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10 Myths About The Legal Challenges To Obamacare--And Why It Isn't 'Here To Stay'

November 3, 2015

Originally written by Todd Gaziano for Forbes

Given how unpersuasive some Obamacare rulings have been, it’s easy to become cynical. But both sides have won and lost on some big issues. Thus, it is a mistake to think that there are five justices who will always vote to uphold Obamacare. The Origination Clause challenge to Obamacare that the Supreme Court is being asked to review today, Sissel v. HHS, presents some truly novel issues, as the debate among appellate judges this summer demonstrates. It also justifies a review of ten myths about Obamacare litigation.

Myth #1: The Supreme Court has rejected every direct Obamacare challenge

That isn’t so, although it did reject some important ones. In NFIB v. Sebelius (2012), the Court rejected the government’s Commerce Clause theory that would have effectively ended limits on government power, even though Chief Justice Roberts and four other justices upheld the individual mandate penalty for not buying insurance as a “tax.” Less well remembered, however, seven justices struck down the mandatory state Medicaid expansion in Obamacare. In doing so, it accepted the states’ constitutional Spending Clause argument that had never prevailed before in any court. Thus, seven justices struck down a major element of Obamacare based on a novel legal theory. To paraphrase Joe Biden when Obamacare was signed, that “is a big [freaking] deal.”

Myth #2: The Supreme Court has rejected all other Obamacare-related constitutional challenges

Again, not so. Recall the shrieking and wailing in June 2014 when the Court rejected Obamacare regulations and upheld Hobby Lobby’s right not to provide the complete range of contraceptives to its employees. The Court made the right ruling in that case, but justices in the majority had reason to know it would evoke strong reactions from hostile academics and the mainstream press. Court watchers expect the Court to grant at least one case this term that could extend the Hobby Lobby principle. The renewed wailing has already begun because no one thinks five justices are in the tank for the government.

Myth #3: With two high-profile saves … “Obamacare is here to stay!” 

That’s a nice slogan if you are an Obamacare booster, but it’s still just wishful thinking. One party’s challenge on certain issues doesn’t preclude all other claims. The fact is that complex, lengthy and sloppy statutes generate more challenges. Obamacare is about as lengthy, complex, and radical in its transformation of a major industry as it comes. It was also carelessly drafted and forced through Congress before almost anyone could read it. The Supreme Court has been resolving ordinary Medicare and Medicaid cases that the lower courts disagree on for over 50 years; Obamacare is far more complex. It will spawn major lawsuits for as long as it is on the books.

Myth #4: All the important constitutional challenges to Obamacare have been resolved by now

This is a variant of myth #3, and it fails for related reasons. Some provisions of Obamacare didn’t or don’t become effective until 2014, 2016, 2017, and 2018. The Goldwater Institute’s worthy challenge to the Independent Payment Advisory Board was held (wrongly in my view) not to be ripe until 2017. Matt Sissel’s challenge, that the individual mandate “tax” violates the Origination Clause because it did not originate in the House, arose only after the Supreme Court ruled in 2012 that the mandate penalty was a tax (recall Obama denied it was a tax for years). Beyond that, landmark rulings interpreting many statutes occur decades after passage. The Supreme Court struck down the one-house veto provision in an immigration statute (and over 160 other statues) when Jagdish Chadha prevailed in his challenge 21 years after the immigration provision was enacted and many years after the other 160 statutes were passed.

Myth #5: The Supreme Court already decided the Origination Clause question when it approved the individual mandate “tax” 

Although the Supreme Court ruled in NFIB v. Sebelius that the individual mandate penalty for not buying insurance was valid under the Direct Tax Clause, it did not consider whether the statute was unconstitutional under other constitutional provisions. Indeed, it expressly stated that it was not deciding such other issues. The most recent Supreme Court case involving Obamacare, King v. Burwell, involved a narrow question of statutory interpretation unrelated to the constitutional issue in Sissel.

