ObamaCare Cases: What’s at Stake?

This post is co-authored with Erik Zimmerman, ACLJ Associate Counsel.

As we noted previously, the Supreme Court recently agreed to consider whether the “individual mandate,” the key provision of the massive, unpopular federal health care law passed in early 2010 commonly known as “ObamaCare,” is unconstitutional.  In particular, the Court will consider whether the Constitution empowers Congress to micromanage the household finances of Americans by telling them what they must or must not buy.  The outcome of the case will have a broad impact on American law and society far beyond the specific issues of health care and health insurance reform.

Summary of the Issues

The lengthy Patient Protection and Affordable Care Act contains a wide range of regulations of the health care and health insurance industries and also expands existing spending programs and creates new ones.  The “individual mandate” is the key provision of the Act.  It requires most Americans to buy and indefinitely maintain government-approved health insurance or pay annual penalties starting in 2014.

Last year, numerous lawsuits were filed across the country alleging that the individual mandate is unconstitutional.  For example, the ACLJ represents the plaintiffs in Seven-Sky v. Holder, a case filed in federal court in Washington D.C. that alleges that the individual mandate is unconstitutional.  We also allege that the individual mandate violates two of our clients’ rights under the Religious Freedom Restoration Act because it requires them to participate in the government managed health insurance system.  This participation violates their religious beliefs.

All the federal district and appellate courts that have considered the various ObamaCare cases to date have reached differing conclusions on the issues, including four three-judge appellate panels that considered cases in Cincinnati, Richmond, Atlanta, and Washington D.C.  The lawsuits present three key issues for the courts to consider:

1. Does the individual mandate exceed Congress’s power under Article I, Section 8 of the Constitution?  More specifically, is the mandate authorized by Congress’s power to regulate interstate commerce or its power to impose taxes?
2. If the individual mandate is unconstitutional, should the rest of the Act be struck down because the individual mandate is the essential provision of the Act?  In other words, is the mandate severable from the rest of the Act?
3. Does the Anti-Injunction Act, a federal law enacted in 1867 that prevents courts from hearing lawsuits that could stop the assessment or collection of a tax, apply to the ObamaCare lawsuits and require the plaintiffs to wait until 2014 and pay the penalty for failing to buy insurance before filing their lawsuits?

The Supreme Court recently agreed to consider all three of these issues by granting review in Florida v. U.S. Department of Health and Human Services, a case brought by twenty-six states. In addition to those three issues, the Court will consider the constitutionality of the Act’s Medicaid amendments as they apply to the states.

The ACLJ has previously filed amicus curiae (“friend of the court”) briefs on behalf of members of the United States Congress and a committee of over 70,000 American citizens in support of the states’ lawsuit at the trial and appellate court levels.  We will prepare another brief supporting the states that will be filed with the Supreme Court in the next couple of months.  We are also preparing a petition asking the Supreme Court to take the Seven-Sky case after an appeals court recently reached a disappointing decision and upheld the individual mandate by a 2-to-1 vote.

Analysis

The key issue in the ObamaCare cases is whether Article I, Section 8 of the Constitution, which gives Congress the power to regulate interstate commerce, authorizes Congress to require American citizens to buy a product or service.

The individual mandate is unprecedented, as are the justifications offered by Congress and the Obama Administration in support of it.  The individual mandate marks the first time in American history that Congress has required American citizens to buy a product in the guise of promoting economic health.  It goes much further than traditional provisions that merely encouraged Americans to buy products through incentives, for example, the Cash for Clunkers program that encouraged the purchase of new fuel-efficient cars, or advertising campaigns that encouraged citizens to buy war bonds during World War II.

The Obama Administration has argued that an individual’s decision whether to buy health insurance (including a decision not to buy health insurance), when viewed together with the decisions of other individuals, substantially affects the national economy and is subject to congressional regulation.  Under this reasoning, however, an individual’s failure to buy any product or service could also be regulated by a federal mandate to buy the product or service because the failure to buy would substantially affect supply and demand as well as market prices.  There would be no principled limit to the type of economic mandates that Congress could impose if the individual mandate were upheld.

Another flawed argument offered by the Obama Administration is that Congress can regulate all Americans now, and indefinitely, through mandates to buy insurance because all Americans will eventually participate in broadly defined markets at some point during their lifetimes (health care, housing, transportation, food, etc.).  This would transform the power to regulate individuals who voluntarily take part in an interstate market during the duration of their participation in that market into an unwieldy power to micromanage every American’s financial decisions long before or after they take any action.

Regarding severability, it is clear that the individual mandate was the lynchpin of the entire Act.  The Act likely would not have been enacted if the individual mandate was not included, and the Obama Administration has stated numerous times that the individual mandate is essential to the Act’s regulation of the health insurance industry.  The individual mandate is the foundation upon which the rest of the Act is built, and since the individual mandate is unconstitutional and must be struck down, the rest of the Act cannot stand.  Congress could consider reenacting any of the Act’s other provisions that do not have constitutional problems through new legislation that does not include a mandate to buy health insurance.

Also, the Anti-Injunction Act does not apply to the ObamaCare lawsuits because, among other things, the Anti-Injunction Act generally applies to “taxes” while the individual mandate imposes a “penalty” unrelated to the collection of taxes.  Moreover, the Anti-Injunction Act generally applies when a tax has already been assessed against the plaintiff or is past due, but the government is not presently owed any money under the individual mandate nor have any assessments been made.

The Supreme Court’s decision in the ObamaCare litigation will directly affect every American by deciding what limits, if any, there are on a Congressional power to require American citizens to buy a product or service.  It is likely that the decision will either draw a principled line that Congress cannot cross due to the Constitution’s creation of a system of federalism or will give Congress a green light to require Americans to buy or not buy a host of products or services.  We are hopeful that the Court will recognize that the individual mandate is unconstitutional and invalidate the Act in its entirety.