Judge’s rul­ing hinged in part on ‘penalty’ ter­mi­nol­ogy

The Washington Times Weekly - - Politics - BY STEPHEN DINAN

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 Dec. 13, 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 Con- gress 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 of the Con­sti­tu­tion, 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.

“This is a good ex­am­ple of the kinds of leaps of logic and lan­guage that the fed­eral govern­ment needed to pre­vail. To­day, it did not pre­vail,” said Vir­ginia At­tor­ney Gen­eral Ken­neth T. Cuc­cinelli II, the Repub­li­can who brought the case be­fore Judge Hud­son.

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

“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 do­ing away with the “in­di­vid­ual re­spon­si­bil­ity por­tion” would un­der­mine the en­tire law since it is the foun­da­tion for elim­i­nat­ing in­surance com­pany dis­crim­i­na­tion against pa­tients with pre­ex­ist­ing con­di­tions.

In a blog post, Stephanie Cut­ter, a se­nior ad­viser to Mr. Obama on health care, com­pared the health in­surance re­quire- ment to states’ re­quire­ment that au­to­mo­bile own­ers pur­chase in­surance.

But whereas the lawyers pointed to the tax­ing power, she pointed in­stead to other parts of the Con­sti­tu­tion for author­ity.

“Con­trary to what op­po­nents ar­gue, the new law falls well within Congress’ power to reg­u­late eco­nomic ac­tiv­ity un­der the Com­merce Clause, the Nec­es­sary and Proper Clause and the Gen­eral Wel­fare Clause,” she wrote.

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 a spe­cial elec­tion 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.”

Cato’s Mr. Can­non said that 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.

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.

Seth McLaugh­lin trib­uted to this ar­ti­cle.

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