Mandatory Health Care Provision Struck Down As Unconstitutional

U.S. District Judge Henry Hudson in Richmond, Virginia had struck down the centerpiece of the national health care plan: the mandatory requirement that all citizens get health care coverage. The lengthy 42-page opinion details how the law falls outside of interstate commerce jurisdiction — the concern that I previously voiced in a column.

Hudson ruled that the mandatory requirement “exceeds the constitutional boundaries of congressional power.” However, he left the other parts of the law intact.

Notably, two other courts in Detroit and Lynchburg, Va. have upheld the law.

This is an important victory for Virginia’s attorney general, Kenneth T. Cuccinelli II, who has a stand-alone challenge from the giant challenge filed in Florida. Twenty attorneys general and governors have filed a challenge in Pensacola, Florida. Cuccinelli’s challenge will now move in tandem with the other case, which will move roughly together toward the Supreme Court.

On a practical level, this could be a problem for the Administration. With roughly half of the states challenging the law, you already have a reluctance to enforce the law. This will add to that resistance. However, since the requirement will not kick in for a couple years, there is no need for an injunction.

Today’s case is Commonwealth of Virginia v. Sebelius, 10-cv- 00188, U.S. District Court, Eastern District of Virginia (Richmond).

Judge Hudson previously denied the federal government’s motion to dismiss the case, warning that the mandatory insurance provision “literally forges new ground and extends Commerce Clause powers beyond its current high-water mark.” While I believe that the Administration has strong cases supporting its position, I agree with that statement. It is difficult to see what would be left of federalism guarantees in the Constitution if Congress has this jurisdictional authority. It is certainly a matter upon which people of good faith can disagree. I strongly encouraged members of Congress to allow states to opt in — perhaps with a reward for such participation in terms of funding. That would have avoided this ruling and much of the constitutional controversy.

It is important to remember that this ruling has little to do with the merits of national care reform. This is about how to interpret the Constitution and the scope of congressional power.

Here is a copy of Judge Hudson’s opinion: Health Care Ruling

There has been a quesiton raised about that fact that Hudson is an investor in Campaign Solutions, a Republican consulting firm which has worked for candidates opposing health care reform, including Virginia Attorney General Ken Cuccinelli. If he is still an active investor, I would be frankly surprised. I believe such connections would be a serious mistake for any prosecutor or judge. While I certainly understand people raising the issue, there is no evidence that this opinion was motivated by anything other than Hudson’s well-known conservative view of the Constitution. The opinion is a thoughtful and comprehensive take on the issue. Many can disagree with it and the Administration clearly has solid arguments to make before the Court of Appeals. However, it appears motivated by the deep-seated philosophical convictions and cannot be dismissed as a political screed.

Jonathan Turley

77 thoughts on “Mandatory Health Care Provision Struck Down As Unconstitutional”

  1. Sorry I posted before finishing my thought:

    “Its kinda like when McGovern lost to Nixon and his words were”well what about watergate?”

    Or in this case what about Campaign Solutions?

  2. Elaine M. & rafflaw:

    Judge Porteous had his problems but in comparison to Judge Hudson his decision affects the nation where as Judge Porteous decisions were felt locally and he got impeached and expeled for action.

    I saw Howard Dean with KO and he was saying in so many words I thought that it was no big deal this conflict that has surfaced.

    Its kinda like when McGovern lost to Nixon and his words were”well what about watergate?”

  3. I think the judge was right–this was heard on motions for summary judgement and the other 400 provisions were not involved. The doctrine of severability does not allow the dumping of an entire law in the absence of a severability provision, just all those provisions intertwined with the provision which is struck down. And that is exactly what Judge Hudson has done.

  4. Much has been said here about the superiority of a nonprofit role for government in administering services, including heath care.

    Let’s look at another example first. Did the private market fairly price education lending before the government arrived to provide all of it? What has been the outcome of government involvement?

    Government student loan guarantees and subsidies have allowed education costs to soar. Universities have little incentive to contain tuition costs because students have very large borrowing capability at very low rates. This has caused over-consumption of education generally, as the government allows students to borrow extensively to study in fields where there is little chance of finding gainful employment. This means that many students spend unproductive years studying things that they never actually use. Private lenders, however, would be reluctant to lend into such a wasteful use of time or risky payback scenario.

    A similar dynamic will eventually crush socialized health care. Our partially-socialized and highly-regulated system leaves insurers with a government-mandated copayment scheme that encourages health care consumption by the patient, who sees incremental procedures as free or nearly free.

    Providers must make up for below-cost government reimbursement levels found in Medicare and Medicaid procedures in their billing rates to private payers. This spikes insurance and cash rates, and is creating serious shortage of providers to the elderly.

    To fix the health system:

    1. Repeal the Patient Protection and Affordable Care Act
    2. Allow insurers to create catastrophic insurance plans
    3. Allow consumers to shop for plans from any state
    4. Drop employer-issued plan requirements and tax incentives, and create a broader consumer marketplace
    5. Ease regulatory barriers to entry for minute clinics and other low-cost providers to the cash marketplace
    6. Radically cut provider documentation requirements for Medicare and Medicaid procedures. These were the genesis for endless paperwork now found in the third-party payment system
    7. Substantially raise patient co-payments on all government-administered plans
    8. Cut back the FDA and allow drugs approved in the EU/Japan to be sold in the United States immediately. Drop import restrictions.
    9. Broaden prescribing powers among providers, and move as many drugs as possible to OTC
    10. Allow providers to counsel realism in end-of-life measures, and legalize euthanasia for patients who seek it

    I welcome today’s ruling. In my view the Supreme Court will eventually reject major parts of Obamacare requiring it to be entirely rewritten or abandoned in the next Congress.

