The Effect of Healthcare Freedom Acts on An Obamacare Administrative Fix

June 24th, 2015

In my Federalist Society White Paper, I note that 18 of the 34-states that did not establish ACA exchanges also enacted a variant of the “Healthcare Freedom Act.”

An executive order is not an option in eighteen of the thirty-four states that enacted variants of the Healthcare Freedom Act, which prohibits state officials from taking any actions that helps to enforce the ACA’s penalties: AL, AZ, GA, ID, IN, KS, LA, MO, MT, ND, NH, OK, OH, TN, UT, VA, and WY.73 Opting to establish an exchange would have the effect of triggering the employer and individual mandates, and would run afoul of the Healthcare Freedom Act.74For these states, a statutory, or even constitutional amendment, may be necessary before any subsidies can be paid out.

My friend Ian Millhiser writes at Think Progress that because the Court held in NFIB that the individual mandate was actually a “tax,” and not a penalty, the Healthcare Freedom Act wouldn’t apply.

The reality, as mentioned above, is much more complicated than Blackman, Adler and theirconservative allies suggest. For starters, the Supreme Court famously held in NFIB v. Sebelius that the Affordable Care Act’s individual mandate “may for constitutional purposes be considered a tax, not a penalty.” Under this theory of the law, the Court explained, “the mandate is not a legal command to buy insurance.” Accordingly, it is doubtful that a law such as the Virginia Health Care Freedom Act (which provides that “[n]o resident of this Commonwealth . . . shall be required to obtain or maintain a policy of individual insurance coverage”) actually has anything to say about the individual mandate.

Ian and I can quibble over the holding of NFIB–I don’t think the mandate imposes a tax for any purposes other than the constitutional “saving construction”–but the Healthcare Freedom Acts are not so narrowly defined.

Consider the Missouri Healthcare Freedom Act. Section 1 provides:

No law or rule shall compel, directly or indirectly, any person, employer, or health care provider to participate in any health care system.

An executive order establishing an exchange, which triggers the individual or employer mandate, would be contrary to the Act. What about the penalty? The Act defines the term:

(5) “Penalties or fines,” any civil or criminal penalty or fine, tax, salary or wage withholding or surcharge or any named fee with a similar effect established by law or rule by a government established, created or controlled agency that is used to punish or discourage the exercise of rights protected under this section.

Even if we apply the “saving construction,” this provision is broad enough to cover the Obamacare mystical tax.

ArizonaOklahoma, and several other states have identical language