The United States Court of Appeals for the District of Columbia Circuit has decided that the Affordable Care Act’s mandate to purchase health insurance or pay a penalty is not primarily about raising revenue and therefore the legislation did not have to originate in the House of Representatives. The circuit court ruled that the Affordable Care Act (ACA) does not violate the Origination Clause of the Constitution based on Supreme Court precedents.
Matt Sissel, who is an artist and small-business, appealed the dismissal of his complaint alleging that the mandate violates the Commerce Clause and the Origination Clause of the Constitution. The circuit court affirmed the dismissal. The circuit court said that his contention that the mandate obligating him to buy government-approved health insurance violates the Commerce Clause fails under the Supreme Court’s interpretation of the mandate in National Federation of Independent Business v. Sebelius. The court also ruled that his contention that the mandate’s shared responsibility payment was enacted in violation of the Origination Clause fails under Supreme Court precedent interpreting that Clause.
The Origination Clause in the Constitution states that “[a]ll Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with Amendments as on other Bills.” Sissel contended that the shared responsibility payment is a bill for raising revenue and that it originated in the Senate, not the House in violation of the Origination Clause. In September, 2009, the House of Representatives passed H.R. 3590, entitled the Service Members Home Ownership Tax Act of 2009, to amend the Internal Revenue Code of 1986 to modify the first-time homebuyers credit in the case of members of the Armed Forces and certain other Federal employees. In November of 2009, the Senate gutted this bill’s contents, replacing them with health insurance reforms (including the purchase requirement and associated penalty), and renamed the bill the Patient Protection and Affordable Care Act. The substitute legislation, Sissel alleged, was a revenue-raising tax bill and the enactment of the Act violated the Origination Clause because the tax originated in the Senate and not in the House. The circuit court concluded that the shared responsibility payment is not a bill for raising revenue within the Supreme Court’s accepted meaning of that phrase and thus was not subject to the Origination Clause.
In interpreting the Origination Clause, the Supreme Court has held, in the words of a case from 1897, “revenue bills are those that levy taxes in the strict sense of the word, and are not bills for other purposes which may incidentally create revenue.” The Court has adhered to this strict interpretation in a number of subsequent cases.
The circuit court said it is beyond dispute that the paramount aim of the Affordable Care Act is to increase the number of Americans covered by health insurance and decrease the cost of health care, not to raise revenue by means of the shared responsibility payment. To the contrary, the aim of the shared responsibility payment is to encourage everyone to purchase insurance; the goal is universal coverage, not revenues from penalties. The shared responsibility payment may ultimately generate substantial revenues if people do not sign up for coverage, but those revenues are a byproduct of the Affordable Care Act’s primary aim to induce participation in health insurance plans.
Accordingly, the circuit court affirmed the dismissal of the complaint.