
to substitute a state alternative. Even if a State believes
that the federal program [***274] is ineffective and
[*2662] inefficient, withdrawal would likely force the
State to impose a huge tax increase on its residents, and
this new state tax would come on top of the federal taxes
already paid by residents to support subsidies to

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participating States. 13

13 JUSTICE GINSBURG argues that “[a] State .
. . has no claim on the money its residents pay in
federal taxes.” Ante, at 59, n. 26. This is true as a
formal matter. “When the United States
Government taxes United States citizens, it taxes
them ‘in their individual capacities’ as ‘the people
of America’-not as residents of a particular State.”
Ante, at 58, n. 26 (quoting U.S. Term Limits, Inc.
v. Thornton, 514 U.S. 779, 839, 115 S. Ct. 1842,
131 L. Ed. 2d 881 (1995) (KENNEDY, J.,
concurring)) . But unless JUSTICE GINSBURG
thinks that there is no limit to the amount of
money that can be squeezed out of taxpayers,
heavy federal taxation diminishes the practical
ability of States to collect their own taxes.

Acceptance of the Federal Government’s
interpretation of the anticoercion rule would permit
Congress to dictate policy in areas traditionally governed
primarily at the state or local level. Suppose, for example,
that Congress enacted [***275] legislation offering each
State a grant equal to the State’s [**557] entire annual
expenditures for primary and secondary education.
Suppose also that this funding came with conditions
governing such things as school curriculum, the hiring
and tenure of teachers, the drawing of school districts, the
length and hours of the school day, the school calendar, a
dress code for students, and rules for student discipline.
As a matter of law, a State could turn down that offer, but
if it did so, its residents would not only be required to pay
the federal taxes needed to support this expensive new
program, but they would also be forced to pay an
equivalent amount in state taxes. And if the State gave in
to the federal law, the State and its subdivisions would
surrender their traditional authority in the field of
education. Asked at oral argument whether such a law
would be allowed under the spending power, the Solicitor
General responded that it would. Tr. of Oral Arg. 44-45
(Mar. 28, 2012).

E

Whether federal spending legislation crosses the line
from enticement to coercion is often difficult to
determine, and courts should not conclude that legislation
is unconstitutional on this ground unless the coercive
[***276] nature of an offer is unmistakably clear. In this
case, however, there can be no doubt. In structuring the
ACA, Congress unambiguously signaled its belief that

every State would have no real choice but to go along
with the Medicaid Expansion. If the anticoercion rule
does not apply in this case, then there is no such rule.

1

The dimensions of the Medicaid program lend strong
support to the petitioner States’ argument that refusing to
accede to the conditions set out in the ACA is not a
realistic option. Before the ACA’s enactment, Medicaid
funded medical care for pregnant women, families with
dependents, children, the blind, the elderly, and the
disabled. See 42 U.S.C. §1396a(a)(10) (2006 ed., Supp.
IV). The ACA greatly expands the program’s reach,
making new funds available to States that agree to extend
coverage to all individuals who are under age 65 and
have incomes below 133% of the federal poverty line.
See§1396a(a)(10)(A)(i)(VIII). Any State that refuses to
expand its Medicaid programs in this way is threatened
with a severe sanction: the loss of all its federal Medicaid
funds. See §1396c (2006 ed.).

Medicaid has long been the largest federal program
of grants to the States. [***277] See Brief for
Respondents in No. 11-400, at 37. In 2010, the Federal
Government directed [*2663] more than $552 billion in
federal funds to the States. See Nat. Assn. of State
Budget Officers, 2010 State Expenditure Report:
Examining Fiscal 2009-2011 State Spending, p. 7 (2011)
(NASBO Report). Of this, more than $233 billion went to
pre-expansion Medicaid. See id., at 47. 14 This amount
equals nearly 22% of all state expenditures combined.
See id., at 7.

14 The Federal Government has a higher number
for federal spending on Medicaid. According to
the Office of Management and Budget, federal
grants to the States for Medicaid amounted to
nearly $273 billion in Fiscal Year 2010. See
Office of Management and Budget, Historical
Tables, Budget of the U.S. Government, Fiscal
Year 2013, Table 12.3-Total Outlays for Grants to
State and Local Governments by Function,
Agency, and Program: 1940-2013, http://
www.whitehouse.gov/omb/budget/Historical s. In
that Fiscal Year, total federal outlays for grants to
state and local governments amounted to over
$608 billion, see Table 12.1, and state and local
government expenditures from their own sources
amounted to $1.6 trillion, see Table 15.2. Using
these numbers, [***278] 44.8% of all federal

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outlays to both state and local governments was
allocated to Medicaid, amounting to 16.8% of all
state and local expenditures from their own
sources.

[**558] The States devote a larger percentage of
their budgets to Medicaid than to any other item. Id., at 5.
Federal funds account for anywhere from 50% to 83% of
each State’s total Medicaid expenditures, see §1396d(b)
(2006 ed., Supp. IV); most States receive more than $1
billion in federal Medicaid funding; and a quarter receive
more than $5 billion, NASBO Report 47. These federal
dollars total nearly two thirds-64.6%-of all Medicaid
expenditures nationwide. 15 Id., at 46.

15 The Federal Government reports a higher
percentage. According to Medicaid.gov, in Fiscal
Year 2010, the Federal Government made
Medicaid payments in the amount of nearly $260
billion, representing 67.79% of total Medicaid
payments of $383 billion. See
www.medicaid.gov/Medicaid-CHIP-Program-I
nformation/By-State/By-State.html.

The Court of Appeals concluded that the States
failed to establish coercion in this case in part because the
“states have the power to tax and raise revenue, and
therefore can create and fund programs of their own if
they do not [***279] like Congress’s terms.” 648 F.3d
1235, 1268 (CA11 2011); see Brief for Sen. Harry Reid
et al. as Amici Curiae in No. 11-400, p. 21 (“States may
always choose to decrease expenditures on other
programs or to raise revenues”). But the sheer size of this
federal spending program in relation to state expenditures
means that a State would be very hard pressed to
compensate for the loss of federal funds by cutting other
spending or raising additional revenue. Arizona, for
example, commits 12% of its state expenditures to
Medicaid, and relies on the Federal Government to
provide the rest: $5.6 billion, equaling roughly one-third
of Arizona’s annual state expenditures of $17 billion. See
NASBO Report 7, 47. Therefore, if Arizona lost federal
Medicaid funding, the State would have to commit an
additional 33% of all its state expenditures to fund an
equivalent state program along the lines of pre-expansion
Medicaid. This means that the State would have to
allocate 45% of its annual expenditures for that one
purpose. See ibid.

The States are far less reliant on federal funding for
any other program. After Medicaid, the next biggest

federal funding item is aid to support elementary and
secondary [***280] education, which amounts to 12.8%
of total federal outlays to the States, see id., at 7, 16, and
equals only 6.6% of all state expenditures combined. See
ibid. In Arizona, for example, although federal Medicaid
expenditures are equal to 33% of all state expenditures,
federal education funds amount to only 9.8% of all state
[*2664] expenditures. See ibid. And even in States with
less than average federal Medicaid funding, that funding
is at least twice the size of federal education funding as a
percentage of state expenditures. Id., at 7, 16, 47.

A State forced out of the Medicaid program would
face burdens in addition to the loss of federal Medicaid
funding. For example, a nonparticipating State might be
found to be ineligible for other major federal funding
sources, such as Temporary Assistance for Needy
Families (TANF), which is premised on the expectation
that States will participate in Medicaid. See 42 U.S.C.
§602(a)(3) (2006 ed.) (requiring that certain beneficiaries
of TANF funds be “eligible for medical assistance under
the State[‘s Medicaid] plan”). And withdrawal or
expulsion [**559] from the Medicaid program would
not relieve a State’s hospitals of their obligation under
federal law to [***281] provide care for patients who are
unable to pay for medical services. The Emergency
Medical Treatment and Active Labor Act, §1395dd,
requires hospitals that receive any federal funding to
provide stabilization care for indigent patients but does
not offer federal funding to assist facilities in carrying out
its mandate. Many of these patients are now covered by
Medicaid. If providers could not look to the Medicaid
program to pay for this care, they would find it
exceedingly difficult to comply with federal law unless
they were given substantial state support. See, e.g., Brief
for Economists as Amici Curiae in No 11-400, p. 11.

For these reasons, the offer that the ACA makes to
the States-go along with a dramatic expansion of
Medicaid or potentially lose all federal Medicaid
funding-is quite unlike anything that we have seen in a
prior spending- power case. In South Dakota v. Dole, the
total amount that the States would have lost if every
single State had refused to comply with the 21-year-old
drinking age was approximately $614 million-or about
0.19% of all state expenditures combined. See Nat. Assn.
of State Budget Officers, 1989 (Fiscal Years 1987-1989
Data) State Expenditure Report [***282] 10, (1989),
http://www.nasbo.org/publications-data/s
tate-expenditure-report/archives. South Dakota stood to

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lose, at most, funding that amounted to less than 1% of its
annual state expenditures. See ibid. Under the ACA, by
contrast, the Federal Government has threatened to
withhold 42.3% of all federal outlays to the states, or
approximately $233 billion. See NASBO Report 7, 10,
47. South Dakota stands to lose federal funding equaling
28.9% of its annual state expenditures. See id., at 7, 47.
Withholding $614.7 million, equaling only 0.19% of all
state expenditures combined, is aptly characterized as
“relatively mild encouragement,” but threatening to
withhold $233 billion, equaling 21.86% of all state
expenditures combined, is a different matter.

2

What the statistics suggest is confirmed by the goal
and structure of the ACA. In crafting the ACA, Congress
clearly expressed its informed view that no State could
possibly refuse the offer that the ACA extends.

The stated goal of the ACA is near- universal health
care coverage. To achieve this goal, the ACA mandates
that every person obtain a minimum level of coverage. It
attempts to reach this goal in several different ways. The
guaranteed [***283] issue and community-rating
provisions are designed to make qualifying insurance
available and affordable for persons with medical
conditions that may require expensive care. Other ACA
provisions seek to make such policies more affordable for
people of modest means. Finally, for low-income
individuals who are simply not able [*2665] to obtain
insurance, Congress expanded Medicaid, transforming it
from a program covering only members of a limited list
of vulnerable groups into a program that provides at least
the requisite minimum level of coverage for the poor. See
42 U.S.C. §§1396a(a) (10)(A)(i)(VIII) (2006 ed., Supp.
IV), 1396u-7(a), (b)(5), 18022(a). This design was
intended to provide at least a specified minimum level of
coverage for all Americans, but the achievement of that
goal obviously depends on participation by every single
State. If any State-not to [**560] mention all of the 26
States that brought this suit- chose to decline the federal
offer, there would be a gaping hole in the ACA’s
coverage.

It is true that some persons who are eligible for
Medicaid coverage under the ACA may be able to secure
private insurance, either through their employers or by
obtaining subsidized insurance through [***284] an
exchange. See 26 U.S.C. §36B(a) (2006 ed., Supp. IV);
Brief for Respondents in No. 11-400, at 12. But the new

federal subsidies are not available to those whose income
is below the federal poverty level, and the ACA provides
no means, other than Medicaid, for these individuals to
obtain coverage and comply with the Mandate. The
Government counters that these people will not have to
pay the penalty, see, e.g., Tr. of Oral Arg. 68 (Mar. 28,
2012); Brief for Respondents in No. 11-400, at 49-50, but
that argument misses the point: Without Medicaid, these
individuals will not have coverage and the ACA’s goal of
near-universal coverage will be severely frustrated.

If Congress had thought that States might actually
refuse to go along with the expansion of Medicaid,
Congress would surely have devised a backup scheme so
that the most vulnerable groups in our society, those
previously eligible for Medicaid, would not be left out in
the cold. But nowhere in the over 900-page Act is such a
scheme to be found. By contrast, because Congress
thought that some States might decline federal funding
for the operation of a “health benefit exchange,”
Congress provided a backup scheme; if a State declines
[***285] to participate in the operation of an exchange,
the Federal Government will step in and operate an
exchange in that State. See 42 U.S.C. §18041(c)(1).
Likewise, knowing that States would not necessarily
provide affordable health insurance for aliens lawfully
present in the United States-because Medicaid does not
require States to provide such coverage-Congress
extended the availability of the new federal insurance
subsidies to all aliens. See 26 U.S.C. §36B(c) (1)(B)(ii)
(excepting from the income limit individuals who are
“not eligible for the medicaid program . . . by reason of
[their] alien status”). Congress did not make these
subsidies available for citizens with incomes below the
poverty level because Congress obviously assumed that
they would be covered by Medicaid. If Congress had
contemplated that some of these citizens would be left
without Medicaid coverage as a result of a State’s
withdrawal or expulsion from the program, Congress
surely would have made them eligible for the tax
subsidies provided for low-income aliens.

These features of the ACA convey an unmistakable
message: Congress never dreamed that any State would
refuse to go along with the expansion of Medicaid.
[***286] Congress well understood that refusal was not a
practical option.

The Federal Government does not dispute the
inference that Congress anticipated 100% state

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participation, but it argues that this assumption was based
on the fact that ACA’s offer was an “exceedingly
generous” gift. Brief for Respondents in No. 11-400, at
50. As the Federal Government sees things, Congress is
like the [*2666] generous benefactor who offers $1
million with few strings attached to 50 randomly selected
individuals. Just as this benefactor might assume that all
of these 50 individuals would snap up his offer, so
Congress assumed that every State would gratefully
accept [**561] the federal funds (and conditions) to go
with the expansion of Medicaid.

This characterization of the ACA’s offer raises
obvious questions. If that offer is “exceedingly
generous,” as the Federal Government maintains, why
have more than half the States brought this lawsuit,
contending that the offer is coercive? And why did
Congress find it necessary to threaten that any State
refusing to accept this “exceedingly generous” gift would
risk losing all Medicaid funds? Congress could have
made just the new funding provided under the ACA
contingent on acceptance [***287] of the terms of the
Medicaid Expansion. Congress took such an approach in
some earlier amendments to Medicaid, separating new
coverage requirements and funding from the rest of the
program so that only new funding was conditioned on
new eligibility extensions. See, e.g., Social Security
Amendments of 1972, 86 Stat. 1465.

Congress’ decision to do otherwise here reflects its
understanding that the ACA offer is not an “exceedingly
generous” gift that no State in its right mind would
decline. Instead, acceptance of the offer will impose very
substantial costs on participating States. It is true that the
Federal Government will bear most of the initial costs
associated with the Medicaid Expansion, first paying
100% of the costs of covering newly eligible individuals
between 2014 and 2016. 42 U.S.C. §1396d(y). But that is
just part of the picture. Participating States will be forced
to shoulder substantial costs as well, because after 2019
the Federal Government will cover only 90% of the costs
associated with the Expansion, see ibid., with state
spending projected to increase by at least $20 billion by
2020 as a consequence. Statement of Douglas W.
Elmendorf, CBO’s Analysis of the Major [***288]
Health Care Legislation Enacted in March 2010, p. 24
(Mar. 30, 2011); see also R. Bovbjerg, B. Ormond, & V.
Chen, Kaiser Commission on Medicaid and the
Uninsured, State Budgets under Federal Health Reform:
The Extent and Causes of Variations in Estimated

Impacts 4, n. 27 (Feb. 2011) (estimating new state
spending at $43.2 billion through 2019). After 2019, state
spending is expected to increase at a faster rate; the CBO
estimates new state spending at $60 billion through 2021.
Statement of Douglas W. Elmendorf, supra, at 24. And
these costs may increase in the future because of the very
real possibility that the Federal Government will change
funding terms and reduce the percentage of funds it will
cover. This would leave the States to bear an increasingly
large percentage of the bill. See Tr. of Oral Arg. 74-76
(Mar. 28, 2012). Finally, after 2015, the States will have
to pick up the tab for 50% of all administrative costs
associated with implementing the new program, see
§§1396b(a)(2)-(5), (7) (2006 ed., Supp. IV), costs that
could approach $12 billion between fiscal years 2014 and
2020, see Dept. of Health and Human Services, Center
for Medicaid and Medicare Services, 2010 Actuarial
[***289] Report on the Financial Outlook for Medicaid
30.

In sum, it is perfectly clear from the goal and
structure of the ACA that the offer of the Medicaid
Expansion was one that Congress understood no State
could refuse. The Medicaid Expansion therefore exceeds
Congress’ spending power and cannot be implemented.

F

Seven Members of the Court agree that the Medicaid
Expansion, as enacted [**562] by [*2667] Congress, is
unconstitutional. See Part IV-A to IV-E, supra; Part
IV-A, ante, at 45-55 (opinion of ROBERTS, C. J., joined
by BREYER and KAGAN, JJ.) . Because the Medicaid
Expansion is unconstitutional, the question of remedy
arises. The most natural remedy would be to invalidate
the Medicaid Expansion. However, the Government
proposes-in two cursory sentences at the very end of its
brief-preserving the Expansion. Under its proposal, States
would receive the additional Medicaid funds if they
expand eligibility, but States would keep their
pre-existing Medicaid funds if they do not expand
eligibility. We cannot accept the Government’s
suggestion.

The reality that States were given no real choice but
to expand Medicaid was not an accident. Congress
assumed States would have no choice, and the ACA
depends on States’ [***290] having no choice, because
its Mandate requires low-income individuals to obtain
insurance many of them can afford only through the
Medicaid Expansion. Furthermore, a State’s withdrawal

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might subject everyone in the State to much higher
insurance premiums. That is because the Medicaid
Expansion will no longer offset the cost to the insurance
industry imposed by the ACA’s insurance regulations and
taxes, a point that is explained in more detail in the
severability section below. To make the Medicaid
Expansion optional despite the ACA’s structure and
design “‘would be to make a new law, not to enforce an
old one. This is no part of our duty.'” Trade-Mark Cases,
100 U.S. 82, 99, 25 L. Ed. 550, 1879 Dec. Comm’r Pat.
619 (1879).

