Bill Franklin / July 1, 2013

Continuing the Fight Against ObamaCare

“In THAT direction,” the Cheshire Cat said, waving its right paw round, “lives a Hatter: and in THAT direction,” waving the other paw, “lives a March Hare. Visit either you like. They’re both mad.”

“But I don’t want to go among mad people,” Alice remarked.

“Oh, you can’t help that,” said the Cat: “we’re all mad here. I’m mad. You’re mad.”

“How do you know I’m mad?” said Alice.

“You must be,” said the Cat, “or you wouldn’t have come here.”

A year ago this month I wrote a two-part blog dissecting the Supreme Court decision that kept ObamaCare alive, thanks to the byzantine legal reasoning of Chief Justice John Roberts.

In Part I of the blog, appropriately called RobertsCare, I explained that the Founders had a good reason for requiring revenue bills that imposed new taxes should originate in the House of Representatives, not the Senate whose members had six-year terms. House members were supposedly closer to the people than the Senate or President because they had to stand for reelection every two years. The Founders believed the desire to retain their office would disincline House members to appropriate only taxes to operate a minimal federal government.

The legislation that gave birth to ObamaCare and 21 new taxes, however, originated in the Senate, not the House. In flagrant violation of the Constitution, a House bill whose stated purpose was to facilitate home ownership by members of the Armed Forces was stripped of its contents (except for the opening sentence) by Harry Reid when it was sent over to the Senate. The carcass was then stuffed with 2,700 pages of the laughably-named Patient Protection and Affordable Care Act authored by Max Baucus. As the provisions of the law now labeled ObamaCare are beginning to be implemented, it is patently obvious that patients will neither be protected nor provided affordable care.

The key to making the ObamaCare engine run was a mandate compelling everyone to buy insurance presumably from a private vendor, and if that were not possible, the federal government would become the vendor. Never in the history of the Republic have its free citizens been compelled to buy something simply because they existed. If we failed to buy health insurance, we would be penalized by an all-powerful government.

As I pointed out in last year’s blog a “do this or else” provision in law constitutes a police power. And police powers are reserved to sovereign states, not the federal government. Therefore, to get around the arrogation of police power prohibition, Congress has historically relied on the Commerce Clause, intruding even into intrastate commerce (not just interstate commerce) to regulate citizen activity. It’s one thing to regulate activity. It’s quite another thing to regulate non-activity. Penalizing the failure to buy health insurance was a unique regulation of non-activity – a tough sell for employing the Commerce Clause.

As a consequence, if John Roberts and his four new best friends in the liberal wing of the Court were to save ObamaCare, the failure to buy health insurance couldn’t be “do this or else” coercion and it couldn’t rely on the Commerce Clause to regulate non-activity.

Roberts and his new best friends, therefore, had to find a way to call the fine for failing to buy insurance a tax. However, calling it a tax posed a problem of its own making because, as I pointed out in Part II of the blog, The Continuing Saga, the ObamaCare legislation uses the word “penalty” 18 times in connection with a failure to buy insurance. A penalty is not a tax. It’s the consequence of the exercise of police power.

Furthermore, a technical obstacle called the Anti-Injunction Act, a law harking back to 1793, prohibits legal challenges to a tax until the tax in question has been collected. If the fine was called a tax, it would by-pass the Commerce Clause and fall under the right of Congress to levy taxes (i.e. the House, not the Senate.) But a tax challenge couldn’t be adjudicated until 2014 when the mandate was scheduled to take effect.

So is the mandate fine a tax or a penalty? The Court unanimously agreed the mandate fine is a penalty. That is what the law called it 18 times, and allowing it to be a penalty instead of a tax permitted ObamaCare to be settled by the Supreme Court before 2014.

But then, in a logical sleight of hand, Roberts and friends said that for the purposes of imposing the mandate, Congress had the right to tax non-compliance. In other words, notwithstanding what Congress actually did or had in mind to do in passing ObamaCare, it could have enforced the mandate with a tax. It obviously chose not to call it a tax because of the 2010 elections. But Roberts and his merry band of liberals reasoned that, since the fine was collected by the IRS, the enforcement of the mandate was pay (a tax) or play (buy insurance.) This effectively rewrote the ObamaCare law so it could survive.

The third issue before the Court last year was the legality of the Medicaid expansion. ObamaCare ordered states to expand the reach of their Medicaid programs or else face the loss of all Medicaid payments from the federal to the state governments. The Court decided this was an unconstitutional exercise of police power and the law could not withhold existing Medicaid payments as leverage to force expansion.

This brought the Court to the fourth issue before it – severability. Most contracts and laws have a provision in them that says if any part is found unenforceable, it does not cancel the entire contract or law. ObamaCare, in its haste to be enacted, failed to insert a severability clause. It therefore fell to the Court to decide if the illegality of the expansion of the Medicaid program dealt a fatal blow to the entire law. This was significant because, among other things, the Medicaid expansion would bring more people into eligibility – those earning up to 400% of the federal poverty level – and the states were required to create insurance exchanges to allow individuals to buy the mandated insurance and receive subsidies to the extent that they couldn’t pay the mandated insurance premiums.

When the Court disallowed the Medicaid expansion on states, states had the option to expand Medicaid and receive federal assistance or they could opt out. The Court should have considered two consequent issues. It should have determined whether or not ObamaCare, absent the Medicaid expansion, could operate as Congress had envisioned. And the Court should have determined whether or not Congress would have enacted any or most of ObamaCare without an expansion of Medicaid.

