Skeptical Federal Appellate Court Hears Arguments on the ACA

Attorneys representing 26 states – with Florida taking the lead – locked horns with the Obama administration in the U.S. Court of Appeals for the 11th Circuit over the constitutionality of the Patient Protection and Affordable Care Act (ACA).Florida, 25 other states and the National Federation of Independent Business claim that the “individual mandate” violates the Constitution’s Commerce Clause by requiring that Americans buy healthcare insurance or pay a penalty.

Arguing for the Obama administration was acting Solicitor General, Neal Katyal, who said “People are seeking this good already in untold numbers.  The good of healthcare.  It’s purely financing.  It’s about failure to pay.  Not about failure to buy.”  Katyal pointed out that the 50 million Americans who currently lack healthcare insurance too often end up in emergency rooms for medical treatment, driving up costs.  Defending the law, Katyal emphasized the special nature of healthcare and the insurance market today.  He said billions of dollars incurred by people without insurance are passed on to people who carry insurance.  Arguing for the states, attorney Paul Clement conceded that the government can enact laws that people acquire healthcare insurance, but not until they need medical care.  Prior to that, “they’re not engaged in commerce.  They’re sitting in their living rooms,” Clement said.

The three-judge panel seemed to be skeptical about the government’s position. “I can’t find any case like this,” Chief Judge Joel Dubina said.  “If we uphold this, are there any limits” to the federal government’s power?  Judge Stanley Marcus said “I can’t find any case” in the past where the courts upheld “telling a private person they are compelled to purchase a product in the open market…Is there anything that suggests Congress can do this?”

So far, three federal district judges have upheld the ACA while two have ruled it is unconstitutional.  Three cases were heard by appeals courts, with a fourth appellate panel planning to hold a hearing in September.  The current case has attracted the most attention because it involves 26 state attorneys general who jointly challenged the law.  Additionally the Atlanta-based 11th Circuit is considered one of the nation’s most conservative federal appellate courts.

If any appeals courts declare the law unconstitutional, the case likely would be heard by the Supreme Court — perhaps during the election year.  Legal experts believe the 11th Circuit is more likely to rule against the administration.

The hearing was a government appeal of a decision by Florida-based U.S. District Judge Roger Vinson that ruled against the insurance mandate and voided the healthcare law.  According to Vinson, the mandate exceeded Congress’ power to regulate commerce because, instead of involving the usual “economic activity,” it targeted “inactivity,” in other words, someone’s decision not to purchase insurance.  This case is high profile because it was brought by more than half of the states; additionally, it tests an unprecedented lower-court ruling that invalidated the entire law.

One of the appellate judges asked Katyal if there are there any limits on Congress’s power to compel people to act. “Absolutely,” Katyal replied.  “We are not saying that Congress can force somebody to buy something and that failure to do so is economic activity.  People are seeking that good already,” he said.  Katyal said $43 billion is spent annually on care for the uninsured.  “That’s quintessentially economic,” he said.  Clement argued that the crux of the issue is whether the federal government can regulate individuals.  “For 220 years, Congress never saw fit to exercise that power,” he said.  “The whole reason we do this is to protect individual liberty.”  According to Clement, the Commerce Clause regulates people engaged in commercial activity and does not force them to engage.

Writing in The New Republic, Jonathan Cohn is reluctant to say how he thinks the court will rule.  “I didn’t hear the entire oral argument, which C-Span helpfully broadcast.  (Note to the federal judiciary: There’s this thing called the internet and it can transmit audio files.)  But I, too, came away genuinely uncertain how the court will rule.  The judges seemed a lot more ornery during the questioning of Katyal than they did during the questioning of Paul Clement, the former solicitor general arguing on behalf of the states filing the lawsuit.  But the actual substance of those questions – and some side comments that the judges made – suggested they were ready to reject essential pieces of the legal challenge.  Particularly striking were a series of comments from Frank Hull, in which she (yes, Frank is a ‘she’) stated repeatedly that she did not agree with the ‘activity-inactivity’ distinction opponents of the law have made.  As those of you following this case know, that’s really the heart of their argument:  They say the decision not to buy insurance is a form of ‘inactivity,’ which means the government may not regulate it.  Supporters of the law, including the government, disagree.  And Hull seemed to side with them, saying (roughly, given my sketchy notes):  ‘When I decide I would rather spend my money differently…that I would rather buy this product than pay for health insurance…that’s an economic decision…How can that be anything other than an economic decision?’”

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