Worse, the Government’s proposed remedy
introduces a new dynamic: States must choose between
expanding Medicaid or paying huge tax sums to the
federal fisc for the sole benefit of expanding Medicaid in
other States. If this divisive dynamic between and among
States can be introduced at all, it should be by conscious
congressional choice, not by Court-invented
interpretation. We do not doubt that States are capable of
making decisions when put in a tight spot. We [***291]
do doubt the authority of this Court to put them there.

The Government cites a severability clause codified
with Medicaid in Chapter 7 of the United States Code
stating that if “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.” 42 U.S.C. §1303 (2006 ed.). But
that clause tells us only that other provisions in Chapter 7
should not be invalidated if §1396c, the authorization for
the cut-off of all Medicaid funds, is unconstitutional. It
does not tell us that §1396c can be judicially revised, to
say what it does not say. Such a judicial power would not
be called the doctrine of severability but perhaps the
doctrine of amendatory invalidation-similar to the
amendatory veto that permits the Governors of some
States to reduce the amounts appropriated in legislation.
The proof that such a power does not exist is the fact that
it would not preserve other congressional dispositions,
but would leave it up to the Court what the “validated”
legislation will contain. The Court today opts for
permitting the [***292] cut-off of only incremental
Medicaid funding, but it might just as well have
permitted, say, the cut-off of funds that represent no more
than x percent of the State’s budget. The [**563] Court
severs nothing, but simply revises §1396c to read as the
Court would desire.

We should not accept the Government’s invitation to
attempt to solve a constitutional problem by rewriting the
Medicaid Expansion so as to allow States that reject it to
retain their pre-existing Medicaid funds. Worse, the
Government’s remedy, [*2668] now adopted by the
Court, takes the ACA and this Nation in a new direction
and charts a course for federalism that the Court, not the
Congress, has chosen; but under the Constitution, that
power and authority do not rest with this Court.

V

Severability

The Affordable Care Act seeks to achieve
“near-universal” health insurance coverage.
§18091(2)(D) (2006 ed., Supp. IV). The two pillars of the
Act are the Individual Mandate and the expansion of
coverage under Medicaid. In our view, both these central
provisions of the Act-the Individual Mandate and
Medicaid Expansion-are invalid. It follows, as some of
the parties urge, that all other provisions of the Act must
fall as well. The following section [***293] explains the
severability principles that require this conclusion. This
analysis also shows how closely interrelated the Act is,
and this is all the more reason why it is judicial
usurpation to impose an entirely new mechanism for
withdrawal of Medicaid funding, see Part IV-F, supra,
which is one of many examples of how rewriting the Act
alters its dynamics.

A

When an unconstitutional provision is but a part of a
more comprehensive statute, the question arises as to the
validity of the remaining provisions. The Court’s
authority to declare a statute partially unconstitutional has
been well established since Marbury v. Madison, 5 U.S.
137, 1 Cranch 137, 2 L. Ed. 60 (1803), when the Court
severed an unconstitutional provision from the Judiciary
Act of 1789. And while the Court has sometimes applied
“at least a modest presumption in favor of . . .
severability,” C. Nelson, Statutory Interpretation 144
(2010), it has not always done so, see, e.g., Minnesota v.
Mille Lacs Band of Chippewa Indians, 526 U.S. 172,
190-195, 119 S. Ct. 1187, 143 L. Ed. 2d 270 (1999).

An automatic or too cursory severance of statutory
provisions risks “rewrit[ing] a statute and giv[ing] it an
effect altogether [***294] different from that sought by
the measure viewed as a whole.” Railroad Retirement Bd.

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v. Alton R. Co., 295 U.S. 330, 362, 55 S. Ct. 758, 79 L.
Ed. 1468 (1935). The Judiciary, if it orders uncritical
severance, then assumes the legislative function; for it
imposes on the Nation, by the Court’s decree, its own
new statutory regime, consisting of policies, risks, and
duties that Congress did not enact. That can be a more
extreme exercise of the judicial power than striking the
whole statute and allowing Congress to address the
conditions that pertained when the statute was considered
at the outset.

The Court has applied a two-part guide as the
frame-work for severability analysis. The test has been
deemed “well established.” Alaska Airlines, Inc. v. Brock,
480 U.S. 678, 684, 107 S. Ct. 1476, 94 L. Ed. 2d 661
(1987). First, if the Court holds a statutory provision
unconstitutional, it then determines whether the now
truncated statute will operate in the [**564] manner
Congress intended. If not, the remaining provisions must
be invalidated. See id., at 685, 107 S. Ct. 1476, 94 L. Ed.
2d 661. In Alaska Airlines, the Court clarified that this
first inquiry requires more than asking whether “the
[***295] balance of the legislation is incapable of
functioning independently.” Id., at 684, 107 S. Ct. 1476,
94 L. Ed. 2d 661. Even if the remaining provisions will
operate in some coherent way, that alone does not save
the statute. The question is whether the provisions will
work as Congress intended. The “relevant inquiry in
evaluating severability is whether the statute will function
in a manner consistent with the intent of Congress.” Id.,
at 685, 107 S. Ct. 1476, 94 L. Ed. 2d 661 (emphasis
[*2669] in original). See also Free Enter. Fund v. Pub.
Co. Accounting Oversight Bd., 561 U.S. ___, ___, 130 S.
Ct. 3138, 177 L. Ed. 2d 706 (2010) (the Act “remains
fully operative as a law with these tenure restrictions
excised”) (internal quotation marks omitted); United
States v. Booker, 543 U.S. 220, 227, 125 S. Ct. 738, 160
L. Ed. 2d 621 (2005) (“[T]wo provisions . . . must be
invalidated in order to allow the statute to operate in a
manner consistent with congressional intent”); Mille
Lacs, supra, at 194, 119 S. Ct. 1187, 143 L. Ed. 2d 270
(“[E]m-bodying as it did one coherent policy, [the entire
order] is inseverable”).

Second, even if the remaining provisions can operate
[***296] as Congress designed them to operate, the
Court must determine if Congress would have enacted
them standing alone and without the unconstitutional
portion. If Congress would not, those provisions, too,
must be invalidated. See Alaska Airlines, supra, at 685,

107 S. Ct. 1476, 94 L. Ed. 2d 661 (“[T]he
unconstitutional provision must be severed unless the
statute created in its absence is legislation that Congress
would not have enacted”); see also Free Enterprise Fund,
supra, at ___, 130 S. Ct. 3138, 177 L. Ed. 2d 706
(“[N]othing in the statute’s text or historical context
makes it ‘evident’ that Congress, faced with the
limitations imposed by the Constitution, would have
preferred no Board at all to a Board whose members are
removable at will”); Ayotte v. Planned Parenthood of
Northern New Eng., 546 U.S. 320, 330, 126 S. Ct. 961,
163 L. Ed. 2d 812 (2006) (“Would the legislature have
preferred what is left of its statute to no statute at all”);
Denver Area Ed. Telecommunications Consortium, Inc.
v. FCC, 518 U.S. 727, 767, 116 S. Ct. 2374, 135 L. Ed.
2d 888 (1996) (plurality opinion) (“Would Congress still
have passed §10(a) had it known that the remaining
provisions [***297] were invalid” (internal quotation
marks and brackets omitted)).

The two inquiries-whether the remaining provisions
will operate as Congress designed them, and whether
Congress would have enacted the remaining provisions
standing alone-often are interrelated. In the ordinary
course, if the remaining provisions cannot operate
according to the congressional design (the first inquiry),
it almost necessarily follows that Congress would not
have enacted them (the second inquiry). This close
interaction may explain why the Court has not always
been precise in distinguishing between the two. There
are, however, occasions in which the severability
standard’s first inquiry (statutory functionality) is not a
proxy for the second inquiry (whether the Legislature
intended the remaining provisions to stand alone).

[**565] B

The Act was passed to enable affordable,
“near-universal” health insurance coverage. 42 U.S.C.
§18091(2)(D). The resulting, complex statute consists of
mandates and other requirements; comprehensive
regulation and penalties; some undoubted taxes; and
increases in some governmental expenditures, decreases
in others. Under the severability test set out above, it
must be determined if those [***298] provisions
function in a coherent way and as Congress would have
intended, even when the major provisions establishing the
Individual Mandate and Medicaid Expansion are
themselves invalid.

Congress did not intend to establish the goal of

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near-universal coverage without regard to fiscal
consequences. See, e.g., ACA §1563, 124 Stat. 270
(“[T]his Act will reduce the Federal deficit between 2010
and 2019”). And it did not intend to impose the inevitable
costs on any one industry or group of individuals. The
whole design of the Act is to balance the costs and
benefits affecting each set of regulated [*2670] parties.
Thus, individuals are required to obtain health insurance.
See 26 U.S.C. §5000A(a). Insurance companies are
required to sell them insurance regardless of patients’
pre-existing conditions and to comply with a host of other
regulations. And the companies must pay new taxes. See
§4980I (high-cost insurance plans); 42 U.S.C.
§§300gg(a)(1), 300gg-4(b) (community rating);
§§300gg-1, 300gg-3, 300gg-4(a) (guaranteed issue);
§300gg-11 (elimination of coverage limits);
§300gg-14(a) (dependent children up to age 26); ACA
§§9010, 10905, 124 Stat. 865, 1017 (excise tax); Health
Care and Education [***299] Reconciliation Act of 2010
(HCERA) §1401, 124 Stat. 1059 (excise tax). States are
expected to expand Medicaid eligibility and to create
regulated marketplaces called exchanges where
individuals can purchase insurance. See 42 U.S.C.
§§1396a(a)(10)(A)(i)(VIII) (2006 ed., Supp. IV)
(Medicaid Expansion), 18031 (exchanges). Some persons
who cannot afford insurance are provided it through the
Medicaid Expansion, and others are aided in their
purchase of insurance through federal subsidies available
on health-insurance exchanges. See 26 U.S.C. §36B
(2006 ed., Supp. IV), 42 U.S.C. §18071 (2006 ed., Supp.
IV) (federal subsidies). The Federal Government’s
increased spending is offset by new taxes and cuts in
other federal expenditures, including reductions in
Medicare and in federal payments to hospitals. See, e.g.,
§1395ww(r) (Medicare cuts); ACA Title IX, Subtitle A,
124 Stat. 847 (“Revenue Offset Provisions”). Employers
with at least 50 employees must either provide employees
with adequate health benefits or pay a financial exaction
if an employee who qualifies for federal subsidies
purchases insurance through an exchange. See 26 U.S.C.
§4980H (2006 ed., Supp. IV).

In short, the Act [***300] attempts to achieve
near-universal health insurance coverage by spreading its
costs to individuals, insurers, governments, hospitals, and
employers- while, at the same time, offsetting significant
portions of those costs with new benefits to each group.
For example, the Federal Government bears the burden of
paying billions for the new entitlements mandated by the
Medicaid Expansion and federal subsidies for insurance

purchases on the exchanges; but it benefits from
reductions in the reimbursements it pays to [**566]
hospitals. Hospitals lose those reimbursements; but they
benefit from the decrease in uncompensated care, for
under the insurance regulations it is easier for individuals
with pre-existing conditions to purchase coverage that
increases payments to hospitals. Insurance companies
bear new costs imposed by a collection of insurance
regulations and taxes, including “guaranteed issue” and
“community rating” requirements to give coverage
regardless of the insured’s pre- existing conditions; but
the insurers benefit from the new, healthy purchasers who
are forced by the Individual Mandate to buy the insurers’
product and from the new low-income Medicaid
recipients who will enroll in [***301] insurance
companies’ Medicaid-funded managed care programs. In
summary, the Individual Mandate and Medicaid
Expansion offset insurance regulations and taxes, which
offset reduced reimbursements to hospitals, which offset
increases in federal spending. So, the Act’s major
provisions are interdependent.

The Act then refers to these interdependencies as
“shared responsibility.” See ACA Subtitle F, Title I, 124
Stat. 242 (“Shared Responsibility”); ACA §1501, ibid.
(same); ACA §1513, id., at 253 (same); ACA §4980H,
ibid. (same) . In at least six places, the Act describes the
Individual Mandate as working “together with the other
provisions of this Act.” 42 U.S.C. §18091(2)(C) (2006
ed., Supp. IV) [*2671] (working “together” to “add
millions of new consumers to the health insurance
market”); §18091(2)(E) (working “together” to
“significantly reduce” the economic cost of the poorer
health and shorter lifespan of the uninsured);
§18091(2)(F) (working “together” to “lower health
insurance premiums”); §18091(2)(G) (working “together”
to “improve financial security for families”);
§18091(2)(I) (working “together” to minimize “adverse
selection and broaden the health insurance risk pool to
include healthy [***302] individuals”); §18091(2)(J)
(working “together” to “significantly reduce
administrative costs and lower health insurance
premiums”). The Act calls the Individual Mandate “an
essential part” of federal regulation of health insurance
and warns that “the absence of the requirement would
undercut Federal regulation of the health insurance
market.” §18091(2)(H).

C

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2012 U.S. LEXIS 4876, ***298; 80 U.S.L.W. 4579

One preliminary point should be noted before
applying severability principles to the Act. To be sure, an
argument can be made that those portions of the Act that
none of the parties has standing to challenge cannot be
held nonseverable. The response to this argument is that
our cases do not support it. See, e.g., Williams v.
Standard Oil Co. of La., 278 U.S. 235, 242-244, 49 S. Ct.
115, 73 L. Ed. 287 (1929) (holding nonseverable
statutory provisions that did not burden the parties). It
would be particularly destructive of sound government to
apply such a rule with regard to a multifaceted piece of
legislation like the ACA. It would take years, perhaps
decades, for each of its provisions to be adjudicated
separately-and for some of them (those simply expending
federal funds) no one may have separate standing. The
Federal Government, [***303] the States, and private
parties ought to know at once whether the entire
legislation fails.

The opinion now explains in Part V-C-1, infra, why
the Act’s major provisions are not severable from the
Mandate and Medicaid Expansion. It [**567] proceeds
from the insurance regulations and taxes (C-1-a), to the
reductions in reimbursements to hospitals and other
Medicare reductions (C-1-b), the exchanges and their
federal subsidies (C-1-c), and the employer responsibility
assessment (C-1-d). Part V-C-2, infra, explains why the
Act’s minor provisions also are not severable.

1

The Act’s Major Provisions

Major provisions of the Affordable Care Act-i.e., the
insurance regulations and taxes, the reductions in federal
reimbursements to hospitals and other Medicare spending
reductions, the exchanges and their federal subsidies, and
the employer responsibility assessment-cannot remain
once the Individual Mandate and Medicaid Expansion are
invalid. That result follows from the undoubted inability
of the other major provisions to operate as Congress
intended without the Individual Mandate and Medicaid
Expansion. Absent the invalid portions, the other major
provisions could impose enormous risks of unexpected
burdens [***304] on patients, the health-care
community, and the federal budget. That consequence
would be in absolute conflict with the ACA’s design of
“shared responsibility,” and would pose a threat to the
Nation that Congress did not intend.

a

Insurance Regulations and Taxes

Without the Individual Mandate and Medicaid
Expansion, the Affordable Care Act’s insurance
regulations and insurance taxes impose risks on insurance
companies and their customers that this Court cannot
measure. Those risks would undermine Congress’ scheme
of “shared responsibility.” [*2672] See 26 U.S.C.
§4980I (2006 ed., Supp. IV) (high-cost insurance plans);
42 U.S.C. §§300gg(a)(1) (2006 ed., Supp. IV),
300gg-4(b) (community rating); §§300gg-1, 300gg-3,
300gg-4(a) (guaranteed issue); §300gg-11 (elimination of
coverage limits); §300gg-14(a) (dependent children up to
age 26); ACA §§9010, 10905, 124 Stat. 865, 1017
(excise tax); HCERA §1401, 124 Stat. 1059 (excise tax).

The Court has been informed by distinguished
economists that the Act’s Individual Mandate and
Medicaid Expansion would each increase revenues to the
insurance industry by about $350 billion over 10 years;
that this combined figure of $700 billion is necessary to
offset [***305] the approximately $700 billion in new
costs to the insurance industry imposed by the Act’s
insurance regulations and taxes; and that the new
$700-billion burden would otherwise dwarf the industry’s
current profit margin. See Brief for Economists as Amici
Curiae in No. 11-393 etc. (Severability), pp. 9-16, 10a.

If that analysis is correct, the regulations and taxes
will mean higher costs for insurance companies. Higher
costs may mean higher premiums for consumers, despite
the Act’s goal of “lower[ing] health insurance premiums.”
42 U.S.C. §18091(2)(F) (2006 ed., Supp. IV). Higher
costs also could threaten the survival of health-insurance
companies, despite the Act’s goal of “effective health
insurance markets.” §18091(2)(J).

The actual cost of the regulations and taxes may be
more or less than predicted. What is known, however, is
that severing other provisions from the Individual
Mandate and Medicaid [**568] Expansion necessarily
would impose significant risks and real uncertainties on
insurance companies, their customers, all other major
actors in the system, and the government treasury. And
what also is known is this: Unnecessary risks and
avoidable uncertainties are hostile to economic [***306]
progress and fiscal stability and thus to the safety and
welfare of the Nation and the Nation’s freedom. If those
risks and uncertainties are to be imposed, it must not be
by the Judiciary.

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2012 U.S. LEXIS 4876, ***302; 80 U.S.L.W. 4579

b

Reductions in Reimbursements to Hospitals and Other
Reductions in Medicare Expenditures

The Affordable Care Act reduces payments by the
Federal Government to hospitals by more than $200
billion over 10 years. See 42 U.S.C.
§1395ww(b)(3)(B)(xi)-(xii) (2006 ed., Supp. IV);
§1395ww(q); §1395ww(r); §1396r- 4(f)(7).

