Roberts vs. Obama and Holder: Round 2- Obamacare

The single act that broke the camel’s back and galvanized the Tea Party into electoral action was the passage of the Affordable Care Act, more commonly known as Obamacare. Some in the Democratic Party have objected to the term “Obamacare” as being derogatory. However, if you want to lay claim to it as your signature piece of legislation, it is quite hypocritical for your Party cronies to now cry wolf, or racism. Everyone knew that at some point the law would reach the Supreme Court. The fact that the Court has scheduled 5-1/2 hours of oral argument over three days underscores its importance. It shows the gravity and importance of the situation, its effects, but most importantly, its constitutionality.
One of the biggest obstacles- Elena Kagan- has recused herself from the decision. There is no doubt that in her capacity as Solicitor General she afforded advice on the legal intricacies of the law to the Administration. This leaves an 8-member Court to decide the fate of the law. Equally important, it represents a technical blunder by Team Obama/Holder. Since the main argument and objection to the law- the individual mandate- was struck down by the 11th Circuit and this case originates out of that Circuit, a 4-4 ideological split in the Supreme Court would let stand the decision of the 11th Circuit and the individual mandate would be, in effect, unconstitutional. It is a lot easier to get four votes than it is to get five.
Arguments will begin at the end of March. The decision should be handed down in June in the midst of a Presidential election. Taking the issues presented in turn as they are argued, first up is the legally arcane but equally important part of the act which later directly links to the individual mandate. Specifically, it involves an old law called the Anti-Injunction Act (AIA). That law asserts that no court can issue an injunction against a tax until someone actually pays the tax or suffers a harm under the tax. During the debate over health care reform, the Obama Administration, in its efforts to sell the law to the public, took great pains to stress that penalties for failing to purchase health insurance were not a tax under the traditional meaning of that word. In fact, the justification for the law was under the Commerce Clause, not the government’s taxing authority. To the people to whom it would apply, it amounts to $650 or 2.5% of income, whichever is greatest. If it smells like a tax, chances are it is a tax and when you “assess” the “penalty” based on income levels and have the IRS collect the penalty, it stinks even more like a tax. In fact, that is what the Obama Administration now wants everyone to believe because the AIA would then prevail and these suits would be null and void since no one suffered any harm, nor was anything “collected” from anyone.
However, the IRS has no enforcement powers in this area. They cannot take you to court for payment, threaten you, accumulate interest and penalties on non-payment of the penalty, or place a lien on your home or garnish your wages. There are no civil or criminal penalties involved. About the only thing they can do is reduce or take away your refund. When the law was litigated in the lower courts, suddenly the Holder had a legal epiphany and determined that the penalty was a “tax” and that the AIA then prevents these suits. In other words, courts can take up the issue in 2015 when the first penalties were assessed. Originally, the case out of the 11th Circuit did not address the AIA aspect of the case. However, the Supreme Court resurrected the issue in the Fourth Circuit. It is strange that they would do this and suggests that perhaps they are leaving themselves a political “out” in this case.
The second and central issue is the individual mandate itself. In 2014, all Americans should have health insurance or pay a penalty. Since most people obtain it through their employers, that leaves three other classes of people: those eligible for Medicare/Medicaid, those in health insurance exchanges with subsidies, or those who simply choose not to purchase insurance. For them, payment of the penalty would be a cheaper option. The government asserts that they have the right to require health insurance under the Commerce Clause. While it is true that they have this power, the law here is essentially requiring that people enter into and participate in commerce- or else. Ever since the New Deal, the limits of the Commerce Clause have been pushed to the limits where, perversely, an individual’s decision not to participate in commercial activity is engaging in commerce and can thus be regulated. Unfortunately, along the way some conservative Justices (Scalia and Thomas) have used this liberal reading of the Commerce Clause to justify conservative policy outcomes, most recently in a case involving the growing of medicinal marijuana for personal use.
This aspect of the case represents the best, most visible way to check Congressional power under the Commerce Clause. If they can mandate, using this “nexus theory,” then there is virtually no area where the government cannot regulate by invoking the Commerce Clause. Somehow, I do not think that is what our Founding Fathers had in mind when they drafted the Constitution. However, there are several Court precedents that should give every conservative pause here.
