Constitution Check: Is Obamacare’s legality still in doubt?

Lyle Denniston looks at four potentially very significant new challenges under way to Obamacare, including one argument that is growing in popularity with the law’s critics.

THE STATEMENTS AT ISSUE:

512px-Obama_signs_health_care-20100323“My jaw dropped when I first saw this.  This has the potential to sink Obamacare.  It could make the current website problems seem minor by comparison.”

 – Michael F. Cannon, health policy analyst at the Cato Institute in Washington, discussing a series of lawsuits challenging the Internal Revenue Service’s interpretation of a key provision in the new federal health care law, as quoted in an October 25 story by David G. Savage in The Los Angeles Times.  Cannon is a critic of the law.

“This is definitely heating up.  It is now the major focus of the Republican strategy for undoing the Affordable Care Act.”

 – Simon Lazarus, an attorney for the Constitutional Accountability Center in Washington, as quoted by Savage in the same story.   Lazarus is a supporter of the law.

WE CHECKED THE CONSTITUTION, AND…

In a very real sense, a law’s constitutionality is seldom settled once and for all; Americans are very fond of using the courts to go on challenging a law even if it has once been held valid – or more than once.  For example, there is still a continuing campaign to overturn at least parts of the Voting Rights Act of 1965, nearly a half century after its enactment.  For a more extreme example, there is still a good deal of constitutional doubt hanging over a law that Congress passed in 1867, in the wake of the Civil War, to try to stop fraud by government contractors.

If a law is deeply controversial, its critics can be counted upon to try to find ever-new ways to test it.  That is the reality today for President Obama’s most important domestic policy program, the overhaul of the nation’s health care system – the Affordable Care Act, or, as it is more widely known, by critics and supporters alike, “Obamacare.”

From the very day in March 2010 that the President signed that measure into law, it has been under assault on three fronts: in the courts, in Congress, and in nearly three dozen states.   Its central feature is a mandate that individuals obtain health insurance, or pay a penalty to the Internal Revenue Service.   Many Americans believe, and even President Obama has been known to say, that the Supreme Court has upheld that mandate.   Perhaps only lawyers and judges can draw a point so finely, but the Court last year actually upheld the penalty without explicitly upholding the duty to obtain insurance, and now both are scheduled to go into effect next year.

The individual mandate is also at the center of the continuing problems the government is having with the website that is the portal through which Americans sign up for health insurance.  The primary aim of Obamacare is to get nearly everybody in America covered by a health policy, but that goal can’t be reached if individuals are thwarted when they try to enroll.

One of the reasons why Obamacare cannot escape repeated challenges in court is that it has so many parts to it, and arguments can be made against a good many of them.   And one of the reasons that it may continue to be vulnerable, in a potentially devastating way, is that so many of the parts are interacting, and a court decision against one may have a spreading impact on others.

The reality is that the Supreme Court has only begun to be asked to reject key parts of the law, with more cases making their way through the lower courts.  There are four potentially very significant new challenges under way.

Within coming weeks, the Justices are expected to act on the first of this new round of challenges.  That is a case being pursued by Liberty University, the religious college in Lynchburg, Va., which contends that the individual insurance mandate interferes with its and its workers’ religious beliefs – a point that the Supreme Court did not consider last year.

The administration’s lawyers are trying to persuade the Supreme Court to deny review of  that case, partly for some of the same procedural reasons that they tried to use, unsuccessfully, to head off the earlier challenges to the mandate.

The administration itself has asked the Court to review, in the current term, the part of Obamacare that requires employers with more than 50 employees to provide their workers with coverage for a variety of birth-control drugs and pregnancy screening methods.    This second challenge developed in more than five dozen lawsuits across the country, with conflicting results that the Supreme Court is likely to step in to resolve.

The third new legal protest that may reach the Justices in coming months is a claim, now under review by a federal appeals court in Washington, that the penalty provision that the court upheld last year is itself unconstitutional.  The argument is that, since the Constitution requires that all tax and revenue measures must get their start in the House of Representatives, this provision is invalid because it originated in the Senate.   A federal judge blocked that claim, on procedural grounds.

As part of that lawsuit, the challenging lawyers are contending that the individual mandate was explicitly not upheld by the Supreme Court last year, so it is open to different opposing arguments.

The fourth new challenge is just getting started in several federal courts around the country, and it apparently has major potential for disrupting Obamacare’s interdependent scheme of coverage and thus is growing in popularity with the law’s critics.

Under the law, if individuals’ income is too low for them to afford insurance coverage, they are exempted from the mandate to buy it and can expect to be eligible for government-provided medical care for the poor.

But the government wants many of those individuals to be able to shop for affordable coverage on the new “exchanges,” or insurance marketplaces, that the law creates.   To make them eligible, Obamacare provides a tax credit they can apply toward insurance premiums.  The tax credit offer is considered vital to making the exchanges work, to assure that many of the nation’s lower income families get covered, and to assure that there are enough customers to keep insurance companies offering affordable policies in those exchanges.

The Internal Revenue Service has ruled that this tax credit will be available to lower income people in every exchange across the country.   But the new lawsuits contend that the IRS has simply misapplied the law.   The law, as they read its wording, says that the tax credit only applies to those shopping at an exchange run by a state government, not at the federal substitutes.

Obamacare gives the states the option of setting up their own exchanges.   If they choose not to do so, the government will set up an exchange on its own.  Thirty-four of the 50 states have refused to set up their own exchanges, so the government is setting up marketplaces, and the new lawsuits are based on the claim that the tax credits don’t apply there at all.

Those lawsuits are being pursued by individuals who do not want to obtain health insurance, and they live in states running their own exchanges.   They claim that, if the tax credit applies in those states, they will be forced into getting insurance from marketplaces because the tax credit will put the insurance premiums below the mandate’s threshold compared to their income level.

That challenge, a threat to the core of the exchange system, is on its surface only a test of what Congress meant in the language it put into the law about tax credits.  Ultimately, though, it is a test of how much leeway the government has to write rules that make Obamacare actually work in practical terms, and that, too, has significant constitutional implications.

Lyle Denniston is the National Constitution Center’s adviser on constitutional literacy. He has reported on the Supreme Court for 55 years, currently covering it for SCOTUSblog, an online clearinghouse of information about the Supreme Court’s work.

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