11th Circuit Court of Appeals strikes down "Individual Mandate" in Obamacare

That Atlanta based 11th Circuit Court of Appeals has ruled that the "Individual Mandate" of the new Health Care legislation is unconstitutional.  [See original opinion]  The "Individual Mandate", scheduled to take effect in 2014, requires each adult American to have health insurance; and to pay a penalty if they do not buy the insurance.  One of the purposes of this mandate is to push the healthy young people into the system - where they will typically pay more in than they take out, thus helping to spread the pool of risk for those who take out more than they pay in.  The mandate also brings into the net the "free riders" who don't carry insurance, but show up at the ER's and can't be denied care, the cost of which is passed along to the hospital and its other patients, insurance carriers, and government reimbursement programs.  The mandate is one of the few provisions in the law that could have a beneficial effect on the economics of health care delivery.  More people in the net, more money paid in, and so the cost can be reduced for everyone else.  That's a good thing.  So how on earth can these judges rule against this?

The answer is that the judges are not there to decide whether the legislation, or pieces of it, are good or bad, or well intentioned or politically correct.  This is a federal appeals court, reviewing the decision of a federal trial court, and its review is limited to the legal issues presented on appeal.  The main issue of contention here is whether the Congress is authorized under the Commerce Clause of the U.S. Constitution to require people to purchase a private product.  The Constitution lists the specific powers that the federal government has, and reserves the balance of possible governmental powers to the state.  The Commerce Clause says, in total, that Congress shall have power "To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes".  Requiring people to purchase health insurance cannot under any stretch reach to “Commerce with foreign Nations" or commerce with the Indian Tribes.  It stands or falls if it is a legitimate exercise in regulation of commerce among the several states.  

The original Commerce Clause cases in the Supreme Court respected the distinction between interstate activities and intrastate activities.  In the 20th century, that distinction was all but obliterated by the expansion of the federal government during the Depression and in the post-war period.  And yet no exercise of the Commerce Clause has affirmatively ordered every citizen to buy a private product.  It's new ground.  Stop to think of the implications of that principle for a moment: the federal government, with all good intentions and nobility of purpose, can tell you that you must buy a private product.  A Chrysler car, to help the auto industry and its workers.  An electric car, to help the struggling Green industry.  A school bond, to help subsidize the costs of the local school system.  You must buy at least $25 in postage each month so that we can continue to subsidize the U.S. Postal Service.  For whatever constituency you feel attached to, can you come up with a required purchase that would help you struggling constituency?  If you can't, then don't run for office.  Any politician can find a noble purpose to keep his constituents happy.  

And so that is the real issue.  The Commerce Clause, originally a limitation on federal power, is turned into a blank check to justify any exercise of power that has a noble purpose.  That is what the legal fight is about.  Suppose you have a man living in the woods of central Pennsylvania.  He has never left his county or his township.  He does not believe in government handouts.  He does not believe in insurance and doesn't purchase it.  He is willing to live with those consequences.  In 2014, under the Individual Mandate, he will be required to purchase health care insurance or pay a penalty, if he is engaged in commerce among the several states.  Is he?    

The 11th Circuit's majority opinion found that:

"... the individual mandate exceeds Congress’s enumerated commerce power and is unconstitutional.  This economic mandate represents a wholly novel and potentially unbounded assertion of congressional authority: the ability to compel Americans to purchase an expensive health insurance product they have elected not to buy, and to make them re-purchase that insurance product every month for their entire lives.  We have not found any generally applicable, judicially enforceable limiting principle that would permit us to uphold the mandate without obliterating the boundaries inherent in the system of enumerated congressional powers."

Several months ago, the U.S. Appeals Court for the 6th Circuit, based in Cincinnati, upheld the individual mandate as constitutional, saying: 

"the minimum coverage provision falls within Congress’s authority under the Commerce Clause for two principal reasons: (1) the provision regulates economic decisions regarding how to pay for health care that have substantial effects on the interstate health care market; and (2) the provision is essential to the Act’s larger regulation of the interstate market for health insurance."

Translation:  the end justifies the means.  

There is a clear dispute between the federal circuit courts – and so this issue is headed to the Supreme Court.  It will be interesting to see how quickly it gets there and is briefed, argued, and announced.  I doubt that this all can occur before the November 2012 election.  But it will most likely be decided before the bulk of the provisions of the law are intended to take effect in 2014.  Four sitting Supreme Court justices are in their seventies:  Scalia, Kennedy, Ginsburg and Breyer.  The next president may be appointing for some or all of those seats.  The 2012 election will have consequences, and the future of the Individual Mandate will likely be one of them.