These Six Court Cases Could Cripple Obamacare

Analysis: Affordable Care Act Faces 100 Pending Lawsuits

February 13, 2014

Around one hundred lawsuits challenging the president’s signature policy achievement are currently making their way through the courts.

Some of these lawsuits challenge very specific parts of the law, while others are challenging the law in its entirety. Here is a list of the six major legal challenges to the law.

1. Legal Taking of Private Property

Health and Human Services Secretary Kathleen Sebelius / AP
Health and Human Services Secretary Kathleen Sebelius / AP

Hotze v. Sebelius challenges the constitutionality of the employer mandate. The Fifth Amendment prohibits the government from taking private property for public use without "just compensation." Steve Hotze, a doctor in Texas, is arguing that Obamacare violates this "takings clause" by mandating that his business give money to another business, specifically an insurance company, without any compensation.

Hotze filed his lawsuit in May. If the suit were successful, the employer mandate—which requires businesses with over 50 full-time employees to provide affordable insurance to their employees—would be struck down.

A district court in Texas ruled against Hotze on January 10 by calling the Obamacare business mandate a tax and not a "taking" under the Fifth Amendment. The judge based her decision on the Supreme Court’s ruling in 2012, which characterized the individual mandate as a tax. Hotze is appealing the ruling.

2. Origination Clause


Hotze is also challenging the law’s constitutionality under the Constitution’s "origination clause," which requires that all spending bills originate in the House of Representatives. The substance of Obamacare was first introduced in the Senate by replacing the text of an unrelated bill that came from the House.

Matthew Sissel and the Pacific Legal Foundation are also making this argument in Sissel v. U.S. Department of Health and Human Services. Hotze lost his case based on this argument, as did Sissel in a D.C. district court. Sissel, like Hotze, is appealing.

Should this argument succeed, the whole law would be struck down.

3. Separation of Powers


Another lawsuit is challenging the law’s attempt to consolidate some legislative power in an executive agency. Obamacare creates the Independent Payment Advisory Board (IPAB), which will make cost-saving cuts to Medicare that Congress can only override with a strong majority and with equal cuts.

The case, Coons v. Lew, challenges the legality of the IPAB on the grounds that it violates the Constitution’s separation of powers. The Goldwater Institute, an Arizona-based think tank, is sponsoring the challenge.

This lawsuit is much more targeted than the other suits. Obamacare does not rely on the IPAB to function, and so the rest of the law would still stand if the IPAB were ruled illegal.

The plaintiffs have lost in federal court and are appealing to the 9th Circuit Court of Appeals. Oral arguments before a three-judge panel were set for the end of January, but they were unexpectedly delayed.

4. Subsidies to Congressional Staff

Capitol Hill

Obamacare requires members of Congress and their staff to buy insurance on the law’s new exchanges. By having to buy insurance on their own, Congressmen and their staff would be losing a valuable benefit, since the federal government was paying about 75 percent of the cost of insurance.

The Obama administration decided last August to let the federal government continue subsidizing the health insurance of staff members who buy insurance on the exchanges, even though this is not explicitly allowed by the law. Under the administration’s rule, the federal government could help Congress and their staff buy insurance on the District of Columbia’s small business, or SHOP, exchange.

Sen. Ron Johnson (R., Wis.) and the Wisconsin Institute for Law and Liberty (WILL) launched a lawsuit in a federal district court in Wisconsin challenging the administration’s new rule. Johnson and WILL are arguing that the administration’s decision is not justified under any law and unfairly benefits Congressmen and their staff.

5. The Subsidies on Federal Exchanges

Obamacare website

Oklahoma Attorney General Scott Pruitt is suing the Obama administration over another rule, this one allowing the federal government to subsidize health insurance bought on federally run exchanges.

The law explicitly allows the federal government to help people buy health insurance if they make under four times the official poverty line, as long as they buy the insurance on exchanges run by the states.

However, most states did not set up their own exchanges, relying on the federal government’s exchange in whole or in part. The law does not explicitly allow the federal government to subsidize insurance plans bought on these federally run exchanges.

Oklahoma, which did not set up its own exchange, is challenging the federal government’s legal authority to offer subsidies in the state. It is arguing that the subsidies were meant to encourage states to set up their own exchanges and not as a benefit available to any individual who qualifies in any state.

Without the subsidies, fewer people will likely sign up for insurance and the exchanges could collapse from a lack of participation.

A federal district court in the District of Columbia struck down a lawsuit, Halbig v. Sebelius, based on the same argument as Oklahoma’s in January.

Oklahoma’s suit is currently in a different federal district court, meaning the judge could come to a different conclusion. The state’s written brief to the court is due on February 18, according to the Attorney General’s office.

6. The Contraception Mandate


Obamacare’s requirement that all insurance plans offer women 20 different kinds of birth control for free is facing the largest number of challenges.

The administration has tried to accommodate religious nonprofits that object to the mandate, but many of them have found the accommodation insufficient and are still seeking an injunction.

Some for-profit companies, such as Hobby Lobby, also object to the requirement. Christians who object to providing some or all of the contraceptives typically own these companies. The administration has made no attempt to accommodate these for-profit companies and is arguing that they have to comply fully.

Over 300 plaintiffs have sued in 93 cases over the contraception mandate, according to the Becket Fund for Religious Liberty. 47 of the cases come from for-profit companies, while 46 come from non-profit groups.

The Supreme Court is scheduled to hear Hobby Lobby’s case on March 25.