National Federation of Independent Business

Business Law
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Business Law
National Federation of Independent Business (NFIB) vs. Sebelius
Four individuals with no health insurance, 26 states and the NFIB sued the national government to stop the Affordable Care Act (ACA) regulation from being implemented. They were challenging a number of portions of the regulation. However, the most noteworthy part that they sued over was the individual mandate obligation. The Commerce Clause of the Constitution of the United States, Article one, Section 8, Clause three states that: the U.S. Congress will have the power of regulating commerce with the Native tribes, amongst the states, and with foreign countries. The Congressional power to regulate commerce amongst states is one of the broadest powers of the U.S. Congress. Many of the regulations passed by the Congress are permitted under this power to regulate interstate commerce. Nonetheless, in this case, the U.S. Congress is accused by several states of exceeding its constitutional power.
The fact is that United States Congress enacted the Affordable Care Act, a directive requiring individual citizens who are not covered by Medicaid, Medicare, government sponsored plan or corporate plan to buy into a plan that is approved by the federal government or would be penalized by the federal government. In the NFIB vs. Sebelius case, the issues were: (i) Whether Congressional law requiring each state to decide between adhering to the ACA or loss of federal funding for Medicaid is valid as per the constitution. (ii) Whether Congressional law that requires every American citizen to get health insurance or be penalized is against the constitution. Essentially, the key issue was whether or not the individual mandate of the ACA exceeds the constitutional power of the national government to regulate commerce.
The court held that for (i) Yes, the directive breaches the tenth amendment. The court held that for (ii) No, ACA is not justified under the commerce clause. The United States Congress has never been authorized by the court to utilize its power in regulating commerce in order to mandate the purchasing of a certain product. In order for the Congress of the United States to regulate interstate commerce, there needs to be something to be regulated. The ACA, in essence, creates commerce through the regulation of inactivity into activity; the Act basically creates or summons commerce.
Basically, the courthouse looks at the tax and made use of the substance and application test in determining if it satisfied the limits essential to fall in the taxing and spending clause. The court found that it met such a definition, and recognized that the fine is enforced by the Internal Revenue Service (IRS) and taxed on individual taxpayers through their respective income taxes. In addition, the Treasury collects the fine and generates income for the government. As per the courthouse, the individual mandat...