In Arizona ruling, Justice Kennedy tips his hand on health-care mandate

Get ready, Congress. Anthony Kennedy, the pivotal justice in most of the split decisions by the Supreme Court, may have just tipped his hand on how he might rule in a likely case involving the one-year-old health-care law.

Justice Kennedy’s reasoning in a ruling issued Monday about tax credits to help private schools in Arizona could easily be applied to a critical piece of President Obama’s major legislative achievement.

A key provision of that 2010 law is the “individual mandate.” It requires most Americans to buy health insurance or face a hefty fine. Such an imposition on private health choices is based on an unproven assertion that everyone at some point will use a hospital emergency room. (The mandate also provides the major funding to achieve universal health care.)

But in writing for the court’s majority in Monday’s ruling, Kennedy warns against government action based on hypotheticals or conjecture. Courts especially should not endorse mere speculation and must instead deal with actual or imminent situations.

He argues against making inferences about “premises as to which there remains considerable doubt” or that are “not particular to certain persons.”

Such general language reflects Kennedy’s long-held caution about government overreach – which could include the health-care mandate. The justice also is often concerned about liberty of conscience, as he noted in this latest ruling.

His approach won the day in the 5-to-4 decision involving an Arizona program that allows individuals to keep $500 of income that they might owe the state if they give that money to groups that provide private-school scholarships for needy children.

The program was set up in 1997 to get around a state ban on school vouchers. It has so far benefited more than 27,000 students, many of whom were stuck in low-performing public schools. A few other states have similar programs, and others may follow.

The high court was not asked to rule on whether the state is supporting religion – which would be a First Amendment violation. Its decision was on the question of whether a group of taxpayers simply had legal standing to challenge the state program because some money flows to religious schools.

The case focused on whether a tax credit is the same as government spending. The four justices in the minority, writing in dissent, saw any tax leniency as a subsidy or a form of government finance. Their presumption is that a taxpayer’s money is state money unless government determines not to take it. And to “divert” private money away from state coffers for use by religious groups is, in effect, “monetary support” of religion.

Not so, the majority justices found. “When Arizona taxpayers choose to contribute [to a school tuition group], they spend their own money,” the ruling stated.

A taxpayer whose dollars are spent by the state to support a religion does indeed have a right to challenge the use of that tax money. But a tax credit, Kennedy wrote, “is not tantamount to a religious tax or tithe.” In fact, money can only be government property if it comes “into the tax collector’s hands.”

Under the Arizona program, the contributions to the scholarship organizations result from a decision by “private taxpayers regarding their own funds” and “in accordance with their own consciences,” he stated.

Taxpayers who object “know that their fellow citizens, not the state, decide to contribute and in fact make the contribution.” And those taxpayers follow their own conscience.

“Private bank accounts cannot be equated with the Arizona State Treasury,” stated the ruling bluntly.

What’s more, any injury to the state’s tax coffers is merely speculative. There’s no evidence of the state being unable to raise sufficient funds, the court decided. It is mere conjecture that a taxpayer suffers because this tax credit might reduce revenue to the state.

Note the concepts here – speculative and conjectural – that could also apply to the premise of the health-care mandate, which is that everyone will someday use medical care at the expense of others.

Kennedy makes clear that any legal standing for taxpayers on church-state issues should be based on specific injury, not theoretical causation. The same reasoning could easily apply to the various federal court cases on the health-care mandate now working their way up to the Supreme Court.

Oddly, the Obama administration filed a brief in support of the Arizona law. And the president has hinted lately that he might seek some compromise on the individual mandate, perhaps letting states decide the matter.

But the final decision on the mandate will likely rest with Kennedy in yet another 5-to-4 decision. If he used this Arizona ruling to hint at what he might do, it was certainly a very big wink.