Constitutional Challenge To Insurance Requirement Of Health Care Reform Act Dismissed

Constitutional Challenge To Insurance Requirement Of Health Care Reform Act Dismissed

DETROIT - (Mealey's) A Michigan federal judge on Oct. 7 dismissed a constitutional challenge to the health insurance mandate/federal income tax penalty of the Health Care Reform Act, saying Congress has a right to try to eliminate cost-shifting by uninsured Americans (Thomas More Law Center, et al. v.  Barack Hussein Obama, et al., No. 10-11156, E.D. Mich., S. Div.).

After the Patient Protection and Affordable Health Care Act, known as the Health Care Reform Act, was passed in March, the Thomas More Law Center, Jann DeMars, John Ceci, Steven Hyder and Salina Hyder sued President Obama and other federal government defendants in the U.S. District Court for the Eastern District of Michigan.  They sought a declaration that Congress lacks authority under the Commerce Clause of the U.S. Constitution to pass the law and a declaration that the individual health insurance provision is an unconstitutional tax.

The health care provision in question requires that starting in 2014, all individuals not covered by health care insurance must either buy insurance on their own or be subject to a penalty on their federal income tax return.

The plaintiffs allege violations of states' rights under the 10th Amendment to the Constitution, the free exercise clause and the Fifth Amendment's equal protection and due process clauses.  They moved for a preliminary injunction on the commerce clause and tax powers claims.

"There is a rational basis to conclude that, in the aggregate, decisions to forgo insurance coverage in preference to attempting to pay for health care out of pocket drive up the cost of insurance," Judge George Caram Steeh wrote.  "The decision whether to purchase insurance or to attempt to pay for health care out of pocket, is plainly economic."

"These decisions," Judge Steeh continued, "viewed in the aggregate, have clear and direct impacts on health care providers, taxpayers, and the insured population who ultimately pay for the care provided to those who go without insurance.  These are the economic effects addressed by Congress in enacting the Act and the minimum coverage provision.

"Far from 'inactivity,' by choosing to forgo insurance plaintiffs are making an economic decision to try to pay for health care services later, out of pocket, rather than now through the purchase of insurance, collectively shifting billions of dollars, $43 billion in 2008, onto other market participants," the judge said.  "The provision at issue addresses cost-shifting in those markets and operates as an essential part of a comprehensive regulatory scheme.

"The uninsured, like plaintiffs, benefit from the 'guaranteed issue' provision in the Act, which enables them to become insured even when they are already sick," he said.  "This benefit makes imposing the minimum coverage provision appropriate."

[Editor's Note:  Full coverage will be in the Oct. 20 issue of Mealey's Managed Care Liability Report.  In the meantime, the opinion is available at www.mealeysonline.com or by calling the Customer Support Department at 1-800-833-9844.  Document #31-101020-001Z.  For all of your legal news needs, please visit www.lexisnexis.com/mealeys.]

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For more information, e-mail editor Cheryl Keely at cheryl.keely@lexisnexis.com.