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Legal analysis by KJ Kaufman

The clear sunshine of the U.S. Constitution has not shone upon Congress for some time.

(Dec. 2, 2009) —While the five separate bills were making their way through committees in both the House of Representatives and the Senate, one thing became abundantly clear:  all five bills relied on the fundamental premise that individuals can be forced by the Federal Government to make a private purchase of health care insurance.  Once the committees completed their work, each House of Congress introduced a bill to their members.  Both bills, House Bill H.R. 3962 already passed by the House of Representatives (on a partisan 220—215 vote) and Senate Bill H.R. 3590 which is currently being debated in the Senate, have kept the underlying promise to compel individuals to purchase health care insurance.

In House Bill H.R. 3962, we find the compulsion to purchase health care insurance begins on page 274 under Title IV, Section 401, “Individual Responsibility” which reads as follows:

For an individual’s responsibility to obtain acceptable coverage, see section 59B of the Internal Revenue Code of 1986 (as added by section 501 of this Act).

Nowhere in the 2016 page bill will you find an argument by the House of Representatives as to their Constitutional authority to add this type of provision in a piece of legislation.  Nowhere in the 2016 page bill will you find Congress’ Constitutional authority to update the Internal Revenue Code compelling a citizen to make a private purchase, and yet we find such a provision in the bill.  Let’s explore what section 501 of this Act has to say and how it usurps your Constitutional rights.

Section 501, “Tax on Individuals without Acceptable Health Care Coverage” states in part (pages 303 and 304 of the bill):

(a) TAX IMPOSED.—In the case of any individual who does not meet the requirements of subsection (d) at any time during the taxable year, there is hereby imposed a tax equal to 2.5 percent of the excess of—

(1) the taxpayer’s modified adjusted gross income for the taxable year, over

(2) the amount of gross income specified in section 6012(a)(1) with respect to the taxpayer…



(A) IN GENERAL.—The tax imposed under subsection (a) with respect to any tax payer for any taxable year shall not exceed the applicable national average premium for such taxable year.

The Senate version includes a similar provision; however, the Senate attempts to enlighten the tax payer with respect to the Congressional Constitutional authority to do so.  Like the House Bill, Senate Bill H.R. 3590 informs the citizen that he or she has an “Individual Responsibility” to pay for his or her health care.  Beginning on page 320 of the Senate Bill, the following requirements for health care and the supposed Constitutional authority are defined:

(1)    IN GENERAL.—The individual responsibility requirement provided for in this section (in this sub section referred to as the ‘‘requirement’’) is commercial and economic in nature, and substantially affects interstate commerce, as a result of the effects described in paragraph (2)…

(2)    EFFECTS ON THE NATIONAL ECONOMY AND INTERSTATE COMMERCE.—The effects described in this paragraph are the following:

(A)   The requirement regulates activity that is commercial and economic in nature: economic and financial decisions about how and when health care is paid for, and when health insurance is purchased.

Thus, we see the Senate arguing that in accordance with their U.S. Constitution, Article I, Section 8 enumerated powers “[t]o regulate commerce with foreign nations, and among the several states…” they have decided that they have the Constitutional authority to enforce this provision.

The Senate appears to understand that their Constitutional authority may not be clear, so the Senate goes to the trouble in their legislation to further define how they derive this power.  The Senate cites a Supreme Court case (page 324 of the bill) that supposedly grants them the authority they have argued above:

(3)    SUPREME COURT RULING.—In United States v. South-Eastern Underwriters Association (322 U.S. 533 (1944)), the Supreme Court of the United States ruled that insurance is interstate commerce subject to Federal regulation.

Conceded, the Senate has the power to regulate interstate commerce including the power to do so with respect to the insurance industry, but how does that enumerated power then include modification of the Internal Revenue Code?  The Congress’ power to tax is embodied in the XVI Amendment of the U.S. Constitution and reads in full:

The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration.

The important portion of the XVI Amendment are the words “collect taxes on incomes.”  Can anyone make a reasonable argument that the purchase of a health insurance policy is an income?  Any basic accounting class would teach the student that the purchase of an insurance policy is an expense and not an income.

