Tuesday, November 30, 2010

Western District of Virginia upholds minimum coverage provision

Judge Norman K. Moon of the United States District Court for the Western District of Virginia today issued an opinion granting the United States's motion to dismiss in Liberty University v. Geithner. You can access the opinion here.

Judge Moon found that the plaintiffs had standing to challenge the ACA (and that their claims were ripe). But he held that each failed to state a plausible claim under Federal Rule of Civil Procedure 12(b)(6).

In their complaint, the plaintiffs pressed several constitutional challenges, ranging from one grounded in the Free Exercise Clause to one that the ACA violated the Guarantee Clause. The one that really matters is their contention that the minimum coverage provision exceeds Congress's enumerated powers. Judge Moon addresses the claim at length, but here are two critical passages. First, Judge Moon concluded that an individual's decision whether to purchase health coverage is "economic in nature," and thus within Congress's commerce power under a straightforward application of Lopez:

"The conduct regulated by the individual coverage provision—individuals’ decisions to forego purchasing health insurance coverage—is economic in nature . . . . Nearly everyone will require health care services at some point in their lifetimes, and it is not always possible to predict when one will be afflicted by illness or injury and require care. The 'fundamental need for health care and the necessity of paying for such services received' creates the market in health care services, of which nearly everyone is a participant. Thomas More Law Ctr., 2010 U.S. Dist. LEXIS 107416, at *28. Regardless of whether one relies on an insurance policy, one’s savings, or the backstop of free or reduced-cost emergency room services, one has made a choice regarding the method of payment for the health care services one expects to receive. 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." (Op. at p. 27)

Additionally, Judge Moon concluded that section 1501(b) is within Congress's commerce power under the logic of Raich and Wickard, as a necessary component of a larger regulatory scheme, which regulatory scheme plainly regulates interstate commerce (namely, the health insurance market):

"[I]t is rational to believe the failure to regulate the uninsured would undercut the Act’s larger regulatory scheme for the interstate health care market. The Act institutes a number of reforms of the interstate insurance market to increase the availability and affordability of health insurance, including the requirement that insurers guarantee coverage for all individuals, even those with preexisting medical conditions. As Congress stated in its findings, the individual coverage provision is “essential” to this larger regulatory scheme because without it, individuals would postpone health insurance until they need substantial care, at which point the Act would obligate insurers to cover them at the same cost as everyone else. This would increase the cost of health insurance and decrease the number of insured individuals—precisely the harms that Congress sought to address with the Act’s regulatory measures." (Op. at p. 29) (citations omitted).

The administration has much reason to worry about what Judge Hudson (Virginia v. Sebelius) and Judge Vinson (Florida v. HHS) are likely to say about the individual mandate in the coming months. But so far, the United States is two for two on courts that have reached the merits of whether ACA 1501(b) is a valid exercise of Congress's enumerated powers.

I will have some more analysis of the opinion tomorrow, once I have had a chance to go through it carefully.