In a decision issued Wednesday, June 29, 2011, the U.S. Sixth Circuit Court of Appeals in Cincinnati upheld the Affordable Care Act, specifically holding that the Act’s requirement that all Americans purchase health insurance is constitutional and does not violate the extent of Congress’ authority to regulate commerce under the Commerce Clause of the U.S. Constitution.
This is the first of three U.S. Circuit Courts of Appeals to decide pending appeals of lower court rulings for or against the constitutionality of the Affordable Care Act, the signature health reform law passed by Congress and signed into law by President Obama in 2010.
Starting in 2014, the Affordable Care Act will require most Americans to buy health insurance or pay an income tax penalty. The administration argues that without the insurance mandate it is not commercially reasonable to require insurers to cover all applicants regardless of their health conditions. The litigation challenging the law argues primarily that the individual insurance mandate contained in the law is unconstitutional because, these law suits allege, it exceeds Congress’ power to regulate under the Commerce Clause of the U.S. Constitution.
In separate cases, opinions are expected soon from panels of the Fourth Circuit Court of Appeals in Richmond, Va., and the 11th Circuit in Atlanta. The litigation challenging the constitutionality of the law is expected eventually to be appealed from one or all of these Courts of Appeals to the U.S. Supreme Court for decision.
The Sixth Circuit decision in its entirety is available from the Sixth Circuit Court of Appeals.
The Sixth Circuit Litigation – Background
The ruling comes in a lawsuit brought by plaintiffs including the Thomas More Law Center, a conservative public interest firm in Ann Arbor, Mich. The plaintiffs challenged the constitutionality of the Affordable Care Act based on allegations that the law’s requirement that all Americans purchase health insurance violates the extent of Congress’ power to regulate commercial activity under the Commerce Clause of the U.S. Constitution. They argued that a decision not to purchase health insurance was not a “commercial activity,” but rather an “inactivity,” and as such beyond the power of Congress to regulate under the Commerce Clause. The plaintiffs lost in the lower court, and appealed to the Sixth Circuit Court of Appeals.
The Sixth Circuit upheld the lower court ruling by U.S. District Judge George C. Steeh in Detroit. Judge Steeh upheld the Constitutionality of the Affordable Care Act, finding that the act of choosing not to buy health insurance was a consequential commercial decision that could be regulated by Congress under the Commerce Clause of the Constitution.
The Sixth Circuit’s Decision
Background. The Sixth Circuit majority opinion, written by Sixth Circuit Judge Boyce F. Martin, Jr., by way of background (pages 4-5 of the opinion), first provides an excellent overview of the provisions of the Affordable Care Act, including the specific findings made by Congress that the individual insurance mandate (which the Court refers to as the “minimum coverage provision”) “is essential to creating effective health insurance markets in which improved health insurance products that are guaranteed issue and do not exclude coverage of pre-existing conditions can be sold.”
Governing Precedent. The Court notes that under Supreme Court precedent, “The minimum coverage provision, like all congressional enactments, is entitled to a ‘presumption of constitutionality.’”
Recognizing that under the 10th Amendment, the Constitution provides that “the federal government is limited to its enumerated powers, while all other powers are reserved to the states or to the people,” the Court goes on to explain that one of those enumerated powers of Congress is provided in the Commerce Clause of the Constitution. “Recognizing that uniform federal regulation is necessary in some instances, the Commerce Clause of the Constitution grants to Congress the power to regulate commerce with foreign Nations, and among the several States, and with the Indian Tribes,” the opinion states.
Explaining the very broad interpretation that the Supreme Court has historically given to the Commerce Clause, in deference to the presumption of constitutionality to which each Act of Congress is entitled, the Court notes that, “From 1937 to 1994 it [the Supreme Court] did not invalidate a single law as unconstitutional for exceeding the scope of Congress’s Commerce Power.”
The opinion explains that under Supreme Court Precedent, Congress’ power to regulate commerce “encompasses three broad spheres,” the one relevant here being: “those activities having a substantial relation to interstate commerce, … i.e., those activities that substantially affect interstate commerce.”
The Court then discusses several Supreme Court precedents holding that Congress’ power under the Commerce Clause includes the authority to regulate non-economic activity, even if done exclusively within only one state, if regulating this activity “is essential to a larger scheme that regulates economic activity.”
