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Federal Judge to ObamaCare Defenders: Nope!

December 15, 2010 By: Scott Spiegel Category: Health Care

NOPE

On Monday a Virginia federal district court judge ruled that the primary enforcement mechanism of ObamaCare, the Minimum Essential Coverage Provision—also known as the individual mandate—was unconstitutional.

Justice Henry E. Hudson’s summary judgment did not rule on any other aspect of the Patient Protection and Affordable Care Act, and the Obama Justice Department will likely appeal the decision, but the individual mandate is key to making ObamaCare work, since requiring the purchase of health insurance by virtually all U.S. citizens is the only way the rest of the bill can be paid for.  Hudson’s ruling provides ammunition to those who argue that requiring people to purchase a product or service against their will is unconstitutional.

Health and Human Services Secretary Kathleen Sebelius took two primary lines of defense against the Commonwealth of Virginia, whose Attorney General Ken Cuccinelli filed the suit.

First, she argued that the purchase of health care insurance is an activity that affects interstate commerce, which the Constitution gives the federal government the power to regulate per the Commerce Clause and via the Necessary and Proper Clause.  She cited the cases of Wickard v. Filburn, which upheld the government’s ability to regulate farmers’ growing and consumption of wheat on their farms, and Gonzales v. Raich, which upheld the government’s ability to do the same for marijuana for medicinal purposes, as evidence that the government can regulate private individual economic activity due to its effect on interstate commerce.

Sebelius stated that the power to force people to buy health insurance “is well within the traditional bounds of Congress’s Article I power,” by which she meant of course that it’s not remotely within those bounds, but she’d throw in “well” to hedge against any doubt the court may have on that matter.

Hudson tore Sebelius’ argument apart by noting that, for starters, Wickard and Gonzales were widely recognized as being at the very outer limits of interpretation of the Commerce Clause, and that the individual mandate provision goes even further than these cases.  Hudson also pointed out a crucial difference between these two cases and the case of the individual mandate.  Namely, in Wickard and Gonzales, the federal government was regulating private economic decisions citizens had made, including purchasing a plot of land and growing wheat on it, and cultivating marijuana.

The individual mandate, in contrast, would be the first case in U.S. history in which the government was targeting a non-decision or non-action—not purchasing health insurance—as interstate “economic activity” subject to regulation.  As Justice Hudson writes, “Neither the Supreme Court nor any federal circuit court of appeals has extended Commerce Clause powers to compel an individual to involuntarily enter the stream of commerce by purchasing a commodity in the private market.”

Second, Sebelius argued that, even if the individual mandate couldn’t be regulated under the Commerce Clause, the Constitution gives the federal government broad power to tax citizens under the General Welfare Clause.  The penalty to be paid for noncompliance with the individual mandate could simply be considered a tax.

Not so fast, wrote Justice Hudson.  Taxes and penalties are different things, and calling a penalty a tax for convenience’s sake doesn’t make it one.  Taxes are used to generate revenue; penalties are used to enforce regulations.

When they were trying to sell their plan to the public, President Obama and Democratic legislators insisted to reporters that the fine was not a tax but a penalty.  An early version of the bill used the word “penalty” to refer to the fine, later versions used the word “tax,” and the final version reverted to “penalty.”  Hudson called the rebranding of the fine as a “tax” a “transparent afterthought.”

There are other revenue-generating mechanisms in the 2,700-page bill that are referred to as taxes, such as the tax on “Cadillac” insurance plans, so clearly the bill’s authors meant for there to be a distinction between its taxes and its penalties.  Finally, Hudson notes that the purpose of the fine couldn’t be primarily to generate revenue, because if the enforcement mechanism worked perfectly, the revenue collected from the fine would be zero dollars.

So kudos to Justice Hudson for yanking out the linchpin of ObamaCare, without which it cannot properly run and will fall to pieces.  Though two Democratic-appointed federal justices in unrelated lawsuits in Virginia and Michigan have found the bill constitutional, and further rulings on the bills will be handed down from the 4th U.S. Circuit Court of Appeals and the Supreme Court, this is an important victory in stopping the ObamaCare Express, even if we couldn’t catch it before it left the station.

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