Insurance mandate rejected; high court eyed

ModernHealthcare | December 13 – All eyes moved to the U.S. Supreme Court following a Virginia-based federal judge’s decision that Congress lacks constitutional authority to force Americans to purchase health insurance.

Both sides in the case and even U.S. District Judge Henry Hudson in his ruling acknowledge that final word on the Patient Protection and Affordable Care Act is likely to come from the high court. A closely watched lawsuit in which 20 states have sued to stop the mandate to purchase insurance is also pending in federal court in Pensacola, Fla., with oral arguments there scheduled for this week.

In Richmond, Va., on Monday, Hudson delivered a partial victory to Virginia Attorney General Kenneth Cuccinelli II, who argued that Congress’ power to regulate interstate commerce does not extend to an individual’s decision not to engage in economic activity—in this case, a consumer’s decision not to buy health insurance.

HHS Secretary Kathleen Sebelius’ office has argued that the decision to avoid carrying insurance qualifies as a decision that affects interstate commerce, since every American will eventually use the healthcare system sometime in their lives, regardless of their insurance status. The collective weight of individuals’ decisions not to carry insurance would affect interstate commerce by denying payers the funding to carry out the reform law’s mandate to offer affordable coverage to virtually all Americans, Sebelius’ attorneys argued.

However, Hudson refused to strike down the reform law in its entirety, as Cuccinelli had asked. Rather, he “severed” the Minimum Essential Coverage Provision of the law and allowed the rest to stand.

Hudson also rejected HHS’ arguments that the reform law was a tax, and therefore outside the reach of the courts.

Although the minimum coverage provision is codified in the tax code and enforced as a penalty by the Internal Revenue Service, the judge noted that Democratic supporters of the law repeatedly insisted in the run-up to the reform law’s passage that it was not a tax. He wrote he did not believe the provision was intended primarily as a revenue-raising measure.

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