PrintDecember 16, 2010
The ObamaCare Ruling Time Bomb
The recent ruling on the Patient Protection and Affordability Act (ACA) could be very bad news for the insurance industry and opponents of single-payer government health care.
Earlier this week, United States District Judge Henry E. Hudson ruled that the Minimum Essential Coverage Provision contained in Section 1501 of ACA which levies a penalty against taxpayers who do not comply with the health insurance mandate is unconstitutional because it "exceeds the congressional boundaries of congressional powers."
The court's key consideration was "whether or not Congress has the power to regulate -- and tax -- a citizen's decision not participate in interstate commerce." Previous expansionary rulings of the Commerce or Tax Clauses addressed only voluntary economic activity that directly or incidentally affect interstate commerce. These two clauses have never been extended "to include the regulation of a person's decision not to buy a product."
Hudson rejected the arguments made on behalf of the Secretary of the Department of Health and Human Services that such a mandate is allowable under both the Commerce Clause and the General Welfare Clause. Hudson ruled that "[t]he unchecked expansion of congressional power" suggested by the mandate could lead to an "unbridled exercise of police powers." In the judge's opinion, a "core issue" was "an individual's right to choose to participate."
The victory on its face may seem to be the death knell for ACA, but two critical decisions included in the court's ruling not only keep ACA alive, but may have disastrous consequences.
Despite the absence of a severability clause, Hudson decided that the court would consider the constitutional flaws only in specific provisions of Section 1501 that make up the "enforcement mechanism" while leaving the rest of the section, and ACA, intact. Hudson justified this action by citing precedent of courts carving out only the sections of legislation that exceed constitutional powers even in the absence of severability clauses.
Also, Hudson declined to grant injunction relief to block implementation of the remainder of Section 1501. Employing a "kick the can down the road" explanation, Hudson reasons that because of the "significant public policy implications," the "final word will undoubtedly reside with a higher court." Hudson further concluded that the costs incurred by the states to prepare for ACA will not cause "irreparable harm" and that the preparatory steps are "irreversible." Both may be true, but Hudson's assumption that time is not a factor since the "key provisions of Section 1501 do not take effect until 2013 at the earliest" is incorrect. Serious breakdowns in the health care system will happen long before then.
Herein lies the problem with the structure of this ruling. Allowing the implementation of Section 1501 without the mandate will cause the insurance industry to become insolvent. This point was made by the counsel for the secretary and summarized in the ruling. "Without full market participation, the financial foundations supporting the healthcare [sic] system will fail, in effect causing the entire health care system to 'implode'."
Bob MacGuffie, co-founder of Right Principles, said, "Many observers seem to be assuming that if the purchasing mandate is declared unconstitutional, the entire law will also be declared unconstitutional because there's no severability clause in it."
MacGuffie also warns that the purchasing mandate was included "in the law to counterbalance the 'no pre-existing conditions exclusion' mandate imposed on the health insurers. It's there so that people do not wait to buy health insurance until after they've been diagnosed with a serious condition. Without it, the insurance programs would tank financially."
With the collapse of the insurance industry, there can be only one outcome: a single-payer, government-run health care system.
Howard Dean was correct when he said that the ruling is immaterial to implementing ACA. In an interview on MSNBC, Dean said, "It doesn't really matter. Because the truth is you don't need the individual mandate to make this work." Dean added, "There are ways around the individual mandate."
In effect, this ruling may have handed the left what they wanted all along.
