Tag Archives: Individual Mandate

Why the President’s ObamaCare Maneuver May Backfire

By postponing the employer mandate, Obama has given millions of Americans the legal standing to sue.

By  DAVID B. RIVKIN JR. AND LEE A. CASEY

President Obama’s announcement on July 2 that he is suspending the Affordable Care Act’s employer health-insurance mandate may well have exposed his actions to judicial review—even though that is clearly what he sought to avoid.

The health-care reform law’s employer mandate requires businesses with more than 50 employees to provide a congressionally prescribed set of health-insurance benefits or pay a penalty calculated at about $2,000 per employee. The law was to take effect on Jan. 1, 2014, but Mr. Obama has “postponed” its application until 2015. His aim, the administration said, was to give employers more time to comply with the new rules. But it was also seen as a way to avoid paying at least part of ObamaCare’s mounting political price in the 2014 congressional elections.

Whatever the reason, the president does not have the power to stop the implementation of a law. If there is one bedrock constitutional legal principle, it is that the president must “faithfully execute” federal statutes. He cannot suspend laws he dislikes on policy grounds or because he fears their political consequences.

Mr. Obama, however, has made a habit of exercising an unlawful suspending power, refusing to enforce selected federal laws, including various provisions of the immigration laws against young, undocumented aliens; work requirements enacted as part of the 1996 federal welfare reform law; and the testing accountability provisions of the No Child Left Behind education law.

One key problem with suspension power—aside from the fact that it destroys the balance of power between the two political branches—is that, when skillfully exercised, it sidelines the judiciary. The Constitution requires that a party commencing litigation must have what is commonly called “standing,” i.e., the party must have suffered or will suffer a legal injury that a court can redress. A determined president can head off litigation by effectively rewriting federal statutes in ways that do not create individual injuries so no party has standing.

By suspending the Affordable Care Act’s employer insurance mandate, however, the president has potentially given millions of Americans the necessary standing to challenge his conduct. This is because the Affordable Care Act is a highly integrated law, with many of its key provisions dependent on each other. In addition to the employer mandate, the law also contains an “individual mandate,” requiring most Americans to sign up for a required level of health-insurance coverage or pay a penalty.

The individual mandate was one of the core parts of the Affordable Care Act considered by the Supreme Court in the 2012 case of NFIB v. Sebelius, where the court upheld the statute against constitutional attack. Throughout that litigation, the Obama administration portrayed the individual mandate as an “integral part of a comprehensive scheme of economic regulation” that included the employer insurance mandate, which was intended to give millions of Americans a way of meeting their new obligation to have health insurance. In other words, suspending the employer insurance mandate prevents the individual insurance mandate from working the way Congress intended.

Like the employer mandate, the individual mandate by law will take effect in January 2014 (unless the president postpones that as well). Individuals who will then have to buy their own health insurance will arguably have suffered an injury sufficient to give them standing to sue.

Once in court, these litigants can argue that the very integrated nature of the Affordable Care Act would make it unlawful to apply one part against them, while suspending another section. They can also argue that only Congress can determine whether, once a statute is fundamentally changed post-enactment, it should survive or fall.

This inquiry usually arises when courts, having invalidated on constitutional grounds part of a statute, must determine whether or not Congress would have wanted the valid remaining parts of the law to remain in effect. The relevant constitutional doctrine is called “severability.”

As the Supreme Court noted in the leading severability case, Ayotte v. Planned Parenthood of Northern New England (2006), the ultimate fate of the revised statute is decided based on the “legislative intent.” In the case of the Affordable Care Act, if the courts were, for example, to determine that the employer insurance mandate is unconstitutional, the well-established severability analysis would lead them to conclude that the individual mandate (and likely the entire law) must also fall because Congress did not intend those provisions to operate in the absence of the employer insurance mandate. The president’s suspension of that part of the law, therefore, should also produce the same result, rendering the remainder of the statute unenforceable.

This argument should find favor with judges who are weary of the use of suspension power that improperly aggrandizes presidential authority, diminishes congressional power, and denies the judiciary an opportunity to have its say. Courts would have to conclude that the whole statute must fall while the president’s suspension is in effect. While reaching this conclusion, they might also declare the suspension itself unconstitutional. Both results would mark a significant win for the American people.

