11th Circuit Appeals Panel Strikes Insurance Mandate, Upholds Rest of Health Care Law

11th Circuit Panel Opinion Striking Down Individual Insurance Mandate in Health Care LawOn Friday, August 12, 2011, a Three-Judge Panel of the U.S. 11th Circuit Court of Appeals in Atlanta issued an opinion, striking down the individual insurance mandate in the Affordable Care Act as unconstitutional under the Commerce Clause of the U.S. Constitution, but upholding the remainder of the health care law.

In doing so, the 11th Circuit’s Three-Judge Panel, in a 2-1 split decision, affirmed in part and reversed in part the lower Florida Federal District Judge’s ruling from which the case had been appealed to the 11th Circuit.

In upholding the balance of the Affordable Care Act, outside of the individual insurance mandate, the 11th Circuit Panel devoted approximately 52 pages of its 207 page majority opinion, plus an Appendix A of 13 pages, to summarizing all of the many provisions of the Affordable Care Act, providing a sort of comprehensive educational tutorial on what is actually in the health care law.

Based on its review of the entirety of the law, the Court found that the Affordable Care Act is actually composed of a series of independent statutes, under nine different Titles of the Act, which stand on their own, are completely separate and severable from the individual mandate, and are not invalidated by striking down the individual insurance mandate.

The Court therefore upheld all the rest of the Affordable Care Act’s provisions, outside of the individual insurance mandate, overturning the part of the lower Florida Court’s judgment that struck down the entire health care law.

For supporters of the health care law, the silver lining in the Court’s opinion may be the comprehensive educational focus it brings to understanding exactly what is in the Affordable Care Act, perhaps for the first time in the politicized fight over the health care law. Consequently, this sharpens the focus on what would be lost if the entire Act were to be stricken down, as the plaintiffs in this lawsuit have sought.

As the Court discussed at length, among the many benefits included in the Affordable Care Act, are provisions that:

  • Guarantee health insurance coverage for all, regardless of health condition, and eliminate “pre-existing conditions” limitations and exclusions from private insurance policies, starting in 2014;
  • Require insurers to provide free coverage effective immediately for certain enumerated preventive health services without any deductibles, copays, or other cost-sharing requirements;
  • Require all insurance policies in the future to include an “essential health benefits package” — including coverage for preventive and wellness care (free of charge), chronic disease management, ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health coverage, prescription drugs, rehabilitative and habilitative services and devices, laboratory services, and pediatric services, including oral and vision care;
  • Require insurers effective immediately to allow dependent children to remain on their parents’ policies until age 26;
  • Prohibit insurers, effective immediately, from imposing lifetime dollar limits on essential health benefits, and prohibit annual dollar limits on insurance coverage, starting in 2014;
  • Guarantee renewability of insurance policies;
  • Limit waiting periods for insurance coverage;
  • Prevent insurers from varying premiums within a geographic area based on gender, health status or other impermissible factors;
  • Require insurers in the large group market to spend at least 85% of their premium revenue on patient care (and no more than 15% on overhead) and require insurers in the individual and small group markets to spend at least 80% of their revenue on patient care (and no more than 20% on overhead);
  • Subject “unreasonable” premium hikes by insurance companies to review by HHS starting in 2010, and require that insurers must justify any such premium increases;
  • Prohibit insurers from rescinding coverage except for fraud or intentional misrepresentation of material fact;
  • Require insurers, in setting premiums, to consider all individual-market enrollees in their health plans to be members of a single risk pool, and to consider all small group enrollees as being in the same risk pool with all other small group enrollees — thus preventing excessive health insurance premium charges;
  • Establish a temporary high risk pool program to provide immediate coverage for individuals denied coverage because of preexisting health conditions, until preexisting condition exclusions are outlawed in 2014;
  • Establish state-run health insurance exchanges to provide transparent access to affordable health insurance policies to individuals and small businesses who do not have insurance through large employer plans;
  • Provide a federal tax credit for premiums to help individuals and families afford health care coverage. The tax credits will be available to all individuals and families (1) with household incomes between 1 and 4 times the federal poverty level, (2) who do not receive health insurance through an employer, and (3) who purchase health insurance through an exchange;
  • Provide a variety of federal cost-sharing subsidies to individuals who enroll in a qualified health plan sold through an Exchange — provisions, which along with the Exchanges and federal tax credits, are predicted to make insurance available to 9 million in 2014 and 22 million by 2016;
  • Provide anti-fraud and other cost-saving provisions to help reduce the future costs of Medicare, thereby addressing the nation’s future budgetary deficit, while at the same time linking reimbursement to outcomes, closing the “donut hole” in Medicare prescription drug coverage, and providing several other important new Medicare benefits;
  • Provide incentives to encourage intelligent use of health care information technology and promote integration of care;
  • Provide new federal grants for (1) improving women’s health, (2) health care delivery system research, and (3) medication management services in treatment of chronic diseases;
  • Provide availability of long-term care insurance for the first time through the “CLASS Act”; and
  • Many more benefits and provisions, described at length in the 11th Circuit’s opinion (pages 11-53 and in the 13 page Appendix A to the opinion).