The concept is straightforward: Near-universal
coverage will reduce uncompensated care, which will
increase hospitals’ revenues, which will offset the
government’s reductions in Medicare and Medicaid
reimbursements to hospitals. Responsibility will be
shared, as burdens and benefits balance each other. This
is typical of the whole dynamic of the Act.

Invalidating the key mechanisms for expanding
insurance coverage, such as community rating and the
Medicaid Expansion, without invalidating the reductions
in Medicare and Medicaid, distorts the ACA’s design of
“shared responsibility.” Some hospitals may be forced to
raise the cost of care in order to offset the reductions in
reimbursements, which [***307] could raise the cost of
insurance premiums, in contravention of the Act’s goal of
“lower[ing] health insurance premiums.” 42 U.S.C.
§18091(2)(F) (2006 ed., Supp. IV). See also §18091(2)(I)
(goal of “lower[ing] health insurance premiums”);
§18091(2)(J) (same). Other hospitals, particularly
safety-net hospitals that serve a large number of
uninsured patients, may be forced to shut down. Cf.
National Assn. of Public [*2673] Hospitals, 2009
Annual Survey: Safety Net Hospitals and Health Systems
Fulfill Mission in Uncertain Times 5-6 (Feb. 2011). Like
the effect of preserving the insurance regulations and
taxes, the precise degree of risk to hospitals is
unknowable. It is not the proper role of the Court, by
severing part of a statute and allowing the rest to stand, to
impose unknowable risks that Congress could neither
measure nor predict. And Congress could not have
intended that result in any event.

There is a second, independent reason why the
reductions in reimbursements to hospitals and the ACA’s
other Medicare cuts must be invalidated. The ACA’s
$455 billion in Medicare and Medicaid savings offset the
$434-billion cost of the Medicaid Expansion. See CBO
Estimate, Table 2 (Mar. 20, 2010) [***308] . The
reductions allowed Congress to find that the ACA “will

reduce the Federal deficit between 2010 and 2019″ and
“will continue to reduce budget deficits after 2019.” ACA
§§1563(a)(1), (2), 124 Stat. 270.

That finding was critical to the ACA. The Act’s
“shared responsibility” concept extends to the federal
budget. Congress chose to offset new federal
expenditures with budget cuts and tax increases. That is
why the United States has explained in the course of this
litigation that “[w]hen Congress passed the ACA, it was
careful to ensure that any increased [**569] spending,
including on Medicaid, was offset by other
revenue-raising and cost-saving provisions.”
Memorandum in Support of Government’s Motion for
Summary Judgment in No. 3-10-cv-91, p. 41.

If the Medicare and Medicaid reductions would no
longer be needed to offset the costs of the Medicaid
Expansion, the reductions would no longer operate in the
manner Congress intended. They would lose their
justification and foundation. In addition, to preserve them
would be “to eliminate a significant quid pro quo of the
legislative compromise” and create a statute Congress did
not enact. Legal Services Corporation v. Velazquez, 531
U.S. 533, 561, 121 S. Ct. 1043, 149 L. Ed. 2d 63 (2001)
[***309] (SCALIA, J., dissenting). It is no secret that
cutting Medicare is unpopular; and it is most improbable
Congress would have done so without at least the
assurance that it would render the ACA deficit-neutral.
See ACA §§1563(a)(1), (2), 124 Stat. 270.

c

Health Insurance Exchanges and Their Federal
Subsidies

The ACA requires each State to establish a
health-insurance “exchange.” Each exchange is a
one-stop marketplace for individuals and small
businesses to compare community-rated health insurance
and purchase the policy of their choice. The exchanges
cannot operate in the manner Congress intended if the
Individual Mandate, Medicaid Expansion, and insurance
regulations cannot remain in force.

The Act’s design is to allocate billions of federal
dollars to subsidize individuals’ purchases on the
exchanges. Individuals with incomes between 100 and
400 percent of the poverty level receive tax credits to
offset the cost of insurance to the individual purchaser. 26
U.S.C. §36B (2006 ed., Supp. IV); 42 U.S.C. §18071

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2012 U.S. LEXIS 4876, ***306; 80 U.S.L.W. 4579

(2006 ed., Supp. IV). By 2019, 20 million of the 24
million people who will obtain insurance through an
exchange are expected to receive an average federal
subsidy of $6,460 per [***310] person. See CBO,
Analysis of the Major Health Care Legislation Enacted in
March 2010, pp. 18-19 (Mar. 30, 2011). Without the
community-rating insurance regulation, however, the
average federal subsidy could be much higher; for
community rating greatly lowers the enormous [*2674]
premiums unhealthy individuals would otherwise pay.
Federal subsidies would make up much of the difference.

The result would be an unintended boon to insurance
companies, an unintended harm to the federal fisc, and a
corresponding breakdown of the “shared responsibility”
between the industry and the federal budget that Congress
intended. Thus, the federal subsidies must be invalidated.

In the absence of federal subsidies to purchasers,
insurance companies will have little incentive to sell
insurance on the exchanges. Under the ACA’s scheme,
few, if any, individuals would want to buy individual
insurance policies outside of an exchange, because
federal subsidies would be unavailable outside of an
exchange. Difficulty in attracting individuals outside of
the exchange would in turn motivate insurers to enter
exchanges, despite the exchanges’ onerous regulations.
See 42 U.S.C. §18031. That system of incentives
collapses [***311] if the federal subsidies are
invalidated. Without the federal subsidies, individuals
would lose the main incentive to purchase insurance
inside the exchanges, [**570] and some insurers may be
unwilling to offer insurance inside of exchanges. With
fewer buyers and even fewer sellers, the exchanges
would not operate as Congress intended and may not
operate at all.

There is a second reason why, if community rating is
invalidated by the Mandate and Medicaid Expansion’s
invalidity, exchanges cannot be implemented in a manner
consistent with the Act’s design. A key purpose of an
exchange is to provide a marketplace of insurance options
where prices are standardized regardless of the buyer’s
pre-existing conditions. See ibid. An individual who
shops for insurance through an exchange will evaluate
different insurance products. The products will offer
different benefits and prices. Congress designed the
exchanges so the shopper can compare benefits and
prices. But the comparison cannot be made in the way
Congress designed if the prices depend on the shopper’s

pre-existing health conditions. The prices would vary
from person to person. So without community
rating-which prohibits insurers from basing [***312] the
price of insurance on pre-existing conditions-the
exchanges cannot operate in the manner Congress
intended.

d

Employer-Responsibility Assessment

The employer responsibility assessment provides an
incentive for employers with at least 50 employees to
provide their employees with health insurance options
that meet minimum criteria. See 26 U.S.C. §4980H (2006
ed., Supp. IV). Unlike the Individual Mandate, the
employer-responsibility assessment does not require
employers to provide an insurance option. Instead, it
requires them to make a payment to the Federal
Government if they do not offer insurance to employees
and if insurance is bought on an exchange by an
employee who qualifies for the exchange’s federal
subsidies. See ibid.

For two reasons, the employer-responsibility
assessment must be invalidated. First, the ACA makes a
direct link between the employer-responsibility
assessment and the exchanges. The financial assessment
against employers occurs only under certain conditions.
One of them is the purchase of insurance by an employee
on an exchange. With no exchanges, there are no
purchases on the exchanges; and with no purchases on
the exchanges, there is nothing to trigger the [***313]
employer-responsibility assessment.

Second, after the invalidation of burdens on
individuals (the Individual Mandate), insurers (the
insurance regulations and taxes), States (the Medicaid
Expansion), the Federal Government (the federal
subsidies [*2675] for exchanges and for the Medicaid
Expansion), and hospitals (the reductions in
reimbursements), the preservation of the
employer-responsibility assessment would upset the
ACA’s design of “shared responsibility.” It would leave
employers as the only parties bearing any significant
responsibility. That was not the congressional intent.

2

The Act’s Minor Provisions

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2012 U.S. LEXIS 4876, ***309; 80 U.S.L.W. 4579

The next question is whether the invalidation of the
ACA’s major provisions requires the Court to invalidate
the ACA’s other provisions. It does.

The ACA is over 900 pages long. Its regulations
include requirements [**571] ranging from a break time
and secluded place at work for nursing mothers, see 29
U.S.C. §207(r)(1) (2006 ed., Supp. IV), to displays of
nutritional content at chain restaurants, see 21 U.S.C.
§343(q)(5)(H). The Act raises billions of dollars in taxes
and fees, including exactions imposed on high-income
taxpayers, see ACA §§9015, 10906; HCERA §1402,
medical devices, see 26 U.S.C. §4191 (2006 ed., Supp.
IV), [***314] and tanning booths, see §5000B. It spends
government money on, among other things, the study of
how to spend less government money. 42 U.S.C. §1315a.
And it includes a number of provisions that provide
benefits to the State of a particular legislator. For
example, §10323, 124 Stat. 954, extends Medicare
coverage to individuals exposed to asbestos from a mine
in Libby, Montana. Another provision, §2006, id., at 284,
increases Medicaid payments only in Louisiana.

Such provisions validate the Senate Majority
Leader’s statement, “‘I don’t know if there is a senator that
doesn’t have something in this bill that was important to
them. . . . [And] if they don’t have something in it
important to them, then it doesn’t speak well of them.
That’s what this legislation is all about: It’s the art of
compromise.'” Pear, In Health Bill for Everyone,
Provisions for a Few, N. Y. Times, Jan. 4, 2010, p. A10
(quoting Sen. Reid). Often, a minor provision will be the
price paid for support of a major provision. So, if the
major provision were unconstitutional, Congress would
not have passed the minor one.

Without the ACA’s major provisions, many of these
minor provisions will not operate in the manner
[***315] Congress intended. For example, the tax
increases are “Revenue Offset Provisions” designed to
help offset the cost to the Federal Government of
programs like the Medicaid Expansion and the
exchanges’ federal subsidies. See Title IX, Subtitle
A-Revenue Offset Provisions, 124 Stat. 847. With the
Medicaid Expansion and the exchanges invalidated, the
tax increases no longer operate to offset costs, and they
no longer serve the purpose in the Act’s scheme of
“shared responsibility” that Congress intended.

Some provisions, such as requiring chain restaurants
to display nutritional content, appear likely to operate as

Congress intended, but they fail the second test for
severability. There is no reason to believe that Congress
would have enacted them independently. The Court has
not previously had occasion to consider severability in
the context of an omnibus enactment like the ACA,
which includes not only many provisions that are
ancillary to its central provisions but also many that are
entirely unrelated-hitched on because it was a quick way
to get them passed despite opposition, or because their
proponents could exact their enactment as the quid pro
quo for their needed support. When we [***316] are
confronted with such a so-called “Christmas tree,” a law
to which many nongermane ornaments have been
attached, we think the proper rule must be [*2676] that
when the tree no longer exists the ornaments are
superfluous. We have no reliable basis for knowing
which pieces of the Act would have passed on their own.
It is certain that many of them would not have, and it is
not a proper function of this Court to guess which. To
sever the statute in that manner “‘would be to make a new
law, not to enforce an old one. This is not part of our
duty.'” Trade-Mark Cases, 100 U.S., at 99, 25 L. Ed. 550.

[**572] This Court must not impose risks
unintended by Congress or produce legislation Congress
may have lacked the support to enact. For those reasons,
the unconstitutionality of both the Individual Mandate
and the Medicaid Expansion requires the invalidation of
the Affordable Care Act’s other provisions.

* * *

The Court today decides to save a statute Congress
did not write. It rules that what the statute declares to be a
requirement with a penalty is instead an option subject to
a tax. And it changes the intentionally coercive sanction
of a total cut-off of Medicaid funds to a supposedly
noncoercive cut-off [***317] of only the incremental
funds that the Act makes available.

The Court regards its strained statutory interpretation
as judicial modesty. It is not. It amounts instead to a vast
judicial overreaching. It creates a debilitated, inoperable
version of health-care regulation that Congress did not
enact and the public does not expect. It makes enactment
of sensible health-care regulation more difficult, since
Congress cannot start afresh but must take as its point of
departure a jumble of now senseless provisions,
provisions that certain interests favored under the Court’s
new design will struggle to retain. And it leaves the
public and the States to expend vast sums of money on

Page 81
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2012 U.S. LEXIS 4876, ***313; 80 U.S.L.W. 4579

requirements that may or may not survive the necessary
congressional revision.

The Court’s disposition, invented and atextual as it is,
does not even have the merit of avoiding constitutional
difficulties. It creates them. The holding that the
Individual Mandate is a tax raises a difficult
constitutional question (what is a direct tax?) that the
Court resolves with inadequate deliberation. And the
judgment on the Medicaid Expansion issue ushers in new
federalism concerns and places an unaccustomed strain
upon the Union. [***318] Those States that decline the
Medicaid Expansion must subsidize, by the federal tax
dollars taken from their citizens, vast grants to the States
that accept the Medicaid Expansion. If that destabilizing
political dynamic, so antagonistic to a harmonious Union,
is to be introduced at all, it should be by Congress, not by
the Judiciary.

The values that should have determined our course
today are caution, minimalism, and the understanding
that the Federal Government is one of limited powers.
But the Court’s ruling undermines those values at every
turn. In the name of restraint, it overreaches. In the name
of constitutional avoidance, it creates new constitutional
questions. In the name of cooperative federalism, it
undermines state sovereignty.

The Constitution, though it dates from the founding
of the Republic, has powerful meaning and vital
relevance to our own times. The constitutional
protections that this case involves are protections of
structure. Structural protections-notably, the restraints
imposed by federalism and separation of powers-are less
romantic and have less obvious a connection to personal
freedom than the provisions of the Bill of Rights or the
Civil War Amendments. [***319] Hence they tend to be
undervalued or even forgotten by our citizens. It should
be the responsibility of the Court to teach otherwise, to
remind our people that the Framers considered structural
protections [*2677] of freedom the most important ones,
for which reason they alone were embodied [**573] in

the original Constitution and not left to later amendment.
The fragmentation of power produced by the structure of
our Government is central to liberty, and when we
destroy it, we place liberty at peril. Today’s decision
should have vindicated, should have taught, this truth;
instead, our judgment today has disregarded it.

For the reasons here stated, we would find the Act
invalid in its entirety. We respectfully dissent.

JUSTICE THOMAS, dissenting.

I dissent for the reasons stated in our joint opinion,
but I write separately to say a word about the Commerce
Clause. The joint dissent and THE CHIEF JUSTICE
correctly apply our precedents to conclude that the
Individual Mandate is beyond the power granted to
Congress under the Commerce Clause and the Necessary
and Proper Clause. Under those precedents, Congress
may regulate “economic activity [that] substantially
affects interstate commerce.” United States v. Lopez, 514
U.S. 549, 560, 115 S. Ct. 1624, 131 L. Ed. 2d 626 (1995).
[***320] I adhere to my view that “the very notion of a
‘substantial effects’ test under the Commerce Clause is
inconsistent with the original understanding of Congress’
powers and with this Court’s early Commerce Clause
cases.” United States v. Morrison, 529 U.S. 598, 627, 120
S. Ct. 1740, 146 L. Ed. 2d 658 (2000) (THOMAS, J.,
concurring); see also Lopez, supra, at 584-602, 115 S. Ct.
1624, 131 L. Ed. 2d 626 (THOMAS, J., concurring);
Gonzales v. Raich, 545 U.S. 1, 67-69, 125 S. Ct. 2195,
162 L. Ed. 2d 1 (2005) (THOMAS, J., dissenting). As I
have explained, the Court’s continued use of that test “has
encouraged the Federal Government to persist in its view
that the Commerce Clause has virtually no limits.”
Morrison, supra, 529 U.S. at 627, 120 S. Ct. 1740, 146 L.
Ed. 2d 658. The Government’s unprecedented claim in
this suit that it may regulate not only economic activity
but also inactivity that substantially affects interstate
commerce is a case in point.

Page 82
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2012 U.S. LEXIS 4876, ***317; 80 U.S.L.W. 4579

NATIONAL LABOR RELATIONS BOARD v. JONES & LAUGHLIN STEEL
CORP. *

* No. 419, National Labor Relations Board v. Jones & Laughlin Steel Corp.;
Nos. 420 and 421, National Labor Relations Board v. Fruehauf Trailer Co., post,

p. 49; Nos. 422 and 423, National Labor Relations Board v. Friedman-Harry
Marks Clothing Co., post, p. 58; No. 365, Associated Press v. National Labor
Relations Board, post, p. 103; and No. 469, Washington, Virginia & Maryland

Coach Co. v. National Labor Relations Board, post, p. 142, which are known as
the “Labor Board Cases,” were disposed of in five separate opinions. The

dissenting opinion, post, p. 76, applies to Nos. 419, 420 and 421, and 422 and 423.
The dissenting opinion, post, p. 133, applies to No. 365. The opinion in No. 469

was unanimous.

No. 419

SUPREME COURT OF THE UNITED STATES

301 U.S. 1; 57 S. Ct. 615; 81 L. Ed. 893; 1937 U.S. LEXIS 1122; 1 Lab. Cas. (CCH)
P17,017; 1 Empl. Prac. Dec. (CCH) P9601; 108 A.L.R. 1352; 1 L.R.R.M. 703

February 10, 11, 1937, Argued
April 12, 1937

PRIOR HISTORY: CERTIORARI TO THE
CIRCUIT COURT OF APPEALS FOR THE FIFTH
CIRCUIT

LAWYERS’ EDITION HEADNOTES:

[***LEdHN1]

validity of National Labor Relations Act. —

Headnote:[1]

The National Labor Relations Act of 1935 (49 Stat.
at L. 449, chap. 372, 29 U. S. C. 151), prohibiting
employers from interfering with, restraining, or coercing
employees in self-organization and collective bargaining
through representatives of their own choosing, may,
notwithstanding its preamble and legislative history, be

construed to reach only what may be deemed to burden or
obstruct interstate and foreign commerce, and not all
industries, and therefore does not invade the reserved
powers of the states over their local concerns.

