11th Circuit Decides the Health Insurance Individual Mandate is Unconstitutional

On Friday (August12, 2011), the Eleventh Circuit held that the new Health Insurance law is unconstitutional.

The particular law that was at issue in the case as the Patient Protection and Affordable Care Act, Pub. L. No. 111-148, 124 Stat. 119 (2010), amended by Health Care and Education Reconciliation Act of 2010, Pub. L. No. 111-152, 124 Stat. 1029 (2010). This is the law that is commonly known in the press as “Obamacare.”  The Court of Appeals noted that the Act is 975 pages long.  Major elements of the law include a requirement that all persons purchase health insurance, a requirement that companies with 50 or more employees provide their employees health insurance or pay a fine, and an obligation for health insurance companies to offer insurance to all persons regardless of pre-existing conditions.  To facilitate this, the law obliges states to establish state-run exchanges through which insurance would be purchased.  The law also greatly expanded state medicaid obligations, imposing new classes of persons who will be entitled to benefits.

Florida and 25 other states sued, claiming that the law was unconstitutional on several grounds.  They claimed that the individual mandate was outside the scope of the Commerce Clause (and thus unconstitutional).  They also claimed that the new state obligations related to medicaid reflected a 10th Amendment infringement.  The District Court had already ruled that the individual mandate was unconstitutional.  The District Court held that the individual mandate was inextricable from the remainder of the law, and thus the entire law was unconstitutional.

Because of the complicated nature of the law, the importance of the law, and also because of the fact that the Court must start with a presumption of Constitutionality whenever it is examining a law passed by Congress (and thus must provide a complete analysis to demonstrate unconstitutionality), it took the Court a few extra pages to analyze the constitutionality of the matter. In fact the decision of the Court of Appeals was 304 pages long (207 for the decision, 84 for the dissenting opinion of Judge Marcus, and 13 for the appendix to the decision).

  • The expansion of Medicaid was Constitutional;
  • The individual mandate to purchase health insurance from a private company exceeded Congress’ power and was thus Unconstitutional;
  • The individual mandate can be severed from the remainder of the health insurance law and thus the remainder of the complicated law remains in effect (without the individual mandate).

This is probably not the end of the road. It is highly likely that the Administration will seek to defend the health insurance law and will thus seek to appeal to the Supreme Court.  The plaintiffs may also appeal, seeking a return of the District Court’s more expansive ruling that invalidated the entire law.

If the parties were to decide not to appeal, or if the Supreme Court was to refuse to hear the case, then this case would not affect the mandate for companies to make insurance available to their employees or face a penalty.

This is a long and complicated ruling. It is not surprising that many people are drawing their own conclusions without reading the ruling itself. It is important to understand the rather limited focus of the Court’s decision (as described in the three bullet points, above). An example of the rhetoric that has already strained the bounds of common sense is found in the House Minority Leader’s responsive press release, which stated “[t]his ruling would put the ban on discrimination against people with pre-existing conditions at risk.”  This claim was incorrect – actually, the ruling explicitly permitted the other elements of the Act (like the ban on discrimination) to remain in place. In fact, the majority decision acknowledges in section II.(D)(4) that the Act forbids insurers from denying coverage on the basis of a pre-existing condition.

Republican lawmakers have suggested passing a law delaying the implementation of the health insurance law until all appeals and current court cases concerning Constitutionality have been completed.  The Administration has downplayed the importance of this ruling, explaining that the decision will not stand.  With the Presidential election just one year away, the current Administration would probably veto such a proposal if it were to be successfully passed in the Senate.

The Eleventh Circuit’s opinion is available online, at http://www.uscourts.gov/uscourts/courts/ca11/201111021.pdf

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About Jason Dickstein
Mr. Dickstein is the President of the Washington Aviation Group, a Washington, DC-based aviation law firm. He represents several aviation trade associations, including the Aviation Suppliers Association, the Aircraft Electronics Association, the Aircraft Fleet Recycling Association and the Modification and Replacement Parts Association.

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