Findings. The Court finds that the Affordable Care Act properly “makes clear that Congress was concerned that individuals maintain minimum coverage not as an end in itself, but because of the economic implications on the broader health care market.” “Through the practice of self-insuring, individuals make an assessment of their own risk and to what extent they must set aside funds or arrange their affairs to compensate for probable future health care needs. Thus, set against the Act’s broader statutory scheme, the minimum coverage provision reveals itself as a regulation on the activity of participating in the national market for health care delivery, and specifically the activity of self insuring for the cost of these services,” the Court wrote.
Holding – The Court’s Conclusions of Law. Based on these background findings, the Sixth Circuit held that the individual insurance mandate was “facially constitutional under the Commerce Clause” for two reasons:
- “First, the provision regulates economic activity that Congress had a rational basis to believe has substantial effects on interstate commerce;” and
- “In addition, Congress had a rational basis to believe that the provision was essential to its larger economic scheme reforming the interstate markets in health care and health insurance.”
In conclusion, the Court stated:
“Congress had a rational basis for concluding that, in the aggregate, the practice of self-insuring for the cost of health care substantially affects interstate commerce. Furthermore, Congress had a rational basis for concluding that the minimum coverage provision is essential to the Affordable Care Act’s larger reforms to the national markets in health care delivery and health insurance. Finally, the provision regulates active participation in the health care market, and in any case, the Constitution imposes no categorical bar on regulating inactivity. Thus, the minimum coverage provision is a valid exercise of Congress’s authority under the Commerce Clause, and the decision of the district court is AFFIRMED.”
Reasoning. Responding to plaintiff’s arguments that choosing not to purchase health insurance is an inactivity, not a commercial activity, the Court majority opinion stated: “The activity of foregoing health insurance and attempting to cover the cost of health care needs by self-insuring is no less economic than the activity of purchasing an insurance plan.”
Moreover, the majority rejected the plaintiffs’ approach in attempting to base their Constitutional challenge to the law on arguments about whether the failure to buy insurance should be defined as an activity or inactivity, saying, “The constitutionality of the minimum coverage provision cannot be resolved with a myopic focus on a malleable label.”
In so reasoning, the majority agreed with Neal K. Katyal, the acting United States solicitor general, who argued that individual choices not to buy insurance, when taken in aggregate, have clear commercial effects because they shift the cost of caring for the uninsured to other payers.
The Court adopted Mr. Katyal’s argument that because an individual’s need for health care is unpredictable, it is impossible for individuals to opt out of the market. They also agreed that, unless everyone is required to have health insurance, cost-shifting is inevitable as long as the federal government requires hospitals to treat all those who appear in Emergency Rooms with life-threatening conditions.
In a concurring opinion written by Judge Jeffrey S. Sutton, an appointee of President George W. Bush, Judge Sutton added, “Inaction is action, sometimes for better, sometimes for worse, when it comes to financial risk.” Whether an individual buys an insurance policy or not, the judge wrote, “each requires affirmative choices; one is no less active than the other; and both affect commerce.”
After acknowledging the difficulty of determining the exact limits on Congress’s power to regulate interstate commerce, Judge Sutton wrote, “In my opinion, the government has the better of the arguments.” He added, “Not every intrusive law is an unconstitutionally intrusive law.”
In looking ahead to the Supreme Court, the Obama Administration and other defenders of the law may be encouraged by the concurring opinion written by Judge Jeffrey S. Sutton. An appointee of President George W. Bush, a Republican, Judge Sutton has typically been considered conservative on questions of the constitutional reach of Congress.
The Sixth Circuit opinion was reportedly the first in which the judges did not break along strictly partisan lines. In the 2-to-1 ruling, a judge appointed by a Republican president joined one named by a Democrat to write the majority opinion.
Joining Judge Sutton was Judge Boyce F. Martin Jr., an appointee of President Jimmy Carter, a Democrat. Dissenting on the central issues was Judge James L. Graham, a District Court judge appointed by President Ronald Reagan who is on temporary assignment to the Sixth Circuit.
Judge Graham countered in his dissent that if the mandate was allowed, “it is difficult to see what the limits on Congress’s Commerce Clause authority would be.”
In the different cases that have been decided so far at the lower District Court level, three Judges appointed by Democratic Presidents have upheld the law, and two Judges appointed by Republican Presidents have held it unconstitutional in whole or in part.
See our previous reporting on the litigation challenging the Affordable Care Act:
And, see generally, our resource pages on
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