- The Washington Times - Monday, December 13, 2010

When Congress was writing the health-care bill, lawmakers insisted the individual mandate that consumers buy insurance was backed up by a penalty, not a tax. On Monday, that decision came back to bite them.

U.S. District Judge Henry E. Hudson, who in a 42-page ruling found key parts of the health-care law unconstitutional, said he was convinced by the government’s repeated denials during the debate that the law is not part of the government’s taxing powers and therefore must meet much stricter limits — which it failed to do.

The ruling is a major setback for President Obama and his administration, which belatedly argued in court that the penalty was, in fact, a tax, and thus the individual mandate to force insurance purchases is allowable by the broader limits the Constitution allows Congress under its taxing powers.

“It’s incontrovertible that Congress thought it was acting under the commerce power, not the taxing power. There’s just no other way of resolving this issue,” said Michael Cannon, director of health policy studies at the Cato Institute.

During the health-care debate, Mr. Obama said the penalty for those who didn’t buy insurance was “absolutely not a tax increase.” But by June, the New York Times reported, government lawyers were defending the law in court by arguing that Congress can use its taxing power to do things that other powers, such as the General Welfare or Commerce clauses, cannot do.

In this case, the administration argued that the only way to achieve the goals of requiring insurers to expand coverage was to force more people to buy insurance — and the way to do that was to penalize them for not buying it.

After the ruling, the White House insisted that the health-care overhaul is constitutional and said it would eventually prevail.

“Obviously, the administration argued on the other side of this case and disagrees with the ruling,” White House press secretary Robert Gibbs told reporters, adding that in two other cases judges have ruled in favor of the administration. “We are confident that the Affordable Care Act will be upheld.”

Mr. Gibbs said he had not spoken with Mr. Obama, a former constitutional law professor, about the ruling.

Judge Hudson’s decision does not bar the federal government from implementing the law until the legal issues are settled. The individual mandate goes into effect in 2014.

Mr. Gibbs said doing away with the “individual responsibility portion” would undermine the entire law since it is the foundation for eliminating insurance company discrimination of patients with pre-existing conditions.

Democrats appeared to suffer in Judge Hudson’s ruling for the tortuous way in which they passed the health-care bill.

The Senate passed its version in late 2009, on the strength of Democrats’ 60 votes, or enough to overcome a filibuster. Just a month later, however, Sen. Scott Brown’s surprise victory in Massachusetts gave the GOP 41 seats in the Senate, which meant Republicans had the votes to block a final compromise bill with the House.

That meant House Democratic leaders had to pass the Senate bill as is, without any changes — including the “penalty” language the Senate adopted. And that was a critical factor in Judge Hudson’s thinking.

“In the final version of the ACA enacted by the Senate on Dec. 24, 2009, the term ‘penalty’ was substituted for ‘tax’ in Section 1501(b)(1),” Judge Hudson wrote. “A logical inference can be drawn that the substitution of this critical language was a conscious and deliberate act on the part of Congress.”

Mr. Cannon said even if the judge had upheld the penalty as a tax, it still could have been found unconstitutional because it doesn’t fit under the authorized types of taxes: income, excise or direct taxes.

“Even if they were right it was a tax, it would be an unconstitutional tax,” he said.

Democratic lawmakers tried to portray the ruling as a political decision, rather than a legal one.

Reps. Sander Levin and Pete Stark, two high-ranking Democrats on one of the House committees with jurisdiction over the law, pointedly noted that Judge Hudson was appointed by a Republican president, and accused him of “judicial activism.”

More than 20 lawsuits have been filed challenging the overhaul, and both sides expect the buck ultimately to stop with the U.S. Supreme Court.

On Monday, several congressional Republicans called on the administration to join Virginia Attorney General Kenneth T. Cuccinelli II’s request for an expedited review by the high court. The tax-versus-penalty issue is likely to dog the case all the way.

“The dictionary at times looked like a major impediment to the federal government,” Mr. Cuccinelli said in a press conference call Monday.

Republicans, who in January will take over the House and see their numbers in the Senate minority rise, campaigned this November on a pledge to repeal at least part of the Democrats’ law.

“The nonpartisan Congressional Research Service called requiring people to buy a good or service or be penalized a ‘novel issue,’ and now a federal court has ruled it unconstitutional,” said Sen. Charles E. Grassley, Iowa Republican. “The ruling is likely to be appealed, but it’s a clear signal that the constitutionality of the law, which was moved through Congress with a lot of controversy and partisanship, isn’t as certain as its supporters have argued.”

Seth McLaughlin contributed to this article.

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