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Lawsuits Challenging Obamacare Roll On as Uncertainty Mounts

Obamacare’s “meat and potatoes” is the January 1, 2014 implementation of (1) Medicaid Expansion and (2) insurance coverage through Health Insurance Exchanges.  These programs would dramatically increase the number of American’s with access to healthcare.

The obstacles facing this unprecedented social experiment are many.

This would be true even if the nation was pulling together for Obamacare’s success. Many rabidly oppose it.

Ferociously posturing partisans will not determine Obamacare’s fate. It will fail for lack of sufficient participation and support unless the Administration can better explain the fundamentals of this program. Too many reasonable American individuals and businesses do not understand it. And they are understandably troubled by the appearance—and perhaps the reality—of clutter, confusion and uncertainty.

Today, we read that we may be about to embark on a federal mission to map the human brain. This is really exciting. But, first, it is the time for the Administration to share its map for achieving its January 1, 2014 Obamacare milestones.

What about all these lawsuits?

Some may harbor the belief that the United States Supreme Court resolved the constitutionality of Obamacare last summer in National Federation of Independent Business v. Sebelius, 132 S.Ct. 2566(2012). This belief is badly misplaced. Lawsuits challenging Obamacare are far from over. The ultimate resolution of any of these lawsuits has far less immediate impact then the uncertainty they are creating.

For the sake of argument only, let us assume this litigation is purely obstructionist. Still, it is exists. It attacks foundational elements of Obamacare. How might these lawsuits affect the individuals and businesses that must plan right now to make important health insurance coverage decisions in a very short time? The Administration should provide at least minimal factual information about these suits. This effort alone might decrease uncertainty. Hoarding any information about Obamacare this close to the opening curtain is difficult to understand.

An example of two legal attacks on Obamacare follows.

Challenges to Individual Mandate

Sixth Circuit: U.S. Citizens Association v. Sebelius, Nos. 11-3327/3798 (6th Cir. February 1, 2013)

We were recently reminded that even the individual mandate—that was directly addressed by the United States Supreme Court–is still under Constitutional attack.   The United States Sixth Circuit Court of Appeals just rejected just such an attack in U.S. Citizens Association v. Sebelius, Nos. 11-3327/3798 (6th Cir. February 1, 2013). The lawsuit, of course, remains pending. It can be further pursued in the Circuit Court, and potentially in the Unites States Supreme Court.

On the other hand, it seems quite a legal reach. It is grounded on the theory that Obamacare forces “traditional” medical treatment on people who have other ideas about the proper treatment or prevention of illness. And National Federation of Independent Business rather clearly held that Obamacare does not force health insurance on anyone. Instead, it imposes a constitutional tax on those who chose not to purchase insurance.

The lead plaintiff, U.S. Citizens Association, “notes that it devotes itself to the preservation of conservative values. . . .” In this case, some members of that group argue that the individual mandate would force them to purchase “traditional health insurance policies.” Those folks say they question the effectiveness of “traditional medicine” and prefer types of healthcare “not covered by traditional health insurance policies.”   As a result, they believe Obamacare infringes their constitutional rights to freedom of expressive and intimate association, liberty, and privacy.

The First Amendment right to freedom of association is not infringed by the individual mandate.

          They Sixth Circuit held that (1) no individual plaintiff proved that they possess a right of intimate association that is infringed by the individual mandate, and (2) U.S. Citizens Association failed to explain its size, purpose, policies, selectivity and congeniality establish a protected right to intimate association. Moreover, the Court found nothing about the individual mandate that prevents plaintiffs from choosing their own medical professionals or forcing them to associate with any particular medical professional. Referring to National Federation of Independent Business, the Court wrote:

The individual mandate simply requires most Americans to maintain a minimum level of health insurance coverage or make the shared responsibility payment.

132 S. CT. at 2580, 2595-96

The First Amendment freedom of expressive association is not infringed by the individual mandate.

U.S. Citizens Association, according to the Sixth Circuit, appears a group protected by the right to associate for the purpose of speaking, but failed to show how the individual mandate infringes this right. So, it rejected that argument.

The right to liberty encompassed in the Due Process Clause of the Fifth Amendment is not infringed by the individual mandate.

