While this ruling is huge political news, validating the largest domestic achievement of President Obama's presidency, it does not significantly alter Supreme Court precedent or the powers reserved for the Congress. For all the political attacks on the Affordable Health Care Act, a year ago, few legal scholars took the [constitutional] challenge seriously. Today's opinion, joined by Chief Justice John Roberts, essentially endorses the current status quo, which enables Congress to use its taxing power to shape national policy and to incentivize certain behavior.No less an expert on Pigouvian taxation than Greg Mankiw described the tax penalty for failure to buy insurance in such terms, back in December 2007. Choose not to buy health insurance, lose a tax deduction.
Whether mandate-as-tax convinces people or polarizes people I leave for others to debate. The Court's ruling, however, opens the field to critics of state action who object to tax incentives, whether optimized for second-best effects or not, on philosophical grounds. Putting that objection simply: a tax code with targeted tax cuts, deductions, and penalties to encourage or discourage various behaviors reduces taxpayers to the status of laboratory animals, learning to press levers and receive pellets.