The individual mandate: A layperson’s explanation of the court challenges and initial rulings

Three federal district judges have ruled on the constitutionality of the federal health reform law’s requirement that individuals must purchase health insurance beginning in 2014 or face a tax penalty. The first two found the law constitutional, but on December 13, 2010, Judge Henry Hudson of federal District Court in Richmond found the “individual mandate” unconstitutional. He declined to grant an injunction – which was requested by the state of Virginia – to block the government’s implementation of the law. 

That challenge was filed by Virginia Attorney General Kenneth T. Cuccinelli on behalf of his state on the day the federal law was signed into law by President Obama. Earlier in 2010, two other federal district judges in Detroit and Lynchburg, Virginia found the law constitutional. These cases are already before appeals courts in Detroit and Richmond. Judge Hudson’s decision would also be appealed to the Richmond Fourth Circuit. Still pending is the challenge in Pensacola, Florida filed by 20 states’ attorneys general or governors. Neither Kentucky Governor Steve Beshear nor Attorney General Jack Conway joined the lawsuit.

One of the primary arguments at the core of the court cases is whether the law’s mandate that individuals purchase insurance exceeds the regulatory authority granted to Congress under the constitution’s Commerce Clause. Plaintiffs argue that the Commerce Clause does not justify compelling individuals to purchase a commodity in the private marketplace. The government has argued that the individual mandate is central to the law’s mission of covering the uninsured. Without the mandate, people could wait to purchase insurance only when they need it, negating the risk pooling that is the key to health insurance’s financial viability. Lawyers argue that the act of not purchasing insurance is an active decision that can shift billions of dollars of uncompensated care to hospitals, other insured persons and the government, and thus can be regulated under the Commerce Clause.  The case filed in Florida on behalf of 20 states also challenges the law’s expansion of Medicaid to include those at or below 133 percent of the federal poverty level.

Most legal scholars believe that ultimately the Supreme Court will settle the issue. Some observers have suggested that the case be fast-tracked to the Supreme Court for an earlier decision. Without being expedited, it is unlikely the Supreme Court would hear the case until 2012.


Other Resources:

FAQ from Kaiser Health Network, December 20, 2010