Health Law

VIRGINIA HEALTHCARE LAW DECISION: CAN CONGRESS REGULATE ECONOMIC INACTION?

By Greg Piche'

      Judge Hudson?s decision invalidating Sec. 1501 of the recent health reform bill, the ?Accountable Care Act? or ?ACA? in Commonwealth of Virginia v. Sebelius, in the U.S. District Court for the Eastern District of Virginia, addresses the key question as to whether Congress can regulate ?economic inactivity? under the provisions of the Commerce Clause of the Constitution. The inactivity is of course the action by individuals in not obtaining mandated health insurance under the ACA and the regulation is the imposition of excise taxes upon those who fail to obtain the required insurance. There are no specific precedents that directly address this issue although logical arguments can be made on both sides.

The federal government argues that the ?minimum essential coverage? provision that mandates coverage critical to the efficacy and cost reduction provisions of the ACA because it prevents ?free riding? the anticipated practice of avoiding coverage until one is sick or injured and purchasing it then since coverage cannot be denied under the ACA. The elimination of the mandatory coverage provision weakens the whole effort to introduce health insurance reform and broaden coverage under the Commerce Clause of the Constitution vastly more difficult and expensive.

 The government also makes the argument that essentially all individuals will need to obtain health care services during their life and the voluntarily uninsured are playing craps with the public?s money because the cost may well be picked up by public sources if the individual is unable to pay. In fact it is precisely these kinds of ?transfer payments? where hospitals and other providers transfer the costs of free care to paying customers that have such an escalating impact on rate of cost increases in health care that we have experienced over the last twenty years. 

         But can Congress regulate ?economic inactivity? that has an impact on interstate commerce?  The government argues for a broad reading of ?activity? that includes its shadow ?inactivity?when it has an aggregating impact on broader economic activity.  Judge Hudson rejected that broad interpretation. But there is another clause, the ?Necessary and Proper Clause? which gives the Congress to make all laws which ?shall be necessary and proper for carrying into execution the foregoing powers.?  Judge Hudson ruled on the basis of ?logic,? not precedent that the Necessary and Proper Clause application was limited by the limited reach of the underlying Commerce Clause. He indicated that otherwise there is no definable limits to the power of Congress.  

    The problem is that the Necessary and Proper Clause was adopted specifically for the purpose of allowing Congress to do that which it might be limited in accomplishing in pursuing legitimate and Constitutional ends under the specific ?enumerated powers? under the Constitution. Otherwise the clause would have no purpose.  The longer term impact of this difficult Constitutional Case is likely to be both enormous and contentious.

Full post as published by Healthcare Law Blog on December 15, 2010 (boomark / email).