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Federal Courts Split on Constitutionality of Individual Mandate in Health Care Law

The 2010 Patient Protection Affordable Care Act calls for the creation of insurance exchanges within each state, bans discrimination against patients with pre-existing conditions, and requires all Americans to purchase some form of health insurance. This last strategy, the individual mandate, has prompted a series of lawsuits by opponents who claim the law exceeds Congress’ authority under the Commerce Clause, which gives the federal government authority over economic activity. They argue that individual decisions not to buy health insurance are forms of inactivity. 

To date, four cases have resulted in substantive rulings on the constitutionality of the law, two upholding the law and two  ruling the individual mandate unconstitutional.  These losses mean, according to Professor Cary Coglianese of the Penn Program on Regulation, that in the years ahead “health care will remain a more salient issue and less clear victory for Democrats and anybody who voted for” the law.
                                              
The first two court decisions were clear victories for the administration. In the first case, Thomas More Law Center v. Obama (E.D. Mich., Oct. 7, 2010), Judge George Steeh ruled that the individual mandate addresses economic activity.  Individuals who choose not to buy health insurance are 
 
collectively shifting billions of dollars, $43 billion in 2008, onto other market participants . . . . How participants in the health care services market pay for such services has a documented impact on interstate commerce. 
 
He also reasoned that the individual mandate is a necessary component of a comprehensive regulatory scheme. Because the law requires insurers to cover patients with pre-existing conditions, an individual mandate is necessary to ensure that people do not begin paying for insurance only at the moment they need coverage.
 
In the second decision, Liberty University v. Geithner (W.D. Va., Nov. 30, 2010), Judge Norman Moon upheld the individual mandate because, quoting Thomas More Law Center,
 
[t]he ‘fundamental need for health care and the necessity of paying for such services received’ creates the market in health care services, of which nearly everyone is a participant . . . . 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.
 
An individual’s choice not to buy health insurance impacts the costs of those who do buy insurance, he reasoned. 
 
Virginia v. Sebelius (E.D. Va., Dec. 13, 2010) was the first case to hold the individual mandate unconstitutional. Judge Henry Hudson argued that not purchasing insurance was not an economic activity. By “compel[ling] an individual to involuntarily enter the stream of commerce by purchasing a commodity in the private market,” Congress was exceeding its Commerce Clause powers.
 
Judge Hudson emphasized that his decision only invalidated the individual mandate, not the rest of the law. Virginia Attorney General Ken Cuccinelli has subsequently petitioned the Supreme Court to hear the appeal of this case immediately, bypassing the Fourth Circuit. 
 
In Florida v. United States Department of Health and Human Services (N.D. Fla., Jan. 31, 2011), Judge Roger Vinson ruled unconstitutional not only the individual mandate, but also the entire law. He reasoned that the law could not function as Congress intended if the individual mandate, and the funding it would provide, were severed from it.
 
Interestingly, to date, only states have successfully challenged the individual mandate. State attorneys general brought the two cases that resulted in judges striking down the mandate.  After Judge Moon held that two Virginia officials lacked standing to challenge the mandate, only private entities remained as plaintiffs in the two cases in which the law was sustained.

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