States’ Lawsuit Against Health Care Overhaul Likely To Move Forward

On Tuesday during a hearing in Florida, U.S. District Judge Roger Vinson said that he likely will allow at least part of a multistate lawsuit against the health reform law's individual mandate to proceed, although he did not say which claims he intends to approve, the New York Times reports (Sack, New York Times, 9/14).

Background

The lawsuit argues that Congress does not have the constitutional authority to require all U.S. residents to obtain health insurance and that states cannot be forced to spend more to provide coverage for low-income families.

Florida Attorney General Bill McCollum (R) filed the complaint in March, shortly after the law was enacted, with support from 19 other mostly Republican state attorneys general and the National Federation of Independent Business.

The Obama administration, in its defense against opposition to the law, has argued that the only way to improve the health insurance market is to require those who can afford to purchase minimum coverage to do so.

The coverage mandate is scheduled to take effect in 2014, and individuals who fail to obtain minimum coverage by 2016 would face a tax penalty of about $700 annually (California Healthline, 9/13).

Vinson is considering a motion by the Department of Justice to dismiss the lawsuit.

However, he said during the hearing that he likely would reject "at least one" of the motions for dismissal, but did not elaborate. McCollum, who attended the hearing, said, "The judge's apparent decision today means we will proceed" (Peltier, Reuters, 9/14).

Judge Questions Whether Lack of Insurance Constitutes Commerce

Vinson questioned the Obama administration's assertion that all U.S. residents are active participants in the country's health care system, regardless if they have health insurance, and, therefore, are eligible for the tax penalty under the federal government's authority to regulate commerce (Norman, CQ HealthBeat, 9/14).

Vinson's comments suggested skepticism that an individual's decision not to purchase health insurance qualifies as commercial activity that Congress can regulate. Vinson said at one point to Ian Gershengorn, deputy assistant U.S. attorney general, "You're trying to turn the word upside down and say activity is really equivalent to inactivity."

Gershengorn countered that the "appearance of inactivity" is "an illusion." He said that U.S. residents' decision not to purchase insurance has a direct effect on commerce because the cost of care for uninsured residents who cannot pay is subsidized by other U.S. residents, hospitals and the government.

Judge Seems To Agree With States on Medicaid Expansion Coercion

Vinson also seemed to agree with the lawsuit's claim that the health reform law amounts to undue pressure by the federal government on state resources through the overhaul's expansion of Medicaid.

Although the federal government initially will pick up the cost of the expansion, by 2016 states will begin to cover part of the expansion's cost, a share that eventually will reach 10%.

DOJ lawyers argued that Medicaid is a voluntary program from which states can withdraw at any time. However, Blaine Winship, an assistant Florida attorney general, said, "The idea that we could walk away from Medicaid is just essentially nonsensical." Vinson "seemed to empathize" with the states' argument, the Times reports (New York Times, 9/14). He said, "The states are in a Catch-22 situation because the government dominates the ability to raise income," adding, "The states are left almost powerless" (Aizenman, Washington Post, 9/14).

Ruling Set for Oct. 14, Oral Arguments on Dec. 16

Vinson said he would issue an opinion no later than Oct. 14, and he scheduled oral arguments to begin Dec. 16.

Many legal experts expect the case eventually to reach the U.S. Supreme Court, which would have a historical opportunity to consider the extent of lawful government influence. McCollum said, "Our whole system of federalism rests on the decisions of this case" (New York Times, 9/14).