[***LEdHN2]

COMMERCE, §47

preservation of distinction between interstate
commerce and internal concerns of state. —

Headnote:[2]

The authority of the Federal Government over
interstate commerce may not be pushed to such an
extreme as to destroy the distinction which the commerce
clause establishes between commerce among the several
states and the internal concerns of a state.

Page 1

[***LEdHN3]

STATUTES, §173

construction — general and specific provisions. —

Headnote:[3]

Effect may not be denied to specific statutory
provisions which Congress has constitutional power to
enact, by superimposing upon them inferences from
general legislative declarations of an ambiguous
character, even if found in the same statute.

[***LEdHN4]

STATUTES, §108

construction to prevent unconstitutionality. —

Headnote:[4]

As between two possible interpretations of a statute,
by one of which it would be unconstitutional and by the
other valid, the duty of the court is to adopt that which
will save the statute.

[***LEdHN5]

STATUTES, §107

construing to avoid doubt as to constitutionality. —

Headnote:[5]

A statute should be so construed as to avoid serious
doubt as to its constitutionality.

[***LEdHN6]

power of Congress to protect right of employees to
organize. —

Headnote:[6]

The National Labor Relations Act of 1935 (49 Stat.
at L. 449, chap. 372, 29 U. S. C. 151) in prohibiting
employers from interfering, restraining, or coercing
employees, by discrimination with regard to hire and
tenure of employment, from exercising the rights of
self-organization and of collective bargaining through
representatives of their own choosing, is, in its
application to cases where labor controversy would

burden or obstruct interstate commerce, a proper exercise
of the legislative power of Congress.

[***LEdHN7]

LABOR ORGANIZATIONS, §1

right of employees to organize. —

Headnote:[7]

Employees have as clear a right to organize and
select their representatives for lawful purposes as a
corporate employer has to organize its business and select
officers and agents.

[***LEdHN8]

COMMERCE, §7

relation of manufacturer to commerce. —

Headnote:[8]

The relation between a manufacturer and his
employees may be the subject of Federal regulation under
the commerce clause where, in view of the fact that the
manufacturer’s materials are obtained from other states
and his products are sold principally in interstate
commerce, such commerce would be obstructed by labor
disturbances in his plant, even though the raw materials
which are brought to the plant are held there for long
periods and after being subjected to manufacturing
processes are changed substantially as to character,
utility, and value, and the finished products which emerge
are, to a large extent, manufactured without reference to
pre-existing orders and contracts.

[***LEdHN9]

COMMERCE, §37

scope of power under commerce clause. —

Headnote:[9]

Congressional authority to protect interstate
commerce from burdens and obstructions is not limited to
transactions which can be deemed to be an essential part
of a flow of interstate or foreign commerce, since burdens
upon and obstructions of such commerce may be due to
injurious action springing from other sources.

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81 L. Ed. 893, ***LEdHN3; 1937 U.S. LEXIS 1122

[***LEdHN10]

COMMERCE, §35

power of Congress to protect and promote. —

Headnote:[10]

The power of Congress to regulate commerce is the
power to enact all appropriate legislation for its
protection and advancement, to adopt measures to
promote its growth and insure its safety, and to foster,
protect, control, and restrain.

[***LEdHN11]

COMMERCE, §37

power of Congress — plenary character. —

Headnote:[11]

The power of Congress over interstate commerce is
plenary, and may be asserted to protect it, no matter what
the source of the dangers which threaten it.

[***LEdHN12]

COMMERCE, §35

Federal power — intrastate activities directly
affecting interstate commerce. —

Headnote:[12]

Although activities may be intrastate in character
when separately considered, if they have such a close and
substantial 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.

[***LEdHN13]

COMMERCE, §37

Federal power — intrastate activities remotely
affecting interstate commerce. —

Headnote:[13]

The scope of the power of Congress over interstate
commerce may not be so extended as to embrace effects
upon interstate commerce so indirect and remote that to

embrace them would effectually obliterate the distinction
between what is national and what is local and create a
completely centralized government.

[***LEdHN14]

COMMERCE, §35

relation of intrastate activities to interstate
commerce which brings them within the sphere of
Federal control. —

Headnote:[14]

The question whether intrastate activities have so
close and substantial a relation to interstate commerce
that their control is essential or appropriate to protect that
commerce from burdens and obstructions is necessarily
one of degree.

[***LEdHN15]

EVIDENCE, §80

judicial notice — refusal to bargain collectively as
source of labor disturbances. —

Headnote:[15]

Judicial notice may be taken of the fact that refusal
of employers to confer and negotiate with representatives
of their employees has been a prolific source of labor
disturbances.

[***LEdHN16]

CONSTITUTIONAL LAW, §711

due process — National Labor Relations Act. —

Headnote:[16]

Due process of law is not denied by the provisions of
the National Labor Relations Act of 1935 (49 Stat. at L.
449, chap. 372, 29 U. S. C. 151) forbidding
discrimination against employees because of union
activities and making such prohibition effective by
providing for the filing of a complaint with the National
Labor Relations Board, charging the employer with
violating the act, upon which the Board, after hearing
both parties, may issue a cease and desist order and may
petition designated courts for its enforcement, and
providing that the findings of the Board as to the facts, if

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81 L. Ed. 893, ***LEdHN10; 1937 U.S. LEXIS 1122

supported by evidence, are to be conclusive, but that if
either party on application to the court shows that
additional evidence is material, and that there were
reasonable grounds for the failure to adduce such
evidence in the hearings before the Board, the court may
order the additional evidence to be taken, and permitting
any person aggrieved by a final order of the Board to
obtain a review in the courts with the same procedure as
in the case of an application by the Board for the
enforcement of its order.

[***LEdHN17]

LABOR ORGANIZATIONS, §1

National Labor Relations Act — requirements —
scope. —

Headnote:[17]

The provision of 9a of the National Labor Relations
Act of 1935 (49 Stat. at L. 449, chap. 372, 29 U. S. C.
151), that representatives for the purpose of collective
bargaining of the majority of the employees in an
appropriate unit shall be the exclusive representatives of
all the employees in that unit, imposes upon the employer
only the duty of conferring and negotiating, and does not
require the making of an agreement or prevent the
employer from hiring individuals on whatever terms the
employer may, by unilateral action, determine.

[***LEdHN18]

LABOR ORGANIZATIONS, §1

National Labor Relations Act — employer’s right to
select or discharge employees. —

Headnote:[18]

The National Labor Relations Act of 1935 (49 Stat.
at L. 449, chap. 372, 29 U. S. C. 151) does not interfere
with the normal exercise of the right of an employer to
select his employees or to discharge them, so long as he
does not under cover of that right intimidate or coerce his
employees with respect to their self-organization and
representation.

[***LEdHN19]

CONSTITUTIONAL LAW, §321

National Labor Relations Act — validity as affected
by failure completely to regulate relations between
employers and employees. —

Headnote:[19]

The validity of the National Labor Relations Act of
1935 (49 Stat. at L. 449, chap. 372, 29 U. S. C. 151) is
not affected by the fact that it subjects the employer to
supervision and restraint and leaves untouched the abuses
for which employees may be responsible.

[***LEdHN20]

CONSTITUTIONAL LAW, §321

equal protection — failure to cover whole field. —

Headnote:[20]

The legislative authority, exerted within its proper
field, need not embrace all the evils within its reach.

[***LEdHN21]

power of Congress to require reinstatement of
employees discharged because of union activity. —

Headnote:[21]

Congress may, as an incident to the regulation of
labor relations affecting interstate commerce, provide for
the reinstatement of employees found to have been
discharged because of their union activity and for the
purpose of discouraging membership in a union.

[***LEdHN22]

JURY, §22

right to trial by — award of wages to discharged
employee in proceeding under National Labor Relations
Act. —

Headnote:[22]

The constitutional right under the Seventh
Amendment of trial by jury in suits at common law where
the value in controversy shall exceed $ 20 is not denied
by an order of the National Labor Relations Board, acting
under the authority of the National Labor Relations Act,
which, in requiring the reinstatement of an employee

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discharged in violation of the act because of union
activities or for the purpose of discouraging membership
in a labor organization, directs the payment to him of
wages for the time lost by the discharge, less amounts
earned by him during that period.

[***LEdHN23]

JURY, §1

constitutional right to jury trial as that existing under
common law. —

Headnote:[23]

The effect of the provision of the Seventh
Amendment that in suits at common law where the value
in controversy shall exceed $ 20, the right of trial by jury
shall be preserved, is to preserve the right of trial by jury
which existed under the common law when the
Amendment was adopted.

[***LEdHN24]

JURY, §24

right to trial by — award of damages as incident to
equitable relief. —

Headnote:[24]

The provision of the Seventh Amendment that in
suits at common law where the value in controversy shall
exceed $ 20 the right of trial by jury shall be preserved,
has no application to cases where the recovery of money
damages is an incident to equitable relief, even though
damages might have been recovered in an action at law.

[***LEdHN25]

JURY, §6

right to trial by — statutory proceeding. —

Headnote:[25]

The provision of the Seventh Amendment that in
suits at common law where the value in controversy shall
exceed $ 20 the right of trial by jury shall be preserved
does not apply in the case of a statutory proceeding not in
the nature of a suit at common law.FRUEHAUF CASE

[***LEdHN26]

COMMERCE, §7

relation of manufacturer of automobile trailers to
interstate commerce. —

Headnote:[26]

The National Labor Relations Act of 1935 (49 Stat.
at L. 449, chap. 372, 29 U. S. C. 151) may
constitutionally be applied in the case of a manufacturer
of automobile trailers who obtains more than 50 per cent
in value of his materials from, and distributes more than
80 per cent of his product in, other states, since the
manufacturing operations are essentially connected with
and dependent upon the purchase, sales, and distribution
operations outside the state; and this although since its
first operation there had not been a strike at the plant
which hampered its operations and it was not shown that
the discharge of employees under circumstances
constituting a violation of the act caused a strike in the
plant or delay in operations.FRIEDMAN CASE

[***LEdHN27]

COMMERCE, §7

relation of manufacturer of men’s clothing to
interstate commerce. —

Headnote:[25]

The National Labor Relations Act of 1935 (49 Stat.
at L. 449, chap. 372, 29 U. S. C. 151) may
constitutionally be applied in the case of a manufacturer
of men’s clothing nearly all of whose materials are
purchased in other states and 82 per cent of whose
products is sold at the place of manufacture to customers
in other states.

SYLLABUS

1. The distinction between what is national and what
is local in the activities of commerce is vital to the
maintenance of our federal form of government. P. 29.

2. The validity of provisions which, considered by
themselves, are constitutional, held not affected by
general and ambiguous declarations in the same statute.
P. 30.

3. An interpretation which conforms a statute to the
Constitution must be preferred to another which would

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render it unconstitutional or of doubtful validity. P. 30.

4. Acts which directly burden or obstruct interstate
or foreign commerce, or its free flow, are within the reach
of the congressional power; and this includes acts, having
that effect, which grow out of labor disputes. P. 31.

5. Employees in industry have a fundamental right
to organize and select representatives of their own
choosing for collective bargaining; and discrimination or
coercion upon the part of their employer to prevent the
free exercise of this right is a proper subject for
condemnation by competent legislative authority. P. 33.

6. The congressional authority to protect interstate
commerce from burdens and obstructions is not limited to
transactions which can be deemed to be an essential part
of a “flow” of such commerce. Pp. 34-36.

7. Although activities may be intrastate in character
when separately considered, if they have such a close and
substantial relation to interstate commerce that their
control is essential, or appropriate, to protect that
commerce from burdens and obstructions, Congress has
the power to exercise that control. P. 37.

8. This power must be considered in the light of our
dual system of government and may not be extended so
as to embrace effects upon interstate commerce so
indirect and remote that to embrace them would, in view
of our complex society, effectually obliterate the
distinction between what is national and what is local and
create a completely centralized government. The
question is necessarily one of degree. P. 37.

9. Whatever amounts to more or less constant
practice, and threatens to obstruct or unduly to burden the
freedom of interstate commerce, is within the regulatory
power of Congress under the commerce clause; and it is
primarily for Congress to consider and decide the fact of
the danger and meet it. P. 37.

10. The close and intimate effect which brings the
subject within the reach of federal power may be due to
activities in relation to productive industry, although the
industry when separately viewed is local. P. 38.

11. The relation to interstate commerce of the
manufacturing enterprise involved in this case was such
that a stoppage of its operations by industrial strife would
have an immediate, direct and paralyzing effect upon

interstate commerce. Therefore Congress had
constitutional authority, for the protection of interstate
commerce, to safeguard the right of the employees in the
manufacturing plant to self-organization and free choice
of their representatives for collective bargaining. P. 41.

Judicial notice is taken of the facts that the
recognition of the right of employees to self-organization
and to have representatives of their own choosing for the
purpose of collective bargaining is often an essential
condition of industrial peace, and that refusal to confer
and negotiate has been one of the most prolific causes of
strife.

12. The National Labor Relations Act of July 5,
1935, empowers the National Labor Relations Board to
prevent any person from engaging in unfair labor
practices “affecting commerce”; its definition of
“commerce” (aside from commerce within a territory or
the District of Columbia) is such as to include only
interstate and foreign commerce; and the term “affecting
commerce” it defines as meaning “in commerce, or
burdening or obstructing commerce or the free flow of
commerce, or having led or tending to lead to a labor
dispute burdening or obstructing commerce or the free
flow of commerce.” The “unfair labor practices,” as
defined by the Act and involved in this case, are restraint
or coercion of employees in their rights to
self-organization and to bargain collectively through
representatives of their own choosing, and discrimination
against them in regard to hire or tenure of employment
for the purpose of encouraging or discouraging
membership in any labor organization. §§ 7 and 8. The
Act (§ 9a) declares that representatives, for the purpose of
collective bargaining, of the majority of the employees in
an appropriate unit shall be the exclusive representatives
of all the employees in that unit; but that any individual
employee or a group of employees shall have the right at
any time to present grievances to their employer. Held:

(1) That in safeguarding rights of employees and
empowering the Board, the statute, in so far as involved
in the present case, confines itself to such control of the
industrial relationship as may be constitutionally
exercised by Congress to prevent burden or obstruction to
interstate or foreign commerce arising from industrial
disputes. P. 43.

(2) The Act imposes upon the employer the duty of
conferring and negotiating with the authorized
representatives of the employees for the purpose of

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settling a labor dispute; but it does not preclude such
individual contracts as the employer may elect to make
directly with individual employees. P. 44.

(3) The Act does not compel agreements between
employers and employees. Its theory is that free
opportunity for negotiation with accredited
representatives of employees is likely to promote
industrial peace and may bring about the adjustments and
agreements which the Act in itself does not attempt to
compel. P. 45.

(4) The Act does not interfere with the normal right
of the employer to hire, or with the right of discharge
when exercised for other reasons than intimidation and
coercion; and what is the true reason in this regard is left
the subject of investigation in each case with full
opportunity to show the facts. P. 45.

13. A corporation which manufactured iron and steel
products in its factories in Pennsylvania from raw
materials most of which it brought in from other States,
and which shipped 75% of the manufactured products out
of Pennsylvania and disposed of them throughout this
country and in Canada, was required by orders of the
National Labor Relations Board to tender reinstatement
to men who had been employed in one of the factories
but were discharged because of their union activities and
for the purpose of discouraging union membership. The
orders further required that the company make good the
pay the men had lost through their discharge, and that it
desist from discriminating against members of the union,
with regard to hire and tenure of employment, and from
interfering by coercion with the self-organization of its
employees in the plant. Held that the orders were
authorized by the National Labor Relations Act, and that
the Act is constitutional as thus applied to the company.
Pp. 30, 32, 34, 41.

14. The right of employers to conduct their own
business is not arbitrarily restrained by regulations that
merely protect the correlative rights of their employees to
organize for the purpose of securing the redress of
grievances and of promoting agreements with employers
relating to rates of pay and conditions of work. P. 43.

15. The fact that the National Labor Relations Act
subjects the employer to supervision and restraint and
leaves untouched the abuses for which employees may be
responsible, and fails to provide a more comprehensive
plan, with better assurance of fairness to both sides and

with increased chances of success in bringing about
equitable solutions of industrial disputes affecting
interstate commerce, does not affect its validity. The
question is as to the power of Congress, not as to its
policy; and legislative authority, exerted within its proper
field, need not embrace all the evils within its reach. P.
46.

16. The National Labor Relations Act establishes
standards to which the Board must conform. There must
be complaint, notice and hearing. The Board must
receive evidence and make findings. These findings as to
the facts are to be conclusive, but only if supported by
evidence. The order of the Board is subject to review by
the designated court; and only when sustained by the
court may the order be enforced. Upon that review all
questions of the jurisdiction of the Board and the
regularity of its proceedings, all questions of
constitutional right or statutory authority, are open to
examination by the court. These procedural provisions
afford adequate opportunity to secure judicial protection
against arbitrary action, in accordance with the
well-settled rules applicable to administrative agencies
set up by Congress to aid in the enforcement of valid
legislation. P. 47.

17. The provision of the National Labor Relations
Act, § 10 (c), authorizing the Board to require the
reinstatement of employees found to have been
discharged because of their union activity or for the
purpose of discouraging membership in the union, is
valid. P. 47.

18. The provision of the Act, § 10 (c), that the
Board, in requiring reinstatement, may direct the payment
of wages for the time lost by the discharge, less amounts
earned by the employee during that period, does not
contravene the provisions of the Seventh Amendment
with respect to jury trial in suits at common law. P. 48.

83 F. (2d) 998, reversed.

CERTIORARI, 299 U.S. 534, to review a decree of
the Circuit Court of Appeals declining to enforce an order
of the National Labor Relations Board.