The Court noted that U.S. Citizens Association had not and could not even make this claim. And it found meritless the individual members’ assertion of a fundamental right necessary to invoke the Due Process Clause. Those members failed to show a fundamental freedom to remain uninsured or avoid the shared responsibility payment. Referencing Washington v. Glucksberg, 521 U.S. 702, 720-22 (1997), the Court wrote, “An alleged fundamental right must be carefully formulated and it must be ‘objectively, deeply rooted in this Nation’s history and tradition, and implicit in the concept of ordered liberty, such that neither liberty nor justice would exist if they were sacrificed.’”

The right to privacy is not infringed by the individual mandate.

Plaintiffs alleged that the individual mandate violates their right to privacy by forcing them to disclose confidential medical information to their insurers who would be compelled to provide it to the State. In making this argument, plaintiffs invoked the First, Third, Fourth, Fifth and Ninth Amendments. The Court rejected this final constitutional attack. First, the individual mandate does not actually require disclosure of medical information to insurance companies. Second, if it did, Whalen v. Roe, 429 U. S. 429 U.S. 589 (1977) “dispenses” with the objection that this unconstitutionally infringes on the right to privacy. Third, plaintiffs are free to eliminate any privacy concern by making the shared responsibility payment. Fourth, plaintiffs failed to allege specific facts to support any claimed injury that would result from disclosing private health insurance information to insurance companies.


Eastern District of Oklahoma: State of Oklahoma v. Sebelius, CIV: 11-030-RAW (EDOK 2011)


Oklahoma filed its original lawsuit challenging the individual mandate January 21, 2011, basing its challenge on alleged infringement of the Commerce and the Necessary and Proper clauses. The lawsuit was stayed, pending the Supreme Court’s resolution of National Federation of Independent Business decision.

The stay has been lifted, and, Oklahoma has adjusted its approach in an Amended Complaint filed September 19, 2012.

Oklahoma clings to its Commerce and Necessary and Proper Clauses arguments based on its state constitution

Oklahoma, to “preserve the freedom of Oklahomans,” amended its own constitution, prohibiting a law or rule that compels a person, employer or health care provider “to participate in any health care system.” As Oklahoma reads National Federation of Independent Business, it “recognizes” that its state constitution is “valid as a protection against mandated purchases of health insurance.”

Oklahoma insists that its refusal to set up a Health Insurance Exchange entitles it to a “competitive advantage” and protests the loss of this entitlement

The September 2012 amendment to Oklahoma’s lawsuit is, at the very least, entertaining. It rests on this bedrock:  As written, Obamacare places a state that chose to implement its own Health Insurance Exchange “at a competitive disadvantage for jobs and job growth.” Apparently, the argument is that Congress did this intentionally.

This argument goes like this: Only people residing in states that elected to participate in an Obamacare Health Insurance Exchange are entitled to a premium tax credit: No Oklahoman, therefore, can receive a premium tax credit. And, as a necessary trigger to employer penalties for providing no or inadequate health insurance is at least one employee who applies for and receives a premium tax credit, Oklahoma employers have no obligation to provide health insurance that complies with Obamacare. Hence, the competitive advantage that Oklahoma views as its entitlement: It did not choose to set up a Health Insurance Exchange and its employers a free to provide no insurance or inadequate insurance as a reward for the state not cooperating with Obamacare.  As said, the argument is entertaining.

Oklahoma attacks the IRS rule under code section 36B as infringing on its sovereign entitlement to its competitive advantage. The challenged IRS rule allows all people with sufficiently low incomes to receive a premium tax credit regardless of whether their state elected to run its own Health Insurance Exchange or refused to do so and their Health Insurance Exchange is run by a federally-facilitated exchange.  This IRS rule, Oklahoma argues, is inconsistent with Act, violates the Administrative Procedures Act, and tramples the Tenth amendment.

This interesting matter remains before the district court, and activity is centered currently centered on the government’s motion to dismiss.

Next we will discuss the ‘‘faith-based” challenges to Obamacare. All the while, the over-arching point is the Administration’s curious unwillingness to discuss its “signature legislation.” Its continued failure to do so poses the gravest threat to Obamacare. The lawsuits discussed serve their purpose well. They add to an ever-growing public sense of uncertainty about the program.

© Jack Edward Urquhart February 19, 2013