The Roberts-led five failed to do either. Avoiding the severability wounds altogether, the Roberts wing effectively rewrote another piece of the law by deciding that the Court did not believe Congress wanted the law to fail if some states opted out of the Medicaid expansion and thus failed to create insurance exchanges. Absent the Court’s reconstruction – essentially divining the mind of Congress – ObamaCare would have been stricken as law.

As a practical matter, the states that opt out of the Medicaid expansion are subsidizing those that opt in by virtue of the taxes their citizens pay to the federal government. Sixty percent of the 50 states have decided not to build insurance exchanges because of the ongoing costs of operating them, which state residents would have to pay in additional state taxes. The federal government is not budgeted to build exchanges, and with the Republicans in control of the House, it isn’t likely to become budgeted to build exchanges. The federal government is not budgeted to operate exchanges if somehow it found the means to build them.

The Court’s failure to take all of this into consideration in a severability analysis now assures hundreds of billions of dollars will be spent jumping halfway over a ditch because the means to get all the way over isn’t there.

Moreover, young people whose insurance dollars are desperately needed to subsidize the claims of older insureds aren’t signing up, choosing instead to pay the relatively inexpensive fines. Companies are reducing the hours of work for employees to make them ineligible for coverage under ObamaCare. Small businesses are canceling expansion plans to keep the number of employees under the ObamaCare minimum. Other employers are opting out by choosing to pay the fines for non-coverage, which are considerably less than insurance premiums. Because of the ridiculous coverage requirements of ObamaCare, insurance premiums have increased further exacerbating the opt out problems. ObamaCare is neither affordable nor protective.

The country is headed for a fiscal disaster not only because of the failure of John Roberts to be a dispassionate judge of the law instead of a political hack, but also because the law, which passed without a single Republican vote, was a monstrosity conceived by politicians who were clueless about the way the real world works. The Democrats have succeeded only in destabilizing one-seventh of the American economy to “fix” a system in which 80% was working fine.

Senator Mike Lee (R-UT) has written a 74-page e-book entitled Why John Roberts Was Wrong About Healthcare: A Conservative Critique of the ObamaCare Ruling. It’s worth reading. He has introduced in the Senate S. 560, which says what the ObamaCare law says 18 times: the mandate penalty is a penalty, not a tax.

If Lee’s bill were to pass, the mandate would become immediately unconstitutional as the Roberts Renegades acknowledged. ObamaCare would not survive without it. If Lee’s bill fails to pass a Senate vote, those who voted against S. 560 would be on record for having voted for a tax increase.

Lee’s bill has been referred to the Senate Finance Committee whose Chairman, Max Baucus (D-MT) was the author of ObamaCare. And Baucus has referred it to the Healthcare Subcommittee, whose Chairman is Senator Jay Rockefeller (D-WV). The changes that Lee’s bill will see the light of day are slim to none. Until low information voters are run over by the cost of ObamaCare compliance, they will take no interest. If you are interested in tracking Lee’s bill this is the link.

In the meantime, the Attorney General for Oklahoma, Scott Pruitt, is working on a clever way to defeat ObamaCare. Unfortunately, he is going it alone because no state has joined him in the same way they teamed up to overturn.

Pruitt is challenging these issues: subsidies are made available to purchase insurance and penalties are imposed on those who don’t buy insurance and employers who don’t provide it. Employers are taxed when employees use tax credits. Individuals are taxed when the credit is made available to them. Tax credits only apply to those using them on state-created exchanges. The federal government may create state exchanges in holdout states, but the feds have no authority to offer subsidies or impose taxes on them.

The ObamaCare Democrats never envisioned that 33 states would refuse to build exchanges. Oklahoma is one of them. If a state’s residents aren’t eligible for subsidies, employers can’t be taxed as a penalty. This wasn’t an oversight. The law was written to deny subsidies to states that refuse to build exchanges, thinking it would be a big enough stick to prevent the dropout rate that has occurred.

The ObamaCare enforcers are proceeding as if they have the legal right to offer subsidies and impose penalties in states that have opted out of the exchange ropa-dope. But the law doesn’t give that right. Nevertheless, Holder’s Justice Department and the IRS are pretending they have grounds for offering subsidies and impose penalties – er, sorry, taxes.

Small businesses and individual taxpayers have joined Pruitt v. Sebelius to challenge the authority of the IRS absent state-created exchanges. It is shameful that Republican governors have caved and bought into the Siren’s Song of ObamaCare. Just wait until the Medicaid assistance from Washington to states stop. Then what? Those turncoat governors include Brewer of Arizona, Scott of Florida, Kasich of Ohio, and Christie of New Jersey. Hopefully, their careers in the Republican Party are over.

Notwithstanding the Roberts Magic Show last year, a Gallup poll this week showed 72% of all Americans believe ObamaCare is unconstitutional, which includes a whopping 56% of Democrats who share that view compared to 94% of Republicans.

Washington Republicans may not have the power that Democrats have because, in the words of John Boehner, hopefully the last of the Republican dinosaurs, Republicans control only half of a third of the governing machinery. Boehner is also the person who, after the reelection of Obama, declared ObamaCare “the law of the land.” But 30 Republican governors lead 50 states and those governors, Republican attorneys general, and state legislators should be presenting a united front to fight ObamaCare.

Helping Scott Pruitt fight the lawlessness that is the Obama administration would be a good place to start.

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