The Patient Protection and Affordable Care Act (PPACA or “Obamacare”) imposes a sliding-scale financial penalty on people who do not buy health insurance conforming to federal standards. In NFIB v. Sebelius, the Supreme Court upheld the penalty as a constitutional “tax.”
But that may not be the last word on its constitutionality.
A lawsuit brought by Matt Sissel, a self-employed artist, contends that the penalty is void under a provision in the Constitution called the Origination Clause: Article I, Section 7, Clause 1. It reads as follows:
“All Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with Amendments as on other Bills.”
As a tax, Sissel argues, the financial penalty is “for raising Revenue.” He then notes how Obamacare was adopted: First, the House passed H.R. 3590, which created a first-time homebuyer tax credit for armed services personnel and “accelerated” certain estimated corporate income tax payments. Next, when H.R. 3590 came to the Senate, that body gutted it and inserted the PPACA instead, which the Senate then passed. Finally, the House passed the new H.R. 3590. So as a practical matter, Sissel says, the Obamacare tax originated in the Senate—not, as constitutionally required, in the House.
If Sissel is right, then the same defect may afflict other levies imposed by Obamacare, such as the one on medical devices.
The case turns on two overarching issues:
(1) Is the penalty for not buying insurance a measure “for raising Revenue?” and
(2) Did the Senate’s action in gutting the original bill and replacing it with Obamacare constitute an “Amendment?”
Only if the penalty was “for raising Revenue” did the Origination Clause apply. Only if the Senate’s changes exceeded the scope of permissible “Amendment” (and thereby constituted an entirely new bill) did Obamacare unconstitutionally arise in the Senate.
In defending the law, the government argues that the penalty, even if the Supreme Court calls it a “tax,” was imposed for independent regulatory reasons, not to raise money. The government also argues that “gut and replace” is a permissible amendment procedure.
In my investigations, I’ve found—at least thus far—that the answer to the first question is a lot easier than the answer to the second.
As to the first question: It is clear that the financial penalty in Obamacare was adopted primarily to regulate the economy pursuant to the Commerce Power (Commerce Clause + Necessary and Proper Clause). If the penalty were valid as a regulatory measure, it would not be “for raising Revenue,” either under the Constitution’s original meaning or under Supreme Court precedent.
The problem for the government, however, is that in NFIB v. Sebelius the Supreme Court held that the penalty was NOT valid as regulatory measure because it exceeded Congress’s Commerce Power. The penalty’s sole constitutional justification was the revenue it could raise—estimated at $4 billion per year by 2017. (Recent revelations about the number of people who are spurning Obamacare-approved health insurance suggests this number may be far too low.)
In other words, the Obamacare penalty for not buying insurance is valid only as a revenue-raising measure, and the NFIB v. Sebelius decision compels the courts to treat it as such.
The second issue is whether the Senate’s action in gutting the original bill and replacing it with something else constituted an “Amendment.” If it was not, then Obamacare’s levies really arose in the Senate, and are unconstitutional.
This is a much harder question to answer. It requires first addressing a number of others:
* What was the understanding of those who ratified the Constitution as to the scope of an amendment?
* If the ratifiers’ understanding on this subject is not clearly ascertainable, then what was the original public meaning of the term “Amendment?” Answering this question requires going beyond the public discussion during the ratification debates and into sources such as 18th century dictionaries and treatises, and the records of contemporaneous legislatures—specifically of the British Parliament, the American colonial assemblies, and the legislatures of the newly independent states.
Previous treatments of these “originalist” questions in law journal articles are distinctly mediocre. This is a common problem because, as I have pointed out elsewhere, most legal scholars are ill-equipped for historical work or too agenda-driven to accomplish it reliably.
Anyway, the questions continue:
* If the scope of “Amendment” requires a subject-matter connection to the original bill, then how much connection is necessary? The original H.R. 3590 was not about health care or health insurance at all. Does that mean that the Senate changes exceeded the scope of “Amendment?”
* But the original H.R. 3590 was connected to revenue! It would have amended the Internal Revenue Code to create a tax credit. Is this sufficient?
* If not, consider that the original H.R. 3590 not only helped a popular group (armed services homebuyers), but it also “paid for” their benefit by sticking it to an unpopular group (larger corporations). Specifically, the measure “accelerated” estimated corporate income taxes. Instead of larger corporations having to pay 100.25% of their taxes in advance, the original H.R. 3590 would have required them to pay 100.75% in advance. Of course, the corporations would have gotten their excess back eventually. But, as everyone in government knows, estimated tax “acceleration” is really a forced loan that makes cash flow to the government faster so as to create bookkeeping entries that cover other shortfalls. It is a financial stunt to enable politicians to effectively increase taxes by giving the government earlier use of citizens’ money, while enabling those politicians to claim they really didn’t raise taxes. So if this part of H.R. 3590 raised money, is this a sufficient connection with the Obamacare taxes to render Obamacare a mere “Amendment?”
I don’t know. But the investigation continues. Stay tuned.
- Insights into the Constitution from English Social History - October 7, 2024
- More Evidence that “Direct Taxes” include Levies on Wealth and Income - July 26, 2024
- Clearing Up the Confusion About the Constitution’s Term “Direct Taxes” - July 17, 2024