Affordable Care Act Individual Mandate Struck Down by US District Court

Contained within the Affordable Care Act (ACA) was Section 1501, known as the Minimum Essential Coverage Provision (the “individual mandate”). This provision requires that “every U.S. citizen, other than those falling within specified exceptions, maintain a minimum level of health insurance coverage for each month beginning in 2014.

Failure to comply with this provision will result in penalty included with the taxpayer’s annual return.” As enacted, this section is administered and enforced as part of the Internal Revenue Code.

Consequently, shortly before Congress passed ACA, Virginia became the first state in the nation to enact legislation—the Virginia Health Care Freedom Act—to protect their citizens from being forced to purchase health insurance or participate in any health care system against their will. Once ACA was passed by Congress, Virginia Attorney General Ken Cuccinelli filed suit in the U.S. District Court for the Eastern District of Virginia, arguing that ACA was unconstitutional. He asserted that Section 1501 was unconstitutional because it exceeded the power of Congress under the Commerce Clause and the General Welfare Clause of the United States Constitution.

Specifically, Cuccinelli argued that “requiring an otherwise unwilling individual to purchase a good or service from a private vendor is beyond the boundaries of congressional Commerce Clause power.” He further maintained that “failure or refusal, of citizens to elect to purchase health insurance is not economic activity historically subject to federal regulation under the Commerce Clause.”

After hearing oral arguments for the case back in October, today, U.S. District Judge Henry E. Hudson ruled in his opinion that Congress exceeded its constitutional authority to regulate interstate commerce by compelling people “to involuntarily engage in a private commercial transaction.”

An article from the Galen Institute analyzing the opinion found that “Judge Hudson also said that the Obama administration can’t argue after the fact that the mandate is a tax and therefore within Congress’s constitutional taxing authority.” In particular, Judge Hudson noted that the “Court was unpersuaded” that the penalty for not purchasing insurance is a “bona fide revenue raising measure enacted under the taxing power of Congress.”

Judge Hudson declared that the mandate to purchase health insurance represents an “unchecked expansion of congressional power” that “would invite unbridled exercise of federal police powers.” He further asserted that the mandate is “neither within the letter nor the spirit of the Constitution.” However, Judge Hudson did “not halt implementation of the law or declare the whole thing invalid,” he only ruled Section 1501 of the ACA unconstitutional.

Opinion

As the Galen Institute carefully points out, Judge Hudson’s 42-page opinion “caught those who drafted the law at their own game: He cited earlier versions of the legislation in both the House and the Senate that explicitly referred to the penalty for not complying by the “politically toxic term ‘tax’.” But they substituted the term “penalty” for the word “tax” in the individual-mandate section of the final law.”

Consequently, in looking at Section 1501’s legislative history, Judge Hudson wrote that “A logical inference can be drawn that the substitution of this critical language was a conscious and deliberate act on the part of Congress.” He pointed to the fact that the term “tax” is used in numerous other places in the law regarding taxing medical devices, employer-sponsored health insurance, high-income taxpayers, and indoor tanning services.

The Galen Institute noted that this “taxing” issue likely “will be key to the Florida court decision that will be argued this Thursday.” The case in Florida, which includes twenty states and the National Federation of Independent Business, involves a challenge to the “individual mandate as well as the government’s authority to dictate health-coverage expansions to the states.”

Interestingly, the Galen Institute article cited a quote from Federal Judge Roger Vinson of Florida, which might give a reliable prediction for how the case in Florida will turn out. Specifically, Judge Vinson had declared earlier that “Congress should not be permitted to secure and cast politically difficult votes on controversial legislation by deliberately calling something one thing, after which the defenders of that legislation take an ‘Alice-in-Wonderland’ tack and argue in court that Congress really meant something else entirely, thereby circumventing the safeguard that exists to keep their broad power in check.”

Impact on ObamaCare

In response to the opinion, White House officials tried to downplay the decision by pointing to other federal cases that had unsuccessfully challenged the ACA but had been thrown out. But as the Galen Institute pointed out, “most of the other cases have been thrown out on “standing” claims or by judges with a very different interpretation of the Constitution.

Accordingly, the outcome of the Florida case will likely have a significant impact on how the issue of the individual mandate eventually reaches the Supreme Court. If the Florida Federal District Court agrees with the Judge Hudson, this could set a difficult uphill battle for the Obama Administration and ObamaCare.