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Health Insurance Mandate Ruled Unconstitutional

by Kroger Burrus on December 13th, 2010

Earlier today, Judge Henry Hudson of the United States District Court for the Eastern District of Virginia became the first judge to rule a portion of the Patient Protection and Affordable Care Act unconstitutional. In Virginia v. Sebelius, 10-CV-00188, the Commonwealth of Virginia filed suit against Kathleen Sebelius, Secretary of the Department of Health and Human Services, requesting a declaration that the Act’s requirement that most Americans purchase health insurance by 2014 was an impermissible exercise of Congressional power. The Court found that Congress exceeded its authority under both the General Welfare and Commerce Clauses of the United States Constitution.

One of the arguments made by Virginia was that the Commerce Clause only allows Congress to regulate “activity.” Regulating the failure to purchase health insurance is “inactivity” that is beyond the scope of the powers of Congress. Judge Hudson wrote: “Neither the Supreme Court nor any federal circuit court of appeals has extended Commerce Clause powers to compel an individual to involuntarily enter the stream of commerce by purchasing a commodity in the private market.”

Sebelius’s position was that the decision of an individual to participate or not participate in the health insurance market has a collective effect on interstate commerce. She argued that unless everyone was required to participate or pay a penalty, the revenue base would be inadequate to underwrite the cost of insuring high risk patients. The individual mandate is the “linchpin” that provides financial viability to the entire Act, giving Congress the power to use it to effectuate constitutional reforms under the Necessary and Proper Clause. The Court rejected that position because any law passed as a mechanism to enforce constitutional authority must itself also be constitutional. If the decision not to purchase health insurance does not constitute the type of economic activity subject to regulation, then an attempt to regulate it through the Necessary and Proper Clause “is equally offensive to the Constitution.”

The Court also rejected the position that the fine imposed for failing to purchase the insurance was a tax allowed by the General Welfare Clause. It was clear Congress intended the mandate to be a regulation and imposing a penalty for violating that regulation is not a proper exercise of Congress’s taxation power.

The ruling did not address any other provisions of the bill. Virginia also sought injunctive relief to prevent implementation of the law, which the Court denied since the mandate does not go into effect until 2014.

At least two other courts had previously found the mandate constitutional, including a ruling earlier this month in the Western District of Virginia. It is unknown whether the Justice Department will appeal this ruling or wait for a more favorable venue with one of the 20-plus challenges filed across the country. All agree that this issue will ultimately be decided by the United States Supreme Court.

A copy of the Court’s Order can be found at:
http://www.oag.state.va.us/PRESS_RELEASES/Cuccinelli/Health%20Care%20Memorandum%20Opinion.pdf

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From → Health Law