The Supreme Court ruling on the Patient Protection and Affordable Care Act is, well, complicated. One of its most interesting features is that the "majority opinion", or the opinion holding legal weight, is held in its entirety only by one man--Chief Justice John Roberts. In this post we'll focus exclusively on his opinion, which is as follows:
1. The Anti-Injunction Act does not impede the States' ability to bring suit against the ACA
2. The Individual Mandate cannot be upheld under the Commerce Clause or the Necessary and Proper Clause
3. The Individual Mandate, being functionally identical to a tax and enforced under the Tax Code, is within the taxing powers of congress and therefore Constitutional
4. The Federal government unduly coerces the states in its conditioning all medicaid funding on the ACA's expansion of medicaid, only new funding may be so conditioned
Basically the only thing the entire court agrees on is (1). The Anti-Injunction Act is a law saying that people can't sue to avoid a tax until they've actually paid the damn thing. Roberts says that congress explicitly said that the penalty associated with the Individual Mandate is not a tax, and therefore the Anti-Injunction Act doesn't apply. (This gets a little weird later on, when the Individual Mandate is determined to be a tax, but the takeaway is just that congress has the power to say what things are and aren't taxes for the purposes of the law, but not for the purposes of the constitution. That actually makes a lot of sense, since otherwise the Feds could do anything, call it a tax, and have it be constitutional.)
Roberts joins the conservative dissent in stating (2) that the Individual Mandate is unsupported by the Commerce Clause because it regulates inactivity, rather than activity. Frankly, I think this distinction is weird and stupid, but I'll put off arguments until after I've gone through the dissenting opinions.
Roberts, along with the liberal dissent, points out (3) that because the Individual Mandate is exercised through the IRS, is governed by the laws governing taxation, is levied at least in part to provide revenue, and is not punitive (it never exceeds the value of purchasing insurance, and is usually substantially less), it is a form of tax for constitutional purposes, and, as such, is constitutional under the taxation powers of congress.
Finally, in agreement with a large block of both liberal and conservatives (though some Justices still dissent), Roberts rules (4). I don't fully understand this argument, but it seems like the basic claim is that federal-state programs have to be looked at as contracts between the federal government and state government. The medicaid expansion greatly exceeds the scope of changes the states could have reasonably expected when signing on to the program, therefore their original contracts must remain valid regardless of whether they decide to expand their programs to the new medicaid levels. That's the theoretical justification, which I find weak. The practical justification is much stronger. Basically, the amount of money involved in medicaid amounts to 10% or more of most states' budgets. Giving up that funding would be fiscal suicide for most states. Therefore, the states have no real choice but to accept the changes to medicaid. The Justice rightly points out that a similar tactic could be used to coerce the states to enact basically any law, even those that the federal government has no right to enact, which would pretty much defeat the purpose of Federalism.