COUNSEL: Mr. J. Warren Madden and Solicitor
General Reed, with whom Attorney General Cummings
and Messrs. Charles E. Wyzanski, Jr., Charles A. Horsky,
A.H. Feller, Charles Fahy, Robert B. Watts, Philip Levy,
and Malcolm F. Halliday were on the brief, for petitioner.

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*

* Arguments in this case are summarized from
the briefs. Extracts from the oral arguments in
this and in other Labor Act cases immediately
following will appear in an appendix in the bound
volume.

The National Labor Relations Act is an exercise of the
power of Congress to protect interstate commerce from
injuries caused by industrial strife.

Before this statute was enacted experience had shown
that industrial strife was a recurrent burden upon the
interstate commerce of the nation. Not only in its totality
had such strie produced obstructions to commerce, but
also in many individual instances such strife eventuated
in conspiracies to restraincommerce or imposed such
substantial burdens upon it that penalties or injunctions
were applied under the Sherman Act. These facts are
clearly shown by a survey of the results of individual
disputes, the statistics with regard to the total number of
such disputes, and repeated federal activities in
connection with industrial strife.

Congress, in dealing with this evil of industrial strife,
might have approached the problem in either of two
ways. It might have enacted a statute designed to remove
the burden on interstate commerce after it had evinced
itself in a particular case, as the Sherman Act did; or, it
might have enacted a statute to deal with the causes of the
burden in anticipation of their probable effect, as the
Packers and Stockyards Act did. Congressional power to
enact this second type of statute (hereinafter called the
preventive power) extends at least as far as the power to
enact a statute to control the burden after its appearance
(hereinafter called the control power). Stafford v.
Wallace, 258 U.S. 495, 525.

The National Labor Relations Act, which is an exercise
of this preventive power, does not attempt to eliminate
causes of strife in all enterprises. The statute and the
mandate addressd to the administrative Board are
specifically directed to the elimination of the proscribed
practices only when they are found to be “affecting
commerce.” § 10(a). This phrase “affecting commerce”
is defined in § 2 (7) of the statute as “in commerce, or
burdening or obstructing commerce or the free flow of
commerce, or having led or tending to lead to a labor
dispute burdening or obstructing commerce or the free
flow of commerce.” These words are plainly patterned

upon language used in decisions of this Court in cases
arising under other statutes enacted by Congress under
the commerce power. This jurisdictional limitation is
manifestly a direction to the Board to exercise the
national power within the limits permitted by the
Constitution. In other words, Congress has taken as the
ambit of this particular preventive statute the boundaries
to which it would be restricted were it exercising to the
full its control power under appropriate legislation.

Of course, in eliminating these proscribed practices in
situations which are likely to come within the control
power of Congress, the application of the Act will upon
occasion result in the prohibition of activities which, even
if allowed to spend their force, would not result in
industrial strife which did in fact come within the federal
control power. But, provided that when the practice was
indulged in there was a reasonable likelihood that any
industrial strife which resulted would be within the
control power, the Board may apply the preventive
measure. To hold otherwise would deprive Congress of
any preventive power, since no one can predict with
absolute accuracy, in advance of the complete
development of the effects of a cause, exactly what those
effects will be. Compare Stafford v. Wallace, 258 U.S.
495; Chicago Board of Trade v. Olsen, 262 U.S. 1. This
lack of predictability is particularly true of industrial
strife. Moreover, in eliminating the cause of an evil
within the power of Congress, the Act may on occasion
eliminate the cause of purely local evils. Indeed, this is
almost inevitable, since a single event has multiple
consequences. Yet plainly the existence of a granted
federal power cannot be limited by the collateral
consequences of its exercise. Ashwander v. Tennessee
Valley Authority, 297 U.S. 288.

The foregoing epitome of the statutory scheme makes it
clear that the question of the validity of a specific
application of the statute depends upon whether industrial
strife resulting from the practices in the particular
enterprise under consideration would be of the character
which the federal power could control if it occurred. The
question of primary importance therefore is the extent of
the federal power of control. Since the langrage of this
statute does not go beyond the ambit of this power,
whatever it may be, the statute is clearly constitutional on
its face, and the only issue is whether it has been
constitutionally applied.

This Court has never had occasion to define the full

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extent to which industrial strife in the manufacturing,
producing, or processing divisions of an enterprise
engaged extensively in interstate commerce may be
subjected to the exercise of the control power of
Congress. It has, however, held that certain situations in
these divisions are clearly within the control power, and
has further laid down general principles which furnish
standards for the proper appreciation of the full scope of
that power.

It is well settled that an industrial dispute in such an
enterprise involving an intent to affect commerce is
within the control power of Congress. United Mine
Workers v. Coronado Coal Co., 259 U.S. 344; Bedford
Cut Stone Co. v. Stone Cutters’ Assn., 274 U.S. 37;
Duplex Printing Co. v. Deering, 254 U.S. 443; Loewe v.
Lawlor, 208 U.S. 274. Consequently, where the situation
in a particular enterprise presents a reasonable likelihood
that industrial strife, if it occurred, would involve an
intent to affect commerce, the Board can apply the statute
to that enterprise.

This Court has also recognized the principle that an
industrial dispute having the necessary effect of
substantially burdening commerce would be within the
control power of Congress. Industrial Association v.
United States, 268 U.S. 64, 81; United Mine Workers v.
Coronado Coal Co., 259 U.S. 344, 410-411. Hence, the
statute is applicable to an enterprise which is shown by
evidence before the Board to be of such a character that
strife, if it occurred, would have such a necessary effect.
The proper application of the statute to such situations
depends, of course, on the precise scope of the “necessary
effect” principle. Although the Court has recognized the
principle it has not heretofore had occasion to define it.

Lastly, the scope of the control power extends to
recurring evils which in their totality constitute a burden
on interstate commerce. This Court has stated that such
recurrent evils may, after appropriate findings, be
subjected by Congress to national supervision and
restraint. Stafford v. Wallace, 258 U.S. 495; Chicago
Board of Trade v. Olsen, 262 U.S. 1. This principle
extends to industrial strife in enterprises which receive a
substantial part of their raw material from, or ship a
substantial part of their products in, interstate commerce.
United Mine Workers v. Coronado Coal Co., 259 U.S.
344, 408; United Leather Workers v. Herkert & Meisel
Trunk Co., 265 U.S. 457, 469; Texas & New Orleans R.
Co. v. Brotherhood of Railway Clerks, 281 U.S. 548.

Here Congress has found, and experience shows, that
industrial strife in such enterprises constitutes such a
recurring evil. Under this view of the control power the
statute may be applied to the individual instances of this
recurring burden — that is, to any enterprise which
receives a substantial part of its materials from, or ships a
substantial part of its products in, interstate commerce,
and is dependent upon such commerce for the successful
conduct of its business.

We believe that the instant case falls within each of these
three situations in which the control power of Congress
may be exercised.

The reasonable likelihood of a contrversy with the intent
to affect commerce might be demonstrated in either of
two ways: First, evidence might be presented to the
Board that in a particular situation the intent already
exists; or second, evidence might be presented to the
Board that the situation was comparable to, and of the
same general type as, others out of which in the past there
had evolved controversies with intent to affect commerce,
or that in the particular situation confronting the Board,
such definite intention might reasonably be expected to
develop. In the case at bar it is not claimed that there is
evidence of the first sort; but there is abundant evidence
that the situation is fraught with the risk that after strife
developed it would involve the purpose to curtail the
movement of goods in commerce.

As previously stated, the Court has not yet determined the
exact scope of the phrase “necessary effect of
substantially burdening commerce.” It undeniably
includes situations in which the participants cannot be
charged with a conscious specific desire to interrupt
commerce. United States v. Patten, 226 U.S. 525. The
statements of this Court make it clear that the application
of this principle may depend upon the magnitude of the
effect on commerce. The possible use of such a standard
is entirely consistent with Carter v. Carter Coal Co., 298
U.S. 238. Three possible definitions of the scope of the
“necessary effect” principle may be advanced: (1) a
necessary effect on commerce results from industrial
strife occurring in an enterprise which lies within a
well-defined stream or flow of commerce, or (2) a
necessary effect on commerce results from industrial
strife which restrains a substantial part of all the
commerce in a particular commodity, or (3) a necessary
effect on commerce results from industrial strife which
restrains the movement of a substantial volume of goods

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which would otherwise move in interstate commerce.
The instant case falls within all three of these aspects of
the principle, but this brief addresses particular attention
to the first and second.

Neither Schechter Corp. v. United States, 295 U.S. 495,
nor Carter v. Carter Coal Co., 298 U.S. 238, is here
applicable. In the Schechter case it was urged that wages
and hours in local industry bore a relation to interstate
commerce by reason of an intricate chain of economic
causes and effects. An effect on commerce which
occurred in such a manner the Court characterized as
indirect. The Act involved in the Carter case had as its
purpose the “stabilizing” of the bituminous coal industry
through regulation of prices and wages. The effect of
wage cutting on interstate commerce was held to be
indirect on the basis of the Schechter case. The collective
bargaining provisions of that Act were, as is clear from
the face of the statute and from the opinion of the Court,
ancillary to the wage fixing provisions and furnished the
means through which regulations with respect to wages
having the force of law were to be arrived at. On the
other hand, the National Labor Relations Act is designed
solely to eliminate the burden on interstate commerce
caused by industrial strife. Such strife constitutes an
interruption to commerce operating directly without “an
efficient intervening agency or condition.” Thus it deals
with matters closely connected with commerce, does not
go beyond what is necessary for the protection of
commerce, and does not attempt “a broad regulation of
industry within the State.”

Mr. Earl F. Reed, with whom Messrs. Charles Rosen and
W.D. Evans were on the brief, for respondent.

The respondent contends that the National Labor
Relations Act is, in reality, a regulation of labor relations,
and not of interstate commerce, and that, as a
consequence, it is not within the power of Congress to
enact. Even if it should be considered a true regulation of
interstate commerce, it still has no application to the
respondent’s relations with its production employees,
because they are not subject to reguation by the Federal
Government. In addition, the provisions of the Act which
the petitioner seeks to apply in the present cases are
invalid, because they violate § 2 of Art. III of the
Constitution, as well as the Fifth and Seventh
Amendments.

The respondent is a corporation engaged in the
manuacture of iron and steel products. In this

connection, it owns and operates a large steel plant at
Aliquippa, Pennsylvania, in which are employed
approximately ten thousand men. The present case is, in
reality, a controversy between ten individuals who were
formerly employed by the respondent in production work
at this plant, and the respondent. These individuals, with
three others, filed a complaint with the petitioner, the
National Labor Relations Board, charging that they had
been discharged or demoted by the respondent because of
union affiliations. The respondent objected to the
jurisdiction of the petitioner, but its motion to dismiss
was overruled and the petitioner, after hearing,
determined that the complainants had been wrongfully
discharged and ordered their immediate restoration, with
compensation for lost pay.

The petitioner has endeavored to justify its assumption of
jurisdiction over the respondent’s employment relations,
by making a finding that the respondent has engaged in
unfair labor practices “affecting commerce” within the
definition of the National Labor Relations Act. The
respondent insists that the facts upon which this “finding”
pretends to be based are, in law, insufficient to justify any
such conclusion, and that this Court is entitled to
reexamine the facts for the purpose of determining the
jurisdictional issue. Crowell v. Benson, 285 U.S. 22; St.
Joseph Stock Yards v. United States, 298 U.S. 38.

The National Labor Relations Act is not a true regulation
of interstate commerce.

The power of Congress is clearly defined by the
commerce clause of the Constitution, and considerations
of political expediency have no weight in fixing the
dividing line between the powers of Congress and the
reserved powers of the several States. The argument of
the petitioner is, in the last analysis, a plea that, from an
economic standpoint, Congress should have power to
apply its legislation to the respondent’s employment
relations. This, we submit, is entirely beside the point if
the exercise of such power would run counter to the
Constitution.

The jurisdiction of Congress under the commerce clause
includes the power to regulate, restrict and protect
interstate commerce; but not the right to use such
jurisdiction as a pretext for legislation which interferes
with the local sovereignty of the separate States. Gibbons
v. Ogden, 9 Wheat. 1. The use of an admitted power of
Congress as a pretext to interfere with local activities
which are not subject to its jurisdiction, is to be

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condemned. The commerce clause will not serve as an
excuse for legislating with respect to labor relations,
which do not constitute a part of interstate commerce.
Schechter Poultry Corp. v. United States, 295 U.S. 495;
Railroad Retirement Board v. Alton R. Co., 295 U.S. 330;
United States v. Butler, 297 U.S. 1.

The legislative history of the National Labor Relations
Act and its substantive provisions are sufficient to
demonstrate that the Act, although disguised as a
regulation of interstate commerce, is, in actuality, a
regulation of labor. The terms of the statute apply to
almost every employer and every employee (§ 2),
although the jurisdiction of the petitioner to enforce it is
somewhat circumscribed.

The provisions of the statute, if carefully analyzed, will
indicate that Congress is primarily concerned with the
protection and establishment of labor organizations. The
provisions condemning plant unions and sanctioning
“closed shop” agreements, bear no reasonable relation to
interstate commerce. Similarly, the express preservation
of the right to strike indicates that Congress was not
interested in preventing interruptions to the movement of
commerce. The interference with the employer’s
discretion to hire and fire is another reason for believing
that efficiency in the shipment of products in interstate
commerce has not been the object of the statute.

Congress has endeavored to save the statute from the
taint of invalidity by confining its enforcement to
transactions “affecting commerce,” which the Act defines
as transactions which burden commerce or lead or tend to
lead to a labor dispute which burdens commerce. § 2.
Despite this limitation on the enforcement of the Act, the
substantive provisions make no such exception and are,
in fact, broad enough to cover almost every employment
relation.

The petitioner has followed the same involved line of
reasoning in endeavoring to “find” that the respondent’s
operations “affect commerce.” Like Congress, it has
found itself faced with the task of piling premise upon
premise and hypothesis upon hypothesis to reach the
conclusion that the discharge of a few production
employees at the respondent’s plant has a vital bearing
upon the movement of interstate commerce. We submit
that the ultimate fact remains that Congress has enacted a
labor law, and not a regulation of commerce, and it does
not help to sustain the pretext that there may be an
indirect connection between the two. Carter v. Carter

Coal Co., 298 U.S. 238.

The national Labor Relations Act can have no application
to the respondent’s relations with its production
employees.

Although the respondent purchases raw materials, which
have a point of origin in other States, and ships a large
portion of its finished products across state lines, its
production activities, including its employment relations,
are not thereby subjected to the jurisdiction of Congress.
Howard v. Illinois Central R. Co., 207 U.S. 463. There is
no logical or legal connection between the respondent’s
limited participation in interstate commerce and the union
affiliations of its production employees. Adair v. United
States, 208 U.S. 161; Hammer v. Dagenhart, 247 U.S.
251; Railroad Retirement Board v. Alton R. Co., 295 U.S.
330.

The principle which impeaches the validity of the
National Labor Relations Act, viz., that federal power
over interstate commerce must be confined to bona fide
regulation of the movements of commerce, likewise
prevents the application of the statute in the present case.
An unbroken line of decisions under the commerce clause
has established that manufacturing and production
activities are not in or a part of interstate commerce, even
though they may be preceded or followed by the
movement of materials between States. Kidd v. Pearson,
128 U.S. 1; Arkadelphia Milling Co. v. St. Louis
Southwestern Ry. Co., 249 U.S. 134; Oliver Iron Co. v.
Lord, 262 U.S. 172; Utah Light & Power Co. v. Pfost,
286 U.S. 165; Chassaniol v. Greenwood, 291 U.S. 584;
Industrial Association v. United States, 268 U.S.
64.Although most of the decisions have dealt with the
police or taxing powers of the States, they are based upon
the fundamental principle that manufacturing activities
are subject to the exclusive jurisdiction of the separate
States. Bacon v. Illinois, 227 U.S. 504; Susquehanna
Coal Co. v. South Amboy, 228 U.S. 665; Packer Corp. v.
Utah, 285 U.S. 105; Nashville, C. & St. L. Ry. v. Wallace,
288 U.S. 249; Edelman v. Boeing Air Transport, 289
U.S. 249; Minnesota v. Blasius, 290 U.S. 1; Fedaral
Compress Co. v. McLean, 291 U.S. 17; Cornell v. Coyne,
192 U.S. 418; Crescent Cotton Oil Co. v. Mississippi,
251 U.S. 129; Heisler v. Thomas Colliery Co., 260 U.S.
245; Oliver Iron Co. v. Lord, 262 U.S. 172; Champlin
Refining Co. v. Corporation Commission, 286 U.S. 210;
United Mine Workers v. Coronado Coal Co., 259 U.S.
344; United Leather Workers v. Herkert & Meisel Trunk

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Co., 265 U.S. 457; Delaware, L. & W.R. Co. v. Yurkonis,
238 U.S. 439.

The distinction between the local manufacturing activities
of a business and its subsequent or precedent
participation in interstate commerce has been maintained
in the field of labor relations. Hammer v. Dagenhart,
247 U.S. 251; Industrial Accident Comm’n v. Davis, 259
U.S. 182. Even though an employee may be employed in
directly assisting the movement of products in interstate
commerce, his relationship to his employer is a status
existing wholly within the State, whose incidents, such as
wages, hours of labor and the like, are purely domestic in
character. Carter v. Carter Coal Co., 298 U.S. 238.

Congressional regulation of the labor relations of
interstate carriers furnishes no precedent for the present
Act. Because interstate carriers are instrumentalities of
the movement of commerce, and because they are public
utilities, Congress has subjected them to an exhaustive
scheme of regulation, of which the labor legislation is
merely an incident. As a result, the decision in Texas &
N.O.R. Co. v. Railway Clerks, 281 U.S. 548, is not
controlling.

