DC Circuit Court Upholds Constitutionality of Affordable Care Act's Individual Mandate

Adding to the existing split among the judicial circuits, in Susan Seven-Sky v. Eric Holder, Jr., (pdf) the U.S. Court of Appeals for the D.C. Circuit affirmed a lower court’s finding that the Affordable Care Act’s individual insurance mandate is constitutional. This mandate, set forth in the law’s minimum essential coverage provision, will require nearly all individuals to obtain health insurance beginning in 2014 or pay a penalty. The plaintiffs’ main argument – among others challenging the law – is that Congress exceeded its authority under the Commerce Clause in requiring individuals to purchase insurance, as the failure to maintain health insurance is not a traditional “economic activity” to be regulated. A three-member panel of the D.C. Circuit rejected this argument in a 2-1 decision, affirming the district court’s dismissal of the case. The lower court had determined that the individual mandate amounted to the lawful “regulation of economic activity that substantially affects the health insurance and health care markets” and amounts to “an essential element of a broader regulatory scheme.”

Writing for the majority, Senior Judge Laurence Silberman affirmed the lower court’s reasoning, emphasizing that the health insurance market “is a rather unique one, both because virtually everyone will enter or affect it, and because the uninsured inflict a disproportionate harm on the rest of the market as a result of their later consumption of health care services.” Concluding his opinion, Judge Silberman explained:

That a direct requirement for most Americans to purchase any product or service seems an intrusive exercise of legislative power surely explains why Congress has not used this authority before–but that seems to us a political judgment rather than a recognition of constitutional limitations. It certainly is an encroachment on individual liberty, but it is no more so than a command that restaurants or hotels are obliged to serve all customers regardless of race, that gravely ill individuals cannot use a substance their doctors described as the only effective palliative for excruciating pain, or that a farmer cannot grow enough wheat to support his own family. The right to be free from federal regulation is not absolute, and yields to the imperative that Congress be free to forge national solutions to national problems, no matter how local–or seemingly passive–their individual origins.

The 6th Circuit similarly determined that the individual mandate was valid, while the 11th Circuit came to the opposite conclusion, finding that Congress exceeded its authority in enacting that provision. Alternatively, in September the 4th Circuit dismissed two lawsuits challenging the Affordable Care Act’s constitutionally on technical grounds. In one case the court found that the action was barred by the Anti-Injunction Act (AIA), while in the other it dismissed the lawsuit on the grounds that the Commonwealth of Virginia lacked standing to sue in the first place, as the provision had not yet taken effect. Notably, the D.C. Circuit disagreed with the 4th Circuit’s reasoning on these points, finding that it did, indeed, have standing to decide the case, and that the AIA “does not, by its terms, cover the shared responsibility payment under the term ‘any tax,’” and therefore only bars suits “that seek to restrain the IRS’s assessment and collection of taxes. It has never been applied to bar suits brought to enjoin regulatory requirements that bear no relation to tax revenues or enforcement.”

As Judge Silberman acknowledged in his opinion, it is widely expected that the Supreme Court will agree to review one or more of these decisions within the year.

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