By Katherine Hayes and Sara Rosenbaum

Background

A fifth U.S. District Court has issued a decision on a challenge to the constitutionality of the Patient Protection and Affordable Care Act (ACA) in Mead et al. v. Holder et al.,^[1] finding the law is constitutional.^[2] Although legal challenges to the ACA have not been limited to the individual requirement to maintain health insurance coverage,^[3] the vast majority of cases have focused on this provision, commonly referred to as the individual mandate. To date, three district courts have held that Congress has the authority to require purchase of health insurance coverage as a reasonable exercise of its Commerce Clause powers,^[4] and two have struck down the provision as unconstitutional.^[5] A Florida district court has gone one step further, holding that the individual mandate, as an essential part of the ACA, was non-severable from the remainder of the Act and, as a result, struck down the entire statute.^[6]

In Mead et al., U.S. District Court Judge Gladys Kessler based her decision on both the Commerce Clause, which empowers Congress to regulate interstate commerce, and the Necessary and Proper Clause, which gives Congress the power to make all laws that are necessary and proper to carry out its powers. At the heart of her decision lay four, key Supreme Court decisions that have figured in the prior decisions (both pro and con) as well. Two of these Supreme Court decisions (Wickard v. Filburn^[7] and Gonzales v. Raich^[8]) generally define the broad reach of Congressional authority under the Commerce Clause. The other two (U.S. v. Lopez^[9] and U.S. v. Morrison^[10]) place limits on that authority. To date, the three trial court rulings upholding the individual mandate have relied on Wickard and Gonzales and have concluded that the decision to remain uninsured, like the decisions to grow wheat or marijuana for personal use, is fundamentally economic conduct that in turn has an indirect but substantial effect on interstate commerce, and furthermore, that the regulation of such conduct through a mandate is a necessary and proper part of a broader, lawful, regulatory scheme aimed at controlling insurance, which is interstate commerce. The two trial courts that have found the individual mandate unconstitutional (in Florida ex. rel. Bondi v. HHS^[11] and Virginia ex. rel. Cuccinelli v. Sebelius^[12]) determined that being uninsured was simply a status rather than an economic decision, and that the Commerce Clause did not empower Congress to force uninsured persons into a regulated private insurance market. In reaching their decisions, these courts distinguished the facts from those presented in Wickard and Gonzales on the ground that the failure to buy a private product is not the type of individual economic conduct found in either of the two precedential cases. In their view, Congress overstepped the bounds of its constitutional powers, as was the case in Lopez, which found that simple handgun possession near a school did not involve economic conduct, and in Morrison, which concluded that violence against women was not the type of economic conduct that Congress could regulate.

District Court Ruling in Mead et al. v. Holder et al.

Individual Mandate and the Commerce Clause

In, Mead et al. v. Holder et al., five plaintiffs challenged the individual mandate, charging, as in the prior cases, that Congress exceeded its Commerce Clause powers.^[13] Plaintiffs explicitly claimed that they chose to not have insurance coverage and asserted that they would self-insure, paying for health care costs on a point-of-service basis or decline medical care.^[14] In reaching her decision, Judge Kessler, citing an earlier Supreme Court decision,^[15] identified the three major areas in which the Supreme Court has identified valid Commerce Clause powers: 1) the power to regulate the channels of interstate commerce; 2) the power to protect the instrumentalities of interstate commerce and persons or things in its stream; and 3) the power to regulate activities that “substantially affect” interstate commerce.^[16] Noting that the government relies on the third category — activities that substantially affect interstate commerce – and citing Morrison, Judge Kessler noted that to be regulated, individual activity must be economic in nature and further, that regulation lawfully can reach such conduct if doing so is a part of a larger regulatory scheme that could be undercut unless the intrastate activity were regulated.^[17] She also noted that the standard by which courts review congressional action in the area of interstate regulation is highly deferential and sensitive to the political process itself; in her view, it was not the job of the courts to substitute their judgment for that of Congress that individual health care payment practices did not substantially affect interstate commerce.^[18]

In short, Judge Kessler found that the decision not to purchase health insurance is economic in nature.^[19] Citing the ACA’s findings that 62 percent of all personal bankruptcies are caused in part by medical expenses, and that the cost of uncompensated care is shifted to those who have health insurance, leading to substantially higher premiums, she concluded that Congress had a rational basis for determining that the decision not to purchase health insurance, when considered in the aggregate, substantially affects the national health insurance market. As a result, a law that makes the purchase of insurance a requirement and couples the requirement with broader insurance regulation is constitutional.^[20]

Judge Kessler also rejected the plaintiffs’ argument that the decision not to purchase coverage was “inactivity” rather than economic activity,^[21] the leading argument in the two cases in which courts to date have ruled against the constitutionality of the law. While noting that the Supreme Court has not distinguished between an economic activity and inactivity, she found the distinction to be “of little significance,” stating that it is “pure semantics” to argue that a person who chooses not to purchase coverage is not “acting,” given the serious economic and health-related consequences.^[22] Finally, she rejected plaintiffs’ arguments that by self-insuring or by foregoing care altogether, plaintiffs could opt-out of the health care market indefinitely.^[23] She concluded that prior Supreme Court rulings have permitted Congress to regulate a larger class of individuals when it determines that individual conduct, even if not a burden on commerce in a single instance, becomes a burden when taken in the aggregate.^[24]

Judge Kessler also ruled that the ACA was constitutional under the Necessary and Proper Clause of the Constitution. Citing a recent Supreme Court decision, U.S. v. Comstock,^[25] she noted that courts look to see if the legislation under scrutiny is rationally related to the exercise of a congressionally enumerated power.^[26] Finding that the individual mandate is just such an appropriate means for carrying out Congress’ Commerce Clause powers to regulate the interstate health care market, Judge Kessler concluded that the Commerce Clause, when combined with the Necessary and Proper Clause, empowered Congress to enact the
mandate.^[27]

Individual Requirement and RFRA

A final claim by plaintiffs in Mead was that a requirement to purchase health insurance violated their rights under the Religious Freedom Restoration Act of 1993 (RFRA).^[28] Judge Kessler noted that judicial precedents require that plaintiffs making such a claim show that the individual mandate imposes a substantial burden on religious exercise.^[29] Noting that the ACA gives individuals the ability to “opt out” of the mandate by paying a fine and thus avoiding having to purchase health insurance in violation of their faith, she concluded that the law did not impose the type of substantial burden prohibited under RFRA.^[30]