Decisions such as Stafford v. Wallace, 258 U.S. 495, and
Chicago Board of Trade v. Olsen, 262 U.S. 1, which
sustain federal regulation of stockyards and grain
exchanges, have no application to the present case. Grain
exchanges and stockyards are instrumentalities of
interstate commerce in much the same sense as the actual
carriers of interstate commerce. They are focal points
through which the stream of commerce in grains and
cattle sweeps on its way from producer to the ultimate
consumer. The activities which were regulated in both
cases were activities in the stream of commerce and
exerted a direct effect upon its flow. Neither case
sanctions the extension of the doctrine to production
activities which may indirectly affect the stream of
commerce. Carter v. Carter Coal Co., 298 U.S. 238. Cf.
Swift & Co. v. United States, 196 U.S. 376; Hill v.
Wallace, 259 U.S. 44; Tagg Bros. & Moorhead v. United
States, 280 U.S. 420; Tyson & Bro. v. Banton, 273 U.S.
418.

The petitioner relies upon decisions which have upheld
the application of the Anti-Trust Laws to industrial
conspiracies, such as Coronado Coal Co. v. United Mine
Workers, 268 U.S. 295. These were cases involving
conspiracies to restrain interstate commerce by means of
local combinations. The element of an intentional

interference with the movement of interstate commerce
was essential in these cases, not only because an intent to
restrain commerce was a part of the proscribed offense,
but also because the existence of such an intent made the
effect on interstate commerce necessarily direct. This is
shown by a comparison of the first Coronado case, 259
U.S. 344, where there was no intent, with the second
Coronado case, 268 U.S. 295, where there was both
direct and inferential evidence of intent. Cf. United
Leather Workers v. Herkert & Meisel Trunk Co., 265
U.S. 457.

The petitioner’s efforts to show an intended restraint in
the present case are futile. Even if a strike should occur
at the respondent’s plant, the respondent could not be
held responsible for the voluntary intervening act of
outside agencies. The suggestion that the respondent
might be charged with an implied intent to destroy
interstate trade, if a labor dispute should occur, is
obviously unsound.

The conspiracy cases, such as United Mine Workers v.
Coronado Coal Co., 259 U.S. 344, and Local 167 v.
United States, 291 U.S. 293, although primarily
concerned with the application of the Anti-Trust Laws,
prove the fallacy of the petitioner’s argument, because
they establish that Congress cannot regulate local
transactions or relations unlss they exert a direct effect on
interstate commerce. The definition of “affecting
commerce” in the National Labor Relations Act is a
confession o the indirectness of the connection between
the respondent’s labor relations and the movement of
interstate commerce. See Schechter Corp. v. United
States, 295 U.S. 495; Industrial Association v. United
States, 268 U.S. 64. The petitioner calls attention to the
fact that strikes may and frequently do produce an
inhibitory effect on the movement of interstate trade to
and from the affected area. This is the fundamental error
in the petitioner’s argument, in that it assumes that it need
only establish the connection between strikes and the
stoppage of commerce. There has been no strike or labor
dispute in the present case. In actuality, the petitioner
means that the respondent’s discharge of ten employees
might have led to dissatisfaction, which might have led to
a labor dispute, which might have led to a strike and a
consequent interruption of interstate commerce.

The findings of Congress that discriminatory discharges
may lead to an interruption of commerce, are unavailing.
A declaration by Congress of the need of regulation will

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not automatically justify its action, where its legislative
findings run counter to established rules of construction,
which hold that there is no necessary and direct
connection between the relations of an employer and his
employees and the movement of interstate commerce. In
this respect, the present case is clearly controlled by the
decision in Carter v. Carter Coal Co., 298 U.S. 238.

There are dangerous implications in the petitioner’s
argument. If it be accepted, there would be no reason
why Congress should not use its power over interstate
commerce as a pretext to stifle the sovereignty of the
States. We therefore believe that the Court will not suffer
the powers of the States to be whittled away by a statute
which piles speculation upon speculation to attain its
ends. United States v. Butler, 297 U.S. 1; Schechter
Corp. v. United States, 295 U.S. 495.

The National Labor Relations Act confers upon the
petitioner exclusive original jurisdiction over
controversies between an employee and his employer as
to the propriety of the employee’s discharge, and the
Board is authorized to render affirmative relief to the
employee, including the restoration of his employment
and compensation for lost wages. The findings of fact of
the Board are conclusive and only objections made before
the Board will be heard. The Act does not make any
provision for a trial de novo in the constitutional courts
on constitutional or jurisdictional issues.

We submit that the Act is invalid because it authorizes
the Board to award a money judgment, depriving the
employer of his right to trial by jury in cases involving
more than twenty dollars. If, as the petitioner contends,
the action of the Board should be considered in the nature
of a suit in equity, with authority in the Board to award a
mandatory injunction restoring employment, with
incidental damages for back pay, then the Act violates the
provision of Art. III of the Constitution, for it deprives
the constitutional courts of their authority to try
constitutional and jurisdictional issues.

The present case presents a controversy between
employees and the respondent, in which the petitioner has
directed the restoration to employment of the
complaining employees’ with back pay. This being the
case, it is a controversy between private citizens,
enforcing private rights. The failure to provide means for
a trial de novo of jurisdictional issues in such a case is
fatal. Crowell v. Benson, 285 U.S. 22.

The proceedings of the Board are not comparable to those
of the Federal Trade Commission.

The petitioner’s order constitutes an unlawful interference
with the right of the respondent to manage its own
business.

The law has always been hesitant to interfere in questions
of employer-employee relationships. From the
standpoint of the employee’ the law has recognized that
he should not be forced into a relationship which may be
distasteful, and from the employer’s viewpoint, the courts
have held that the right to judge the capabilities of
employees is absolutely essential to the efficient
management of the employer’s business. The question of
retaining or discharging an employee involves delicate
considerations of discretion which the law is loath to
attempt to weigh. The facts of the present case show the
dangers of bureaucratic interference, in that each
discharge involved some admitted fault on the part of the
complaining employee, but the petitioner determined that
it was better qualified to decide and that the respondent’s
action had been too drastic. This is clearly an
interference with the normal right of the respondent to
manage its own business, because it is a dictatorial
usurpation of the respondent’s discretion to determine the
capabilities of its employees.

Another dangerous implication of the law and of the
petitioner’s decision is that it confers a kind of civil
service status upon union employees, which will
inevitably encourage laziness, insolence, and
inefficiency. This is confirmed by a notice which the
petitioner, in its decision, has ordered the respondent to
post in its plants, to the effect that it will not discharge
members of the union. It would be the equivalent of
informing the employees that if they become affiliated
with the union, they will be thenceforth immune from
discharge.

We submit that the underlying philosophy of the National
Labor Relations Act is a constant threat to the
respondent’s normal right to manage its own business.
Not only does the Act provide, in effect, that an
unqualified bureau will sit as a higher court over the
respondent’s employment office, but it also ordains that
the respondent must deal with whatever union may be
selected by a majority of its employees and refuse to
negotiate with other employees or their representatives.
The power which it delegates to a majority of the
employees to bind the minority is arbitrary and unfair and

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81 L. Ed. 893, ***LEdHN27; 1937 U.S. LEXIS 1122

will necessarily lead to the suffocation of minorities and
to the closed shop, forcing the employer to herd his
employees into an organization which is not of their own
choice. This will in turn seriously disturb the discipline
and morale of the respondent’s employees, with obvious
injury to them and to the respondent. Cf. Carter v.
Carter Coal Co., 298 U.S. 238.

JUDGES: Hughes, Van Devanter, McReynolds,
Brandeis, Sutherland, Butler, Stone, Roberts, Cardozo

OPINION BY: HUGHES

OPINION

[*22] [**617] [***903] MR. CHIEF JUSTICE
HUGHES delivered the opinion of the Court.

In a proceeding under the National Labor Relations
Act of 1935, 1 the National Labor Relations Board found
that the respondent, Jones & Laughlin Steel Corporation,
had violated the Act by engaging in unfair labor practices
affecting commerce. The proceeding was instituted by the
Beaver Valley Lodge No. 200, affiliated with the
Amalgamated Association of Iron, Steel and Tin Workers
of America, a labor organization. The unfair labor
practices charged were that the corporation was
discriminating against members of the union with regard
to hire and tenure of employment, and was coercing and
intimidating its employees in order to interfere with their
self-organization. The discriminatory and coercive action
alleged was the discharge of certain employees.

1 Act of July 5, 1935, 49 Stat. 449, 29 U.S.C.
151.

The National Labor Relations Board, sustaining the
charge, ordered the corporation to cease and desist from
such discrimination and coercion, to offer reinstatement
to ten of the employees named, to make good their losses
in pay, and to post for thirty days notices that the
corporation would not discharge or discriminate against
members, or those desiring to become members, of the
labor union. As the corporation failed to comply, the
Board petitioned the Circuit Court of Appeals to enforce
the order. The court denied the petition, holding that the
order lay beyond the range of federal [***904] power.
83 F. (2d) 998. We granted certiorari.

The scheme of the National Labor Relations Act —
which is too long to be quoted in full — may be briefly

stated. The first section sets forth findings with respect to
the injury to commerce resulting from the denial by
employers of the right of employees to organize and from
the refusal of employers to accept the procedure of
collective [*23] bargaining. There follows a declaration
that it is the policy of the United States to eliminate these
causes of obstruction to the free flow of commerce. 2 The
Act [*24] then defines the terms it [**618] uses,
including the terms “commerce” and “affecting
commerce.” § 2. It creates the National Labor Relations
Board and prescribes its organization. §§ 3-6. It sets
forth the right of employees to self-organization and to
bargain collectively through representatives of their own
choosing. § 7. It defines “unfair labor practices.” § 8. It
lays down rules as to the representation of employees for
the purpose of collective bargaining. § 9. The Board is
empowered to prevent the described unfair labor
practices affecting commerce and the Act prescribes the
procedure to that end. The Board is authorized to petition
designated courts to secure the enforcement of its orders.
The findings of the Board as to the facts, if supported by
evidence, are to be conclusive. If either party on
application to the court shows that additional evidence is
material and that there were reasonable grounds for the
failure to adduce such evidence in the hearings before the
Board, the court may order the additional evidence to be
taken. Any person aggrieved by a final order of the
Board may obtain a review in the designated courts with
the same procedure as in the case of an application
[***905] by the Board for the enforcement of its order.
§ 10. The Board has broad powers of investigation. §
11. Interference with members of the Board or its agents
in the performance of their duties is punishable by fine
and imprisonment. § 12. Nothing in the Act is to be
construed to interfere with the right to strike. § 13.
There is a separability clause to the effect that if any
provision of the Act or its application to any person or
circumstances shall be held invalid, the remainder of the
Act or its application to other persons or circumstances
shall not be affected. § 15. The particular provisions
which are involved in the instant case will be considered
more in detail in the course of the discussion.

2 This section is as follows:

“Section 1. The denial by employers of the
right of employees to organize and the refusal by
employers to accept the procedure of collective
bargaining lead to strikes and other forms of
industrial strife or unrest, which have the intent or

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81 L. Ed. 893, ***; 1937 U.S. LEXIS 1122

the necessary effect of burdening or obstructing
commerce by (a) impairing the efficiency, safety,
or operation of the instrumentalities of commerce;
(b) occurring in the current of commerce; (c)
materially affecting, restraining, or controlling the
flow of raw materials or manufactured or
processed goods from or into the channels of
commerce, or the prices of such materials or
goods in commerce; or (d) causing diminution of
employment and wages in such volume as
substantially to impair or disrupt the market for
goods flowin from or into the channels of
commerce.

“The inequality of bargaining power between
employees who do not possess full freedom of
association or actual liberty of contract, and
employers who are organized in the corporate or
other forms of ownership association substantially
burdens and affects the flow of commerce, and
tends to aggravate recurrent business depressions,
by depressing wage rates and the purchasing
power of wage earners in industry and by
preventing the stabilization of competitive wage
rates and working conditions within and between
industries.

“Experience has proved that protection by
law of the right of employees to organize and
bargain colletively safeguards commerce from
injury, impairment, or interruption, and promotes
the flow of commerce by removing certain
recognized sources of industrial strife and unrest,
by encouraging practices fundamental to the
friendly adjustment of industrial disputes arising
out of differences as to wages, hours, or other
working conditions, and by restoring equality of
bargaining power between employers and
employees.

“It is hereby declared to be the policy of the
United States to eliminate the causes of certain
substantial obstructions to the free flow of
commerce and to mitigate and eliminate these
obstructions when they have occurred by
encouraging the practice and procedure of
collective bargaining and by protecting the
exercise by workers of full freedom of
association, self-organization, and designation of
representatives of their own choosing, for the

purpose of negotiating the terms and conditions of
their employment or other mutual aid or
protection.”

The procedure in the instant case followed the
statute. The labor union filed with the Board its verified
charge. [*25] The Board thereupon issued its complaint
against the respondent alleging that its action in
discharging the employees in question constituted unfair
labor practices affecting commerce within the meaning of
§ 8, subdivisions (1) and (3), and § 2, subdivisions (6)
and (7) of the Act. Respondent, appearing specially for
the purpose of [**619] objecting to the jurisdiction of
the Board, filed its answer. Respondent admitted the
discharges, but alleged that they were made because of
inefficiency or violation of rules or for other good
reasons and were not ascribable to union membership or
activities. As an affirmative defense respondent
challenged the constitutional validity of the statute and its
applicability in the instant case. Notice of hearing was
given and respondent appeared by counsel. The Board
first took up the issue of jurisdiction and evidence was
presented by both the Board and the respondent.
Respondent then moved to dismiss the complaint for lack
of jurisdiction; and, on denial of that motion, respondent
in accordance with its special appearance withdrew from
further participation in the hearing. The Board received
evidence upon the merits and at its close made its
findings and order.

Contesting the ruling of the Board, the respondent
argues (1) that the Act is in reality a regulation of labor
relations and not of interstate commerce; (2) that the Act
can have no application to the respondent’s relations with
its production employees because they are not subject to
regulation by the federal government; and (3) that the
provisions of the Act violate § 2 of Article III and the
Fifth and Seventh Amendments of the Constitution of the
United States.

The facts as to the nature and scope of the business
of the Jones & Laughlin Steel Corporation have been
found by the Labor Board and, so far as they are essential
to the determination of this controversy, they are not in
dispute. The Labor Board has found: The corporation is
[*26] organized under the laws of Pennsylvania and has
its principal office at Pittsburgh. It is engaged in the
business of manufacturing iron and steel in plants situated
in Pittsburgh and nearby Aliquippa, Pennsylvania. It
manufactures and distributes a widely diversified line of

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81 L. Ed. 893, ***905; 1937 U.S. LEXIS 1122

steel and pig iron, being the fourth largest producer of
steel in the United States. With its subsidiaries —
nineteen in number — it is a completely integrated
enterprise, owning and operating ore, coal and limestone
properties, lake and river transportation facilities and
terminal railroads located at its manufacturing plants. It
owns or controls mines in Michigan and Minnesota. It
operates four ore steamships on the Great Lakes, used in
the transportation of ore to its factories. It owns coal
mines in Pennsylvania. It operates towboats and steam
barges used in carrying coal to its factories. It owns
limestone properties in various places in Pennsylvania
and West Virginia. It owns the Monongahela connecting
railroad which connects the plants of the Pittsburgh
works and forms an interconnection with the
Pennsylvania, New York Central and Baltimore
[***906] and Ohio Railroad systems. It owns the
Aliquippa and Southern Railroad Company which
connects the Aliquippa works with the Pittsburgh and
Lake Erie, part of the New York Central system. Much
of its product is shipped to its warehouses in Chicago,
Detroit, Cincinnati and Memphis, — to the last two places
by means of its own barges and transportation
equipment. In Long Island City, New York, and in New
Orleans it operates structural steel fabricating shops in
connection with the warehousing of semi-finished
materials sent from its works. Through one of its
wholly-owned subsidiaries it owns, leases and operates
stores, warehouses and yards for the distribution of
equipment and supplies for drilling and operating oil and
gas wells and for pipe lines, refineries and pumping
stations. It has sales offices in [*27] twenty cities in the
United States and a wholly-owned subsidiary which is
devoted exclusively to distributing its product in Canada.
Approximately 75 per cent. of its product is shipped out
of Pennsylvania.

Summarizing these operations, the Labor Board
concluded that the works in Pittsburgh and Aliquippa
“might be likened to the heart of a self-contained, highly
integrated body. They draw in the raw materials from
Michigan, Minnesota, West Virginia, Pennsylvania in
part through arteries and by means controlled by the
respondent; they transform the materials and then pump
them out to all parts of the nation through the vast
mechanism which the respondent has elaborated.”

To carry on the activities of the entire steel industry,
33,000 men mine ore, 44,000 men mine coal, 4,000 men
quarry limestone, 16,000 men manufacture coke, 343,000

men manufacture steel, and 83,000 men transport its
product. Respondent has about 10,000 employees in its
Aliquippa plant, which is located in a community of
about 30,000 persons.

Respondent points to evidence that the Aliquippa
plant, in which the discharged [**620] men were
employed, contains complete facilities for the production
of finished and semi-finished iron and steel products from
raw materials; that its works consist primarily of a
by-product coke plant for the production of coke; blast
furnaces for the production of pig iron; open hearth
furnaces and Bessemer converters for the production of
steel; blooming mills for the reduction of steel ingots into
smaller shapes; and a number of finishing mills such as
structural mills, rod mills, wire mills and the like. In
addition there are other buildings, structures and
equipment, storage yards, docks and an intra-plant
storage system. Respondent’s operations at these works
are carried on in two distinct stages, the first being the
conversion of raw materials into pig [*28] iron and the
second being the manufacture of semi-finished and
finished iron and steel products; and in both cases the
operations result in substantially changing the character,
utility and value of the materials wrought upon, which is
apparent from the nature and extent of the processes to
which they are subjected and which respondent fully
describes. Respondent also directs attention to the fact
that the iron ore which is procured from mines in
Minnesota and Michigan and transported to respondent’s
plant is stored in stock piles for future use, the amount of
ore in storage varying with the season but usually being
enough to maintain operations from nine to ten months;
that the coal which is procured from the mines of a
subsidiary located in Pennsylvania and taken to the plant
at Aliquippa is there, like ore, stored for future use,
approximately two to three months’ supply of coal being
always on hand; and that the limestone which is obtained
in Pennsylvania and West Virginia is also stored in
amounts usually adequate to run the blast furnaces for a
few weeks. Various details of operation, transportation,
and distribution are [***907] also mentioned which for
the present purpose it is not necessary to detail.

