Virginia decision striking down individual mandate is contrary to precedent and will not be the last word
A judge's decision this week striking down the Affordable Care Act's mandate to buy health insurance should be viewed in context with other court decisions, the full implications for federal health reform and the near certainty of further judicial review. The decision came from a federal district court judge in the Eastern District of Virginia. Here's what you need to know about the decision and what it means.
Other courts have upheld the individual mandate
This week's decision is one of three federal trial court decisions on the merits of the argument that the individual mandate is unconstitutional. In two previous cases, the first decided in October, the second in early December, federal district court judges in the Eastern District of Michigan and the Western District of Virginia decided that the mandate is constitutional.
The core issue is whether refusing to buy insurance is economic activity
What this week's decision said was the individual mandate is unconstitutional. In what many describe as a relatively weak analysis of the law, Judge Henry Hudson found Congress does not have the power under the Commerce Clause of the U.S. Constitution to require people to purchase health insurance, nor does it have that power under its authority to tax.
Ultimately whether Congress has the power to require the purchase of individual insurance is likely to be decided based on whether an individual's decision to stay out of the health insurance marketplace (by not buying insurance) is considered an economic activity. The government has argued, and two other courts so far have found, that Congress could rationally conclude that the decision not to purchase health insurance is an economic activity because that decision imposes a substantial financial burden on others and the interstate health care marketplace. As Judge George C. Steeh wrote in the Michigan case, which found the mandate constitutional, “[t]he health care market is unlike other markets. No one can guarantee his or her health, or ensure that he or she will never participate in the health care market. Indeed, the opposite is nearly always true. … Far from 'inactivity', by choosing to forgo insurance, plaintiffs are making an economic decision to try to pay for health care services later, out of pocket, rather than now through the purchase of insurance, collectively shifting billions of dollars, $43 billion in 2008, onto other market participants.”1 That cost shifting, said the court, is exactly what the Affordable Care Act was enacted to address.
The decision found all other provisions of health reform lawful
This week's decision invalidates only the individual mandate section of the Affordable Care Act, Section 1501. The court declined to invalidate any other provision of the act. In addition, because the mandate provision does not take effect until at least 2013 (when states must be in the process of establishing health insurance exchanges), the court also rejected plaintiffs' request to issue an injunction prohibiting implementation of the mandate. That means that aside from the mandate all other provisions of the Affordable Care Act are lawful under the court's ruling. That includes consumer protections that have already taken effect such as elimination of pre-existing condition exclusions for children and the requirement that insurance companies permit parents to enroll their adult children in their health plans.
The U.S. Supreme Court will likely have the final word
This week's decision (in the Eastern District of Virginia) will very likely be appealed to the 4th Circuit Court of Appeals. The case decided in the Western District of Virginia (upholding the constitutionality of the mandate) is already being appealed, also to the 4th Circuit. The Michigan case is under appeal in the 6th Circuit. Important cases work up to the U.S. Supreme Court in that way, and it is highly likely the issue of the constitutionality of the Affordable Care Act will be decided by the U.S. Supreme Court. Most court watchers predict it will take about two years for the cases to work their way up.
The case the Supreme Court is most likely to take up is the one filed in the Northern District of Florida2. where oral arguments were held Dec. 16. That is the case Colorado's Attorney General John Suthers has joined. Court watchers believe the case is likely to get to the Supreme Court because of the legal issues framed and because 20 states have joined as plaintiffs.
A predicted and predictable outcome from a conservative court
Not surprisingly, opponents of the Affordable Care Act are spinning this week's decision as a significant win. It's not. It's a predicted and predictable outcome from a conservative court. Health plans want the individual mandate and are very unhappy with the decision. The mandate is the key element of the deal that was struck with the industry – they have to provide coverage, but people can't wait until they get sick to sign up. Without the mandate, the requirement to provide coverage to all with no pre-existing condition exclusions is a huge problem for insurance companies and the market as a whole.
The industry group America‟s Health Insurance Plans said the decision striking down the individual mandate would cause “skyrocketing costs” if it's affirmed by a higher court, Bloomberg reports.3 Former Cigna executive Wendell Potter posted on his blog this week: “I'm sure my old buddies who are still in the industry are downright apoplectic.” They want the mandate, he says, they don‟t want the consumer protections that go along with it.4
For more about provisions of health reform now in effect, see CCLP’s issue brief, “Getting Colorado covered: Sept. 23 reforms are vital steps toward accessible, affordable health care.”
Contact: Elisabeth Arenales
Health care director
303-573-5669, ext. 302
Released Dec. 17, 2010