Today, a federal district court ruled in Virginia v. Sibelius that an important part of the Patient Protection and Affordable Care Act (the “Act”) was unconstitutional. The case is one of several constitutional challenges from states, public interest groups, and other opponents filed since Congress passed health care reform earlier this year. These plaintiffs have argued that Congress exceeded its constitutional authority by including in the Act an individual mandate provision requiring the uninsured to pay a penalty unless they had individual or employer-sponsored health insurance. Prior to this ruling, federal district courts in Michigan and another district in Virginia held that the law was within Congress’s authority under the Commerce Clause. Although today’s ruling will not (given the likelihood of appeals) have an immediate impact on the Act’s enforceability, it may affect the future of health care reform because, as the government argued, the individual mandate is the “linchpin” that makes the entire regulatory scheme financially viable.
The primary issue in Virginia v. Sibelius and in similar challenges is whether the individual mandate is within Congress’s authority under the Commerce Clause. The Act’s opponents argue that, although even the most minimum conduct affecting interstate commerce has been held to be within this authority, some sort of positive “activity” has always been required. Not buying insurance arguably involves no activity, and opponents contend that Congress has never before sought to impose regulations on people for doing nothing.
In response, the law’s proponents have argued that courts cannot isolate the individual mandate from the other plainly constitutional provisions of the Act, and that when read as a whole, the Act fits within Congress’s authority to regulate the health care and insurance industries. Further, forgoing participation in the health insurance market still affects interstate commerce because individuals making that choice will inevitably need medical services someday, and how and when they receive and pay for those services will affect interstate commerce. Or, as several Nobel Prize winners put it in an amicus brief, “there is no such thing as ‘inactivity’ or non-participation in the health care market.”
Following this reasoning, Judge Norman Moon of the United States District Court for the Western District of Virginia concluded earlier this month that the Act was within Congress’s Commerce Clause authority. In assessing what is required for conduct to fall within the reach of that clause, Judge Moon likened individuals forgoing insurance coverage to wheat farmers in Wickard v. Filburn and medicinal marijuana growers in Gonzales v. Raich who unsuccessfully claimed that, because they were harvesting their crops for only personal consumption, their activities did not affect interstate commerce. Judge Moon reasoned that, like these defendants, individuals who forgo health insurance are within Congress’s regulatory authority because, notwithstanding their intent not to participate in interstate commerce, their decision still affects interstate commerce in the aggregate. For example, because full participation by healthy individuals in the insurance market is crucial to paying for reforms, such as providing coverage to individuals with pre-existing conditions, allowing these individuals to avoid participating in the national health insurance market would undermine those efforts. A Michigan federal court upheld the Act for similar reasons.
In today’s decision, Judge Henry Hudson of the Eastern District of Virginia disagreed, ruling that the individual mandate was not within Congress’s Commerce Clause authority. “Every application of Commerce Clause power found to the constitutional,” he reasoned, “involved some form of action, transaction, or deed placed in motion by an individual or legal entity.” Since the decision not to purchase health insurance did not involve some “type of self-initiated action,” Congress could not rely upon the Commerce Clause to “compel an individual to involuntarily enter the stream of commerce by purchasing a commodity in the private market.”
Given that Congress did not have the authority to enact this provision under the Commerce Clause, the Court also ruled that Congress could not rely upon the Necessary and Proper clause, since “[t]his authority may only be constitutionally deployed when tethered to a lawful exercise of an enumerated power,” which the individual mandate was not. Likewise, given that the consequences of failing to comply with the individual mandate were seen as a penalty rather than a tax, the court ruled that Congress lacked authority to enact this provision under its independent taxation power pursuant to the General Welfare Clause.
Judge Hudson’s ruling found support in the preliminary ruling of Judge Roger Vinson of the United States District Court for the Northern District of Florida, who declined to dismiss a similar constitutional challenge brought by the State of Florida. Judge Vinson’s final decision in that case is expected at any time.
Because the individual mandate is not scheduled to go into effect for several years, Judge Hudson’s decision should not have an immediate impact on the Act’s enforceability. Recognizing that the final resolution of the constitutional issues raised will be decided by higher courts, Judge Hudson stayed the implementation of his final ruling pending appeal. He also declined the state’s invitation to strike down the Act in its entirety, limiting the scope of his ruling to only the individual mandate provision. But, the Act’s opponents will likely argue on appeal and in other challenges that the individual mandate cannot be “severed” from the remainder of the law, meaning that if that provision is unconstitutional, the entire law must fall. In any event, the individual mandate provides a key source of funding for other health care reforms, and its invalidation would likely have practical consequences affecting the Act’s financial viability.
Although Judge Hudson’s decision indicates that constitutional challenges to the Act are gaining more traction than was originally anticipated, it is unlikely that it and other challenges will disrupt health care reform in the near future. It does however now appear that appellate courts, and perhaps the Supreme Court, will have the last word, at least on the constitutionality of the individual mandate.