The inception of contemporary Commerce Clause doctrine dates to the Interstate Commerce Act of 1887, regulating railroad monopolies, and the Sherman Antitrust Act of 1890, designed to curb monopolies and trusts. The Court upheld the Sherman Antitrust Act in 1905 -- in Swift and Company v. United States, 196 U.S. 375. However, the justices based that decision on the finding that the effect of price-fixing by Chicago meat-packers on interstate commerce was not "accidental, secondary, remote or merely probable" but immediate. The opinion reinforced the traditional literal view of Congress's Commerce power.
The Supreme Court case that established the constitutionality of the expanded interpretation of Congress's commerce power was National Labor Relations Board (NLRB) v. Jones & Laughlin Steel Corporation, 301 U.S. 1, in 1937. The case originated in Aliquippa, Pennsylvania, where Jones & Laughlin was penalizing and discriminating against workers attempting to unionize. NLRB ordered Jones & Laughlin to end its coercive union-busting tactics; the firm refused to obey. After the circuit court refused to enforce the NLRB's order against Jones & Laughlin, the NLRB appealed to the Supreme Court.
Jones & Laughlin argued that Congress could not regulate its labor practices because manufacturing is an intrastate activity, not interstate commerce. The firm based its argument on then-standard reasoning stemming from a 1918 Supreme Court case, Hammer v. Dagenhart, 241 U.S. 251. In Hammer, the Court allowed a father to commit his son to child labor in a North Carolina textile mill despite the Keating Owen Child Labor Act of 1916, reasoning that mill work was part of intrastate manufacturing, not commerce between or among states.
Rejecting the firm's argument and ruling in favor of the NLRB, the Court stated for the first time that Congress could regulate activities with "a close and substantial relation to interstate commerce." The NLRB decision marked the replacement of the strict criterion that regulated activities must be part of the "stream of commerce" with the "substantial effects" doctrine still in use in Commerce Clause cases.
Based on other SCOTUS decisions, notably United States v. Darby, it seems pretty clear that a firm can be forced to purchase health insurance for its employees if it's engaged in anything close to interstate commerce.
The real question is, can an employee be forced to buy it? There is some precedent for mandating individual action-- or rather inaction-- when it comes to farm subsidies and paying farmers to not grow crops, since the aggregating effect of the individual mandate could affect interstate commerce.
This is a pretty strong argument, to be sure.
There's also a side issue to the case, involving the recusal of some of the Justices. For example, Clarence Thomas probably should recuse himself, based on his wife's activities working against the bill in the first place. Antonin Scalia attended a public dinner held by the Federalist Society, a group who is arguing against the mandate, altho I'm not sure that rises to the level of recusal.
And the most ridiculous recusal argument, that Elena Kagan should recuse herself based on her possible involvement in drafting the defense of the bill will likely be ignored.
Should Thomas recuse himself, the bill could conceivably end up deadlocking the court.
And then what?
In case you needed reminding as to why this healthcare reform legislation, as paltry as it is, is so important, here you go.