The plaintiffs in the health care litigation have sought to overturn and declare void all of these above provisions, by asking the Courts to void the entire Affordable Care Act. The 11th Circuit Panel refused to grant plaintiffs’ wishes, and upheld all of the above provisions and the entire Affordable Care Act except for the individual insurance mandate.

The 11th Circuit Panel’s entire 304 page Opinion (including the two-Judge majority opinion (207 pages), the dissenting opinion (84 pages) and Appendix A (13 pages) extending the Panel’s summary of the Affordable Care Act) is here attached. The description of the above provisions of the Affordable Care Act is found on pages 11-53 and pages 292-304 (Appendix A) of the attached document.

The Health Care Litigation — Background

The 11th Circuit’s ruling comes on an appeal by both sides from a January 31, 2011 summary judgment issued by a Florida Federal District Judge in a lawsuit brought by 26 states, all of which are led by predominantly Republican state officials, together with two individual plaintiffs and a trade group, challenging the Obama Administration’s signature health care law.

The District Judge in Florida on January 11, 2011 had issued a summary judgment holding that Congress’ expansion of Medicaid was constitutional, but that the individual mandate was unconstitutional as beyond the power of Congress under the Commerce Clause of the U.S. Constitution, and consequently that the entire health care law was void. The Florida District Court Judge later stayed (suspended) his decision voiding the health care law, pending appeal. Both the plaintiffs and the government appealed to the 11th Circuit.

In issuing its Panel opinion on Friday, the 11th Circuit Court of Appeals became the second Federal Circuit Court of Appeals to rule in the multi-jurisdictional litigation over the health care law. The U.S. Sixth Circuit Court of Appeals, in Cincinnati, issued a decision on June 29, 2011 in which it upheld the entirety of the Affordable Care Act and rejected the plaintiffs’ constitutional challenges to the Act. That opinion also provided an excellent, though briefer (2 page) overview of the provisions actually contained in the Affordable Care Act.

An opinion is also expected soon from the Fourth Circuit Court of Appeals in Richmond in related litigation, which was argued before that Court on May 10, 2011.

Some or all of these decisions are expected to be appealed to the U.S. Supreme Court for ultimate decision, which could occur either in the Supreme Court’s 2012 term ending in June, 2012 (before the next Presidential election), or in the Court’s following term (after the 2012 Presidential Election).

The Three-Judge Panel that issued Friday’s opinion in the 11th Circuit litigation was composed of Judges Joel F. Dubina and Frank M. Hull, who together wrote the majority opinion, and Judge Stanley Marcus who dissented. Judge Dubina was appointed by the first President George Bush, and Judges Hull and Marcus were both appointed by President Bill Clinton.

The Government will now have 90 days in which to appeal the 11th Circuit Panel’s decision directly to the U.S. Supreme Court, or to request that the decision of the Three-Judge Panel first be reviewed by the entire 11th Circuit Court of Appeals, composed of 12 Judges. It is unclear whether taking the later course could have the effect of delaying any U.S. Supreme Court decision on a subsequent appeal of this litigation beyond the 2012 Presidential Election.

The 11th Circuit Panel’s Decision

In its majority decision, the 11th Circuit Panel did acknowledge judicial precedent, holding that “We, as all federal courts, must begin with a presumption of constitutionality, meaning that “we invalidate a congressional enactment only upon a plain showing that Congress has exceeded its constitutional bounds.”

Nevertheless, two of the three Judges on the Panel, found that the mandate contained in the health care law, requiring all Americans to obtain health insurance by 2014 or pay a penalty, was beyond the power of Congress to impose under the Commerce Clause of the U.S. Constitution, and therefore unconstitutional.

