Contributor, The Volokh Conspiracy

Today the U.S. Court of Appeals for the District of Columbia Circuit rejected a petition for rehearing en banc in Sissel v. U.S. Dept. of Health and Human Services, another constitutional challenge to the Patient Protection and Affordable Care Act (ACA).  The plaintiffs allege the ACA violates the Origination Clause of the U.S. Constitution because it is a bill for raising revenue and did not originate in the House of Representatives. The Origination Clause in Article I, Section 7, provides “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.”

Last year, a three-judge panel rejected the challenge, concluding that although the ACA raises substantial revenue and the individual mandate was ultimately sustained by the Supreme Court as an exercise of the taxing power, the ACA was not properly considered a “Bill for raising Revenue” under the clause because any revenue-raising in the act is “incidental” to its primary purposes.

On review of a petition for rehearing en banc, the full D.C. Circuit was unanimous that the plaintiffs’ challenge must fail, but disagreed sharply on the rationale. Judge Kavanaugh, joined by Judges Henderson, Brown and Griffith, dissented from the denial of en banc on the grounds that the original three-judge panel erred in its Origination Clause challenge.  According to Kavanaugh, the ACA is a “Bill for raising Revenue,” but satisfied the Origination Clause because the bill formally originated in the House. (For what it’s worth, I suggested that this was the reason any such challenges would have a difficult time when commenting on another D.C. Circuit decision in a challenge involving the Origination Clause last year.)

Here is how Judge Kavanaugh’s 32-page dissent begins:

This case raises a serious constitutional question about the 2010 Affordable Care Act, one of the most consequential laws ever enacted by Congress. Did Congress’s enactment of the Act comport with the Origination Clause of the Constitution? The Origination Clause provides: “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.” U.S. Const. art. 1, § 7, cl. 1. The Origination Clause therefore requires that bills for “raising Revenue” originate in the House of Representatives. Revenue bills may be amended in the Senate “as on other Bills,” but they must originate in the House. If the Affordable Care Act did not meet the requirements of the Origination Clause, then the Act – or at least revenue-raising provisions such as the individual mandate – must be invalidated.

In my view, the Affordable Care Act complied with the Origination Clause, but not for the reason articulated by the three-judge panel opinion. The panel opinion concluded that the Affordable Care Act was not a revenue-raising bill for purposes of the Origination Clause and therefore did not have to originate in the House. In my respectful view, that conclusion is untenable. The Affordable Care Act established new subsidies for the purchase of health insurance and expanded the Medicaid program for low-income Americans. Those new subsidies and expanded entitlements cost an enormous amount of money. So as not to increase the annual budget deficit and the overall national debt, the Act imposed numerous taxes to raise revenue. Lots of revenue. $473 billion in revenue over 10 years. It is difficult to say with a straight face that a bill raising $473 billion in revenue is not a “Bill for raising Revenue.”

The Affordable Care Act therefore was a revenue-raising bill subject to the Origination Clause. That said, the Act did in fact originate in the House, as required by the Clause. Although the original House bill was amended and its language replaced in the Senate, such Senate amendments are permissible under the Clause’s text and precedent.

So in concluding that the Affordable Care Act complied with the Origination Clause, the panel opinion reached the right bottom line, but relied on what I see as a faulty rationale. Does such a case still warrant en banc review? Oftentimes no, but here yes. The panel opinion sets a constitutional precedent that is too important to let linger and metastasize. Although no doubt viewed by some today as a trivial or anachronistic annoyance, the Origination Clause was an integral part of the Framers’ blueprint for protecting the people from excessive federal taxation. It is true that the Framers’ decision to grant the Senate a broad amendment power gave the Origination Clause less bite than it otherwise might have had. But the Clause nonetheless has been important historically and remains vital in the modern legislative process. By newly exempting a substantial swath of tax legislation from the Origination Clause, the panel opinion degrades the House’s origination authority in a way contrary to the Constitution’s text and history, and contrary to congressional practice. As a result, the panel opinion upsets the longstanding balance of power between the House and the Senate regarding the initiation of tax legislation. Therefore, I would grant rehearing en banc. In my respectful view, the en banc Court should vacate the panel opinion and rule for the Government on the ground that the Affordable Care Act originated in the House and thereby complied with the Origination Clause.

At oral argument in the Supreme Court’s most recent Origination Clause case some years ago, United States v. Munoz-Flores, 495 U.S. 385 (1990), Justice O’Connor posed a hypothetical about a national highway funding bill that increased income taxes to be paid into the general treasury “for that purpose” – that is, to “support the road building.” That hypothetical almost precisely tracks the Origination Clause issue we face in this case. The hypothetical was not presented in Munoz-Flores, but Justice O’Connor asked about it to test the limits of the Government’s theory. The Government attorney dutifully claimed (then as now) that such a hypothetical bill would not be subject to the Origination Clause. Justice O’Connor responded: “Well, that’s a pretty extreme position.” True then. And true now.

Judges Rogers, Wilkins and Pillard, who sat on the original three-judge panel, issued an equally lengthy opinion defending their original ruling and concurring in the D.C. Circuit’s decision to deny the petition for rehearing en banc. From the introduction to their joint opinion:

Doctrinal and prudential reasons counseled against relying on the alternative ground that the dissent proposes the en banc court adopt. Among other things, the panel’s narrow course avoided more categorical and less historically rooted holdings that the dissent’s approach would require: (1) that all bills containing tax provisions that do not designate the funds raised for use by a specified government program implicate the Origination Clause, and (2) that the Senate may amend House-originated revenue bills without limit. The former is contrary to the best reading of governing law, which does not support application of the Origination Clause to legislation like the ACA. The latter may be contrary to congressional practice or, relatedly, be perceived as judicial endorsement of treating the Origination Clause as empty formalism. The panel found no reason to tread on such infirm ground. The dissent disagrees, and in doing so occasions this response.

The dissent misreads the Supreme Court’s Origination Clause precedent. The novel approach proposed by the dissent—exempting bills that levy taxes from the Origination Clause where they designate the funds for exclusive use by a particular government program—is also flawed for a number of other reasons. Textually, the dissent asserts that the Origination Clause “unmistakably embraces all bills that are intended to raise revenue.” Dissent 13. The dissent provides no satisfying explanation why bills that raise revenue designated for expenditure only on specified programs—and only such bills—are outside the Clause, nor how the Clause’s text forecloses the panel’s interpretation. See Dissent 13, 17-20. The dissent’s analysis of congressional practice suffers from the same defect. The House of Representatives has at times interpreted the Clause more broadly than does the Supreme Court, the panel, or the dissent, and it retains the prerogative to do so. The dissent’s discussion of the history of the Constitution’s ratification as relevant to the Origination Clause analysis omits essential context that undercuts the dissent’s conclusions. See Dissent 13-16, 25-28. We take up the dissent’s principal concerns below.

Rick Hasen has more here, including some speculation about the potential for Supreme Court review of this question.