Appeals court strikes down individual mandate in reform law

(Updated with additional content at 2:45 p.m. ET)

In a 304-page opinion, the 11th U.S. Circuit Court of Appeals in Atlanta on Friday struck down the individual insurance mandate in the Patient Protection and Affordable Care Act, but allowed the rest of the sweeping law to stand.

In its decision, a divided three-judge panel of the federal appeals court ruled in favor of 26 states that had joined a lawsuit in Pensacola, Fla., which argued the reform law should be struck down because it relies on an unconstitutional expansion of federal power.

The ruling means that the Supreme Court will now have the classic split in the circuit courts that it often relies on when deciding whether to take on a case. The 6th Circuit Court of Appeals upheld the law in June, and the losers in that case filed for permission last month to have their case heard by the Supreme Court.

Critics said—and the 11th Circuit judges agreed—that Congress' ability to regulate interstate commerce cannot be expanded to include a power to compel private individuals to buy health insurance. Under the law, nearly all Americans who can't prove they have health insurance would face a penalty on their income taxes starting in 2014.

“What Congress cannot do under the Commerce Clause is mandate that individuals enter into contracts with private insurance companies for the purchase of an expensive product from the time they are born until the time they die,” the judges wrote.

A dissenting opinion from U.S. Circuit Judge Stanley Marcus said the majority opinion ignored decades of Supreme Court precedents to expand and define the scope of Commerce Clause powers to include over-arching regulatory schemes.

“The individual mandate was designed and intended to regulate quintessentially economic conduct in order to ameliorate two large national problems: first, the substantial cost shifting that occurs when uninsured individuals consume health care services—as virtually all of them will, and many do each year—for which they cannot pay; and, second, the unavailability of health insurance for those who need it most—those with pre-existing conditions and lengthy medical histories,” Marcus wrote.

Although the ruling technically only strikes out the individual mandate, legal observers have said that it's not clear whether the law is workable from a practical perspective without the provision. Proponents of the law have said the mandate was necessary to offset insurers' costs, since the reform law also took away their right to turn away sick patients.

The 11th Circuit is the second federal appeals court to issue a ruling on the merits of the reform law.

In June, the 6th Circuit Court of Appeals in Cincinnati upheld the law on a challenge from a federal lawsuit in Detroit after hearing a nearly identical set of arguments as the 11th Circuit judges did. The Thomas More Law Center, which lost the Detroit appeal, has already filed a petition for writ of certiorari with the U.S. Supreme Court to hear oral arguments in the lawsuit.

Still outstanding are rulings from the 4th Circuit Court of Appeals in Richmond, Va., which heard oral arguments in May on two different lawsuits challenging the reform law. The judges have not yet ruled on those cases.