  5. Euthynus,

    “Sucking” isn’t the issue. Cost containment is the issue. One channel versus six channels (5 ins. co.’s plus government). It’s simple process improvement and basic accounting. Even if government paperwork costs twice as much to process, it’s still cheaper than maintaining a doubly expensive single channel than six redundant channels.

  6. @Bdaman

    It warms my heart when I see somebody posting something from the Heartland Instutute, a hard core free market libertarian think tank, funded mostly by tobacco and energy companies (hence why they are primarily known for being pro-tobbaco and anti-climate change). They still argue that second hand smoke is harmless. You should reconsider where you get your information.

  7. from my understanding, government paper work is horrendous.

    I am not sure I agree with your model/hypothesis.

    And I am not sure you could get a viable comparison because of the amount of regulations insurance companies must comply with.

    My doctor says it sucks now and will suck under government control, he is hoping it sucks less under government control vs government regulation.

  8. “A comparison of Medicare and Medicaid claims/processing staff/cost per claim vs. the same for private insurers would be a good bit of data to have.”

    I think it would be an interesting bit of data, but should only be contextually considered against unnecessary redundancy.

  9. Euthynus: “(why) do you think one entity can do better when 5 cannot. Isn’t that contradictory?”

    BIL’s right, admin. costs (which are not capped under the healthcare law BTW,) and profit are where all the fat is. A comparison of Medicare and Medicaid claims/processing staff/cost per claim vs. the same for private insurers would be a good bit of data to have.

  10. No. It’s a basic function of risk distribution. You can say “you mistake risk pool for the problem, the risk pool is not the problem” but as a matter of mathematics, smaller pools are going to have higher per member costs and associated risk than larger ones. That simply how risk pools work. More participants equal greater numbers to share the risk and show resultant savings from greater dilution of said risks. Plus with five providers instead of one, you are creating additional costs by supporting five separate administrative channels for the paperwork – an operational inefficiency that leeches money out not only at the insurer level but at the doctor and hospital level by necessitating their maintenance of systems for each additional provider. Doctors and hospitals spend a ridiculous amount of money on these kinds of administrative costs right now. Cutting that to maintain one channel instead of five would be a huge savings.

  11. you mistake risk pool for the problem, the risk pool is not the problem.

    But you are right about those 5 companies being propped up by government and the regulations that prohibit more competition.

    Why do you think one entity can do better when 5 cannot. Isn’t that contradictory?

  12. LK,

    No worries. I was more agreeing with the gift part of the statement. By limiting the choices to five companies, they have effectively propped up those five companies instead of creating the largest, and ergo cheapest, risk pool possible. A risk pool 1/5th the size of the total potential pool is still 1/5 as cost effective and the substandard price savings is rewarded – which serves as a subsidy for private profits over maximization of distribution of risk and a non-profit model.

  13. Elaine M. and rafflaw:

    Its early but I think this judge story is marinating right now,some reporter may start asking questions on televised media as we already see it is in the print media.

    We will see.

  14. Excuse my earlier posting, I was greatly distracted when I read the article and responded. I was a single-payer advocate and still am. The fact that the government can demand that anyone buy anything from a private entity is absurd. If the government wants money to flow to a private industry then they spud do it the old-fashioned way, tax cuts or direct federal subsidies.

    BIL, Sorry buddy, you kinda’ agreed with my earlier posting then here I come calling it wrong;, man, you even can’t count on the people you agree with, sorry, sorry, sorry. 🙂

  15. Short answer though is that everything has a cost and someone has to pick it up. If you increase the number of insured’s and a good many of them cannot afford to pay the money must come from somewhere. The federal government will require states to pay for those because they will not have the money to pay so they put it on the states. The states then have to come up with the money or reduce services. This exact same model was tried in TN a few years ago, it was called TennCare and it almost bankrupted the state.

  16. Eniobob and Elaine,
    It is important to note that Judge Hudson, who has been called a “passive” investor in Campaign Solutions, is one of only 13 investors. How “passive” can he be if there are only 13 investors. His dividends range in his judicial disclosure from this stock go from $30,000 to over $100,000. I think if I was making 30,000 or even $100,000, I would be keeping a close eye on that stock. Here is the Crooks and Liars article that outlines Judge Hudson’s interests:
    “Judge Henry Hudson owns a piece of the Donatelli firm Campaign Solutions, Inc., a right-wing go-to source for turnkey campaigns and donation collections. I wrote about their ties to the right-wing establishment back in August, when he first agreed to hear the case. Since August, Campaign Solutions has made millions from Republican campaigns for candidates running on the repeal of the Affordable Care Act. Hudson’s annual financial disclosures show that he owns a sizable chunk of Campaign Solutions, Inc., a Republican consulting firm that worked this election cycle for John Boehner, Michele Bachmann, John McCain, and a whole host of other GOP candidates who’ve placed the purported unconstitutionality of health care reform at the center of their political platforms. Since 2003, according to the disclosures, Hudson has earned between $32,000 and $108,000 in dividends from his shares in the firm (federal rules only require judges to report ranges of income). As one of only thirteen investors, I’m certain this year will be a bang-up year for him, dividend-wise. Just have a look at their client list.”http://crooksandliars.com/karoli/anti-hcr-judge-should-have-recused-himself

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