Source: http://online.wsj.com/article/SB10001424127887323368704578596360026187772.html?mod=wsj_streaming_stream

The opening for a fresh ObamaCare challenge

By defining the mandate as a tax, one that will not be uniformly applied, the Supreme Court ran afoul of the Constitution.

By DAVID B. RIVKIN, JR. AND LEE A. CASEY

ObamaCare is being implemented, having been upheld as constitutional by the Supreme Court in June in a series of cases now known as National Federation of Independent Business v. HHS. It is becoming increasingly clear, however, that the court took a law that was flawed but potentially workable and transformed it into one that is almost certainly unworkable. More important, the justices also may have created new and fatal constitutional problems.

ObamaCare, or the Affordable Care Act, was conceived as a complex statutory scheme designed to provide Americans with near-universal health-care coverage and to effectively federalize the nation’s health-care system. The law’s core provision was an individual health-insurance purchase mandate, adopted by Congress as a “regulation” of interstate commerce. The provision required most Americans to buy federally determined minimum health-care insurance, or to pay a penalty more or less equivalent to the cost of that coverage.

Equally important were provisions requiring creation of state-run health-care insurance exchanges (where middle-income earners could obtain the prescribed coverage) and an expanded Medicaid program (also administered by the states) to cover people with incomes up to 133% (later upped to 138%) of the federal poverty level. An income of up to $31,809 for a family of four would qualify for Medicaid. States that failed to join in the Medicaid expansion were threatened with the loss of all federal Medicaid dollars, nearly a quarter of all state expenditures.

In the ObamaCare ruling, the Supreme Court correctly held that Congress could not impose the individual mandate as a constitutional regulation of interstate commerce and that Congress could not constitutionally use its spending power to coerce the states to expand Medicaid. Rather than strike down the law, however, the court construed the insurance-purchase mandate and its penalty as a “tax” on the failure to have health insurance. The justices also interpreted the Medicaid-expansion requirements as optional—permitting states to opt out of these provisions while staying within the traditional Medicaid program. Given that interpretation, the court’s majority upheld the statute as constitutional.

The court’s determination to preserve ObamaCare through “interpretation” has exacerbated the law’s original flaws to the point that it has become palpably unworkable. By transforming the penalties for failing to comply with the law’s requirements into a “tax,” the court has given the public a green light to ignore ObamaCare’s requirements when it is economically beneficial. Law-abiding individuals, who might otherwise have complied with the law’s expensive purchase mandate to avoid being subjected to financial penalties, can simply now choose to pay a tax and not sign up for coverage. There is certainly no stigma attached to simply paying a tax, and noncompliance with the law’s other requirements—such as those imposed on employers—is arguably made more attractive on the same basis. This effect fundamentally undercuts Congress’s original purpose, which was to expand health-care coverage to the greatest number of people, not to improve federal revenues.

Similarly, having reviewed the likely costs and benefits, states are now taking advantage of the court-granted flexibility. Seven states, including Texas, Mississippi and Georgia, have so far opted out of the Medicaid-expansion provisions, and eight (with more certain to come) are refusing to create the insurance exchanges, leaving this to a federal bureaucracy unequipped to handle these new administrative burdens. As a result, a growing number of low-income Americans will be unable to obtain the free or cost-effective insurance that Congress originally meant them to have, although they remain subject to the mandate-tax.

Policy problems aside, by transforming the mandate into a tax to avoid one set of constitutional problems (Congress having exceeded its constitutionally enumerated powers), the court has created another problem. If the mandate is an indirect tax, as the Supreme Court held, then the Constitution’s “Uniformity Clause” (Article I, Section 8, Clause 1) requires the tax to “be uniform throughout the United States.” The Framers adopted this provision so that a group of dominant states could not shift the federal tax burden to the others. It was yet another constitutional device that was simultaneously designed to protect federalism and safeguard individual liberty.

The Supreme Court has rarely considered the Uniformity Clause’s reach, but it cannot be ignored. The court also refused to impose meaningful limits on Congress’s power to regulate interstate commerce for decades after the 1930s, until justices began to re-establish the constitutional balance in the 1990s with decisions leading up to the ObamaCare ruling this summer. And although the court has upheld as “uniform” taxes that affect states differently in practice, precedent makes clear that a permissible tax must “operate with the same force and effect in every place where the subject of it is found,” as held in the Head Money Cases (1884). The ObamaCare tax arguably does not meet this standard.