Myth #6: Whether Obamacare taxes originated in the House or the Senate is a political question the courts won’t wade into

The Supreme Court held in the Munoz-Flores case that the Origination Clause is “justiciable” in the courts. The reason is clear. The Origination Clause, like other aspects of the constitutional separation of powers, protects individual rights. The House can’t waive the Origination Clause and saddle taxpayers with unconstitutional taxes. The House does have a “blue slip” procedure to help enforce its tax origination duty, as it should, but Congress has other procedures (including points of order) that should stop other unconstitutional bills that the courts regularly review. In sum, the Origination Clause protects individuals, not just the House’s prerogatives.

Myth #7: Gutting a House bill and replacing it with a new tax bill in the Senate is common

The practice of gutting a non-revenue bill and adding text without taxes may be somewhat common, but that presents no constitutional problem. The relevant practice in Sissel v. HHS is gutting a six-page House bill concerning military housing credits that supposedly raised revenue (it would not have raised taxes) and the Senate’s substitution of a 2074 page health care bill with 17 historically large taxes. The use of the gut-and-substitute maneuver in the Senate to add huge new taxes is a relatively new and uncommon practice, because Congress previously understood that it would be unconstitutional. In all events, the fact that a congressional practice became common in the last century is rarely relevant to a constitutional challenge, e.g., one-House and committee veto provisions were very common in the 1960s and 1970s.

Myth #8: Any Senate amendment of a House tax bill satisfies the Origination Clause

Under the Origination Clause, the Senate may amend House-passed tax measures, yet the Supreme Court has long held that the Senate’s tax amendment must be “germane” to the House originated tax measure. Obamacare and its taxes have nothing to do with military home buying. Before Sissel’s challenge, no court had ever upheld a Senate gut-and-replace tactic that added unrelated general revenue taxes. Sissel’s challenge is literally without precedent in many ways. The Senate has never substituted anything as sweeping as Obamacare for an unrelated House bill before. Admittedly, four judges on the DC Circuit Court believe that anything qualifies as a Senate “amendment.” The original panel of judges on the circuit court wrote a 29-page opinion during the en banc rehearing stage explaining why that would “treat[] the Origination Clause as empty formalism.” That’s one of two
constitutional issues the Supreme Court is being asked to decide. The justices have not treated the Origination Clause as an empty and useless formality before, and they shouldn’t do so now.

Myth #9: The courts do not take Origination Clause challenges seriously

Though they are somewhat rare, the courts do take Origination Clause challenges seriously, as the Supreme Court has instructed. The courts have held that the Origination Clause does not apply when Congress enacts criminal fines, user fees, or special trust funds, but the High Court explained in Munoz-Flores that there is no exception to the Origination Clause when a tax goes into the treasury for general revenue purposes, as is true with the individual mandate tax. The DC Circuit Court certainly took Sissel’s challenge seriously, with 61 pages of heated opinions involving seven judges. Judge Kavanaugh’s dissent joined by four judges argued that the ACA “easily qualifies as a ‘bill for raising Revenue,’” and that the panel’s analysis was dangerous and should be overruled. The Fifth Circuit Court also agreed the Obamacare challenge presented a serious issue, but dismissed a similar challenge for lack of standing.

Myth #10: With the direct election of senators, the Origination Clause serves no purpose

The Founders’ debates over the Origination Clause at the Constitutional Convention provided a significant breakthrough that made the Constitution possible. The Clause serves the same purpose today as it did then: to ensure that the taxing power is kept as close to the voters as possible. Its enforcement prevents Congress from increasing taxes without proper accountability. House members are still elected every two years from smaller, more accountable districts than senators. Indeed, voters in 2010 changed control of the House in response to anger over Obamacare, but it took two more years to change control in the Senate. With a broadly expanded taxing power, democratic controls over the process are even more important

After dispensing with the above myths, it’s clear that Sissel’s Origination Clause challenge is a strong and meritorious defense of limited government and individual rights. Sissel’s argument has also been supported by a number of states, Members of Congress in both Houses (see here, here, and here), and other influential amici. The Supreme Court should hear the case and decide the important Origination Clause questions, regardless of what the result is for Obamacare.



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