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Tuesday, December 14, 2010

Cuccinelli vs Obamacare: Who'll Win Mandatory Purchase Challenge?

Right Ruling Against Obamacare Doesn't Go Far Enough

Yesterday a Va. Federal Court rightly struck down as unconstitutional Obamacare’s individual mandate. But this decision is only half right. It also shows that if Congress won’t repeal this law entirely, then tinkering with it might doom our chances in court of having this whole monstrosity thrown out.

Judge Henry Hudson of the U.S. District Court for the Eastern District of Virginia held that Obamacare’s individual mandate—requiring most Americans must buy health insurance—is unconstitutional. Although states might be able to require people to buy health insurance (like they do car insurance), the federal government cannot because it’s not authorized by any provision in the U.S. Constitution.

After correctly striking down the mandate, Judge Hudson then went in the wrong direction. Virginia Attorney General Ken Cuccinelli argued that the individual mandate cannot be severed from the rest of Obamacare’s 2,700 pages. As such, striking down the mandate means you have to strike down the whole law. Judge Hudson declined to take that step.

Cuccinelli’s right, and Judge Hudson—who’s a very good judge—got this one wrong. Hudson held that the record doesn’t make clear whether Congress intended the law to survive without the mandate, and that without such a record he should only strike down the part that’s clearly unconstitutional.

That’s not what Supreme Court precedent requires. As I explained in detail in a brief I filed on behalf of the Family Research Council in the multi-state challenge to Obamacare in Florida, if a provision in a law is unconstitutional, a court must ask whether the statute can function in the manner Congress intended without the invalid part. If not, then the court must strike down the whole law.

There are two key points on this question of severability when it comes to Obamacare.

First, the law does not contain a severability clause, in which Congress announces that if part of the law is found invalid, the remaining provisions continue to carry the force of law. Courts treat a severability clause as strong evidence that Congress intended the rest of a law to survive without the unconstitutional section.

Even without a severability clause, a court still presumes an unconstitutional provision can be severed. It just doesn’t take as much to make the case that Congress would rather have no law at all.

That’s where the second point becomes critical. In Section 1501 of the Patient Protection and Affordable Care Act (Obamacare’s official name), Congress inserted a finding that the individual mandate, “is essential to creating effective health insurance markets.” Then, in their briefs and court arguments, the Justice Department admitted that the individual mandate is absolutely necessary for Obamacare to function as Congress intended.

The Virginia district court did not comment on this congressional finding and these government admissions. Taken in this context, the mandate is so intertwined with various parts of the law that a court needs to strike down many of Obamacare’s 450 sections.

Judge Hudson noted that he would have no way of knowing which provisions of Obamacare Congress intended to save without the mandate, also commenting that a number of provisions surely cannot be severed from the mandate. However, the correct course in that event is to strike down the entire law, allowing Congress to take the issue up all over again.

That raises a serious cautionary flag to Congress. The new Congress should do everything possible to repeal Obamacare entirely. However, if those efforts fail—as they likely will given that President Obama will veto any flat-out repeal, meaning a repeal couldn’t succeed before the 2012 elections—Republicans must not allow partial repeals to doom the court challenges to Obamacare.

Some moderate Democrats support a bill that would repeal the individual mandate. If that were to pass, then all of the major Obamacare lawsuits would become moot (since all of them challenge the mandate), and would be thrown out of court. Should that happen, then the rest of Obamacare would survive until 2013—or permanently.

Repeal Obamacare entirely. If Congress can’t, then it should be very careful, allowing the lawyers on these cases every opportunity to convince the Supreme Court that the individual mandate is unconstitutional, and cannot be severed from the remainder of the law.

If the Court holds the mandate unconstitutional and that it cannot be severed, then the whole law goes down, and we’ll kill this leviathan once and for all.

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Va. Federal Judge Strikes Down Health Care Law

A Federal Judge declared the Obama administration's health care law unconstitutional Monday, siding with Virginia's attorney general in a dispute that both sides agree will ultimately be decided by the U.S. Supreme Court.

Read the Va. judge's ruling on the health care law (.pdf)

U.S. District Judge Henry E. Hudson is the first federal judge to strike down the law, which has been upheld by two others in Virginia and Michigan. Several other lawsuits have been dismissed and others are pending, including one filed by 20 other states in Florida.

