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Tax or fee? Justices argue law's intent

| Tuesday, March 27, 2012

WASHINGTON -- Supreme Court justices today will enter the second and most crucial day of historic, closely watched arguments that could determine whether most Americans will have to buy health care coverage or pay penalties.

The legal and political world will be watching closely. Monday was a preview -- while justices heard arguments on a tax-related case in chambers, lawyers, politicians and protesters gathered outside, arguing their own cases. And to add punctuation, Republican presidential candidate Rick Santorum stopped by, using the forum to tout his staunch opposition to the health care mandate.

Inside, Chief Justice John Roberts offered a signal of his own.

"We cannot avoid a decision simply because the case has political implications," he said, while summarizing an unrelated decision.

The 90-minute argument had little to do with the merits or even the substance of the 2,700-page health care law passed by congressional Democrats in 2010. Instead, opening-day arguments centered on whether lawsuits challenging the case are premature.

The two-hour arguments today, by contrast, will strike at the heart of the Patient Protection and Affordable Care Act by challenging the law's requirement that residents either buy insurance or pay a tax penalty.

"Day Two is where the action is," said Ohio Attorney General Mike DeWine, an opponent of the law.

Today deals with the power of Congress under the Constitution, one of the issues, Solicitor General Donald B. Verrilli Jr. told the court, that is "of great moment." Yesterday dealt more with a 19th-century law and the meaning of the word "tax."

The Anti-Injunction Act, first written in 1867, states that legal action cannot be taken to block a tax until the tax itself has been imposed.

The health care law imposes a fee, to be collected by the Internal Revenue Service at tax time, on residents who fail to purchase health insurance. This so-called individual mandate starts in 2014, and the first fees would be collected by April 15, 2015.

If the penalty imposed on those who don't buy insurance isn't a tax, then the Anti-Injunction Act doesn't apply and the lawsuits can proceed.

"Congress has nowhere used the term 'tax,' " said Justice Stephen Breyer during the argument. "What it says is 'penalty.' "

Justice Sonia Sotomayor agreed that "Congress is not denominating it as a tax; it's denominating it as a penalty." Justice Antonin Scalia said that "there's at least some doubt about the issue," and other justices likewise sounded similar themes.

"This is not a revenue-raising measure," Justice Ruth Bader Ginsburg said. "If it's successful, nobody will pay the penalty, and there will be no revenue to raise."

The Obama administration had initially deployed the tax argument in an effort to block the lawsuits, but after losing in one trial, officials changed course and now agree with the bill's opponents that lawsuits can proceed. The Supreme Court assigned attorney Robert Long to make the case that the lawsuits are premature.

"Congress directed that the penalty shall be assessed and collected in the same manner as taxes," Long said, adding that "you must pay the tax first, and then litigate."

The Congressional Budget Office has estimated the fees will produce between $5 billion and $6 billion annually.

Before, during and after the arguments, about 400 people gathered below the steps outside the Supreme Court; most appeared to be supporting the law. About 75 people marched in a parabolic circle holding red, white and blue signs that said "Protect the Law" and chanting, "Care for you, care for me, care for every family."

The supporters were largely organized by a coalition of labor and activist groups. Across the street from the court, 27 supportive talk-show hosts formed a "Radio Row" featuring sympathetic guests. Nearby stood Katherine Prather, a medical student from Kansas City, with her dog Ellie.

"If she has health insurance, so should everyone else," Prather said.

The opponents were represented by the Tea Party Patriots, a grassroots conservative group that helped elect dozens of Republicans to Congress in 2010. Ken Campbell flew to Washington from Lincoln, Calif., where he has a ranch. He spent $640 on a round-trip ticket so he could spread his message critiquing the individual mandate that's at the heart of today's arguments.

"I fear government is going to mandate health care as long as you exist or breathe," Campbell said. "Next will they tell me to buy a Chevy Volt from Government Motors?"

About a half hour after the court arguments ended, Santorum hopped from a Chevy Suburban van and walked to the foot of the Supreme Court steps. Surrounded by reporters and onlookers, he railed against Republican rival Mitt Romney.

"If you really want Obamacare repealed," the former U.S. senator from Pennsylvania said, "there's only one person who can make that happen."

Santorum was speaking of himself, though in fact the full or partial repeal possibility seems to be much more in the hands of the justices who will continue hearing arguments today and Wednesday.

"I think the justices want to rule on the merits of this case," said Ron Pollack, executive director of the health care advocacy group Families USA.

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