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Employer Mandate Under Fire

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The Patient Protection and Affordable Care Act (PPACA) came under heavy fire at a hearing today before a House health panel, with witnesses calling the law unconstitutional and saying it is an inappropriate subsidy for health insurers and the insured.

Witnesses said the legislation will raise employment costs when fully implemented in 2014 and that the “individual mandate is not a tax because its primary purpose is to punish, not to raise revenue.”

Ironically, the only PPACA supporter to testify at the hearing cited the 1944 Supreme Court case, United States v. South-Eastern Underwriters Ass’n.

The 1944 decision prompted Congress to enact the McCarran-Ferguson Act.

That law reserves insurance regulation to the states. “It is common ground on all sides of the ACA litigation that the Commerce Clause gives Congress broad authority to regulate insurance,” stated Neil S. Siegel a professor of law and political science at the Duke University Law School.

“It is thus also undisputed in the litigation that Congress has the constitutional authority to guarantee access to health insurance in the ACA by prohibiting insurance companies from denying coverage based on preexisting conditions, canceling insurance absent fraud, charging higher premiums based on medical history, and imposing lifetime limits on benefits,” Siegal said.

The hearing, the Individual and Employee Mandates in the Democrats’ Health Care Law, was held by the Health Subcommittee of the House Ways and Means Committee.

The panel is chaired by Rep. Wally Herger, R-Calif.

Critics of the law included Carrie Severino, chief counsel and policy director of the Judicial Crisis Network.

She said the Obama administration’s expansive interpretation of its authority in the PPACA “goes against 200 years of history and all Supreme Court precedent.”

“As both the Congressional Research Service and the Congressional Budget Office have observed, the PPACA is entirely without precedent insofar as it mandates individuals to enter a stream of commerce,” Severino said. “The fact that, over the course of two centuries, Congress never used this purported power to compel purchases, suggests that Congress never has understood itself to have this power in the first place.”

“Even under the Supreme Court’s broadest reading of the Commerce Clause, no law and no case has yet attempted to compel individuals to enter a market under the guise of ‘regulating’ that market,” Severino said.

And, in citing concerns also voiced by Justice Anthony Kennedy during oral arguments on the case Monday, Severino said that another problem with the administration’s interpretation of the Commerce Clause is that it lacks any limiting principle.

“The Supreme Court’s Commerce Clause jurisprudence has emphasized that government’s power must have a stopping point to be constitutional, precisely because the court recognizes the structural limits on our government as the preeminent constitutional guarantee of individual liberty.”

In his testimony, Steven G. Bradbury, a partner at Dechert LLP, argues that the real reason the individual mandate was enacted was not to stop cost-shifting, “but to compel millions of Americans to pay more for health insurance than they receive in benefits in order to subsidize both the voluntarily insured and the insurers, and thereby to mitigate the steep rise in insurance premiums that would otherwise be caused by the law itself.” 

“The data belie the government’s claim that the individual mandate is constitutional on the ground that it regulates economic conduct with a substantial effect on interstate commerce,”  Bradbury said.

Diana Furchtgott-Roth, a senior fellow at the Manhattan Institute for Policy Research, New York, asked, “Could it be that the $2,000 per worker penalty in the new health care law, effective 2014 and levied on employers who do not provide the right kind of health insurance, is discouraging hiring?”

She testified that the law will raise the cost of employment when fully implemented in 2014.

“Companies with 50 or more workers will be required to offer a generous health insurance package, with no lifetime caps and no copayments for routine visits, or pay an annual penalty of $2,000 for each full-time worker,” she testified.

“This penalty raises significantly the cost of employing full-time workers, especially low-skill workers, because the penalty is a higher proportion of their compensation than for high-skill workers, and employers cannot take the penalty out of employee compensation packages,” she said.


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