"The Minimum Essential Coverage Provision is neither within the letter nor the spirit of the Constitution," Hudson wrote in a 42-page decision. However, he declined to invalidate the entire healthcare law, a small victory for Obama.

The law has become a cornerstone of Obama's presidency, aiming to expand health insurance for millions more Americans while curbing costs, and his Justice Department lawyers have been sent around the country to defend it in federal courts.

The Obama administration will likely appeal.

Virginia Republican Attorney General Kenneth Cuccinelli filed a separate lawsuit in defense of a new state law that prohibits the government from forcing state residents to buy health insurance. However, the key issue was his claim that the federal law's requirement that citizens buy health insurance or pay a penalty is unconstitutional.

Hudson, a Republican who was appointed by President George W. Bush, sounded sympathetic to the state's case when he heard oral arguments in October, and the White House expected to lose this round.

Administration officials told reporters last week that a negative ruling would have virtually no impact on the law's implementation, noting that its two major provisions — the coverage mandate and the creation of new insurance markets — don't take effect until 2014.

The central issue in Virginia's lawsuit was whether the federal government has the power under the constitution to impose the insurance requirement. The Justice Department said the mandate is a proper exercise of the government's authority under the Commerce Clause.

Cuccinelli argued that while the government can regulate economic activity that substantially affects interstate commerce, the decision not to buy insurance amounts to economic inactivity that is beyond the government's reach.

Business On Obamacare: Resist, Don't Repeal

Congressional Republicans are touting plans to repeal the Obama Administration's health care reform law, but they face wariness for a full rollback from a key constituency: the business lobby.

In the weeks before the midterm elections, many Republicans used the health care law to tap into anti-government sentiment and angst about the economy. In their Pledge to America, Republican candidates committed to "repeal and replace the government takeover of health care" by any means necessary. Even John Boehner, the incoming House Speaker, filed a brief on Nov. 16 in support of a lawsuit filed by 20 states challenging the constitutionality of a central part of the new law that requires individuals to purchase health insurance. "ObamaCare is a jobkiller, and our economy simply cannot afford this unprecedented, unconstitutional power grab by the federal government," Boehner said in a statement.

But few in the business community want to embark on the grueling process of seeking a full repeal of health care reform, because they believe it will ultimately fail. Even if a repeal effort passed the Republican-led House, it would be certain to die in a Senate still dominated by Democrats. And if repeal legislation miraculously survived the Senate, President Obama would never sign it. The more viable strategy, business believes, is to try to tweak or eliminate key parts of the law. James Gelfand, the U.S. Chamber of Commerce's director of health policy, says of the new law, "We'd like it to go away. But we're business people, and we're pragmatic."

The Big Business game plan is moving forward on several key fronts. The first strike is likely to come on the provision of the law requiring businesses to file 1099 tax forms on any individual or business with which it incurs an expense of more than $600 over the course of a year, starting in 2012. Small-business owners, in particular, warn that the requirement will overwhelm them with paperwork — and, consequently, stymie job creation and economic growth. Last week, a senior Democrat, Senator Max Baucus, announced plans to file legislation repealing the 1099 portion of the law. Second, business groups will focus on new restrictions on how much individuals can deduct on nonprescription drugs, like Tylenol, using flexible spending accounts.

The business community also plans to fight new regulations that would fully implement health reform. On Nov. 17, the U.S. Chamber of Commerce's CEO, Tom Donohue, challenged what the organization calls a "regulatory tsunami" by the government, including the one created by health care. As the health care law is implemented in the coming years, the chamber predicts it will create 183 new agencies, commissions and panels. While the new law sharply expands Americans' access to health care, critics warn of the cost: a CATO Institute report claims that the law will increase taxes by nearly $670 billion in the coming decade. "We've never seen anything on this scale before," Donohue said, adding, "It defies all logic and common sense." The chamber will hire a regulatory economist and encourage its internal law firm to take a more activist posture in fighting increased regulation.

The last prong of the attack will come in congressional oversight. In the coming weeks, Republicans are expected to hold hearings on what has happened with the health care law. That may look good for the television cameras and generate headlines. It will also test the public's willingness to go further with a broader legislative rollback of the law.

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Sources: CNN, Fox News, Heritage Foundation, MSNBC, Politico, Red State, TIME, Washington Times, Youtube, Google Maps

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