Notice & Comment

The D.C. Circuit splits over the ACA and the Origination Clause

Back in July 2014, a panel of three D.C. Circuit judges on the rejected Sissel v. HHS, the big Origination Clause challenge to the Affordable Care Act. In the plaintiffs’ view, the ACA didn’t comply with the Origination Clause, which requires all bills for raising revenue to “originate” in the House of Representatives. As such, the plaintiffs said, the ACA is null and void.

All was quiet until last Friday, when the D.C. Circuit issued an order refusing to rehear the case before the full court. By itself, that wasn’t surprising. The court takes very few cases en banc. What was surprising was a lengthy dissent from the court’s four Republican-appointed judges explaining why, in their view, the full court should rehear the case.

These sorts of dissents are uncommon. Judges typically don’t write separate opinions when they’re outvoted. But this dissent was especially unusual because the four judges agreed with the panel that the case lacked merit. They just thought that the panel didn’t decide the case in the right way.

Here’s what’s going on. As I explained last June, there are two major arguments for dismissing the Origination Clause challenge.

First, the Origination Clause only matters if the ACA is a bill for “raising Revenue.” It probably isn’t, even though it imposes a bunch of different taxes. The Supreme Court has long adhered to the principle 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.” In other words, a bill that just raises taxes is a revenue bill. A bill with a different “primary purpose”—say, extending health insurance coverage to tens of millions of people—is not a bill for “raising Revenue,” even if the bill also imposes some taxes.

Second, the bill that became the ACA both originated in the House and raised revenue—again, about $1 billion worth. [The Senate then deleted the content of that bill, which was on another topic altogether, and replaced it with the ACA.] Although the challengers argue that there must be a direct, substantive connection between the Senate bill and the House bill, there’s no “germaneness” requirement in the Origination Clause. Nor would such a requirement be judicially manageable. How would a court know when a Senate amendment differed “too much” from a House-originated bill?

The panel adopted the first approach. It held that the ACA isn’t primarily a bill for raising revenue, even though it does raise revenue. Instead, it’s a bill that makes health insurance available to millions of people. As such, it didn’t need to originate in the House.

Judge Kavanaugh’s opinion on behalf of the four conservative judges criticizes the panel for adopting this purpose-based approach to the Origination Clause. The implication of the panel’s opinion, he says, is that Congress can lump tax bills with other, substantive legislation and—voilá—avoid the Origination Clause.

Kavanaugh also thinks the panel makes too much of earlier Supreme Court cases that dismissed Origination Clause suits because the “primary purpose” of the challenged law wasn’t to raise revenue. Each of those cases, he points out, involved statutes that imposed modest taxes and devoted the collected receipts to a specific program. The ACA, in contrast, imposes enormous taxes and uses them to fund all sorts of government programs, including but not limited to programs created under the ACA.

Kavanuagh’s opinion is in many respects compelling; indeed, he’s persuaded me that the existing case law offers thin support for the panel’s purpose-based approach. And he’s absolutely right that its opinion drains the Origination Clause of much of its force.

But here’s the thing: so too would Kavanaugh’s approach. Even on his view, the Senate is free to scoop out the content of a House-originated revenue bill and replace it with whatever taxes it wants. Kavanaugh is alive to the concern, and he makes some noises about how “a flawed judicial decision will often influence the give-and-take of congressional practice.”

I’m not so sure. Even if the Supreme Court were to embrace the panel’s decision, the Senate would be foolish to originate a bill that raises revenue. The prudent course would still be to adhere to the costless formality of amending a House-originated revenue bill. That’s why I suspect that the legislative conventions surrounding the Origination Clause are neither the product of, nor likely to be displaced by, what the courts say about it.

In any event I have a hard time getting as worked up as Judge Kavanaugh about the panel’s reasoning. I don’t read his opinion as a serious bid to get the Supreme Court to take the case. Everyone agrees that the outcome of the case is right, and the justices can’t possibly have the appetite to pull the country through another wrenching fight over the ACA. (Although if King had come out the other way, maybe Sissel would have been the coup de grâce for the ACA?)

Instead, I think Kavanaugh just wants to signal—loudly—that the panel’s decision is open to question. Given that the Origination Clause isn’t litigated often, he may not have another opportunity to do so. And so his dissent will serve as a placeholder, sort of like Chekhov’s shotgun on the wall. It won’t go off today. But maybe, just maybe, it’ll go off in the next chapter.

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