Federal Judge Strikes Down Entire Healthcare Reform Law

January 31, 2011

January 31, 2011 — A federal judge in Florida today struck down the entire Affordable Care Act (ACA) because it requires individuals to buy health insurance or else pay a penalty, a provision the judge ruled both unconstitutional and inseparable from the rest of the law.

The decision increases the likelihood that the Supreme Court will be the final arbiter in a plethora of legal challenges to the healthcare reform law.

US District Judge Roger Vinson in Pensacola, Florida, ruled in a suit brought by officials from 26 states that the law's "individual mandate" exceeds the authority of Congress to regulate interstate commerce as granted by the Constitution's commerce clause. "If Congress can penalize a passive individual for failing to engage in commerce, the enumeration of powers in the Constitution would have been in vain...and we would have a Constitution in name only," Vinson writes. "Surely this is not what the Founding Fathers could have intended."

That was the same conclusion reached in December by US District Judge Henry Hudson in Richmond, Virginia, in a suit filed by Virginia Attorney General Kenneth Cuccinelli II. However, unlike Hudson, Vinson did not leave the rest of the law intact.

US District Judge Roger Vinson

"I must conclude that the individual mandate and the remaining provisions are all inextricably bound together in purpose and must stand or fall as a single unit," Vinson writes. "The entire act must be declared void." Vinson buttressed his position by quoting the Obama administration and Congressional Democrats, who said that the insurance market reforms of the ACA depended on the individual mandate.

Today's decision can be said to even the score for the 20-odd lawsuits seeking to overturn the law. Two federal judges have struck down the individual mandate, whereas 2 others in Detroit, Michigan, and Lynchburg, Virginia, have upheld it in rulings based on the merits of the case. Such split decisions — which could be repeated at the appellate level — typically pull in the Supreme Court to settle the matter. However, Cuccinelli wants to fast-track the case to the high court before any appellate courts issue a ruling.

The Obama administration has achieved less definitive victories in 12 other anti-ACA federal lawsuits that were dismissed at earlier stages for a variety of reasons. Several other lawsuits in federal district courts are pending.

The new healthcare reform law is embattled on all sides, and not just in the courts. Earlier this month, a GOP-controlled House passed a bill repealing the ACA and approved marching orders to draft replacement legislation. The repeal bill and what follows it, however, face dim prospects for passage in the Senate, where Democrats enjoy a majority.

Vinson's Broccoli Question Foreshadowed Decision

The decision by Vinson does not come as a complete surprise. In a court hearing on December 16, the judge revealed his sympathy with the plaintiffs' argument that the commerce clause does not permit the government to regulate economic "inactivity" or require individuals to buy or sell anything against their will.

"If (the federal government) decided everybody needs to eat broccoli because broccoli makes us healthy," Vinson asked, "they could mandate that everybody has to eat broccoli each week?"

The Obama administration has contended that people who forgo healthcare insurance are not passive actors, because they will eventually need healthcare, and many stand to gain it free of charge from hospitals and physicians. Such individuals disrupt the healthcare marketplace, the argument goes, because the cost of this care gets shifted to healthcare providers and, ultimately, insured individuals and taxpayers. In addition, by failing to obtain coverage, "free riders" shrink the insurance risk pool, driving up premiums for the insured even more.

Vinson rejected that reasoning in his ruling today.

"The mere status of being without health insurance, in and of itself, has absolutely no impact whatsoever on interstate commerce," he writes. Although he conceded that lack of insurance could in some instances lead to cost shifting, Vinson said there are too many "if's" in the administration's argument — if the uninsured get sick, if they seek medical care, if they are unable to pay, and so on — for it to be legally supportable.

Without the individual mandate, other key parts of the ACA will not work as designed, according to the Obama administration. For example, the ban on insurers rejecting people with preexisting conditions or charging them extra depends on individuals obtaining coverage before they need medical care, not afterward. However, some observers say deleting the individual mandate would not cripple the law.

The litigation in the federal courts is playing out along political lines. The plaintiffs in the Florida case are 20 state attorneys general and 6 governors, all but 1 of them Republican. Virginia Attorney General Kenneth Cuccinelli also is in the GOP camp. The 2 federal judges who have declared the individual mandate unconstitutional were appointed by Republican presidents. Democratic presidents picked the 2 judges who said the law is sound.

Law's Medicaid Provisions Do Not Violate Congress' Spending Powers

In what might considered a moot point in terms of overall healthcare reform, Vinson also ruled today that the ACA does not overstep the Constitutional spending powers of Congress by forcing states to fund expanded Medicaid programs while giving more control of them to the federal government. The healthcare program for low-income individuals is jointly paid for by the federal government and the states.

The plaintiffs maintain that states will have to cut spending in other areas such as education, law enforcement, and corrections to foot the healthcare bills for millions of more individuals who will become eligible for Medicaid because of the ACA. The Obama administration has countered that states have the option of not participating in the program, and thus no government coercion is involved. Several states, such as Texas, have explored the idea of dropping out of Medicaid.

Vinson agreed with the Obama administration that the states are not victims of federal coercion and that participation is Medicaid is indeed voluntary. However, he said he appreciates "the difficult situation in which states find themselves" as junior partners in the federal–state Medicaid partnership.

"It is a matter of historical fact that at the time the Constitution was drafted and ratified, the Founders did not expect that the federal government would be able to provide sizable funding to the states, and consequently, be able to exert power over the states to the extent that it currently does," Vinson writes.

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