Yesterday we filed our opening brief on appeal in Sissel v. United States Department of Health and Human Services. Since 2010, PLF attorneys have represented small-business owner and military veteran Matt Sissel in his constitutional challenge against the Patient Protection and Affordable Care Act, now popularly known as “Obamacare.” After the Supreme Court allowed Obamacare to stand—on the theory that Congress may tax people who do not choose to buy government-prescribed health insurance—we redoubled our efforts and revised Sissel’s case to include a claim under the Constitution’s Origination Clause. That clause requires all “bills for raising revenue” to originate in the House of Representatives, the legislative chamber most directly accountable to the people.
We contend that the legislation that eventually became Obamacare failed to comply with the Origination Clause because it contains a tax on individuals that originated in the Senate. That’s where Majority Leader Harry Reid took a bill the House had already passed—HR 3590, which would have provided incentives for veterans to buy their first homes—and replaced all its contents with what became the “Patient Protection and Affordable Care Act.”
Unfortunately, the federal trial court dismissed our lawsuit in June, holding that although Obamacare is a tax, it isn’t a “bill for raising revenue,” and therefore is exempt from the Origination Clause requirement. The court also held that the Senate’s “gut and replace” procedure satisfied the Origination requirement, since the Senate is allowed to “amend” House-passed bills, including inserting taxes.
The first part—that the Obamacare “tax” isn’t a “bill for raising revenue” may seem strange, but courts have in fact exempted certain taxes from the Origination Clause. Although the Clause is presumed to apply to all federal taxes, the Supreme Court has held that measures which only raise funds that are earmarked to support a specific program may start in the Senate. That was the case with the Crime Victims Fund, which the Court upheld against an Origination Clause challenge in 1990. But the Obamacare tax does not raise revenue for a particular program. It raises revenue that goes into a general fund, which the government may spend however it pleases. Thus, the “earmark” exception to the Origination Clause can’t apply here.
Courts have also held that some taxes are exempt because they are actually “penalties” designed to enforce programs enacted under Congress’s other enumerated powers. Penalties aren’t taxes, and aren’t subject to constitutional limits on taxation. But in last year’s NFIB decision, the Supreme Court said that the Obamacare tax is not a penalty. It called the PPACA payment a tax, and held that it would not be constitutional if viewed as a penalty. The Origination Clause exceptions therefore can’t excuse Congress’s failure to comply with the Constitution’s limits.
The trial court also held that Obamacare satisfied the origination requirement because the Senate is allowed to amend House-passed bills by adding taxes. But the Supreme Court has already declared that, to be valid, a Senate amendment must be “germane” to the subject of the bill the House first passed. Without this limitation on the Senate’s amendment power, the Origination Clause would be a nullity, since the Senate could replace any House bill with a revenue-raising measure and claim that it complied with the Origination Clause because the Senate had simply “amended” a House bill. The bill that metamorphosed into Obamacare first passed the House as the Service Members Home Ownership Tax Act of 2009, a bill that had nothing to do with health insurance reform until Senator Reid proposed the “gut-and-replace” “amendment” that stripped the House bill’s entire contents and replaced it with language that would eventually be signed into law as the Patient Protection and Affordable Care Act. The Senate thus created Obamacare from scratch, but used a House bill as a “shell” to pass it. Our brief explains that this procedure is not a constitutionally valid “amendment” under the Origination Clause.
These arguments might sound like procedural technicalities, but the procedural safeguards the Constitution imposes on Congress’s ability to levy destructive taxes on the people are absolutely crucial. Now that the Supreme Court has made clear that Obamacare’s “shared responsibility payment” is a tax, it is time for the Court of Appeals to confront the question that the Supreme Court did not address—whether Obamacare has a fatal flaw.
Briefing in Sissel’s case will proceed in the D.C. Circuit Court of Appeals, and we hope to receive an opinion early next year. For more information about this case, please visit our case page, where you will find the case briefs, an in-depth backgrounder, and other materials that explain Matt Sissel’s important challenge to Obamacare.