Obamacare supporters rejoiced in June when the Supreme Court ruled the U.S. could use its taxing authority to mandate that most people buy health insurance.
But their celebrations may have been a bit premature.
The Affordable Care Act faces other legal hurdles—including a challenge that only could have been made after the Supreme Court’s ruling.
The right-leaning Pacific Legal Foundation amended its challenge to the ACA after the Supreme Court upheld the insurance mandate under Congress’ taxing powers.
The group's challenge turns on the Origination Clause in the U.S. Constitution, which requires that bills for raising revenue start in the House of Representatives.
Problem is, the group argues, Obamacare started in the Senate.
The clause has one loophole that might be Obamacare’s salvation: the Origination Clause doesn’t apply to bills that create specific government programs for which the U.S. is trying to raise revenue.
To argue against applying that loophole, Pacific Legal’s amended filing alleges the tax was instituted to fund general government revenues:
Unlike the program-specific assessment and taxes at issue in Munoz-Flores, Millard, or Nebeker, the tax here is more akin to an income tax, whose revenues go to the general treasury and are used for general Government operations. NFIB, 132 S. Ct. at 2594 (comparing the Affordable Care Act tax to a tax on “earning income”). The tax is paid into the Treasury when individuals file their tax returns, and the amount is based on “such familiar factors as taxable income, number of dependents, and joint filing status.” Id. The requirement to pay is in the Internal Revenue Code and is enforced by the IRS, which “must assess and collect it ‘in the same manner as taxes.’” Id. (quoting the Act).
Of course, it's not entirely clear whether Pacific Legal will ultimately prevail on this reasoning.
Georgetown Law School Professor Randy Barnett thinks Pacific will be successful, contending the Senate used a "shell bill procedure" to "scoop out" the contents of a House bill and insert its own language.
But that kind of "shell bill procedure" has been used a number of times to enact taxes, Jack Balkin, professor of constitutional law at Yale, wrote in The Atlantic.
That tactic even worked in 1986 when the Senate passed sweeping tax reform under Ronald Reagan, he wrote.
The case is currently under consideration in the D.C. District Court.
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