In his opinion today, District Court Judge George Steeh (E.D. Mich.) upheld the ACA's minimum coverage requirement on the merits and dismissed the plaintiffs' complaint in its entirety. The proceeding was a trial on the merits, under which the parties had agreed that there were no disputed material facts.
What did the court hold? First, Judge Steeh found that all of the plaintiffs had standing. The four individual plaintiffs had standing because, although ACA 1501(b) will not go into effect until 2014, they plausibly alleged that they must immediately begin saving money for the cost of purchasing insurance in the future. "Plaintiffs' decisions to forego certain spending today, so they will have the funds to pay for health insurance when the Individual Mandate takes effect in 2014, are injuries fairly traceable to the Act for the purposes of conferring standing." (Slip op. at 7.) The Thomas More Law Center had standing as an organization because some of its members had standing for this same reason.
Next, Judge Steeh turned to the merits. And he concluded that the minimum coverage requirement was within Congress's commerce power on both of the grounds asserted by the federal government. First, he rejected the plaintiffs' characterization of the regulated conduct as "inactivity." Specifically, he reasoned that, "[f]ar 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 health insurance, collectively shifting billions of dollars, $43 billion in 2008, onto other market participants." (Slip op. at 16-17.) Consequently, the authority to regulate these decisions is well within the power recognized even in Lopez and Morrison. Because the regulated activity is economic in nature, it can be aggregated, and as such has a substantial effect on interstate commerce.
Second, Judge Steeh also embraced the government's alternative rationale that the minimum coverage provision constitutes an essential aspect of a broader regulatory scheme, which regulatory scheme clearly regulates an interstate commercial market. "The provision at issue addresses cost-shifting in [the health care services] markets and operates as an essential part of a comprehensive regulatory scheme." (Slip op. at 18.) Importantly, Judge Steeh commented that, under Raich, Congress is empowered to regulate "wholly intrastate, wholly non-economic matters that form 'an essential part of a larger regulation of economic activity.'" (Slip op. at 18) (quoting Raich, 545 U.S. at 24-25). Thus, Judge Steeh reads Raich as not limiting Congress to reaching only those activities, reached as a means of supporting a larger regulatory scheme, that are economic in nature. The nature of activities so regulated -- economic or non-economic, commercial or non-commercial -- is immaterial.
Finally, having upheld the minimum coverage requirement as a valid exercise of the commerce power, Judge Steeh did not address whether it might alternatively be upheld as a valid tax under the General Welfare Clause. He dismissed the argument that the penalty for failing to acquire minimum coverage constituted an impermissible, unapportioned "direct" tax on the ground that penalties imposed by Congress for the failure to comport with a valid regulation need not conform to the Constitution's limitations on taxes. That is, because ACA 1501(b) amounts to a valid regulation (and sanction), it need not conform to any constitutional limitation on taxes. Those limitations would only be relevant if the provision could only be justified as a tax.
As this was a trial on the merits, decided as a matter of law, there is nothing left to be resolved at the trial court. The next stop is the United States Court of Appeals for the Sixth Circuit.