The Alan Katz Health Care Reform Blog

Health Care Reform From One Person's Perspective

Federal District Court Declares PPACA’s Individual Mandate Unconstitutional

Posted by Alan on December 13, 2010


A federal district judge in Virginia found the Patient Protection and Affordable Care Act unconstitutional today.

The ruling by Judge Henry Hudson makes the count at the district court level 2-to-1 in favor of the new health care reform law’s constitutionality. Another Judge in Virginia and one in Michigan ruled in favor of the legislation’s requirement that individuals obtain health coverage beginning in 2014. There are nearly two dozen legal challenges to the PPACA and no doubt others will go against the law as well, while others side with the Obama Administration.

In making his decision, Judge Hudson concurred with the arguments put forward by Virginia Attorney General Kenneth Cuccinelli. The core of his this argument is that while the federal government has the power and authority to regulate interstate commerce, whether or not to buy health insurance coverage is a local decision and beyond the reach of the federal government. The Washington Post offers a quote from the 42-page ruling that makes this position clear: “Neither the Supreme Court nor any federal circuit court of appeals has extended Commerce Clause powers to compel an individual to enter the stream of commerce by purchasing a commodity in the private market.”

In claiming the individual mandate was unconstitutional, Judge Hudson specifically stated that “portions of the law that do not rest on the requirement that individuals obtain insurance are legal and can proceed,” according to the Washington Post. Officials in the Obama Administration concede that, if the Supreme Court were to find the individual mandate requirement the goal of President Barack Obama’s health care reform law would be crippled. Politico.com, reports that these officials concede “the lack of a mandate would cut the number of uninsured people who would get coverage in half and threaten the ban on denying coverage [to] people with pre-existing conditions.” Medicaid expansion, the creation of state-run insurance exchanges and the medical loss ratio requirements would not be impacted, however.

The ruling by Judge Hudson was not unexpected as he was very skeptical of the law during a hearing in October. Nor did Judge Hudson stay implementation of the law, which means implementation of even those PPACA provisions tied to the individual mandate may continue until a decision on the laws constitutionality is made by the Supreme Court. 

With various judges deciding differently the constitutionality of the law will need to be determined by the Supreme Court. The new Virginia decision, the others in which a federal district court judge has ruled, and a decision yet to come on a suit filed by 20 states against the PPACA in a Florida court, will need to work their way through the judicial system before the issue reaches the Supreme Court. Attorney General Cuccinelli has requested that his suit bypass the Fourth Court of Appeals (which would normally hear an appeal from a Virginia federal court) and go directly to the Supreme Court. To accept this request, the Washington Post notes that the Supreme Court would have to decide that the case “held extreme public importance” and immediate intervention was required.

Whether Attorney General Cuccinelli’s request is accepted or not, the Supreme Court is expected to rule on the constitutionality of the Patient Protection and Affordable Care Act prior to 2014.

12 Responses to “Federal District Court Declares PPACA’s Individual Mandate Unconstitutional”

  1. Randall said

    I believe that there are a lot of good reasons in the constitutionality of the new health care reform law and that it will benefit many.

  2. Randall said

    I believe that there are a lot of good reasons in the constitutionality of the new health care reform law and that it will benefit many. On the other hand, there are many who want to have a free choice in determining if it is needed of not. Or maybe if they can really afford it.

  3. Brett Richesin said

    Alan,

    What was the difference in evidence that led Judge Henry Hudson to determine that the individual mandate in PPACA was unconstitutional? Was this specific case just presented with more concrete evidence than the prior two cases regarding the same subject matter? All three of these cases were presented to the same district court level so how could the outcome be different?

