Benefits and Compensation

Health Reform Law Clears Appeals Court Hurdle

In a Nov. 8 decision, the U.S. Court of Appeals for the District of Columbia Circuit affirmed a lower court’s ruling that the U.S. Congress may require all individuals to get health coverage (the individual mandate). A circuit-court split on whether the individual mandate stands or falls makes it more likely the Supreme Court will hear the case.

It becomes a waiting game for employers. Businesses and individuals are still waiting for a penultimate ruling from the U.S. Supreme Court, but this ruling made the possibility of repeal look a bit more remote.

Judge Laurence H. Silberman— a conservative judge with the D.C. circuit appeals court — wrote the opinion, and he was part of a three-judge panel that had a 2-1 GOP majority. The fact that a conservative appeals court judge ruled for health reform could presage similar outcome in the 5-to-4 conservative-majority Supreme Court, the Washington Post observed:

Silberman’s participation in the majority is noteworthy because he is highly respected in conservative judicial circles. An appointee of Republican President Ronald Reagan and veteran of two Republican administrations, he has written several recent decisions whose arguments were upheld by the Supreme Court.

In upholding the provision, Silberman rejected the argument (a common thread in many of health reform challenges) that the law is an unconstitutional expansion of federal power.

Silberman held that Congress has the constitutional authority “to forge national solutions to national problems,” adding that “the right to be free from federal regulation is not absolute.” Silberman ruled that — in order to fix the health system’s market distortions — Congress has the power to require people to get coverage, even if it infringes on the liberty of the few healthy, uninsured persons who will never consume health care.

The complaint originated from a Christian legal group. The plaintiffs claimed that the insurance mandate is unconstitutional because Congress does not have the authority under the Commerce Clause to impose such a mandate.

But Silberman rejected the argument that the Commerce Clause could never be used to regulate “inactivity,” or that it could only regulate ongoing activity and never be used to push people into a market for the first time.

Senior White House Adviser Stephanie Cutter blogged about “another legal victory for health reform” and said:

People who make a decision to forego health insurance do not opt out of the health care market. Their action is not felt by themselves alone. Instead, when they become ill or injured and cannot pay their bills, their costs are shifted to others. Those costs — $43 billion in 2008 alone — are borne by doctors, hospitals, insured individuals, taxpayers and small businesses throughout the nation.

Court of Appeals for the 11th Circuit, based in Atlanta, struck down the individual mandate in a suit brought by officials of 26 states (see this blog post).

The 4th Circuit in a ruling dated Sept. 8 said it would be impossible to challenge the law’s penalty for not buying insurance until it actually takes effect in 2014; it also said the law was sanctioned as part of Congress’ ability to levy taxes, which is what many courts and lawyers consider the individual mandate to be.

Christopher M. Huryn, a partner with Brouse McDowell in Akron, Ohio, says here that employers should continue implementing the provisions up until 2014; and small companies should consider the Small Business Health Insurance Tax Credit.


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