A just-released memo from the Congressional Research Service (CRS) raises fresh constitutional concerns about a provision in President Obama’s health-care law that could impose tens of millions of dollars in fines on Congress, state and local governments.
As reported by The Daily Caller, Congress could be fined up to $50 million annually by its own health-care law if low-level aides apply for government subsidies to help pay their health-care costs.
The new memo from Congress’s research arm states that state and local governments would be on the hook for such fines as well – but argues those fines may be unconstitutional under Supreme Court precedents on federalism.
The issue is important because a slew of states are challenging the health-care law’s legality in court. If governments were found to be exempt in court, a ruling could establish one set of rules for the private sector and another more lenient set for the rapidly expanding public sector.
The April 29 memo, sent to top House conservative Rep. Tom Price, Georgia Republican, and obtained exclusively by The Daily Caller, is inconclusive about whether the health-care law will withstand constitutional scrutiny in court on the provision in question. On one potential challenge, CRS says the argument is “unlikely” to be successful in court. On another, CRS says recent rulings “might suggest” the Supreme Court would look harshly at the relevant provision in the law.
Uncertainty is providing fodder for critics of the health-care law who charge Democratic leaders did not fully think out a written bill negotiated behind Sen. Harry Reid’s, Nevada Democrat, closed doors.
A spokesperson for Speaker Nancy Pelosi admitted the government would be considered an “employer” under the law, thus subject to the fines. “The health-care legislation signed into law makes it clear that all employees, wherever they work, are treated the same and have access to health care,” Nadeam Elshami said. But neither the speaker’s nor Reid’s offices offered comment on the constitutional concerns. “We haven’t seen the memo until now, but stand by the bill,” one aide said.
Privately, a second Democratic aide questioned whether the health-care law will ensnare Congress and local governments in the fines, thinking the law will be implemented to avoid such an outcome. The source said exempting the public sector would be politically difficult because it would look hypocritical.
Specifically, the CRS memo says the health-care law may be unconstitutional under the Tenth Amendment under two legal doctrines the Supreme Court has developed under that constitutional amendment: the “commandeering” doctrine and intergovernmental tax immunity.
The Tenth Amendment says: “Powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”
“While this language would appear to represent one of the clearest examples of a federalist principle in the Constitution, the Supreme Court has been inconsistent in deciding how the Amendment limits Congress’s ability, through the regulation of interstate commerce, to influence the states’ exercise of their own powers,” the memo says.
In 1976, the Supreme Court ruled applying minimum wage laws to state government employees was unconstitutional under the Tenth Amendment because deciding the wages of its employees was a “traditional governmental function” reserved to states. Nine years later the high court overturned its own decision in Garcia v. San Antonio Metropolitan Transit Authority, ruling that the Fair Labor Standards Act could indeed be applied to state and local governments, asking state governments to seek recourse through the political process, not the courts.
Even under the Garcia precedent the Supreme Court has “recognized certain constitutional limits on the manner in which the federal government may influence the states’ activities. Specifically, the Court has not looked favorably upon Congress’s efforts to ‘commandeer’ state legislative or executive branch powers to serve federal ends,” the CRS memo says.
Under the high court’s decisions on “commandeering,” “[o]ne might make the argument that a state might be coerced into modifying the health insurance offered to its employees in order to avoid the employer mandate penalty,” the CRS memo says, but decisions on similar circumstances make it “unlikely that a court would find that the employer mandate presented a clear case of unconstitutional commandeering.”
Another Tenth Amendment concern is intergovernmental tax immunity doctrine, the CRS memo says. Generally speaking, state governments cannot levy a tax on the federal government, and the federal government is limited in what taxes it can levy on states.
On this issue, the Supreme Court’s “seminal” case was decided in 1946 when the court upheld a federal tax on the sale of mineral water by New York. A splintered court could not agree on a single majority decision. Instead, “[t]wo Justices seemed to suggest that a nondiscriminatory tax would generally be permissible, while four Justices appeared to recognize a further limitation, stating that a nondiscriminatory tax could be unconstitutional if it ‘interfere[s] unduly with the state’s performance of its sovereign functions of government’,” the CRS memo says.
The modern Supreme Court has recently referenced the 1946 case, New York v. United States, in a way that “might suggest that some nondiscriminatory federal taxes which are collected directly from the states may still raise concerns about state immunity from federal taxation,” the CRS memo says.
The Supreme Court “has not clearly enunciated a standard to answer this question,” the CRS memo says, but if it applied the four Justice decision to the health care law’s employer fines it would subject the law to more vigorous scrutiny.
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