After first reviewing Supreme Court precedents interpreting the scope of Congress’ power to regulate commerce under the Commerce Clause and the Necessary and Proper Clause of the U.S. Constitution, the majority of the Panel wrote, “We conclude that the individual mandate exceeds Congress’s commerce power.”

“This economic mandate represents a wholly novel and potentially unbounded assertion of congressional authority: the ability to compel Americans to purchase an expensive health insurance product they have elected not to buy, and to make them re-purchase that insurance product every month for their entire lives,” the Judges wrote.

Reasoning of the Panel on the Individual Insurance Mandate. In arriving at its conclusion, the majority of the Panel first gave its interpretation of what limitations the Constitution imposes on Congressional authority to regulate “commerce” under the Commerce Clause of the U.S. Constitution:

“The Supreme Court has placed two broad limitations on congressional power under the Commerce Clause. First, Congress’s regulation must accommodate the Constitution’s federalist structure and preserve “a distinction between what is truly national and what is truly local.” … Second, the Court has repeatedly warned that courts may not interpret the Commerce Clause in a way that would grant to Congress a general police power, “which the Founders denied the National Government and reposed in the States.”

“While these structural limitations are often discussed in terms of federalism, their ultimate goal is the protection of individual liberty,” the two-Judge majority wrote.

The majority then rejected, as a basis for its decision, the plaintiffs’ arguments that failure to buy health insurance cannot be regulated as “commercial activity” by Congress because it does not constitute “activity.” The Panel said,

“Nevertheless, we are not persuaded that the formalistic dichotomy of activity and inactivity provides a workable or persuasive enough answer in this case. Although the Supreme Court’s Commerce Clause cases frequently speak in activity-laden terms, the Court has never expressly held that activity is a precondition for Congress’s ability to regulate commerce—perhaps, in part, because it has never been faced with the type of regulation at issue here. We therefore must refine our understanding of the nature of the individual mandate and the subject matter it seeks to regulate.”

The Panel re-framed the issue before it. “Properly formulated,” they wrote, “we perceive the question before us to be whether the federal government can issue a mandate that Americans purchase and maintain health insurance from a private company for the entirety of their lives.”

The Government’s argument, they said, was that “the Commerce Clause gives Congress the power to direct and compel an individual’s spending in order to further its overarching regulatory goals, such as reducing the number of uninsureds and the amount of uncompensated health care.”

The Judges acknowledged that through the Affordable Care Act Congress sought to cover the approximately 50 million Americans who are now without health care insurance – many because they cannot afford it or have been denied coverage on the basis of “pre-existing health conditions.” The Court also acknowledged that use of hospital emergency rooms and other health care by these uninsured without paying for these services, actually shifts the costs of their care – amounting to over $43 Billion annually – to health care providers and ultimately to other citizens through increased costs of care and insurance.

Nevertheless, the Judges did not accept the reasoning earlier applied by the Sixth Circuit Court of Appeals, when it upheld Congress’ power under the Commerce Clause to impose the individual mandate on the basis that (i) the individual mandate “regulates economic activity that Congress had a rational basis to believe has substantial effects on interstate commerce” and (ii) “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.”

The Test. Instead, the majority of the 11th Circuit Panel stated a three-part test it said it would apply in deciding the issue before it:

“In answering whether the federal government may exercise this asserted power to issue a mandate for Americans to purchase health insurance from private companies, we next examine a number of issues: (1) the unprecedented nature of the individual mandate; (2) whether Congress’s exercise of its commerce authority affords sufficient and meaningful limiting principles; and (3) the far-reaching implications for our federalist structure.”

First, the two-Judge majority concluded that the individual mandate was unprecedented in its scope, and that no previous judicial precedent exists that would directly support the exercise of Commerce Power to impose this insurance mandate on individuals. “The individual mandate is breathtaking in its expansive scope,” the Judges wrote.

“Even in the face of a Great Depression, a World War, a Cold War, recessions, oil shocks, inflation, and unemployment, Congress never sought to require the purchase of wheat or war bonds, force a higher savings rate or greater consumption of American goods, or require every American to purchase a more fuel efficient vehicle,” the majority opinion stated.

