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Appeals court rejects tax challenge to Obamacare

Published: Tuesday, July 29, 2014 4:20 p.m. CST

WASHINGTON (AP) — Rejecting the latest effort to sidetrack "Obamacare," a federal appeals court turned away a challenge by a conservative group that said Congress imposed new taxes unconstitutionally when it created the Affordable Care Act.

Pacific Legal Foundation and a small-business owner, Matt Sissel, argued that the Affordable Care Act is a bill for raising revenue and that it violated the Origination Clause of the Constitution because it began in the Senate, not the House. The Constitution requires that legislation to raise revenue must start in the House.

In a 3-0 ruling, the U.S. Court of Appeals for the District of Columbia Circuit said that rather than being a revenue-raising device, it is beyond dispute that the paramount aim of Obamacare is to increase the number of Americans covered by health insurance and decrease the cost of health care.

"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 appeals court decision said.

The challengers to the law said it began in the Senate when Majority Leader Harry Reid took an unrelated House bill and inserted language that became the Affordable Care Act. The original measure was designed to help veterans buy homes.

Appeals judge Judith Rogers, an appointee of President Bill Clinton, wrote the opinion for the court. The other two judges in the case — Cornelia Pillard and Robert Wilkins — are appointees of President Barack Obama.

Pacific Legal Foundation said the appeals court judges adopted a vague general purpose test for deciding which taxes have to start in the House and which do not. The Constitution, the organization said, makes no such distinction and neither does Supreme Court precedent. The group said it will pursue the issue — up to the Supreme Court if necessary.

The appeals court said the Supreme Court acknowledged that the shared responsibility payments for not signing up for coverage may ultimately generate substantial revenues — potentially $4 billion in annual income for the government by 2017.

But those revenues are a byproduct of the Affordable Care Act's primary aim to induce participation in health insurance plans, said the appeals court. Successful operation of Obamacare, the appeals court pointed out, would mean less revenue from the shared responsibility payments, not more.

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Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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