Many have made the argument that this purchase compulsion is analogous to the purchase of liability insurance for one’s car, but this is a false analogy.  If one does not purchase automobile liability insurance, the Federal Government does not tax you.  The potential penalties are loss of your driver’s license, or your lender adding a comprehensive auto insurance policy to your loan and charging you for the policy.  If you fail to pay this additional expense to the lender, the lender can repossess your vehicle.  You will not find a section on your Federal Income Tax Return for proof of automobile liability insurance or a penalty of payment of a tax.

Others have argued that we already pay Social Security (FICA) and Medicare payroll taxes to the Federal Government, so surely the Federal Government can tax us for private health care insurance; but this is also a false analogy.  Unlike a tax on a private purchase as provided for in the current legislation, FICA and Medicare are payroll taxes for a government fund where the contributor receives a future benefit.  Said benefits are not analogous to making a private purchase, and this is the crux of the matter.

If the health care bill that comes out of the two houses of Congress does not include a provision compelling Citizens to purchase insurance, then the unfunded liabilities for this legislation or the national debt will exponentially increase.  The CATO Institute argues in Michael F. Cannon’s piece “Senate Health Reform Plan Prescribes Heavy Tax Dose” that the true cost of  Bill H.R. 3590, when you include the mandated taxes, is $2.5 trillion which is equal to more than double the official estimate of the cost of the bill.

If the combined bill that comes out of the House and the Senate includes the mandated purchase of private health care insurance or a tax will be imposed, there will certainly be lawsuits regarding the Constitutionality of the bill.  Should those cases be successful, then the National Debt will exponentially increase, and it is already in excess of $12 trillion.  Should the Congress try to rectify the Constitutionality of the legislation by attempting to setup a system comparable to Medicare or Social Security Insurance, then we are looking at a government run single-payer health care system.  The unfunded liability for Social Security is already in excess of $14 trillion and the unfunded liability for Medicare is over $73 trillion.  Can you fathom what the unfunded liabilities for a single-payer national health care system would be?

The present health care legislation in the Congress in its founding principle of compulsion to purchase approved health care insurance is clearly un-Constitutional.  Any attempt to rectify the Constitutionality of the legislation is simply unsustainable.

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  1. KJ, you are correct. The tax code does not provide a definition for individual. It is actually defined on the code of federal regulations.

    26 CFR 1.1441-1 Requirement for deduction and withholding of tax on payments to foreign persons.
    (c) Definitions
    (3) Individual.
    (i) Alien individual. The term alien individual means an individual who is not a citizen…
    (ii) Nonresident alien individual. The term nonresident alien individual means a person described in section 7701(b)(1)(B), an alien individual who is…

  2. So does this bill have a section that defines the meaning of “individual” or is this incorporating the meaning of “individual” from the tax code?

    If you read the tax code the only definition found of “individual” states “ILLEGAL ALIEN”

    So if they are using the tax codes definition of individual then this bill only applies to ILLEGAL ALIENS! So we the people who are citizens, this bill would not apply.

    And if they have a different definition for individual in this healthcare bill, then how does that pan out when adding the tax code into this bill where individual has two different meanings?

    1. On page 20. of the House Bill H.R. 3962 under a section regarding High Risk Pool, we see the first definition of the individual as: “an eligible individual and is a resident of one of the 50 States or the District of Columbia.” Later, on page 27, under the same section, the term Citizenship is first used in stating: “No individual shall be an eligible individual under this section unless the individual is a citizen or national of the United States or is lawfully present in a State in the United States…” With respect to H.R. 3962 as quoted in the article referencing pages 302 and 303 of the Bill the quote used is the actual wording added to the tax code. Without searching the entire Bill, there appears to be no clear definition for Individual.

      Like the House Bill, the Senate Bill H.R. 3590 does not really define individual other than how the term would be generally understood. Like the House, the Senate also first qualifies individual on page 44 under a section regarding eligibility for insurance for those with pre-existing conditions. From page 44 of the Senate Bill it is stated: “ELIGIBLE INDIVIDUAL.—An individual shall be deemed to be an eligible individual for purposes of this section if such individual—(1) is a citizen or national of the United States or is lawfully present in the United States (as determined in accordance with section 1411)…” Later in the Senate bill, on page 324, the term “applicable individual” is used, yet again without the term individual ever being clearly defined.