In 2010, a federal court in Virginia said the individual mandate in the Patient Protection and Affordable Care Act was unconstitutional. The principal issue in the litigation was if the individual mandate would be a valid exercise of the power to regulate interstate commerce.
The Supreme Court of the United States has continuously acknowledged the government’s right to regular local activity if it significantly affects interstate commerce. The mandate presents a novel question of law about the commerce clause: is it broad enough to permit the federal government to require consumers to purchase private products and services.
In Virginia v. Sebelius, the court said no. The court acknowledged the plaintiff’s characterization of the subject being regulated and noted that to survive a constitutional challenge, the topic must be financial in nature. Permitting the government to regular inactivity by forcing citizens to purchase insurance seemed an extreme extension of the commerce clause authority that is incompatible with legal precedent.
Despite the development, the issue is not settled. The Virginia decision is still being appealed. To date, two other courts have upheld the individual mandate.
Courts in Michigan and the Western District of Virginia have determined that the mandate is permissible and maintained the government’s right to regulate interstate commerce for two primary reasons.
First, the two courts found the government made a strong case for the idea that health care coverage substantially affects interstate commerce, and a mandate is essential for the overall thrust created in the Care Act.
Second, the courts rejected the plaintiff’s characterization of the failure to purchase insurance as “inactivity”. The courts agreed with the government that health care is a unique market and that people cannot opt out. A decision to not purchase insurance is activity and is an economic decision to pay out-of-pocket that has implications for health care providers, government and other patients.
Plaintiffs have pointed to other legal arguments to challenge the mandate. Plaintiffs have alleged that the mandate violates the Free Exercise Clause of the 1st Amendment and Equal Protection Clause of the 5th Amendment. Plaintiffs also challenged the government claim that the tax penalty for the mandate is a valid exercise of its taxing power. Despite the reality that the fine is imposed as a tax, courts have largely rejected the government’s taxing power justification.
Instead, the courts agreed with plaintiffs that this assessment is correctly characterized as an administrative “penalty” whose constitutionality revolves on if the individual mandate is legitimate under the Commerce Clause.