    I want to run this scenario by all of you to see what your opinions are, any and all comments are welcome. The argument I can imagine the Obama administration using in defense of the individual mandate is Social Security. In 1935, under the first term of Franklin D Roosevelt, the government passed the Social Security Act which made it mandatory that a portion of every employee’s paycheck be put aside for retirement. The concept was met with substantial opposition from many business owners and private citizens for much of the same reason PPACA is today, it forces people into paying a tax/penalty. Here are two court decisions that are strikingly similar to the situation we are seeing today:

    1. Steward Machine Company v. Davis, 301 U.S, 548[22] (1937) held, in a 5–4 decision, that, given the exigencies of the Great Depression, “[It] is too late today for the argument to be heard with tolerance that in a crisis so extreme the use of the moneys of the nation to relieve the unemployed and their dependents is a use for any purpose narrower than the promotion of the general welfare”. The arguments opposed to the Social Security Act (articulated by justices Butler, McReynolds, and Sutherland in their opinions) were that the social security act went beyond the powers that were granted to the federal government in the Constitution. They argued that, by imposing a tax on employers that could be avoided only by contributing to a state unemployment-compensation fund, the federal government was essentially forcing each state to establish an unemployment-compensation fund that would meet its criteria, and that the federal government had no power to enact such a program.

    2.Helvering v. Davis, 301 U.S. 619 (1937), decided on the same day as Steward, upheld the program because “The proceeds of both [employee and employer] taxes are to be paid into the Treasury like internal-revenue taxes generally, and are not earmarked in any way”. That is, the Social Security Tax was constitutional as a mere exercise of Congress’s general taxation powers.

    What makes us believe that the United States Supreme Court and the Government would act any different regarding PPACA?

    Now I strongly believe that it is in the best interest for every American to purchase health insurance and properly plan for retirement. However, in the case of both circumstances I know I can do a better job at determining what is best for myself over what the government can provide.

    • JimK said

      The two cases cited were included in the government’s brief for Summary Judgment in the VA case and the Judge obviously did not believe they were on point in the current PPACA debate.
      The decisions do appear to be politically motivated as thetwo cases that supported the governments’s right to issue a public mandate were made by Clinton appointees while the case ruling against the madate was a Reagan appointee.
      Given the fact that the Roberts Court ignored 100 years of precedent to decide Citizens United why would anyone believe that this same court would not revisit precedents that were struck down prior to the Hevering and Steward Machine rulings.
      Admittedly this is a guess on my part as I did not thoroughly research the above cited cases and the caselaw that they overturned but the actual fact is that the government does not have a strong case to support the individual mandate at the national level and even though the States can opt out the current language mandating that the States implement a program similar to the US exchanges may be considered coercive.

  4. As much as I am a personal fan of President Obama, and admire the intent of PPACA, I am getting more and more disgusted by how implementation of the legislation is being handled. This law assumed goodwill on everyones part and that all parties (carriers, providers, patients) would work together to create coverage for all at a reasonable cost. NOT HAPPENING FOLKS!!! Carriers are seizing the oportunity to make more off the law, people want everything at no cost, and no one is reigning in the providers. As usual, greed wins.

  5. JimK said

    The attached link is to the VA District Court Decision:

  6. Alan,

    I’m left with this thought: So, should the Supreme Court agree that the Individual Mandate is unconstitutional, how might that affect the Risk Pool if all plans must be Guarantee Issue? Where is the balance? Will the Feds simply expect the Insurance Companies to “suck up” all of the risk, and see MLR requirements become “moot”, as the percentage of payout far exceeds 80%?

    That a very serious issue now exists between the companies and their current actions in “effectively removing the Agent/Broker Community” from the delivery equation using MLRs as their excuse, is not at question; yet what consequences, beyond losing their Agents, can the Public expect as their Premium rates skyrocket to allow the companies to not have to observe a 100% or higher loss ratio in meeting other requirements of the PPACA?

    Are we witnessing the “implosion” of the PPACA, only a few short months from the date of its inception? Was this entire past year and a half, a bad experiment gone completely awry, at the expense of the American Taxpayer, as well as at the expense of hundreds of thousands of jobs and careers lost because of this extremely poorly written, researched, and voted into law without proper “Due-diligence”, a waste, just to get some politicians’ names in lights?

    Your thoughts?

    • mulp said

      Well, we could start by eliminating the mandates to treat (EMTALA et al) and eliminate the ability to shed medical debt in bankruptcy unless sufficiently insured at the time the debt was incurred, and set surcharges on insurance bought after the first opportunity to buy as in the Medicare drug benefit. Add in attachment for old medical debt via the IRS a la student loans and child support.

