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Appellate Court Upholds Constitutionality of Health Insurance Mandate

By Bruce R. Hopkins, Editor August 22, 2011

(Originally published in the August issue of Bruce R. Hopkins Nonprofit Counsel, available electronically to subscribers on publication.)

The US Court of Appeals for the Sixth Circuit, on June 29, upheld (2-1) the constitutionality of the individual health insurance mandate, enacted by the Patient Protection and Affordable Care Act (summarized in the June 2010 issue), as being action by Congress that is within the scope of its authority to regulate, directly or indirectly, economic activity under the Constitution’s Commerce Clause (Thomas More Law Center v. Obama). In so holding, it not only became the first federal court of appeals to pass on the issue, but it also gave the Obama administration a major win as the question as to the constitutionality of the mandate makes its way, presumably, to the US Supreme Court, to be heard and decided during the Court’s 2011–2012 term.

This issue has also been reviewed by five federal district courts (see the December 2010, and the February, April, and May 2011 issues), so the statutory provision and the constitutional law arguments are generally familiar. In a sentence, as to the facts, the provision, set to take effect in 2014, requires all applicable individuals to maintain minimum essential health insurance coverage or pay a penalty. In a longer sentence, as to the law, the Supreme Court’s pertinent jurisprudence as to Commerce Clause principles is that Congress may regulate (1) economic activity, even if wholly intrastate, if it substantially affects interstate commerce, and (2) noneconomic activity if doing so is essential to the workability of a larger scheme that regulates economic activity.

Rejecting the assertion that not purchasing insurance and facing health care needs on an out-of-pocket basis (generically, self-insuring) is not economic activity, the Sixth Circuit wrote that the “activity of foregoing health insurance and attempting to cover the cost of health care needs by self-insuring is no less economic than the activity of purchasing an insurance plan.” Therefore, the court concluded, the “minimum coverage provision is a valid exercise of the Commerce Clause power because Congress had a rational basis for concluding that, in the aggregate, the practice of self-insuring for the cost of health care substantially affects interstate commerce.”

Alternatively, assuming self-insuring is not economic activity with a substantial effect on interstate commerce, Congress, wrote the court of appeals, “could still properly regulate the practice because the failure to do so would undercut its regulation of the larger interstate markets in health care delivery and health insurance.” The court accepted the assertion that the health care market is unique, in that virtually all citizens, by nature, participate in it. It stated that, “although there is no firm, constitutional bar that prohibits Congress from placing regulations on what could be described as inactivity, even if there were it would not impact this case due to the unique aspects of health care that make all individuals active in this market.”

With a last swipe at the asserted activity/inactivity distinction, the court held that the “constitutionality of the minimum coverage provision cannot be resolved with a myopic focus on a malleable label.” In a concurring opinion (which also held that the penalty is not a tax), the circuit judge wrote: “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.”

The Thomas More Law Center, on July 26, filed a petition with the US Supreme Court, asking the Court to review the Sixth Circuit’s decision.


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