The Supreme Court, with a narrow decision has decided to uphold the majority of the Affordable Care Act. The Wall Street Journal ran an editorial on June 29, 2012 entitled "The Roberts Rules" which outlines why this decision was unsound from a tax point of view, and I'd recommend that everyone read that editorial. It is excellent. Good job WSJ.
The Supreme Court limited the ability of the Congress to extend the elastic Commerce clause of the Constitution to suit any need they might want. This should have been enough to shoot the bill down in flames. However, since they evidently liked the bill and wanted to find a way to keep it in place, they chose to take a different approach in order to make this possible.
In essence, the majority on the court came to the conclusion that the way the law was clearly written was wrong. The penalty on the mandate to buy insurance wasn't really a penalty, but it was instead a tax. Since Congress can tax, then everything was all right. I'll again ask you to refer to the WSJ's treatment of the problems with treating the penalty as a tax - there are several.
I'd like to comment on one aspect of why this was a bad precedent for the court to set. My concern is that the court wanted a particular outcome and decided to take law writing into its own hands in order to make that outcome come about. I don't see anything in the Constitution where the Supreme Court is allowed to pretend a law says something that it does not say in order to get a desired outcome. They should have declared it unconstitutional and left it up the the Legislature to fix their error by changing the law to be in compliance with what was constitutionally valid. Instead, they made the decision to leave the law mostly intact and just pretend that it said something that it didn't say.
Think back over the close to 250 years of our country's existence. How many times have criminal cases been thrown out by the courts because there was a loophole in the law that had been overlooked by the lawmakers that the criminal's lawyers were able to exploit to get their client off on a "technicality". There is a real concern that this will no longer happen. The Supreme Court has now set precedent that it is OK for the court system to make a law really say something that it does not say in order to achieve a desired outcome.
Of all the reasons that this decision is wrong, this is one of the top ones. Laws need to be clearly written and mean particular things. I'll be the first to argue that we have far too many of them and the legalese is excessively obtuse. But law enforcement just can't bend any law that seems close to applying to suit their needs if they want to arrest someone for something they did. This protection under the law has been undercut by our Supreme Court.
Just to be clear, I do think that everyone should be covered by insurance and that our current medical system is almost irretrievably broken. But the Affordable Care Act is not a constitutional solution because the medical and insurance industries are yet more entities that the constitution does not give the Federal Branch any authority to mess with in the first place. For my thoughts on solutions, see Politics 2012.