ObamaCare provides that low-income taxpayers, who are nevertheless above the federal poverty line, can discharge their mandate-tax obligation by enrolling in the new, expanded Medicaid program, which serves as the functional equivalent of a tax credit. But that program will not now exist in every state because, as a matter of federal law, states can opt out. The actual tax burden will not be geographically uniform as the court’s precedents require.

Thus, having transformed the individual mandate into a tax, the court may face renewed challenges to ObamaCare on uniformity grounds. The justices will then confront a tough choice. Having earlier reinterpreted the mandate as a tax, they would be hard-pressed to approve the geographic disparity created when states opt out of the Medicaid expansion. But that possibility is inherent in a scheme that imposes a nominally uniform tax liability accompanied by the practical equivalent of a fully off-setting tax credit available only to those living in certain states. To uphold such a taxing scheme would eliminate any meaningful uniformity requirement—a result that the Constitution does not permit.

ObamaCare was always a poorly conceived and constitutionally deficient statute. The Supreme Court’s ruling upholding the law has simply made it worse. In the future, that decision is likely to be seen as a prime reason that the federal courts should judge and never legislate—even in the cause of rescuing an otherwise unconstitutional law from oblivion.

Messrs. Rivkin and Casey are lawyers in the Washington, D.C., office of Baker & Hostetler LLP. They pioneered the constitutional arguments against the individual mandate and represented 26 states in challenging ObamaCare before the trial and appellate courts.

A version of this article appeared December 6, 2012, on page A17 in the U.S. edition of The Wall Street Journal, with the headline: The Opening for a Fresh ObamaCare Challenge.

Source: http://online.wsj.com/article/SB10001424127887324705104578151164101375482.html?mod=djemEditorialPage_h

ObamaCare’s Supreme Court fallout: The good, the bad, and the Fig Leaf

David Rivkin Analyzes the Supremes’ Decision at the Cato Institute’s annual Constitution Day symposium on Supreme Court rulings. The Chief Justice’s opinion expanded Congress’ taxing power in order to uphold the ObamaCare legislation.
 
FOR IMMEDIATE RELEASE
 
DRIV Screen shot 2012-09-19 at 9.02.14 AM
DRIV Screen shot 2012-09-19 at 9.02.14 AM

PRLog (Press Release) – Sep 19, 2012 – Washington D.C. – The ObamaCare issue isn’t going away. While Chief Justice John Roberts’ opinion put limits on the Congress’ power to regulate citizens’ activity, it gutted limitations on Congress’ taxing power.  So said constitutional attorney David Rivkin at the Cato Institute’s Annual Constitution Day symposium on the Supreme Court rulings.  The symposium was held yesterday at the institute’s conference facility in Washington, D.C.

David Rivkin, who led the 26-state case against the U.S. government in Florida’s 11th District Court (whose judge, Roger Vinson, ruled in the plaintiffs’ favor), said that the Supreme Court decision in June was both “excellent and bad.” For years, Congress has enacted legislation that increasingly broadened its regulatory powers, assuming that any regulation is justified by the Constitution’s Commerce Clause.  The Supreme Court decision put limits on Congress’ power to do so.  For those interpreting the Constitution as limiting and enumerating the powers of government, this aspect of the ruling was good news.

Unfortunately, according to Rivkin, the Supreme Court’s decision to uphold ObamaCare required that they effectively rewrite the law and broaden Congress’ tax authority.  They converted the individual mandate into a tax for not purchasing insurance.  Rivkin asserted that this expansion of the taxing power enables Congress to tax inactivity—crossing a constitutional barrier into police powers that are generally reserved for the states.  

Rivkin observed that the Supreme Court adheres to the principles of federalism, i.e., the dual sovereignty of the federal government and the states, only when ruling on laws that are not important—a position known as “fig leaf federalism.”

To view a video on the symposium, visit http://www.cspan.com. For more information about David Rivkin, visit http://www.davidrivkin.com.

Source: http://www.prlog.org/11978584-obamacares-supreme-court-fallout-the-good-the-bad-and-the-fig-leaf.html