Health care law: why federal judge struck key provision down

A federal judge in Virginia ruled on Monday that President Obama’s health care reform law exceeds Congress’s authority under the Constitution’s commerce clause.

In striking down a key provision of the law, US District Judge Henry Hudson said Congress does not have the power to order Americans to purchase a private product like health insurance or pay a penalty.

The Patient Protection and Affordable Care Act includes a section requiring every American to purchase a government-approved level of health-care insurance starting in 2014. Those who refuse to abide by this individual mandate would be required to pay a fine assessed each year on their federal tax return.

Judge Hudson ruled that the mandate is designed to penalize people not for their participation in interstate commerce, but for their lack of participation.

“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,” Hudson wrote in his 42-page decision. “In doing so, [the health-care reform law’s individual mandate] exceeds the commerce clause powers vested in Congress.”

Hudson is the first federal judge to rule that the law is unconstitutional. Two judges – one in Lynchburg, Va., and one in Detroit – have issued decisions upholding the law. Both said the measure was within Congress’s powers under the commerce clause.

A federal judge in Florida is set to hear arguments on Thursday in a fourth challenge to the law, filed by 20 states.

The high-profile cases are expected to be appealed and eventually reach the US Supreme Court.

The health-care reform law is considered Mr. Obama’s signature achievement in his first two years in office.

“We disagree with the ruling,” Stephanie Cutter, assistant to the president for special projects, wrote in a White House blog post. “We’re confident that when it’s all said and done, the courts will find the Affordable Care Act constitutional.”

Virginia Gov. Bob McDonnell (R) praised the decision as “a victory for the United States Constitution, our federalist system, and individual liberty.”

He also called on the Justice Department to join an effort to fast-track the case for an immediate appeal to the US Supreme Court.

Hudson’s decision stems from a lawsuit filed by Virginia Attorney General Kenneth Cuccinelli.

Mr. Cuccinelli and Virginia Solicitor General E. Duncan Getchell argued that the federal government, in 220 years of history, has never before claimed the power to order Americans to purchase a particular private product. The commerce clause establishes limited federal authority to regulate economic activities between the states but does not extend to the private decisions of would-be consumers of products that circulate nationwide, they said.

The Obama administration has defended the law by saying that Americans who refuse to buy health insurance are making an economic decision to not participate in the national health-care insurance market. That decision, government lawyers say, has economic consequences that are within Congress’s power to address.

To effectively reform the health-insurance market – and provide expanded coverage to low-income Americans – a larger pool of policyholders is necessary. The administration justifies the forced participation in the market by arguing that every person in the US will eventually require medical services in some form.

The aggregate effect on the national health-insurance market triggers Congress’s commerce clause authority, the government lawyers say.

Hudson rejected the suggestion, saying it would lead to an unlimited expansion of federal authority to regulate almost everything.

“The same reasoning could apply to transportation, housing, or nutritional decisions,” the judge said. “This broad definition of the economic activity subject to congressional regulation lacks logical limitation and is unsupported by commerce clause jurisprudence,” he wrote.

The federal government is empowered to regulate activities that substantially affect interstate commerce and other economic activity among the states. But the individual mandate, Hudson said, sought to regulate economic inactivity by forcing individual Americans to buy health insurance they would not otherwise purchase.

That, he said, extends congressional authority beyond constitutional boundaries.

“The unchecked expansion of congressional power to the limits suggested by the [health-care law] would invite unbridled exercise of federal police powers,” Hudson said.

“At its core, this dispute is not simply about regulating the business of insurance,” he said. “[I]t’s about an individual’s right to choose to participate.”

Hudson also rejected the Obama administration’s argument that the law had also been passed under Congress’s broad taxing authority. The fine required for not purchasing health-care coverage is a penalty, not a tax, he said.

“If allowed to stand as a tax,” the judge wrote in a footnote, it “would be the only tax in US history to be levied directly on individuals for their failure to affirmatively engage in activity mandated by the government not specifically delineated in the Constitution.”

Although Cuccinelli, the Virginia attorney general, had asked that the entire reform law be struck down, Hudson said he would invalidate only the individual-mandate portion of the law. If upheld on appeal, it would then be up to the Obama administration to decide whether to recraft the law, repeal the law, or move forward with the surviving provisions.

Reaction to the ruling varied widely. House Health Subcommittee Chairman Pete Stark (D) of California criticized Hudson for engaging in what he called judicial activism.

“Unfortunately, we already know what happens if this lawsuit succeeds,” he said. “Millions of Americans will lose their health insurance, premiums will go up for working families, and more people will be forced into bankruptcy when they get sick.”

Timothy Sandefur, a lawyer with the conservative Pacific Legal Foundation, had a different view.

“Judge Hudson’s ruling against the so-called individual mandate is a powerful reaffirmation of traditional principles of limited government,” he said.

“The Obama administration argument would, if accepted, give Congress absolute power to force Americans to join a gym to improve their health, or buy a car from government-owned General Motors to ‘stimulate the economy,’ or do anything else that has any economic consequences – which, of course, means anything,” Mr. Sandefur said.