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On August 12, 2011, the Eleventh Circuit Court of Appeals held that the individual mandate provision of the Patient Protection and Affordable Care Act, passed in 2010, is unconstitutional. The divided three-judge panel struck down the requirement that Americans must carry health insurance or face penalties.  The Eleventh Circuit ruling conflicts with the June 29, 2011 Sixth Circuit ruling upholding the constitutionality of the statute’s individual mandate, which was the first appeals court decision to rule on a challenge to the law. Other appeals are presently pending in the 4th Circuit and D.C. Circuit.

The Eleventh Circuit ruling makes it more likely that the Supreme Court will soon grant certiorari to resolve the conflicting decisions regarding the constitutionality of the individual mandate provisions of the statute, and possibly others. Challenging the 6th Circuit’s opinion, the Thomas More Law Center filed a petition for certiorari to the Supreme Court on July 26, 2011. The Justice Department will no doubt challenge the 11th Circuit opinion, and so the Supreme Court may take the issue up fairly soon.

The 11th Circuit’s 2-1 ruling by Judge Frank Hull, a Clinton appointee,  was joined by Chief Judge Joel Dubina, appointed by George H.W. Bush.  Judge Stanley Marcus, in a dissenting opinion, said the mandate is constitutional. He was also appointed by Clinton.

The panel found that even though the individual mandate is unconstitutional, the remainder of the law can stand. The panel also said that the law’s expansion of Medicaid is constitutional.  In striking down the individual mandate, the panel noted, among other things, that, “Properly formulated, we perceive the question before us to be whether the federal government can issue a mandate that Americans purchase and maintain health insurance from a private company for the entirety of their lives. These types of purchasing decisions are legion. Every day, Americans decide what products to buy, where to invest or save, and how to pay for future contingencies such as their retirement, their children’s education, and their health care. The government contends that embedded in the Commerce Clause is the power to override these ordinary decisions and redirect those funds to other purposes.” 

The panel rejected such a reading of the Commerce Clause, saying “the Supreme Court has always described the commerce power as operating on already existing or ongoing activity.” All prior cases “involved attempts by Congress to regulate preexisting, freely chosen classes of activities.” Not buying health insurance is not an already existing or ongoing activity, or a preexisting class of activity, the panel found.  The panel concluded, “The government’s position amounts to an argument that the mere fact of an individual’s existence substantially affects interstate commerce, and therefore Congress may regulate them at every point of their life. This theory affords no limiting principles in which to confine Congress’s enumerated power.”

Judge Marcus, who dissented, called the decision “wooden, formalistic and myopic.”  He said that Congress has shown time and again that it has power over the national health care markets, especially in its ability to set prices under Medicare, its regulatory authority over insurers and drugmakers and its ability to issue rules that cut across both how care is delivered and covered. “Both the congressional intent to link the two and the empirical relation between the purchase of health insurance and the consumption of health care services are clear,” Marcus wrote.

The 11th Circuit decision contrasts with the 6th Circuit’s 2-1 June 2011 decision upholding the law.  

The 6th Circuit found, “Congress had a rational basis for concluding that the minimum coverage provision is essential to [Obamacare’s] larger reforms to the national markets in health care delivery and health insurance,” Judge Boyce F. Martin, a Carter appointee, wrote for the majority in the 2-1 ruling.  Judge Jeffrey Sutton, a George W. Bush appointee, concurred. Judge James Graham, a Reagan appointee who is a U.S. district judge, dissented.  Judge Martin dismissed the argument that there’s a difference between economic activity and inactivity, because “the text of the Commerce Clause does not acknowledge a constitutional distinction between activity and inactivity, and neither does the Supreme Court.”  Judge Martin further note that “there is no constitutional impediment to enacting legislation that could be characterized as regulating inactivity.”  After rejecting this argument, however, Judge Martin found that “far from regulating inactivity, the minimum coverage provision regulates individuals who are, in the aggregate, active in the health care market.”

In his concurring opinion, Judge Sutton noted that “the lingering intuition—shared by most Americans, I suspect—that Congress should not be able to compel citizens to buy products they do not want.” However, he then found that health care is different, because it involves “regulating how citizens pay for what they already receive.”  Thus, Congress may regulate this conduct through the Commerce Clause.

In his dissent, Judge Graham stated: “If the exercise of power is allowed and the mandate upheld, it is difficult to see what the limits on Congress’ Commerce Clause authority would be.” He asked, “What aspect of human activity would escape federal power?”

The clear division among these jurists, and the primary issue that will be framed for the Supreme Court, is how far Congress may go in regulating individuals under the Constitution’s Commerce Clause? Can Congress regulate inaction, e.g., an individual’s decision not to purchase an item, or not to purchase a specific kind of item? Can Congress force individuals to purchase something they don’t want or believe they don’t need? Can Congress regulate a purely private transaction (or failure to transact) that by itself may have no direct impact on interstate commerce?  The Supreme Court has at times viewed the Commerce Clause as an expansive grant of power to Congress to regulate conduct that only incidentally touches interstate commerce. Other times, the Court has refused to read the clause as expansively. It is an important issue that may have a much broader impact on businesses and individuals than simply with respect to purchasing health care coverage.