Health-Care Law Appeal: Round One Goes to the White House

6th Circuit Judges differ on the definition of "activity" as it applies to the individuals and the purchasing of health insurance


Giving the Obama Administration an incremental victory in the legal battle over the nation's new health-care law, the 6th U.S. Circuit Court of Appeals Wednesday narrowly upheld the "individual mandate" provision of the Patient Protection and Affordable Care Act. A divided three-judge panel held 2-1 that the controversial provision-- which requires individuals to purchase health insurance by 2014 -- is a "valid exercise of legislative power by Congress under the Commerce Clause" of the Constitution.

The main opinion in Thomas More Law Center v. Obama was written by 6th Circuit Judge Boyce F. Martin, an appointee of President Carter. His colleague, 6th Circuit Judge Jeffrey Sutton, an appointee of President George W. Bush, ruled that the "mandate" was beyond Congress' vast taxing power but, critically, agreed with Judge Martin that federal legislators did not exceed some of their other constitutional powers when they enacted the funding provision of the Affordable Care Act. The third judge on the panel, James L. Graham, an appointee of President Ronald Reagan, dissented. The appeal stemmed from a ruling last October by U.S. District Judge George Steeh, a Clinton appointee out of Michigan, who had upheld the measure.

The ruling is the first by a federal appeals court on the merits of the Care Act -- but it will not be the last. Panels of the 3rd Circuit (New Jersey), the 4th Circuit (Virginia) and the 11th Circuit (Florida) have each held their own oral arguments on the topic and currently are writing their own opinions about the constitutionality of the health-care law. Those decisions are expected before the end of the summer and each may be appealed at that time to the United States Supreme Court. Each of the Ohio-based judges of the 6th Circuit acknowledged Wednesday in the decision that the issues raised by the new law's critics ultimately will be resolved by the justices in Washington.

In the meantime, Judge Martin quickly resolved one of the key questions that has surrounded the legal fight over the new law. Opponents of the Affordable Care Act have argued, before the 6th Circuit and elsewhere, that Congress may not constitutionally regulate "inactivity"-- what they contend is the private, individual choice not to buy health insurance. But "Congress had a rational basis for concluding that the practice of self-insuring for the cost of health care has a substantial effect on interstate commerce," Judge Martin wrote, "and that the minimum coverage provision is an essential part of a broader economic regulatory scheme. Thus, the provision is constitutional notwithstanding the fact that it could be labeled as regulating inactivity."

Judge Martin wrote:

The Act considered as a whole makes clear that Congress was concerned that individuals maintain minimum coverage not as an end in itself, but because of the economic implications on the broader health care market. Virtually everyone participates in the market for health care delivery, and they finance these services by either purchasing an insurance policy or by self-insuring. Through the practice of self-insuring, individuals make an assessment of their own risk and to what extent they must set aside funds or arrange their affairs to compensate for probable future health care needs.Thus, set against the Act's broader statutory scheme, the minimum coverage provision reveals itself as a regulation on the activity of participating in the national market for health care delivery, and specifically the activity of self insuring for the cost of these services (my emphasis).

Judge Sutton, one of the first Republican-appointed federal judges in the nation to uphold any portion of the Act on its merits, framed the action/inaction dichotomy differently even as he agreed with Judge Martin's assessment of the scope of the Commerce Clause. First, Judge Sutton wrote:

In choosing how to regulate this group, Congress also did not exceed its power. The basic policy idea, for better or worse (and courts must assume better), is to compel individuals with the requisite income to pay now rather than later for health care. Faced with $43 billion in uncompensated care, Congress reasonably could require all covered individuals to pay for health care now so that money would be available later to pay for all care as the need arises. Call this mandate what you will--an affront to individual autonomy or an imperative of national health care--it meets the requirement of regulating activities that substantially affect interstate commerce.

Then, the Bush appointee whose opinion here surely will earn the wrath of conservative opponents of the Affordable Care Act, sided with administration lawyers who had argued that for, purposes of the debate over health insurance, there is no true "inactivity." Judge Sutton wrote:

No one is inactive when deciding how to pay for health care, as self-insurance and private insurance are two forms of action for addressing the same risk. Each requires affirmative choices; one is no less active than the other; and both affect commerce. In affidavits filed in this case, the individual plaintiffs all mention the need to make current changes in their spending and saving practices to account for the need to pay for medical insurance in the future. Saving to buy insurance or to self-insure, as these affidavits attest, involves action (citations omitted by me).

Significantly, the 6th Circuit unanimously found that the plaintiffs challenging the controversial law had legal "standing" to pursue their claims now, three years before the "mandate" is scheduled to take effect. This procedural question has come up in virtually all of the challenges to the new health-care law -- and some legal observers have wondered whether it might ultimately provide the United States Supreme Court with a way of gently dispatching these cases without getting to the merits of the Act. But Judge Martin wrote:

In view of the probability, indeed virtual certainty, that the minimum coverage provision will apply to the plaintiffs on January 1, 2014, no function of standing law is advanced by requiring plaintiffs to wait until six months or one year before the effective date to file this lawsuit. There is no reason to think that plaintiffs' situation will change. And there is no reason to think the law will change. By permitting this lawsuit to be filed three and one-half years before the effective date, as opposed to one year before the effective date, the only thing that changes is that all three layers of the federal judiciary will be able to reach considered merits decisions, as opposed to rushed interim (e.g., stay) decisions, before the law takes effect. The former is certainly preferable to the latter, at least in the current setting of this case.

Judge Graham, the Reagan appointee, issued a forceful, even strident dissent in which he wrote that only a constitutional amendment could accomplish what the Affordable Care Act seeks to do. "The mandate and its penalty are not conditioned on the failure to pay for health care services, or, for that matter, conditioned on the consumption of health care," Judge Graham wrote. "Congress instead choose a more coercive and intrusive regulation. The proper object of Congress's power is interstate commerce, not private decisions to refrain from commerce."

Judge Graham wrote:

Here, Congress's exercise of power intrudes on both the States and the people. It brings an end to state experimentation and overrides the expressed legislative will of several states that have guaranteed to their citizens the freedom to choose not to purchase health insurance. The mandate forces law -abiding individuals to purchase a product- an expensive product, no less - and thereby invades the realm of an individual's financial planning decisions. In the absence of the mandate, individuals have the right to decide how to finance medical expenses. The mandate extinguishes that right (citations omitted by me).

It was not immediately clear whether the plantiffs in the case including a conservative advocacy group, would appeal the ruling directly to the Supreme Court or seek to have the full 6th Circuit reconsider the decision offered Wednesday by the panel. It is unlikely that the Supreme Court would accept that review at this time. An en banc hearing by the 6th Circuit would take months to resolve.

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