      Less than a decade ago we had a Republican Congress seeking a Supreme Court ruling they hoped would require free health care for a dead woman. No one expresses outrage that hospitals are investigated and charged for dumping patients on the street because they can’t pay for their care. I would be very surprised if the same judge ruled in a case that the Constitution didn’t allow mandating a sick person be treated and that the provider had a right to dump them helpless on the street.

      EMTALA mandating care even without hope of compensation was signed by President Reagan.

      • Mulp:

        You said: “No one expresses outrage that hospitals are investigated and charged for dumping patients on the street because they can’t pay for their care. I would be very surprised if the same judge ruled in a case that the Constitution didn’t allow mandating a sick person be treated and that the provider had a right to dump them helpless on the street.”

        I really can’t imagine where you got that idea, I, and my friends and colleagues, all expressed extreme outrage when we read of these issues. Who in the world, besides someone totally mentally vacuous, wouldn’t?

        You won’t read of that outrage on this blog, however, as this blog is an Agents and Brokers blog where we discuss other issues, perhaps not important to you, but issues such as whether or not Agents and Brokers will continue to be paid for the work we do, are important to us.

        Color me puzzled; I don’t understand why you seem to be condemning Republicans (your mentioning Reagan). Some of us are Democrats, some of us are independents (me, for example) and some of us are, yes, Republicans.

        Perhaps, Mulp, it might help if you explain your perspectives, and why you saw fit to take umbrage with my post. Could it be because I am one of those not happy with the Obama Administration spending the first year and a half of his term jamming HCR down the throats of Americans, instead of placing the economy and the 18 Million unemployed’s in position #1 on the list of Priorities? Could it be because I’m concerned about the hundreds of thousands of Agents and Brokers and their families who are now wondering what they will do to earn a living, as the MLR issue and Agent involvement was ignored by the NAIC, and is now being ignored by HHS, to whom the NAIC passed on the problem? Or is there some other valid reason for your taking issue with my comments. And yes, it is that obvious.

        And, while we’re at it, Mulp, just what it is that you do for a living?

        Finally, I am one who believes in the Individual Mandate. Americans are not known for being “Individually responsible”, and seem to prefer an Entitlement Philosophy, one that “rewards” “Societal Welfare-ism” versus being responsible for your own actions or lack of actions. I think that the Individual Mandate was a good step in the right direction. That isn’t the perspective from which I framed my questions. That should have been clear to anyone reading my post, who isn’t already predisposed to be defensive for ObamaCare. So I ask again, just what is your perspective, and why the obvious umbrage?

        A response will be respectfully appreciated.

      • Mulp. I just read you post on “Understanding Broker Anger”.

        Your bitterness with the world, more specifically America and our “in the toilet” economy, is very sad, and glares at the reader with virtually every word you wrote.

        Equally unfortunate is that you don’t seem to have grasped the essence of Alan’s commentary, or the frustration of the Agents and Brokers who have worked hard all of their lives to help their clients. It is equally a shame that existing law didn’t help you as you felt it should.

        Nonetheless, your insensitivity to those hundreds of thousands of Agents and Brokers has the effect of neutering any valid comments you may have made.

        It is a shame that you lost your job in the computer industry, Mulp, though 18 Million other people also lost their jobs (including my son-in-law, who was doing well, and was also in the computer industry…strangely, he doesn’t feel the bitterness you seem to feel).

        As you are a “Non-Broker” and a non-insurance person, none of us can fault you for thinking that as you were “screwed”, why shouldn’t we all be screwed? Perhaps, that thinking makes you feel better. It shouldn’t.

        Instead of posting on an Agents and Brokers blog, letting us know of your bitterness toward us, perhaps you would do better to be harnessing all of that anger in looking for work, and not in seeming to take pleasure in having others join you in your unhappiness. Perhaps, it would be enlightening if you were to take a much closer look at what the Obama Administration has NOT done in addressing our serious economic and jobless issues, and instead concentrated on passing a HCR Law that the vast majority of Americans did not want, wasting a year and a half of our Electorate’s and taxpayer’s time doing so, and to accomplish, what, exactly, as even President Barack Obama has admitted that the “Due diligence” that should have been done, wasn’t.

        Or, you can continue to take out your bitterness on everyone else, and not look carefully at yourself, in the mirror.

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