Practically all the factual evidence in the case, except
that which dealt with the nature of respondent’s business,
concerned its relations with the employees in the
Aliquippa plant whose discharge was the subject of the
complaint. These employees were active leaders in the
labor union. Several were officers and others were

Page 16
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81 L. Ed. 893, ***905; 1937 U.S. LEXIS 1122

leaders of particular groups. Two of the employees were
motor inspectors; one was a tractor driver; three were
crane operators; one was a washer in the coke plant; and
three were laborers. Three other employees were
mentioned in the complaint but it was withdrawn as to
one of them and no evidence was heard on the action
taken with respect to the other two.

[*29] While respondent criticises the evidence and
the attitude of the Board, which is described as being
hostile toward employers and particularly toward those
who insisted upon their constitutional rights, respondent
did not take advantage of its opportunity to present
evidence to refute that which was offered to show
discrimination and coercion. In this situation, the record
presents no ground for setting aside the order of the
Board so far as the facts pertaining to the circumstances
and purpose of the discharge of the employees are
concerned. Upon that point it is sufficient to say that the
evidence supports the findings of the Board that
respondent discharged these men “because of their union
activity and for the purpose of discouraging membership
in the union.” We turn to the questions of law which
respondent urges in contesting the validity and
application of the Act.

[***LEdHR1] [1]First. The scope of the Act. — The
Act is challenged in its entirety as an attempt to regulate
all industry, thus invading the reserved powers of the
States over their local concerns. It is asserted that the
references in the Act to interstate and foreign commerce
are colorable at best; that the Act is not a true regulation
of such commerce or of matters which directly affect it
but on the contrary has the fundamental object of placing
under the compulsory supervision of the federal
government all industrial labor relations within the
nation. The argument seeks support in the broad words
of the preamble (section one 3) and in the sweep of the
provisions of the Act, and it is further insisted that its
legislative history shows an essential universal purpose in
the light of which its scope cannot be limited by either
construction or by the application of the separability
clause.

3 See Note 2, supra, p. 23.

[***LEdHR2] [2]If this conception of terms, intent
and consequent inseparability were sound, the Act would
necessarily fall [*30] by reason of [**621] the
limitation upon the federal power which inheres in the
constitutional gran, as well as because of the explicit

reservation of the Tenth Amendment. Schechter Corp. v.
United States, 295 U.S. 495, 549, 550, 554. The authority
of the federal government may not be pushed to such an
extreme as to destroy the distinction, which the
commerce clause itself establishes, between commerce
“among the several States” and the internal concerns of a
State. That distinction between what is national and what
is local in the activities of commerce is vital to the
maintenance of our federal system. Id.

[***LEdHR3] [3] [***LEdHR4] [4] [***LEdHR5]
[5]But we are not at liberty to deny effect to specific
provisions, which Congress has constitutional power to
enact, by superimposing upon them inferences from
general legislative declarations of an ambiguous
character, even if found in the same statute. The cardinal
principle of statutory construction is to save and not to
[***908] destroy. We have repeatedly held 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. Even to avoid a serious doubt the rule is the same.
Federal Trade Comm’n v. American Tobacco Co., 264
U.S. 298, 307; Panama R. Co. v. Johnson, 264 U.S. 375,
390; Missouri Pacific R. Co. v. Boone, 270 U.S. 466,
472; Blodgett v. Holden, 275 U.S. 142, 148; Richmond
Screw Anchor Co. v. United States, 275 U.S. 331, 346.

We think it clear that the National Labor Relations
Act may be construed so as to operate within the sphere
of constitutional authority. The jurisdiction conferred
upon the Board, and invoked in this instance, is found in
§ 10 (a), which provides:

“SEC. 10 (a). The Board is empowered, as
hereinafter provided, to prevent any person from
engaging in any unfair labor practice (listed in section 8)
affecting commerce.”

[*31] The critical words of this provision,
prescribing the limits of the Board’s authority in dealing
with the labor practices, are “affecting commerce.” The
Act specifically defines the “commerce” to which it refers
(§ 2(6)):

“The term ‘commerce’ means trade, traffic,
commerce, transportation, or communication among the
several States, or between the District of Columbia or any
Territory of the United States and any State or other
Territory, or between any foreign country and any State,
Territory, or the District of Columbia, or within the

Page 17
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81 L. Ed. 893, ***907; 1937 U.S. LEXIS 1122

District of Columbia or any Territory, or between points
in the same State but through any other State or any
Territory or the District of Columbia or any foreign
country.”

There can be no question that the commerce thus
contemplated by the Act (aside from that within a
Territory or the District of Columbia) is interstate and
foreign commerce in the constitutional sense. The Act
also defines the term “affecting commerce” (§ 2 (7)):

“The term ‘affecting commerce’ means in commerce,
or burdening or obstructing commerce or the free flow of
commerce, or having led or tending to lead to a labor
dispute burdening or obstructing commerce or the free
flow of commerce.”

This definition is one of exclusion as well as
inclusion. The grant of authority to the Board does not
purport to extend to the relationship between all industrial
employees and employers. Its terms do not impose
collective bargaining upon all industry regardless of
effects upon interstate or foreign commerce. It purports to
reach only what may be deemed to burden or obstruct
that commerce and, thus qualified, it must be construed
as contemplating the exercise of control within
constitutional bounds. It is a familiar principle that acts
which directly burden or obstruct interstate or foreign
commerce, or its free flow, are within the reach of the
congressional power. Acts having that effect are not
[*32] rendered immune because they grow out of labor
disputes. See Texas & N.O.R. Co. v. Railway Clerks, 281
U.S. 548, 570; Schechter Corp. v. United States, supra,
pp. 544, 545; Virginian Railway v. System Federation,
No. 40, 300 U.S. 515. [**622] It is the effect upon
commerce, not the source of the injury, which is the
criterion. Second Employers’ Liability Cases, 223 U.S. 1,
51. Whether or [***909] not particular action does
affect commerce in such a close and intimate fashion as
to be subject to federal control, and hence to lie within
the authority conferred upon the Board, is left by the
statute to be determined as individual cases arise. We are
thus to inquire whether in the instant case the
constitutional boundary has been passed.

[***LEdHR6] [6]Second. The unfair labor
practices in question. — The unfair labor practices found
by the Board are those defined in § 8, subdivisions (1)
and (3). These provide:

Sec. 8. It shall be an unfair labor practice for an

employer —

“(1) To interfere with, restrain, or coerce employees
in the exercise of the rights guaranteed in section 7.”

“(3) By discrimination in regard to hire or tenure of
employment or any term or condition of employment to
encourage or discourage membership in any labor
organization: . . .” 4

4 What is quoted above is followed by this
proviso — not here involved — “Provided, That
nothing in this Act, or in the National Industrial
Recovery Act (U.S.C., Supp. VII, title 15, secs.
701-712), as amended from time to time, or in any
code or agreement approved or prescribed
thereunder, or in any other statute of the United
States, shall preclude an employer from making
an agreement with a labor organization (not
established, maintained, or assisted by any action
defined in this Act as an unfair labor practice) to
require as a condition of employment membership
therein, if such labor organization is the
representative of the employees as provided in
section 9 (a), in the appropriate collective
bargaining unit covered by such agreement when
made.”

[*33] Section 8, subdivision (1), refers to § 7,
which is as follows:

“Sec. 7. Employees shall have the right to
self-organization, to form, join, or assist labor
organizations, to bargain collectively through
representatives of their own choosing, and to engage in
concerted activities, for the purpose of collective
bargaining or other mutual aid or protection.”

Thus, in its present application, the statute goes no
further than to safeguard the right of employees to
self-organization and to select representatives of their
own choosing for collective bargaining or other mutual
protection without restraint or coercion by their
employer.

[***LEdHR7] [7]That is a fundamental right.
Employees have as clear a right to organize and select
their representatives for lawful purposes as the
respondent has to organize its business and select its own

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81 L. Ed. 893, ***908; 1937 U.S. LEXIS 1122

officers and agents. Discrimination and coercion to
prevent the free exercise of the right of employees to
self-organization and representation is a proper subject
for condemnation by competent legislative authority.
Long ago we stated the reason for labor organizations.
We said that they were organized out of the necessities of
the situation; that a single employee was helpless in
dealing with an employer; that he was dependent
ordinarily on his daily wage for the maintenance of
himself and family; that if the employer refused to pay
him the wages that he thought fair, he was nevertheless
unable to leave the employ and resist arbitrary and unfair
treatment; that union was essential to give laborers
opportunity to deal on an equality with their employer.
American Steel Foundries v. Tri-City Central Trades
Council, 257 U.S. 184, 209. We reiterated these views
when we had under consideration the Railway Labor Act
of 1926. Fully recognizing the legality of collective
action on the part of employees in [*34] order to
safeguard their proper interests, we said that Congress
was not required to ignore this right but could safeguard
it. Congress could seek to make appropriate collective
action of employees an instrument of peace rather than of
strife. We said that such collective action would be a
mockery if representation were made [***910] futile by
interference with freedom of choice. Hence the
prohibition by Congress of interference with the selection
of representatives for the purpose of negotiation [**623]
and conference between employers and employees,
“instead of being an invasion of the constitutional right of
either, was based on the recognition of the rights of
both.” Texas & N.O.R. Co. v. Railway Clerks, supra. We
have reasserted the same principle in sustaining the
application of the Railway Labor Act as amended in
1934. Virginian Railway Co. v. System Federation, No.
40, supra.

[***LEdHR8] [8]Third. The application of the Act
to employees engaged in production. — The principle
involved. — Respondent says that whatever may be said
of employees engaged in interstate commerce, the
industrial relations and activities in the manufacturing
department of respondent’s enterprise are not subject to
federal regulation. The argument rests upon the
proposition that manufacturing in itself is not commerce.
Kidd v. Pearson, 128 U.S. 1, 20, 21; United Mine
Workers v. Coronado Coal Co., 259 U.S. 344, 407, 408;
Oliver Iron Co. v. Lord, 262 U.S. 172, 178; United
Leather Workers v. Herkert & Meisel Trunk Co., 265
U.S. 457, 465; Industrial Association v. United States,

268 U.S. 64, 82; Coronado Coal Co. v. United Mine
Workers, 268 U.S. 295, 310; Schechter Corp. v. United
States, supra, p. 547; Carter v. Carter Coal Co., 298 U.S.
238, 304, 317, 327.

The Government distinguishes these cases. The
various parts of respondent’s enterprise are described as
interdependent and as thus involving “a great movement
of [*35] iron ore, coal and limestone along well-defined
paths to the steel mills, thence through them, and thence
in the form of steel products into the consuming centers
of the country — a definite and well-understood course of
business.” It is urged that these activities constitute a
“stream” or “flow” of commerce, of which the Aliquippa
manufacturing plant is the focal point, and that industrial
strife at that point would cripple the entire movement.
Reference is made to our decision sustaining the Packers
and Stockyards Act. 5 Stafford v. Wallace, 258 U.S. 495.
The Court found that the stockyards were but a “throat”
through which the current of commerce flowed and the
transactions which there occurred could not be separated
from that movement. Hence the sales at the stockyards
were not regarded as merely local transactions, for while
they created “a local change of title” they did not “stop
the flow,” but merely changed the private interests in the
subject of the current. Distinguishing the cases which
upheld the power of the State to impose a
non-discriminatory tax upon property which the owner
intended to transport to another State, but which was not
in actual transit and was held within the State subject to
the disposition of the owner, the Court remarked: “The
question, it should be observed, is not with respect to the
extent of the power of Congress to regulate interstate
commerce, but whether a particular exercise of state
power in view of its nature and operation must be deemed
to be in conflict with this paramount authority.” Id., p.
526. See Minnesota v. Blasius, 290 U.S. 1, 8. Applying
the doctrine of Stafford v. Wallace, supra, the Court
sustained th Grain Futures Act of [***911] 1922 6 with
respect to transactions on the Chicago Board of Trade,
although these transactions were “not in and of
themselves interstate commerce.” Congress had found
[*36] that they had become “a constantly recurring
burden and obstruction to that commerce.” Chicago
Board of Trade v. Olsen, 262 U.S. 1, 32; compare Hill v.
Wallace, 259 U.S. 44, 69. See, also, Tagg Bros. &
Moorhead v. United States, 280 U.S. 420.

5 42 Stat. 159.
6 42 Stat. 998.

Page 19
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81 L. Ed. 893, ***LEdHR7; 1937 U.S. LEXIS 1122

Respondent contends that the instant case presents
material distinctions. Respondent says that the Aliquippa
plant is extensive in size and represents a large
investment in buildings, machinery and equipment. The
raw materials which are brought to the plant are delayed
for long [**624] periods and, after being subjected to
manufacturing processes, “are changed substantially as to
character, utility and value.” The finished products which
emerge “are to a large extent manufactured without
reference to pre-existing orders and contracts and are
entirely different from the raw materials which enter at
the other end.” Hence respondent argues that “If
importation and exportation in interstate commerce do
not singly transfer purely local activities into the field of
congressional regulation, it should follow that their
combinaton would not alter the local situation.”
Arkadelphia Milling Co. v. St. Louis Southwestern Ry.
Co., 249 U.S. 134, 151; Oliver Iron Co. v. Lord, supra.

[***LEdHR9] [9] [***LEdHR10] [10]
[***LEdHR11] [11] [***LEdHR12] [12] [***LEdHR13]
[13] [***LEdHR14] [14]We do not find it necessary to
determine whether these features of defendant’s business
dispose of the asserted analogy to the “stream of
commerce” cases. The instances in which that metaphor
has been used are but particular, and not exclusive,
illustrations of the protective power which the
Government invokes in support of the present Act. The
congressional authority to protect interstate commerce
from burdens and obstructions is not limited to
transactions which can be deemed to be an essential part
of a “flow” of interstate or foreign commerce. Burdens
and obstructions may be due to injurious action springing
from other sources. The fundamental principle is that the
power to regulate commerce is [*37] the power to enact
“all appropriate legislation” for “its protection and
advancement” ( The Daniel Ball, 10 Wall. 557, 564); to
adopt measures “to promote its growth and insure its
safety” ( Mobile County v. Kimball, 102 U.S. 691, 696,
697); “to foster, protect, control and restrain.” Second
Employers’ Liability Cases, supra, p. 47. See Texas &
N.O.R. Co. v. Railway Clerks, supra. That power is
plenary and may be exerted to protect interstate
commerce “no matter what the source of the dangers
which threaten it.” Second Employers’ Liability Cases, p.
51; Schechter Corp. v. United States, supra. Although
activities may be intrastate in character when separately
considered, if they have such a close and substantial
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. Schechter Corp. v. United
States, supra. Undoubtedly [***912] the scope of this
power must be considered in the light of our dual system
of government and may not be extended so as to embrace
effects upon interstate commerce so indirect and remote
that to embrace them, in view of our complex society,
would effectually obliterate the distinction between what
is national and what is local and create a completely
centralized government. Id. The question is necessarily
one of degree. As the Court said in Chicago Board of
Trade v. Olsen, supra, p. 37, repeating what had been
said in Stafford v. Wallace, supra: “Whatever amounts to
more or less constant practice, and threatens to obstruct
or unduly to burden the freedom of interstate commerce
is within the regulatory power of Congress under the
commerce clause and it is primarily for Congress to
consider and decide the fact of the danger and meet it.”

That intrastate activities, by reason of close and
intimate relation to interstate commerce, may fall within
federal control is demonstrated in the case of carriers who
[*38] are engaged in both interstate and intrastate
transportation. There federal control has been found
essential to secure the freedom of interstate traffic from
interference or unjust discrimination and to promote the
efficiency of the interstate service. Shreveport Case, 234
U.S. 342, 351, 352; Wisconsin Railroad Comm’n v.
Chicago, B. & Q.R. Co., 257 U.S. 563, 588. It is
manifest that intrastate rates deal primarily with a local
activity. But in rate-making they bear such a close
relation to interstate rates that effective control of the one
must embrace some control over the other. Id. Under the
Transportation Act, 1920, 7 Congress went so far as to
authorize the Interstate [**625] Commerce Commission
to establish a state-wide level of intrastate rates in order
to prevent an unjust discrimination against interstate
commerce. Wisconsin Railroad Comm’n v. Chicago, B. &
Q.R. Co., supra; Florida v. United States, 282 U.S. 194,
210, 211. Other illustrations are found in the broad
requirements of the Safety Appliance Act and the Hours
of Service Act. Southern Railway Co. v. United States,
222 U.S. 20; Baltimore & Ohio R. Co. v. Interstate
Commerce Comm’n, 221 U.S. 612. It is said that this
exercise of federal power has relation to the maintenance
of adequate instrumentalities of interstate commerce. But
the agency is not superior to the commerce which uses it.
The protective power extends to the former because it
exists as to the latter.

Page 20
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81 L. Ed. 893, ***911; 1937 U.S. LEXIS 1122

7 §§ 416, 422, 41 Stat. 484, 488; Interstate
Commerce Act, § 13 (4).

