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Florida Ruling Challenges Reach of Federal Powers

02/02/11

  05:52:56 pm, by MedBen5   , 527 words,  
Categories: News, Health Plan Management

Florida Ruling Challenges Reach of Federal Powers

As we reported on this blog yesterday, a federal judge in Florida has ruled that a key element of the health care reform act – the mandate that every U.S. citizen purchase health insurance – is unconstitutional. As the attorneys general from 26 states are now participating in a suit to declare elements of the health care reform bill unconstitutional, we would like to examine this particular ruling more closely.

In essence, Judge Roger Vinson (a Reagan appointee) has ruled that it is unconstitutional for the federal government to use the Commerce Clause to penalize an individual for inactivity – failure to take a positive action to purchase health insurance. From the ruling:

“At issue here, as in the other cases decided so far, is the assertion that the Commerce Clause can only reach individuals and entities engaged in an ‘activity’; and because the plaintiffs maintain that an individual’s failure to purchase health insurance is, almost by definition, ‘inactivity,’ the individual mandate goes beyond the Commerce Clause and is unconstitutional. The defendants contend that activity is not required before Congress can exercise its Commerce Clause power, but that, even if it is required, not having insurance constitutes activity.”

This is an important issue since the bounds of the Commerce Clause have been pushed over the years as federal powers have eclipsed those of the states.

Judge Vinson went further and denied “severability” since the Act did not include common language to declare if a part of the legislation is struck down, the remainder of the Act will stay intact – the struck-down portion of the Act will be severed from the rest of the Act.

An earlier ruling granted severability even though it was not specifically written into the Act. As Vinson ruled:

“First, the Act does not contain a ’severability clause,’ which is commonly included in legislation to provide that if any part or provision is held invalid, then the rest of the statute will not be affected …

“Moreover, the defendants have conceded that the Act’s health insurance reforms cannot survive without the individual mandate, which is extremely significant because the various insurance provisions, in turn, are the very heart of the Act itself. The health insurance reform provisions were cited repeatedly during the health care debate, and they were instrumental in passing the Act.”

Why is the mandate so important? Since the legislation outlaws “pre-existing condition restrictions” (insurance companies not covering conditions that existed when an individual purchased coverage IF the individual allowed coverage to lapse for an extended period of time) and many elements of risk underwriting, the mandate is important to keep people from only purchasing coverage when they are sick. (Purchasing insurance for a burning building is the property and casuality insurance analogy. We life and health people would equate it to purchasing insurance on the way to the hospital – and canceling it once a procedure is complete.)

So if the mandate goes away a central economic principle of health care reform goes away. The rest of the legislation doesn’t work.

This will be decided by the Supreme Court but Vinson’s ruling is well-reasoned and worth reading.

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