March 26, 2017

Key Health Care Provision Struck Down

Perhaps the most controversial provision of the recent health care law is Section 1501, which would financially penalize individuals each year beginning in 2014 if they do not have health insurance for all 12 months of the previous year. The amount of the fine is 8.3% of taxable income or a maximum amount that will gradually increase until 2016. The maximum fine is $285 in 2014, $1,050 in 2015, and $2,250 in 2016, according to the 906-page Affordable Care Act [.pdf]. Despite this provision not having effect until 2013, several lawsuits across the country have challenged the constitutionality of Section 1501. Today a federal district court judge in Virginia ruled Section 1501 is unconstitutional – effectively issuing an injunction against the provision until further ruling.

The Virginia case is Kenneth T. Cuccinelli II v. Kathleen Sebelius and today’s 42-page ruling [.pdf] details the following arguments for each side of the case. Sebelius and the Obama Administration argue the Commerce Clause provides the federal government with the constitutional authority to pass Section 1501. Additionally, the Obama Administration emphasizes that “most individuals use health care services and few people can guarantee they will not shift the cost of the health care services to the rest of society.”

On the other hand, Cuccinelli, who is the Attorney General of Virginia, argues the mandate to purchase health coverage is outside the scope of the Commerce Clause because it requires individuals to purchase a product. Further, Cuccinelli argues the Commerce Clause allows Congress to regulate interstate commerce, not require participation in it. Judge Henry Hudson, who George W. Bush appointed in 2002, sided with the latter argument in today’s ruling and struck down Section 1501.

Though, the Obama Administration is certain to appeal this ruling, which may eventually reach the Supreme Court. Also, every other District Court ruling regarding the constitutionality of Section 1501 includes:

  1. A Michigan lawsuit found Section 1501 to be constitutional on October 8th.
  2. On December 1st, in a separate Virginia lawsuit, a judge also ruled Section 1501 is constitutional.
  3. On December 9th, a New Jersey lawsuit similarly found Section 1501 to be constitutional.

Meanwhile, a Florida lawsuit, which has prominent sponsors including 16 Attorneys General and 4 Governors, has not yet issued a ruling on Section 1501. Depending on the outcome of this Florida suit, there may be more than one federal ruling supporting each side of the health care debate, which would only increase the likelihood of the Supreme Court hearing a case about Section 1501.

Lastly, another reason the Supreme Court will hear such a case is that striking down Section 1501 would jeopardize the entire health care reform law. Basically, requiring individuals to have health insurance is the mechanism to pay for the addition of new aspects to health care services, such as high-risk patients who were previously excluded from health insurance because of pre-existing conditions, as well as insuring young adults under their parents until the age of 26. Therefore, this provision is of profound importance to the landmark law and will undoubtedly attract attention from the Supreme Court, especially with the conflict between District Court rulings.

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