“Traditionally, Congress has sought to encourage commercial activity it favors while discouraging what it does not. This is instructive,” the opinion stated. As an example of how Congress may encourage commercial activity without mandating it, the Judges cited the National Flood Insurance Act of 1968. In that Act Congress did not require that anyone who chooses to build a new house in a flood plain buy flood insurance, but “Rather,” the Judges wrote, “Congress created a series of incentives designed to encourage voluntary purchase of flood insurance. These incentives included requiring flood insurance before the home owner could receive federal financial assistance or federally regulated loans.” The opinion nevertheless conceded that this approach did not work very well to induce citizens to buy flood insurance.

The Judges’ reasoning in suggesting that Congress has power to attach conditions to federal funding or federal incentives, was consistent with their holding in another part of the opinion, where they in fact upheld the Medicaid expansion that Congress imposed as part of the Affordable Care Act, and rejected the plaintiffs’ challenge to that part of the health care law. The Judges reasoned there that Congress did have power under the Spending Clause of the U.S. Constitution to condition States’ receipt of federal funds for the Medicaid program upon the States’ acceptance of the revised and expanded conditions of Medicaid now being imposed.

However, the individual insurance mandate, the Judges held, amounted to an unprecedented expansion of Congress’ power under the Commerce Clause. “This economic mandate represents a wholly novel and potentially unbounded assertion of congressional authority: the ability to compel Americans to purchase an expensive health insurance product they have elected not to buy, and to make them re-purchase that insurance product every month for their entire lives,” the Judges said.

Second, the majority reasoned that the individual insurance mandate is beyond Congress’ authority under the Commerce Clause, because if it were allowed, these Judges could not conceive of any activity that Congress could not then regulate, which they suggested would make Congress’ power under the Commerce Clause unlimited.

Seeming to assume, without discussing, that the decision not to buy health insurance was in fact not a commercial activity, the Judges wrote, “The question before us is whether Congress may regulate individuals outside the stream of commerce, on the theory that those “economic and financial decisions” to avoid commerce themselves [when aggregated] substantially affect interstate commerce.”

They then went on to state:

“From a doctrinal standpoint, we see no way to cabin the government’s theory only to decisions not to purchase health insurance. If an individual’s mere decision not to purchase insurance were subject to [Congress' authority to regulate under the Commerce Clause], we are unable to conceive of any product whose purchase Congress could not mandate under this line of argument.”

“Although any decision not to purchase a good or service entails commercial consequences, this does not warrant the facile conclusion that Congress may therefore regulate these decisions pursuant to the Commerce Clause,” the Judges concluded.

Thirdly, the two-Judge majority argued that the individual mandate was “overinclusive,” and therefore upholding it would allow Congress to overreach its limited federal powers. They wrote,

“In this regard, the individual mandate’s attempt to reduce the number of the uninsured and correct the cost-shifting problem is woefully overinclusive. The language of the mandate is not tied to those who do not pay for a portion of their health care (i.e., the cost-shifters). It is not even tied to those who consume health care. Rather, the language of the mandate is unlimited, and covers even those who do not enter the health care market at all.”

The Judges wrote that plaintiffs had acknowledged at oral argument that, “when the uninsured actually enter the stream of commerce and consume health care, Congress may regulate their activity at the point of consumption.”

Nevertheless, the two Judges writing the opinion found the mandate overbroad because “It regulates those who have not entered the health care market at all,” … “regulates those who … have not entered the insurance market (and have no intention of doing so),” and … “conflates those who presently consume health care with those who will not consume health care for many years into the future.”

In making this argument, the Judges made no mention of the fact that during the health care debates in Congress, private insurance companies had insisted upon the universal insurance mandate as a condition to dropping policy exclusions for sick people, because, the insurance companies argued, unless everyone is required to buy health insurance, people would wait until they become sick to buy insurance, thus removing well people from the insurance pool and making it economically impossible to cover the costs of insuring only the sick.

The Judges also failed to acknowledge here what their own earlier summary of the health care law explained: That the insurance mandate in the Affordable Care Act is not universal. In fact the Act provides many exemptions from the mandate. These include exemptions for (i) persons with religious exemptions, (ii) individuals whose required annual premium contribution would exceed 8% of their household income for the taxable year, (iii) individuals whose household income for the taxable year is below the federal income tax filing threshold, (iv) individuals whose gaps in health insurance last less than three months, and (v) persons who may be exempted by HHS on the basis of “hardship,” among other exemptions.

Nevertheless, the Court found the insurance mandate to be “overinclusive” and thereby to stretch the authority of Congress under the Commerce Clause beyond the limits of federal power.

