Did Congress pass Obamacare the right way? Court dismisses lawsuit.

The Supreme Court upheld the individual mandate citing Congress's tax-writing authority, the lawsuit noted. But the federal appeals court said Obamacare's purpose is not to raise revenue, so it did not have to originate in the House.

A federal appeals court on Tuesday dismissed a lawsuit that sought to invalidate the president’s health-care reform law on grounds that the massive piece of legislation did not originate in the House of Representatives as required by the Constitution.

A three-judge panel of the US Circuit Court of Appeals for the District of Columbia rejected the lawsuit filed on behalf of an Iowa artist and part-time National Guardsman.

The artist, Matt Sissel, pays for medical expenses out of pocket and does not want to be forced to purchase a required level of health insurance or pay a tax to the government.

He challenged the constitutionality of the Affordable Care Act, charging, in part, that Congress followed improper procedure by initiating the health-care law in the Senate rather than the House.

The Constitution’s Origination Clause says: “All Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with Amendments as on other Bills.”

The provision is intended to ensure that any effort by Congress to raise money from the American people must first receive the approval of those lawmakers closest to the people – and presumably more receptive to the wishes and concerns of voters.

The ACA’s journey from debate to bill to law was somewhat unusual. What would become the ACA was actually drafted in the Senate. Senate Democrats then gutted a bill that passed the House – offering tax credits to military veterans buying a first home – jettisoning every provision of that measure. All that remained was the designation – HR 3590.

Into that empty shell the Senate poured the full contents of what became the Patient Protection and Affordable Care Act. The approved Senate version was then sent to the House for approval.

Sissel’s lawyers noted that in 2012, Chief Justice John Roberts upheld the Affordable Care Act’s individual mandate on the grounds that it was enacted under Congress’s taxing authority.

They argued that if the ACA is a tax, it had to have been passed by Congress in compliance with the Origination Clause.

In rejecting that argument, the appeals court panel said the ACA is not subject to the terms of the Origination Clause because the ACA is not a “bill for raising revenue.”

As such, the court said it had no reason to conduct a detailed examination of how the ACA was passed in Congress.

In dismissing the lawsuit, the appeals court said the purpose of the underlying bill was critical to determine whether the Origination Clause would apply.

“After the Supreme Court decision [upholding the ACA], 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,” Judge Judith Rogers wrote for the court.

Judge Rogers acknowledged that although the ACA’s individual mandate might raise up to $4 billion a year by 2017, “it is plainly designed to expand health insurance coverage,” rather than to raise revenue.

The upshot of the appeals court’s ruling is that the ACA’s required payment for failing to purchase health insurance is a “tax” significant enough to support Congress’s authority to pass such a measure, according to the US Supreme Court. But the required payment does not qualify as “tax” for constitutional provisions dictating how Congress passes such legislation, according to the DC Circuit court.

Two of the judges on the appeals court panel were appointed by President Obama. Rogers was appointed by President Clinton.

“The mere fact that [the individual insurance mandate] may have been enacted solely pursuant to Congress’s taxing power does not compel the conclusion that the entire Affordable Care Act is a bill for raising revenue subject to the Origination Clause,” Rogers wrote.

“Where, as here, the Supreme Court has concluded that a provision’s revenue-raising function is incidental to its primary purpose, the Origination Clause does not apply,” she said.

One of Sissel’s lawyers, Timothy Sandefur of the conservative Pacific Legal Foundation, said the court’s decision was “disappointing.” He suggested they were considering filing an appeal to the US Supreme Court.

Mr. Sandefur said the appeals court relied on “a new and unprecedented distinction to exempt the Obamacare tax from the Constitution’s rules for enacting taxes.”

“The Constitution makes no such distinction, and neither does Supreme Court precedent,” Sandefur said in a statement.

“The precedents say that the only kinds of taxes that don’t have to originate in the House are penalties and fines,” he said. “But the Supreme Court itself ruled in 2012 that Obamacare’s individual mandate is not a penalty or a fine. So the Origination Clause should therefore apply.”

Sandefur added: “The DC Circuit for the first time holds that judges can decide for themselves what the ‘main object or aim’ of a tax is, and then pick and choose whether the constitutional rules on the enactment of new taxation should apply. We think that’s wrong, and that’s what we’ll be taking to the Supreme Court if necessary.”

The case is Sissel v. US Department of Health and Human Services (13-5202).