Is the penalty for not buying insurance in the Affordable Care Act (ACA—Obamacare) unconstitutional as a “tax” that originated in the Senate?
Under the Constitution’s Origination Clause, the answer appears to be “no”—the Senate’s decision to add the penalty to the underlying bill was not a violation of that Clause. But under the same provision, most of the remainder of Obamacare may be unconstitutional.
As I reported in February, I have been involved in a multi-month study into the meaning of the Constitution’s Origination Clause and its implications for the ACA. The Origination Clause is the Constitution’s rule that “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.” My project was provoked by several federal lawsuits that claimed that because (1) the Supreme Court has held that the penalty for not buying insurance is a “tax,” and (2) the ACA law really originated in the Senate, therefore (3) the penalty was unconstitutionally adopted.
Here’s how the ACA became law: First, the House of Representatives passed H.R. 3590, a bill to expand a tax credit and force certain corporations to pay income taxes earlier than previously required. When H.R. 3590 went to the Senate, that body “amended” it to delete all six pages in the bill and insert the 2076-page ACA. This amendment “in the nature of a substitute” included not only the penalty for failing to purchase insurance, but a mass of other new taxes, appropriations, and regulations. The Senate then adopted the revised H.R. 3590 and sent it back to the House, which passed it.
Many people instinctively react against this procedure, but instinctive reaction is not the same as constitutional law. My job was to reconstruct the actual meaning of the Origination Clause, not expound what I would like it to mean. I therefore reviewed the debates over the Clause at the Constitutional Convention and in the ensuing ratification contest. I then turned to 18th century legislative vocabulary, procedures, and practice. This required reviewing 50 years of British parliamentary records; examining several decades of legislative records in 14 American colonies and states; consulting 18th century treatises and other writings; and reviewing the records of the Continental Congress (1774-81), the Confederation Congress (1781-89), and the First Federal Congress (1789-91). Here is what I learned:
* Any measure that alters the tax code to raise or reduce revenue is a “Bill for raising Revenue.” Another way to state it is that any law that can be justified only by the Taxation Clause (I-8-1) rather than by some other enumerated power is a “Bill for raising Revenue.” Thus, the original H.R. 3590 qualified as a “Bill for raising Revenue” as the Constitution uses the term, even though it was revenue-neutral or revenue-negative.
* The Constitution permits the Senate to adopt “Amendments” to “Bills for raising Revenue.”
* The Senate’s “Amendment” of H.R. 3590 was what is called a “complete substitute.” I could find no precedents for complete substitutes in British parliamentary practice, but they did exist in early American practice.
* The constitutional term “Amendments” is broad, but not unlimited in scope. As the Founders used the word, an “amendment” might make virtually any kind of alteration in the underlying bill, BUT it had to address the same subject matter as the underlying bill. This rule also applied to amendments that, like H.R. 3590, were complete substitutes.
* For constitutional purposes, all tax/revenue measures are deemed to address the same subject as all other tax/revenue measures. So even an amendment (or substitute) that completely changes the taxes in the underlying bill is a valid amendment.
* Given the Supreme Court’s decision that the penalty for not buying insurance is a “tax” (a decision that was erroneous, but is now settled law) the Senate was within the rightful scope of its amendment power by adding the penalty and other taxes to the original H.R. 3950.
* However, the original H.R. 3590 addressed only taxes. The House could have added appropriations or regulations, but it did not. The Senate not only added the penalty/tax. It also inserted appropriations for various purposes and regulations on health care providers, employers, and insurance companies.
*The added regulations did NOT address the same subject (revenue) as the underlying H.R. 3590. It was therefore outside the amendment power of the Senate to add those regulations. From an originalist point of view, those regulations are void as never properly enacted, even though the House voted for them.
* This is true even though the Senate could have originated the regulations itself in a separate bill. When amending a revenue bill, the Senate does not have power as broad as it does when originating its own (non-revenue) bills.
* In addition, the Senate inserted appropriations into H.R. 3590. These probably was also outside the Senate’s amendment power.
A court constrained by the Supreme Court’s Obamacare decision, but otherwise applying the Constitution’s original meaning, should rule as follows: It should uphold the ACA’s taxes, including the penalty for not buying insurance, but strike down the regulations and appropriations in the law.