“The government’s position, the Court said, “amounts to an argument that the mere fact of an individual’s existence substantially affects interstate commerce, and therefore Congress may regulate them at every point of their life. This theory affords no limiting principles in which to confine Congress’s enumerated power.”

Upholding the Remainder of the Affordable Care Act. As referenced and explained above, the 11th Circuit Panel upheld the remainder of the Affordable Care — all of the Act other than the individual insurance mandate. The Panel found that those provisions are stand-alone statutes which are severable from the individual mandate, and are within the authority of Congress.

The Panel specifically upheld the Medicaid expansion that Congress included within the Affordable Care Act, rejecting the plaintiffs’ challenge to that part of the law. The Judges reasoned that Congress did have power under the Spending Clause of the U.S. Constitution to condition States’ receipt of federal funds for the Medicaid program upon the States’ acceptance of the revised and expanded conditions of Medicaid now being imposed by Congress.


In a dissenting opinion, Judge Marcus wrote that judges have a duty to act with “caution, restraint and great humility” and to accord a presumption of validity to uphold laws enacted by Congress, the elected branch of the government.

“At bottom, Congress rationally concluded that the uninsured’s consumption of healthcare services shifts enormous costs unto others … and the individual mandate directly addresses this cost-shifting problem,” wrote Judge Marcus.

Senate Minority Leader Mitch McConnell (R-Ky.) said the ruling “only strengthens and adds more momentum to the efforts of those of us who are working to repeal.”

The White House reacted in a blog post by Stephanie Cutter:

“Today, a different court ruled against the Affordable Care Act’s individual responsibility provision. We strongly disagree with this decision and we are confident it will not stand.

The individual responsibility provision – the main part of the law at issue in these cases – is constitutional. Those who claim this provision exceeds Congress’ power to regulate interstate commerce are incorrect. Individuals who choose to go without health insurance are making an economic decision that affects all of us – when people without insurance obtain health care they cannot pay for, those with insurance and taxpayers are often left to pick up the tab.”

More Information

See previous reporting by HelpingYouCare™ on the litigation challenging the Affordable Care Act:

U.S. Sixth Circuit Court of Appeals Upholds Affordable Care Act

Lawsuits Challenging Health Care Law to Be Argued on Appeal May 10;

Florida Federal Judge Stays His Previous Decision Against Health Care Reform Law;

D.C. Federal Judge Dismisses Lawsuit Challenging Health Care Law — Courts now 3-2 in Favor of Law;

Florida Federal Judge Declares Health-Care Law ‘Void’ in its Entirety – Conflicting Judicial Decisions Now Pending Appeal; and

Central Provision of Health Care Law Is Ruled Unconstitutional.

And, see generally, the HelpingYouCare™ resource pages on:

Latest News on Health Care Reform

Health Reform Legislation – Pending & Recently Adopted

Editorials on Health Care Reform

Advocacy – Proposals for Reform; and

International Health Care Compare


Copyright © 2011 Care-Help LLC, publisher of HelpingYouCare™.


3 comments to 11th Circuit Appeals Panel Strikes Insurance Mandate, Upholds Rest of Health Care Law

  • Editor

    This article is open to comment. We invite you to contribute your thoughts, questions, observations, suggestions, and comments on this and other articles on HelpingYouCare™. All comments are subject to moderation. Please Register and Login to post comments more easily, without having to re-enter your information each time. Welcome to the HelpingYouCare™ Community!

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  • Murray Nadler

    The court gives two reasons for striking down the ACA as unconstitutional. Both are illogical:

    The first reason is that requiring everyone to do something buy something is a new concept so it must be unconstitutional becau– it is a new concept. Newness is not a test for constitutionality. The correct test is: is it necessary and proper to require everyone to buy health insurance to eliminate dead beats who don’t pay to make the system actuarily sound.Of course it is.

    The second reason the Court gives is that requiring Americans to buy private health care insurance or pay a fine will apriori grant unlimited power to Congress to legislate in all aspects of American life where it has no power.That is patently false. Congress has the power to impose the individual mandate in this case because it has the power to regulate interstate commerce and dthe individual mandate is required to do that. If Congress should pass a law that requires people to do something and that something does not affect interstate commerce or is irrational the courts will strike it down.

  • Joetta Dillion

    I really liked this site, this is nice blog.

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