The U.S. Supreme Court upheld President Barack Obama's health-care law in a narrow 5-4 decision, with Chief Justice John Roberts providing the deciding vote. At the same time, the court put limits on some of Congress' most potent powers — its power to regulate commerce and to attach conditions to federal funding.

The decision is a major victory for Obama. It may also be viewed as a major achievement of Chief Justice Roberts who joined the four Democratically appointed justices to uphold the biggest piece of economic and social welfare legislation of the past half century.  And he managed to do it while validating conservative arguments about limits of federal power.

The most important new limitation is to Congress' spending power, which it limited for the first time. The court ruled that Congress could not cut off all current Medicaid funding to states that refused to expand Medicaid coverage to those earning 133 percent of the poverty level. That Medicaid expansion is a major part of the Affordable Care Act, intended to expand health coverage to 16 million people currently uninsured. The limitation opens the way for the 26 states and Missouri, which challenged the law, to decide not to accept federal funding to expand Medicaid without risking all their current funding.

(Start update) Roberts rejected the government's main argument that Congress' power to regulate interstate commerce gave it the authority to impose the individual mandate.

In the past, the court has approved broad exertions of congressional power under the commerce clause. For example, the Civil Rights Act is justified by commerce powers.

But Roberts accepted the third fallback position of the Obama administration -- that the mandate was a tax and justified by Congress' broad power to tax.  He said it could be considered a tax even though supporters were at pains to avoiding calling that in order to win approval of the legislation.  The oral arguments in the case had hardly mentioned this argument.

“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,” Roberts wrote. “Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness.”

The joint dissenting opinion, written by Justice Anthony M. Kennedy and joined by Justices Antonin Scalia, Clarence Thomas and Samuel Alito, accused Roberts of rewriting the law and approving a law that had not been passed by Congress.

The dissenters wrote that the decision was a “vast judicial overreaching” that “creates a debilitated, inoperable version of health-care regulation that Congress did not enact and the public does not expect.”

Drawing line on Medicaid expansion

But Roberts joined the conservatives on the court to limit the expansion of Medicaid and to draw a constitutional limit on how much pressure the federal government can exert on states to follow Congress' bidding.

Congress has almost unlimited spending power to achieve the "general welfare."  As Roberts put it: "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."

So, for example, it is fine for Congress to threaten to cut off 5 percent of highway funds if a state won't raise the drinking age to 21 to improve highway safety.

But Roberts said the Medicaid expansion went too far and amounts to "a gun to the head" of states. It gave the federal government the power to cut off all current Medicaid money to the states if they did not agree to the Medicaid expansion to cover those up to 133 percent of poverty. Medicaid spending is now about one-fifth of state budgets and the federal government already provides 50-83 percent of that funding.

"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," wrote Roberts.

Roberts said that when the states agreed to the current Medicaid program they could not have foreseen the vast expansion worked by the ACA. "The Medicaid expansion... accomplishes a shift in kind, not merely degree," he wrote.  For this reason, the states can't now be threatened with losing all of their Medicaid money because of a program they could not have envisioned.

Putting limitations on Congress' spending power that forbids congressional compulsion is important to federalism, Roberts said. "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." (End update)

Roberts' 'brilliant' judicial strategizing

Greg P. Magarian, a law professor at Washington University Law School, said the "result here is an unqualified victory for the Obama administration and a qualified victory for federal power. As to the act itself, implementation can proceed now without any complications other than the slight weakening of the government's hand on Medicaid. Here and in the Arizona immigration case, Roberts has emerged as a new generation of judicial conservative. He isn't preoccupied with the state power wars that have dominated constitutional discourse since at least the Civil Rights era. Instead, he appears to be more of a national security conservative."

The chief justice's opinion was a "brilliant piece of judicial strategizing," Magarian added in an email. "Roberts has threaded several needles here very carefully, and I think I know why. He's in charge of the court's institutional reputation. The best thing for the court is to make the fewest waves possible. 

"This case was going to make waves one way or the other," Magarian continued, "but I've always thought the court would ultimately take more hits if it struck down the ACA -- charges of judicial activism, body slams from a president up for re-election, lingering questions about how the court parsed the law because, if it had struck the act down, it would have had to wade into severability. Roberts may have voted to uphold the law primarily to avoid those results, and then he wrote an opinion that gives everyone something rhetorically while reaching a firm result that sustains the status quo."

Joel Goldstein, a law professor at Saint Louis University, agreed in part. He also saw the decision as a "major victory for those who argued that ACA is constitutional, but also probably provides a basis to resist some future federal initiatives. Roberts appears to have written a decision which allows the ACA to stand in its significant parts while contracting federal power.

"Roberts' opinion reflects both his strong institutional attachment to the court and his skills as an outstanding lawyer. Consistent with proper practice, he construes ACA in a manner to allow a finding of constitutionality rather than unconstitutionality. He makes narrow distinctions, for example Congress can regulate economic activity but not inactivity under the Commerce Clause, and takes constitutional text very seriously,” said Goldstein.

"His approach reflects a respect for a coordinate branch of government rather than a disposition to wield the Marbury power in an aggressive fashion as the Rehnquist court did in federalism cases. Roberts is clearly very sensitive to the court's institutional standing and believes that constitutional law is not simply a tool of partisan politics. This decision, at first blush, seems to present an effort to avoid the disastrous outcome for the court and constitutional law of Bush vs. Gore by emphasizing legal arguments rather than overt political calculations," concluded Goldstein.

Political ramifications

Bruce La Pierre, a Washington University law professor, was not as willing to praise Roberts. "It is tempting to applaud Roberts’ decision to cast a deciding swing vote in support of the statute as an exercise of the taxing power," he wrote in an email. 

"The four justices’ joint dissent is -- nonetheless -— right: The court, that is Roberts 'save[d] a statute that Congress did not write.' Congress did NOT rely on the tax power to enact the ACA; it enacted this statute under the commerce power. Given popular opposition to taxes, it is wildly improbable that Congress would have had the political will to enact the ACA as a tax. The chief justice is -- I am sure that he would reject the charge  -- a judicial activist; he has done for Congress what Congress couldn’t do for itself."

La Pierre added, however, "This judicial activism has obvious benefit. It will be harder to sustain the charge that the Supreme Court is just another political branch of government. The chief justice, a prominent Republican appointee, broke ranks with his conservative brethren.... Another benefit: The issue, see putative nominee Romney’s response to today’s decision, will remain a hot political potato. Those who hate ‘Obamacare’ can vote to elect Romney and fellow Republicans, who presumably will follow through on their promise to repeal it. Those who approve the ACA can take the opposite political tack."

David Roland, director of litigation for the libertarian Freedom Center of Missouri, cautioned against overreading the court's decision.  He noted that a number of other constitutional challenges to the Affordable Care Act still are wending their way through the courts. In light of the court's limitation on federal power in the decision, future court challenges to other provisions might be more successful.

Michael Wolff, former chief justice of the Missouri Supreme Court and a law professor at Saint Louis University, wrote in an email that even though the Obama administration won the case, he and Democrats had better be willing to defend the law on the stump or they will lose the political war.

"The real question now shifts to the political, as it should," wrote Wolff in an email. "Will the (Democrats) take this opportunity to explain the act to the public?  They had better do so, because it polls badly because the spending on PR against the act is wildly greater than the spending on PR to explain it.”