Employee Benefits Compliance, Individual Mandate, Laws, Regulations & FAQs

MOST RECENT COURT OF APPEALS CASE STRIKES DOWN INDIVIDUAL MANDATE

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On August 12, 2011, the 11th circuit court of Appeals struck down PPACA’s “individual mandate” provision as unconstitutional, upholding the lower court’s decision that the individual mandate violates the Commerce Clause of the United States Constitution. You may recall that two months ago the 6th circuit Court of Appeals rendered the opposite decision in a different case challenging the constitutionality of the individual mandate–holding that the individual mandate is constitutional. This conflict between the circuits increases the likelihood the US Supreme Court will grant certiorari and hear one or more of the cases challenging federal health care reform law, perhaps even rendering a decision before the 2012 Presidential elections. This most recent (11th circuit) case is State of Florida v US Dept of HHS.

Background

PPACA includes a comprehensive scheme to regulate health care services and cost in the United States. The five primary components of it are: 1) Insurance market reforms; 2) the Individual mandate; 3) State-run Health Insurance Exchanges; 4) the Large Employer mandate; and 5) Medicaid expansion. The individual mandate has been the most controversial and has been the basis of most of the lawsuits challenging the Health Care Reform Act.
Summary of the Appeals Court’s Decision

The Appeals Court:

  • Affirmed the decision of the District Court, holding that PPACA’s individual mandate for health coverage was unconstitutional under the Commerce Clause;
  • Held that the individual mandate was severable from the rest of the health care reform law, so did not strike down the entire law as the District Court had done; and
  • Held that the Medicaid expansion was constitutional, contrary to the District Court’s holding.
Regulation of Economic Activity that Substantially Affects Interstate Commerce
Plaintiffs in this case (and other cases challenging the HCR Act and the individual mandate) argued that the individual mandate is an unconstitutional exercise of congressional authority under the Commerce Clause because it is regulating economic “inactivity” (i.e., not purchasing health insurance), and the Commerce Clause only allows Congress to regulate economic activity that substantially affects commerce among the states. The 11th circuit court agreed, holding that allowing Congress to regulate such inactivity would be an unprecedented expansion of the Commerce Clause.
 
Relevant Sections of the US Constitution

The Commerce Clause (Article I, Section 8, Clause 3)
“The Congress shall have Power To regulate Commerce with foreign Nations, and among the several States, and with the Indian tribes”

The Necessary and Proper Clause (the final clause of Article I, section 8)
It is often cited in conjunction with the Commerce Clause. It says that the Commerce Clause power, and all of the other enumerated powers, may be implemented by the power:
“To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.”

The General Welfare clause (Article I, Section 8, Clause 1)
“The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States”