Appeals court blasts mandate

In an opinion stretching more than 300 pages, 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.

A divided three-judge panel of the federal appeals court ruled in favor of the 26 states that had joined a lawsuit in Pensacola, Fla., arguing that the reform law relies on an unconstitutional expansion of congressional power.

Friday’s ruling means the U.S. Supreme Court now has before it a split in the circuit courts. The 6th U.S. Circuit Court of Appeals in Cincinnati 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.

The 11th Circuit judges ruled 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 uninsured Americans would face a penalty on their income taxes starting in 2014 for not having health insurance. The court ruled that Congress essentially ordered citizens to buy insurance so it could then regulate that purchase as a form of commerce.

“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.

Sen. Orrin Hatch (R-Utah) applauded the ruling as a victory for personal liberty. “Never before has the federal government forced the American people to purchase something they do not want,” he said in a written statement.

Hatch—the ranking member of the Senate Finance Committee, which produced much of the healthcare law—has introduced legislation to repeal the individual insurance mandate.

Friday’s 11th Circuit opinion also included a dissent from U.S. Circuit Judge Stanley Marcus, who wrote that the majority opinion ignored decades of Supreme Court precedents that expand and define the scope of Congress’ Commerce Clause powers to include overarching regulatory schemes.

“The individual mandate was designed and intended to regulate quintessentially economic conduct in order to ameliorate two large national problems,” Marcus wrote. “First, the substantial cost-shifting that occurs when uninsured individuals consume healthcare 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.”

The ruling struck down the individual insurance mandate but left intact the rest of the law, including a provision that would expand states’ Medicaid rolls by at least 14 million people. The appeals court rejected arguments by the litigant-states that the law should also be thrown out because it forced state lawmakers into costly Medicaid expansions.

However, it’s not clear whether the reform law is financially tenable without the individual mandate.

Proponents of the law say the mandate was central to reform as a way to offset insurers’ costs, since it also took away their right to turn away sick beneficiaries.

“This ruling would put the ban on discrimination against people with pre-existing conditions at risk,” House Minority Leader Nancy Pelosi (D-Calif.) said in a statement. “There have been and will continue to be a wide range of attempts to roll back the law, but as in previous court rulings across the country, I am confident that the Affordable Care Act will ultimately be sustained.”

But Rep. Joe Pitts (R-Pa.), chairman of the House Energy and Commerce Health Subcommittee, said the ruling brought the nation “one step closer to the elimination of the unconstitutional mandate to purchase health insurance” and urged Congress to continue efforts to repeal the entire law.

“The Affordable Care Act will not reduce healthcare costs,” he said in a written statement. “We still need real reform.”

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.

Sen. Tom Harkin (D-Iowa), chairman of the Health, Education, Labor and Pensions Committee, described Friday’s majority opinion as “wrong.”

“Fortunately, the 11th Circuit’s will not be the final word on this issue—I am confident that the Supreme Court will find the Affordable Care Act constitutional, ensuring that Americans keep crucial new protections against the unfair practices of insurance companies,” Harkin said.

Rep. Fred Upton (R-Mich.), chairman of the powerful Energy and Commerce Committee, said the law will push premiums higher.

“The sooner the courts make a final ruling on this unconstitutional law, the sooner we can begin to pick up the pieces and make the kinds of common-sense, bipartisan reforms that should have been at the heart of healthcare reform all along,” Upton said in a written statement.

—with Rich Daly and Jessica Zigmond