I don’t generally talk about politics here, but I wanted to understand the ACA decision a little better. So I asked my brother the lawyer to explain it to me. Here’s what he had to say. -N

The Patient Protection and Affordable Care Act, or ACA, has passed the scrutiny of the United States Supreme Court. In this post, I’m going to try to explain why and how. And I’m going to try to do it using language that people who didn’t go to Harvard or Yale can actually understand.

First, understand that the key provision of the ACA that had some people worked up is the individual mandate provision. There are other provisions of the ACA that some folks don’t like, but the individual mandate provision is the one that most people identified as the weak point of the ACA, and it is the one I’ll focus on here.

What is the individual mandate provision?

The individual mandate provision of the ACA says that most Americans need to have health insurance. If you don’t get it through your employer or a government program, you need to buy it from a private company. If you don’t, starting in 2014, you have to pay a penalty to the IRS. The penalty is called a “shared responsibility payment,” and it is to be assessed and collected in the same manner as tax penalties. That is the one and only consequence to failing to comply with the provision.

So what is the problem? The way our Constitution is written, the federal government has a limited set of powers. These are called the enumerated powers. If a power isn’t on the list, the federal government isn’t supposed to have it. There isn’t much debate about that. The debate is typically about whether certain action by the federal government fits within a power that is on the list. Such is the case here. So for the individual mandate to be constitutional, at least five of the nine members of the Supreme Court needed to agree that the individual mandate fits into a power on the list.

Supporters of the mandate argued that there are three powers in which it fits. They are (i) the Commerce Clause; and (ii) the Necessary and Proper Clause; and (iii) the Taxing Power Clause. Cutting to the chase, five of the nine justices consider individual mandate to be a constitutional exercise by Congress of the Taxing Power, and so the individual mandate is Constitutional.

But you came here for more than that. You want to know why the Commerce Clause and the Necessary and Proper Clause don’t work and why the Taxing Power Clause does. Here we go.

The Commerce Clause

Let’s start with the Commerce Clause. It says that Congress has the power to “regulate Commerce.” Under the Supreme Court’s reasoning, you can’t regulate commerce that doesn’t exist, and the individual mandate is an example of the Congress trying to create new commerce as opposed to regulating existing commerce. Supporters of the individual mandate generally agree with that but think that the individual mandate is still an exercise of congressional power under the Commerce Clause because existing commerce is affected by people choosing not to engage in that existing commerce. So those folks who chose not to engage in the existing commerce and therefore affect that existing commerce can be regulated.

The Supreme Court did not buy that argument: “Construing the Commerce Clause to permit Congress to regulate individuals precisely because they are doing nothing would open up a new and potentially vast domain to congressional authority.” So Congress cannot make people buy things and say it is an exercise of power under the Commerce Clause.

The Necessary and Proper Clause

The Necessary and Proper Clause says that Congress has the power to pass laws which are necessary and proper for exercising the other powers on the list. This is kind of an “ends justify the means” thing. If the ends are covered by an enumerated power, the necessary means are okay too. Proponents argued that the individual mandate is just a necessary and proper step in the remainder of the ACA, which is covered by the Commerce Clause (see above).

The Supreme Court disagreed (again). It said that all other cases in which laws were upheld under the Necessary and Proper Clause upheld laws involving “exercises of authority derivative of and in service to a granted power…” and that “the individual mandate, by contrast, vests Congress with the extraordinary ability to create the necessary predicate to the exercise of an enumerated power.” I put that in quotes so that you could read it for yourself because I have no earthly idea what it means. What I do know is that the Supreme Court doesn’t think the individual mandate fits within the Necessary and Proper Clause, and so it has two strikes.

The Taxing Power Clause

The Taxing Power Clause gives Congress the authority to “lay and collect Taxes.” Understand that the theory of supporting the individual mandate is completely different here. Under the Commerce Clause or the Necessary and Proper Clause, the theory is that the individual mandate makes people buy things and that is okay because allowing them not to buy things affects commerce. Under the Taxing Power, the theory is that the individual mandate doesn’t actually make people buy things; it just taxes them if they choose not to buy things. The Supreme Court noted that the only consequence to a citizen’s decision not to buy insurance is that he has to pay the penalty to the IRS when he pays his taxes. In other words, it establishes a condition (not owning insurance) which triggers a tax (the required payment to the IRS). So the mandate isn’t a mandate that people buy insurance — which isn’t an okay thing to require — but merely a tax hike on folks that decide not to buy insurance. And because that is the case, it is a valid exercise of the Taxing Power.

And that is the Supreme Court’s decision regarding the individual mandate provision of the ACA as I understand it. I can’t promise you that I’m right, but I can promise you that I think I am.