Obama's health-care reform law faces new test in appeals court

The first two cases challenging the constitutionality of President Obama’s health-care reform law arrive on Tuesday for oral argument in a federal appeals court in Richmond, Va.

At issue is whether Congress exceeded its authority in a section of the reform law that requires every American to purchase a government-approved level of health insurance.

The so-called individual mandate is necessary to the overall reform package because it creates a large enough pool of paying customers to help cover the extra cost of the government’s requirement that companies insure everyone, regardless of preexisting medical conditions. The mandate is also designed to lower premiums.

Supporters say the Patient Protection and Affordable Care Act falls within Congress’s power to regulate interstate economic activities. Opponents say the law represents a dramatic expansion of the federal government’s authority under the Constitution’s commerce clause. The law, they say, allows the government for the first time to regulate not only economic activities, but also the inactivity of those who might prefer not to purchase health insurance.

The two cases will be heard by a three-judge panel of the Fourth Circuit Court of Appeals in Richmond.

One of the cases was filed on behalf of the Commonwealth of Virginia by Virginia Attorney General Kenneth Cuccinelli; the other was filed on behalf of Liberty University in Lynchburg, Va. Acting US Solicitor General Neal Katyal is representing the federal government in both cases.

The same three-judge panel will hear the cases back to back starting at 9:30 a.m. Each case has been allotted 40 minutes.

So far, five federal judges have ruled on the constitutionality of the health-care law. Three have upheld the measure, while two have struck it down as exceeding congressional limits under the commerce clause. (The judge in the case filed by Mr. Cuccinelli struck down the health-care law, while the judge in the Liberty University case upheld it.)

All five cases have been appealed. In addition to the two cases at the Fourth Circuit, the three other appeals are pending at the Eleventh Circuit in Atlanta, the Sixth Circuit in Cincinnati, and the District of Columbia Circuit in Washington.

The cases are expected to be appealed to the US Supreme Court, which could take up the health-care reform issue as early as next year.

In his brief to the Fourth Circuit, Mr. Katyal said Virginia lacks the necessary legal standing to bring its lawsuit. The law’s individual mandate applies only to individuals, he said. Since no individual is named as a plaintiff in the state’s suit, the case – including the underlying decision that the health-care law is unconstitutional – must be thrown out.

Virginia Solicitor General E. Duncan Getchell countered in his brief that the federal health-care reform law’s individual mandate clashes with a state law seeking to protect the right of Virginia residents to decide for themselves whether to buy health insurance or remain uninsured.

A validly enacted federal statute trumps state law under the Constitution’s supremacy clause. But lawyers for Virginia say Congress exceeded its authority in enacting the individual mandate.

The case represents an injury to the sovereignty of Virginia, Mr. Getchell wrote. As such, the state has standing to challenge a federal enactment that threatens to undermine a state law.

Aside from the question of standing, the central issue in the case concerns the power of the national government to order all Americans to buy a certain level of health insurance.

Under the constitutional structure of American government, the federal government is authorized to exert a limited array of powers. All remaining government authority, including general police power, is retained by the states.

The Virginia brief argues that if the courts uphold the health-care mandate, it will establish for the first time in the nation’s history open-ended powers for Congress to regulate almost anything.

“Because the claimed power to order a citizen to purchase a good or service from another citizen has no principled limit, it violates the ... limits of the commerce clause,” Getchell wrote.

He urged the court not only to uphold the federal judge’s ruling declaring the individual mandate unconstitutional, but to also strike down the entire health-care reform law.

Katyal’s reading of the commerce clause is more permissive of federal authority than Getchell’s. He rejects the argument that the health-care law fails because it seeks to regulate inactivity.

“The purpose of health insurance is to pay for expenses incurred in the health care services market,” Katyal wrote. “That some participants in the health care market may be ‘passive’ in the insurance market – in the sense that they may not currently have insurance – has no constitutional significance.”

The buying and selling of health insurance in America is a national economic activity, Katyal says. “The modern health care system operates across state boundaries. Most health insurance is sold or administered by national or regional companies that operate interstate, and pays for medical supplies shipped in interstate commerce,” he said.

“The Affordable Care Act regulates interstate activity that is truly national and inherently economic,” Katyal added.