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Legal Challenges to Healthcare Reform

By Laura A. Petersen

President Obama signed the Patient Protection and Affordable Care Act (“PPACA”) into law on March 23, 2010. The enactment of healthcare reform has not quelled public debate. Less than an hour after the bill was signed into law, the first lawsuit opposing the legislation was filed. Legal scholars anticipate the litigation and legislation challenging the PPACA will fail.

Litigation

The first lawsuit was filed by 13 states in federal court in Florida on March 23. Seven more plaintiffs joined that lawsuit, including the National Federation of Independent Business. That lawsuit claims the PPACA should be overturned as unconstitutional because it violates the Interstate Commerce Clause, constitutes an unlawful direct tax violation, and violates states sovereign immunity. The plaintiffs argue that the PPACA puts an unfair financial burden on state governments. The largest cost is attributed to the revised Medicaid eligibility standards which will increase the number of enrollees. The plaintiffs also claim the federal law infringes upon individuals’ rights by mandating that people have qualifying healthcare coverage or pay a tax penalty. The Department of Justice has yet to comment on the amended complaint. However, the DOJ initially stated that the law was constitutional because the federal government has the ability through the Interstate Commerce Clause to ensure healthcare. The DOJ indicated that the insurance mandate is a matter of interstate commerce because it seeks to end uncompensated care which raises healthcare costs for providers, plans, health insurers, consumers, and taxpayers nationwide.

Virginia’s Attorney General filed a separate lawsuit on March 23 in federal court in Virginia. Virginia’s lawsuit is different from the other states’ challenges because it relates to Virginia’s new state law which is in conflict with the federal mandate. The DOJ maintains that the Virginia law conflicts with a congressional act in violation of the Supremacy Clause of the Constitution. The DOJ also argued that Virginia has no standing to sue because the state will not be harmed by the individual purchase mandate and because the mandate does not even take effect until 2014. 

Private individuals also filed a lawsuit in a Michigan federal court on March 23. That action seeks an injunction to block the PPACA. The complaint alleges that the plaintiffs do not currently have private health insurance and that they object to being forced to obtain it because “deeply held religious beliefs” object them to being “forced by the federal government to contribute in any way to the funding of abortion.” They raise First Amendment free exercise of religion claims and Fifth Amendment claims in addition to the constitutional challenges raised in the other lawsuits. They claim the federal law unconstitutionally recognizes certain groups, such as Amish and Mennonites, but not others for exemption.

It is expected that the DOJ will raise the same lack of standing arguments brought in the Virginia case. The DOJ also noted that the plaintiffs have not opted out of healthcare but only rejected insurance. This is part of the cost of uncompensated healthcare costs that are passed on to governments and third parties. 

Legislation

Additionally, several states proposed legislation to challenge the PPACA. As of June 1, at least 39 legislatures proposed legislation to limit, alter, or oppose various provisions. Most of the measures contradict some of the federal provisions. The proposed legislation seeks to eliminate the mandatory insurance purchase and tax penalties, instead allowing people to purchase coverage they choose. The measures are a constitutional amendment in thirty states. Idaho requested that a 28th Amendment be added to the U.S. Constitution prohibiting Congress from passing any law requiring insurance participation. At least sixteen states proposed bills amending state law to address the federal insurance requirement. Virginia was the first state with a new statute section entitled “Health Insurance Coverage Not Required.” That became law on March 10, 2010 and is the subject of the Virginia lawsuit. Idaho and Utah enacted similar statutes. Many states’ legislation is based upon language in the Arizona constitutional amendment which will be voted upon in November 2010.

Legal Scholars Commentary on Challenges

Legal experts generally anticipate the federal law will be upheld. States’ attempts to override the federal law with state law are unlikely to succeed as the federal Constitution makes it clear that federal law is supreme. Several legal experts have characterized the lawsuits as futile because the federal government can compel people to pay taxes. One expert concluded that the revenue creation aspect of the law trumps questions raised by the Commerce Clause. Many commentators have pointed out that the case law regarding the Commerce Clause relied upon by PPACA opponents has significantly changed. A 2005 case poses a particular hurdle for the lawsuits because it gives Congress vast regulatory authority over interstate commerce. However as we have seen many times, precedent rarely dictates how the court will rule on hot button partisan issues. Regardless of the manner in which the PPACA is challenged, it will likely be quite some time before there is resolution of the issue.

Originally published in the Summer 2010 edition of Quinn Quarterly.