The third issue is severability. The law lacks this clause probably due to an oversight in their haste to pass the law. These clauses state that if one aspect is ruled unconstitutional, the remainder of the law remains in effect. This was a major topic of debate in the District Court hearings in the Fourth Circuit. However, even though Judge Hudson raised and argued the issue over several days of arguments and he ultimately deemed the mandate unconstitutional, he never addressed the issue of severability. Hence, on appeal to the Circuit Court, there was no need to address the issue, yet now the Supreme Court brings up the issue again. There are cases where laws lacking a severability clause have been upheld, the most recent case involving Sarbanes-Oxley. One should have pause here since the Court dedicates ninety minutes of argument to an issue they again resurrect.
The final issue is whether Congress exceeded their authority in contradiction of the Ninth and Tenth Amendments. Here the states argue that forcing Obamacare on the individual states under threat of losing Medicaid funding is a broad, frontal attack on state sovereignty. The issue leaves teh area of Congressional authority under the Commerce Clause and enters the more broad area of federalism. This is a more fundamental issue where this Court can lay claim to an area that has long escaped concise interpretation. One of those present at the Constitutional Convention- Benjamin Franklin- viewed it thus: states were to be the “incubators of democracy.” It was at the state level that experiments would be conducted to solve the perceived ills of the population. What worked could be implemented or improved upon elsewhere and what failed would be discarded. States were to be in competition with one another and democracy as a whole would be the better for it.
By challenging Obamacare in this legal atmosphere, the states are saying “Enough already!” In two recent cases tangentially related to the 9th and 10th Amendments, the Court has sided with the states over the Federal government. The first involved environmental law and was local in scope. However, the second involved the Brady Bill where the federal government dictated that local and state law enforcement actually enforce certain aspects of a federal law. In the current case, forcing states to accept Obamacare in whole under threat of losing Medicaid funding is clearly more encompassing than requiring local enforcement of federal gun laws. It is a clear infringement upon an historical state function. Still, the use of the carrot and stick to force states into compliance has been done before, the 65 MPH being a recent example.
The decision will most likely center around the individual mandate and Congressional authority under the Commerce Clause. Ironically, the wild card here is Scalia, one of the Court’s most conservative members. Unfortunately, he has boxed himself in with his decision in the marijuana case. If principled, he would have to follow through and rule in favor of the mandate thus shifting the decision to 5-3 to overturn the 11th Circuit’s decision and therefore allow the mandate. Perhaps that is why Roberts added the other questions of the AIA and the Ninth and Tenth Amendment challenges to the law. Here, he can go two ways assuming Scalia bolts to the other side. First, he can rule that Congress did overstep its bounds under the Ninth and Tenth Amendments and issue a sweeping decision upholding state’s rights over encroachment by the Federal government. Assuming he gets the votes (a 4-4 decision upholds the lower courts and the Federal government would prevail), then Roberts can place his imprint upon his tenure. The other way he could go, assuming Scalia bolts, is to take the argument originally set forth by Holder and rule that the penalty IS a tax and then invoke the AIA. In other words, he pulls an Obama and kicks the can down the road. On the issue of severability, he creates another “out.” Should they rule 4-4 on the mandate and thus invalidate it, a ruling against severability would let the remainder of the law stand. This would be the most likely path taken. In short, assuming they get by the AIA hurdle, the mandate will most likely be ruled unconstitutional in a 4-4 decision, the severability issue will be resolved most likely 6-2 allowing the remainder of the law to remain in effect, and the lower courts will be upheld 4-4 on the federalism issue and Congress can deny Medicaid funding. It is a little bit for everyone- the most likely outcome. If Roberts really wanted to stick it to Obama and Holder, they would reject the AIA argument, rule the mandate unconstitutional, then rule the entire law void due to the lack of the severability clause, then stick a knife in the Administration’s heart and rule for the states under the Ninth and Tenth Amendments. Unfortunately, he is only one of eight deciding these cases.