The close and intimate effect which brings the
subject within the reach of federal power may be due to
activities in relation to productive industry although the
industry when separately viewed is local. This has been
abundantly illustrated in the application of the federal
Anti-Trust Act. In the Standard Oil and American
Tobacco cases, 221 U.S. 1, 106, that statute was applied
to combinations of employers engaged in productive
industry. [*39] Counsel for the offending corporations
strongly urged that the Sherman Act had no application
because the acts complained of were not acts of interstate
or foreign commerce, nor direct and immediate in their
effect on interstate or foreign commerce, but primarily
affected manufacturing and not commerce. 221 U.S. pp.
5, 125. Counsel relied upon the decision in United States
v. Knight Co., 156 U.S. 1. The Court stated their
contention as follows: “That the act, even if the
averments of the bill be true, cannot be constitutionally
applied, because to do so would extend the power of
Congress to subjects dehors the reach of its authority to
regulate commerce, by enabling that body to deal with
mere questions of production of commodities within the
States.” And the Court summarily dismissed the
contention in these words: “But all the structure upon
which this argument proceeds is based [***913] upon
the decision in United States v. E.C. Knight Co., 156 U.S.
1. The view, however, which the argument takes of that
case and the arguments based upon that view have been
so repeatedly pressed upon this court in connection with
the interpretation and enforcement of the Anti-trust Act,
and have been so necessarily and expressly decided to be
unsound as to cause the contentions to be plainly
foreclosed and to require no express notice” (citing
cases). 221 U.S. pp. 68, 69.

Upon the same principle, the Anti-Trust Act has been
applied to the conduct of employees engaged in
production. Loewe v. Lawlor, 208 U.S. 274; Coronado
Coal Co. v. United Mine Workers, supra; Bedford Cut
Stone Co. v. Stone Cutters’ Assn., 274 U.S. 37. See, also,
Local 167 v. United States, 291 U.S. 293, 397; Schechter
Corp. v. United States, supra. The decisions dealing with
the question of that application illustrate both the
principle and its limitation. Thus, in the first Coronado
case, the Court held that mining was not interstate
commerce, that the power of Congress did not extend to
its regulation as such, [*40] and that it had not been

shown that the activities there involved — a local strike —
brought them within the provisions of the Anti-Trust Act,
notwithstanding the broad terms of that statute. A similar
conclusion was reached in United Leather Workers v.
Herkert & Meisel Trunk Co., supra, Industrial
Association v. United States, supra, and Levering &
Garrigues Co. v. Morrin, 289 U.S. 103, 107. But in the
first Coronado case the Court also said that “if Congress
deems certain recurring practices, though not really part
of interstate commerce, likely to obstruct, restrain or
burden it, it has the power to [**626] subject them to
national supervision and restraint.” 259 U.S. p. 408. And
in the second Coronado case the Court ruled that while
the mere reduction in the supply of an article to be
shipped in interstate commerce by the illegal or tortious
prevention of its manufacture or production is ordinarily
an indirect and remote obstruction to that commerce,
nevertheless when the “intent of those unlawfully
preventing the manufacture or production is shown to be
to restrain or control the supply entering and moving in
interstate commerce, or the price of it in interstate
markets, their action is a direct violation of the Anti-Trust
Act.” 268 U.S. p. 310. And the existence of that intent
may be a necessary inference from proof of the direct and
substantial effect produced by the employees’ conduct.
Industrial Association v. United States, 268 U.S. p. 81.
What was absent from the evidence in the first Coronado
case appeared in the second and the Act was accordingly
applied to the mining employees.

It is thus apparent that the fact that the employees
here concerned were engaged in production is not
determinative. The question remains as to the effect upon
interstate commerce of the labor practice involved.
[***914] In the Schechter case, supra, we found that the
effect there was so remote as to be beyond the federal
power. To find “immediacy or directness” there was to
find it “almost [*41] everywhere,” a result inconsistent
with the maintenance of our federal system. In the
Carter case, supra, the Court was of the opinion that the
provisions of the statute relating to production were
invalid upon several grounds, — that there was improper
delegation of legislative power, and that the requirements
not only went beyond any sustainable measure of
protection of interstate commerce but were also
inconsistent with due process. These cases are not
controlling here.

Fourth. Effects of the unfair labor practice in
respondent’s enterprise. — Giving full weight to

Page 21
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81 L. Ed. 893, ***912; 1937 U.S. LEXIS 1122

respondent’s contention with respect to a break in the
complete continuity of the “stream of commerce” by
reason of respondent’s manufacturing operations, the fact
remains that the stoppage of those operations by
industrial strife would have a most serious effect upon
interstate commerce. In view of respondent’s far-flung
activities, it is idle to say that the effect would e indirect
or remote. It is obvious that it would be immediate and
might be catastrophic. We are asked to shut our eyes to
the plainest facts of our national life and to deal with the
question of direct and indirect effects in an intellectual
vacuum. Because there may be but indirect and remote
effects upon interstate commerce in connection with a
host of local enterprises throughout the country, it does
not follow that other industrial activities do not have such
a close and intimate relation to interstate commerce as to
make the presence of industrial strife a matter of the most
urgent national concern. When industries organize
themselves on a national scale, making their relation to
interstate commerce the dominant factor in their
activities, how can it be maintained that their industrial
labor relations constitute a forbidden field into which
Congress may not enter when it is necessary to protect
interstate commerce from the paralyzing consequences of
industrial war? We have often said that interstate
commerce itself is a practical [*42] conception. It is
equally true that interferences with that commerce must
be appraised by a judgment that does not ignore actual
experience.

[***LEdHR15] [15]Experience has abundantly
demonstrated that the recognition of the right of
employees to self-organization and to have
representatives of their own choosing for the purpose of
collective bargaining is often an essential condition of
industrial peace. Refusal to confer and negotiate has
been one of the most prolific causes of strife. This is such
an outstanding fact in the history of labor disturbances
that it is a proper subject of judicial notice and requires
no citation of instances. The opinion in the case of
Virginian Railway Co. v. System Federation, No. 40,
supra, pointsout that, in the case of carriers, experience
has shown that before the amendment, of 1934, of the
Railway Labor Act “when there was no dispute as to the
organizations authorized to represent the employees and
when there was a willingness of the employer to meet
such representative for a discussion of their grievances,
amicable adjustment of differences had generally
followed and strikes had been avoided.” That, on the
other hand, “a prolific source [**627] of dispute had

been the maintenance by the railroad of company unions
and the denial by railway management of the authority of
representatives chosen by their employees.” The opinion
in that case also points to the large measure of success of
the labor policy embodied in the Railway Labor Act. But
with respect to the appropriateness of the [***915]
recognition of self-organization and representation in the
promotion of peace, the question is not essentially
different in the case of employees in industries of such a
character that interstate commerce is put in jeopardy from
the case of employees of transportation companies. And
of what avail is it to protect the facility of transportation,
if interstate commerce is throttled with respect to the
commodities to be transported!

[*43] These questions have frequently engaged the
attention of Congress and have been the subject of many
inquiries. 8 The steel industry is one of the great basic
industries of the United States, with ramifying activities
affecting interstate commerce at every point. The
Government aptly refers to the steel strike of 1919-1920
with its far-reaching consequences. 9 The fact that there
appears to have been no major disturbance in that
industry in the more recent period did not dispose of the
possibilities of future and like dangers to interstate
commerce which Congress was entitled to foresee and to
exercise its protective power to forestall. It is not
necessary again to detail the facts as to respondent’s
enterprise. Instead of being beyond the pale, we think
that it presents in a most striking way the close and
intimate relation which a manufacturing industry may
have to interstate commerce and we have no doubt that
Congress had constitutional authority to safeguard the
right of respondent’s employees to self-organization and
freedom in the choice of representatives for collective
bargaining.

8 See, for example, Final Report of the Industrial
Commission (1902), vol. 19, p. 844; Report of the
Anthracite Coal Strike Commission (1902), Sen.
Doc. No. 6, 58th Cong., spec. sess.; Final Report
of Commission on Industrial Relations (1916),
Sen. Doc. No. 415, 64th Cong., 1st sess., vol. I.,
National War Labor Board, Principles and Rules
of Procedure (1919), p. 4; Bureau of Labor
Statistics, Bulletin No. 287 (1921), pp. 52-64;
History of the Shipbuilding Labor Adjustment
Board, U.S. Bureau of Labor Statistics, Bulletin
No. 283.
9 See Investigating Strike in Steel Industries,

Page 22
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81 L. Ed. 893, ***914; 1937 U.S. LEXIS 1122

Sen. Rep. No. 289, 66th Cong., 1st sess.

[***LEdHR16] [16] [***LEdHR17] [17]Fifth. The
means which the Act employs. — Questions under the due
process clause and other constitutional restrictions. —
Respondent asserts its right to conduct its business in an
orderly manner without being subjected to arbitrary
restraints. What we have said points to the fallacy in the
argument. Employees have their correlative [*44] right
to organize for the purpose of securing the redress of
grievances and to promote agreements with employers
relating to rates of pay and conditions of work. Texas &
N.O.R. Co. v. Railway Clerks, supra; Virginian Railway
Co. v. System Federation, No. 40. Restraint for the
purpose of preventing an unjust interference with that
right cannot be considered arbitrary or capricious. The
provision of § 9 (a) 10 that representatives, for the
purpose of collective bargaining, of the majority of the
employees in an appropriate unit shall be the exclusive
representatives of all the employees in that unit, imposes
upon the respondent only the duty of conferring and
negotiating with the authorized representatives of its
employees for the purpose of settling a labor dispute.
This provision has its analogue [***916] in § 2, Ninth,
of the Railway Labor Act which was under consideration
in Virginian Railway Co. v. System Federation, No. 40,
supra. The decree which we affirmed in that case
required the Railway Company to treat with the
representative chosen by the employees and also to
refrain from entering into collective labor agreements
with anyone other than their true representative as
ascertained in accordance with the provisions of the Act.
We said that the obligation to treat with [**628] the true
representative was exclusive and hence imposed the
negative duty to treat with no other. We also pointed out
that, as conceded by the Government, 11 the injunction
[*45] against the Company’s entering into any contract
concerning rules, rates of pay and working conditions
except with a chosen representative was “designed only
to prevent collective bargaining with anyone purporting
to represent employees” other than the representative they
had selected. It was taken “to prohibit the negotiation of
labor contracts generally applicable to employees” in the
described unit with any other representative than the one
so chosen, “but not as precluding such individual
contracts” as the Company might “elect to make directly
with individual employees.” We think this construction
also applies to § 9 (a) of the National Labor Relations
Act.

10 The provision is as follows: “SEC. 9 (a)
Representatives designated or selected for the
purposes of collective bargaining by the majority
of the employees in a unit appropriate for such
purposes, shall be the exclusive representatives of
all the employees in such unit for the purposes of
collective bargaining in respect to rates of pay,
wages, hours of employment, or other conditions
of employment: Provided, That any individual
employee or a group of employees shall have the
right at any time to present grievances to their
employer.”
11 See Virginian Railway Co. v. System
Federation, No. 40, 300 U.S. 515.

[***LEdHR18] [18]The Act does not compel
agreements between employers and employees. It does
not compel any agreement whatever. It does not prevent
the employer “from refusing to make a collective contract
and hiring individuals on whatever terms” the employer
“may by unilateral action determine.” 12 The Act
expressly provides in § 9 (a) that any individual
employee or a group of employees shall have the right at
any time to present grievances to their employer. The
theory of the Act is that free opportunity for negotiation
with accredited representatives of employees is likely to
promote industrial peace and may bring about the
adjustments and agreements which the Act in itself does
not attempt to compel. As we said in Texas & N.O.R. Co.
v. Railway Clerks, supra, and repeated in Virginian
Railway Co. v. System Federation, No. 40, supra, the
cases of Adair v. United States, 208 U.S. 161, and
Coppage v. Kansas, 236 U.S. 1, are inapplicable to
legislation of this character. The Act does not interfere
with the normal exercise of the right of the employer to
select its employees or to discharge them. The employer
may not, under cover of that right, intimidate or coerce its
employees with respect to their [*46] self-organization
and representation, and, on the other hand, the Board is
not entitled to make its authority a pretext for
interference with the right of discharge when that right is
exercised for other reasons than such intimidation and
coercion. The true purpose is the subject of investigation
with full opportunity to show the facts. It would seem
that when employers freely recognize the right of their
employees to their own organizations and their
unrestricted right of representation there will be much
less occasion for controversy in respect to the free and
appropriate exercise of the right of selection and
discharge.

Page 23
301 U.S. 1, *43; 57 S. Ct. 615, **627;

81 L. Ed. 893, ***915; 1937 U.S. LEXIS 1122

12 See Note 11.

[***LEdHR19] [19] [***LEdHR20] [20]The Act
has been criticised as one-sided in its application; that it
subjects the employer to supervision and restraint and
leaves untouched the abuses for which employees may be
responsible; that it fails to provide a more comprehensive
plan, — with better assurances of fairness to both
[***917] sides and with increased chances of success in
bringing about, if not compelling, equitable solutions of
industrial disputes affecting interstate commerce. But we
are dealing with the power of Congress, not with a
particular policy or with the extent to which policy
should go. We have frequently said that the legislative
authority, exerted within its proper field, need not
embrace all the evils within its reach. The Constitution
does not forbid “cautious advance, step by step,” in
dealing with the evils which are exhibited in activities
within the range of legislative power. Carroll v.
Greenwich Insurance Co., 199 U.S. 401, 411; Keokee
Coke Co. v. Taylor, 234 U.S. 224, 227; Miller v. Wilson,
236 U.S. 373, 384; Sproles v. Binford, 286 U.S. 374, 396.
The question in such cases is whether the legislature, in
what it does prescribe, has gone beyond constitutional
limits.

The procedural provisions of the Act are assailed.
But these provisions, as we construe them, do not offend
against the constitutional requirements governing
[**629] the [*47] creation and action of administrative
bodies. See Interstate Commerce Comm’n v. Louisville
& Nashville R. Co., 227 U.S. 88, 91. The Act establishes
stanards to which the Board must conform. There must
be complaint, notice and hearing. The Board must
receive evidence and make findings. The findings as to
the facts are to be conclusive, but only if supported by
evidence. The order of the Board is subject to review by
the designated court, and only when sustained by the
court may the order be enforced. Upon that review all
questions of the jurisdiction of the Board and the
regularity of its proceedings, all questions of
constitutional right or statutory authority, are open to
examination by the court. We construe the procedural
provisions as affording adequate opportunity to secure
judicial protection against arbitrary action in accordance
with the well-settled rules applicable to administrative
agencies set up by Congress to aid in the enforcement of
valid legislation. It is not necessary to repeat these rules
which have frequently been declared. None of them
appears to have been transgressed in the instant case.

Respondent was notified and heard. It had opportunity to
meet the charge of unfair labor practices upon the merits,
and by withdrawing from the hearing it declined to avail
itself of that opportunity. The facts found by the Board
support its order and the evidence supports the findings.
Respondent has no just ground for complaint on this
score.

[***LEdHR21] [21]The order of the Board required
the reinstatement of the employees who were found to
have been discharged because of their “union activity”
and for the purpose of “discouraging membership in the
union.” That requirement was authorized by the Act. §
10 (c). In Texas & N.O.R. Co. v. Railway Clerks, supra,
a similar order for restoration to service was made by the
court in contempt proceedings for the violation of an
injunction issued by the court to restrain an interference
with [*48] the right of employees as guaranteed by the
Railway Labor Act of 1926. The requirement of
restoration to service, of employees discharged in
violation of the provisions of that Act, was thus a
sanction imposed in the enforcement of a judicial decree.
We do not doubt that Congress could impose a like
sanction for the enforcement o its valid regulation. The
fact that in the one case it was a judicial sanction, and in
the other a legislative one, is not an essential difference in
determining its propriety.

[***LEdHR22] [22] [***LEdHR23] [23]
[***LEdHR24] [24] [***LEdHR25] [25]Respondent
complains that the [***918] Board not only ordered
reinstatement but directed the payment of wages for the
time lost by the discharge, less amounts earned by the
employee during that period. This part of the order was
also authorized by the Act. § 10 (c). It is argued that the
requirement is equivalent to a money judgment and hence
contravenes the Seventh Amendment with respect to trial
by jury. The Seventh Amendment provides that “In suits
at common law, where the value in controversy shall
exceed twenty dollars, the right of trial by jury shall be
preserved.” The Amendment thus preserves the right
which existed under the common law when the
Amendment was adopted. Shields v. Thomas, 18 How.
253, 262; In re Wood, 210 U.S. 246, 258; Dimick v.
Schiedt, 293 U.S. 474, 476; Baltimore & Carolina Line v.
Redman, 295 U.S. 654, 657.Thus it has no application to
cases where recovery of money damages is an incident to
equitable relief even though damages might have been
recovered in an action at law. Clark v. Wooster, 119 U.S.
322, 325; Pease v. Rathbun-Jones Engineering Co., 243

Page 24
301 U.S. 1, *46; 57 S. Ct. 615, **628;

81 L. Ed. 893, ***LEdHR18; 1937 U.S. LEXIS 1122

U.S. 273, 279. It does not apply where the proceeding is
not in the nature of a suit at common law. Guthrie
National Bank v. Guthrie, 173 U.S. 528, 537.

The instant case is not a suit at common law or in the
nature of such a suit. The proceeding is one unknown to
the common law. It is a statutory proceeding.
Reinstatement of the employee and payment for time lost
are [*49] requirements imposed for violation of the
statute and are remedies appropriate to its enforcement.
The contention under the Seventh Amendment is without

merit.

Our conclusion is that the order of the Board was
within its competency and that [**630] the Act is valid
as here applied. The judgment of the Circuit Court of
Appeals is reversed and the cause is remanded for further
proceedings in conformity with this opinion.

Reversed.

For dissenting opinion, see p. 76.

Page 25
301 U.S. 1, *48; 57 S. Ct. 615, **629;

81 L. Ed. 893, ***918; 1937 U.S. LEXIS 1122

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