By Stephen Dinan and Tom Howell Jr.
The Washington Times
Updated: 12:29 p.m. on Tuesday, July 29, 2014
A key appeals court on Tuesday ruled that despite including a tax, Obamacare doesn't violate the Constitution's requirement that all tax bills originate in the House of Representatives, giving the Obama administration another health care win.
The three-judge panel of the U.S. Circuit Court of Appeals for the District of Columbia said that the Obamacare tax was "incidental" to the primary purpose of the Affordable Care Act, so it isn't a revenue-raising measure as envisioned by the Constitution.
"Some exercises of the taxing power are not subject to the Origination Clause," the unanimous panel concluded.
The issue had been in doubt after Chief Justice John G. Roberts Jr.'s surprise decision two years ago saying that while Obamacare wasn't allowed under Congress's powers to control interstate commerce, it was valid as an exercise of Congress's taxing power.
Since the key language of Obamacare came from the Senate, opponents then said it violated another part of the Constitution that requires tax bills — or, more specifically, revenue-raising measures — to begin in the House.
But the judges ruled that not all bills that increase taxes are considered revenue-raising bills. They said the tax must be the primary purpose.
"In interpreting the Origination Clause, the Supreme Court has held from the early days of this nation that '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 judges ruled.
The case involved a plaintiff named Matt Sissel, a Washington State artist who also served part-time in the National Guard. Mr. Sissel said he did not want to pay for health coverage as required by Obamacare's "individual mandate" and that he could pay for his medical expenses out of pocket, according to court papers.
The Pacific Legal Foundation, which argued the case, is "disappointed in the panel's decision," said principal attorney Paul Beard.
"We think they got the merits portion of it wrong that this actually was a bill for raising revenue," he said in an interview.
Although origination-clause challenges, historically, have been a tough sell in the courts, the foundation feels Obamacare paved new ground.
"It's so unprecedented in terms of the scope of the bill, the amount of revenues it actually raises, and just sort of the blatant way the Senate circumvented the origination clause in our view," Mr. Beard said.
Moving forward, the foundation plans to ask the entire D.C. Circuit to review the case, hoping to produce a strong voice of dissent that could cue up the next round of appeals even if the Democrat-leaning court upholds the panel's decision.
"We're definitely going to try to take this up to the Supreme Court review," he said.
Last week, the D.C. circuit issued a ruling that dented Obamacare, with another three-judge panel deciding that the health law's insurance subsidies can only be paid to individuals who sign up in states that run their own exchanges. That excludes the two-thirds of states that opted to rely on the federal HealthCare.gov exchange instead.
The 2-to-1 decision featured a pair of Republican-appointed judges in the majority and a Democrat appointee in dissent. Hours after their ruling, three Democratic appointees on the 4th Circuit in Richmond unanimously sided with the Obama administration's position that subsidies should flow to all states.
Tuesday's ruling continued that trend, with three Democratic appointees finding in favor of the administration.
Circuit Judge Judith W. Rogers, who wrote the opinion for the court, had been nominated by President Bill Clinton, while judges Cornelia "Nina" Pillard and Robert L. Wilkins were Obama nominees at the heart of a Senate squabble last year over the Democratic leaders' decision to use the "nuclear option" to overcome Republican filibusters with a majority vote.