Appeals court backs Obama healthcare law

WASHINGTON Tue Nov 8, 2011 2:46pm EST

President Obama walks into the Rose Garden of the White House to announce initiatives to get veterans back to work in Washington November 7, 2011.   REUTERS/Kevin Lamarque

President Obama walks into the Rose Garden of the White House to announce initiatives to get veterans back to work in Washington November 7, 2011.

Credit: Reuters/Kevin Lamarque

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WASHINGTON (Reuters) - President Barack Obama's signature healthcare law got a boost on Tuesday when an appeals court agreed with a lower court that dismissed a challenge and found the law's minimum coverage requirement was constitutional.

The Appeals Court for the District of Columbia Circuit upheld a lower court ruling that had found it constitutional to require Americans to buy healthcare insurance coverage by early 2014 or face a penalty and had dismissed a lawsuit challenging it.

"It certainly is an encroachment on individual liberty, but it is no more so than a command that restaurants or hotels are obliged to serve all customers regardless of race ... or that a farmer cannot grow enough wheat to support his own family," wrote Judge Laurence Silberman in the majority opinion, citing past federal mandates that inspired legal fights.

"The right to be free from federal regulation is not absolute, and yields to the imperative that Congress be free to forge national solutions to national problems, no matter how local -- or seemingly passive -- their individual origins."

It was the latest victory for the Obama administration, which sought the new law to try to stem the soaring costs of healthcare and to increase coverage for the more than 35 million Americans without healthcare insurance.

Silberman, a noted conservative judge, was appointed by President Ronald Reagan and was joined by Judge Harry Edwards who was appointed by President Jimmy Carter. The dissenting judge was Brett Kavanaugh, appointed by President George W. Bush.


Two federal courts have thrown out the so-called individual mandate but others have upheld it. The Supreme Court is expected to take up the matter this term.

In the latest case, Kavanaugh broke with the other two judges on the panel because he said the court did not have jurisdiction to decide the case because the penalty charged for not having insurance is effectively a tax.

In his 65-page dissent he wrote that the Anti-Injunction Act, "limits the jurisdiction of federal courts over tax-related matters" and thus should not touch the case until 2015 when the penalties could be imposed and challenged.

Kavanaugh also cautioned the courts against rushing to decide the constitutionality of the law.

"We should hesitate to unnecessarily decide a case that could usher in a significant expansion of congressional authority with no obvious principled limit," he wrote.

Last month the Obama administration asked the Supreme Court for a quick ruling on the requirement. The high court could resolve the uncertainty over the law that is affecting the federal government, states and companies. The court's current term runs through June 2012.

"We're confident that, like today, we will prevail," said Stephanie Cutter, assistant to Obama and his deputy senior adviser, in a statement noting "the ruling also marks the third time a federal appeals court has ruled in favor of the law."

"People who make a decision to forego health insurance do not opt out of the health care market. Their action is not felt by themselves alone," she said.

More than half the states have sued to challenge the law, saying Congress overstepped its constitutional authority.

A three-judge panel of the 11th Circuit Court agreed, saying in August that the law is not protected by the Commerce Clause of the U.S. Constitution, which allows Congress to regulate commerce among states.

It too said the penalty for not having insurance was akin to a tax, which the U.S. government was not entitled to levy.

But a U.S. Appeals Court in Cincinnati said the individual mandate was constitutional.

Meanwhile, Virginia is asking the Supreme Court to overturn a decision throwing out its challenge that contends a federal law cannot trump a state one allowing residents to forego health insurance.

(Editing by Howard Goller and Cynthia Osterman)

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Comments (26)
In 1868, the Supreme Court first found, in the case of Paul v. Virginia, that insurance was not interstate commerce, and, thus, the states had the right to regulate insurance. Then in 1944, the Supreme Court reversed itself in the case of South-Eastern Underwriters Association (SEUA), a cooperative rating bureau that was found guilty of price-fixing and other violations of the Sherman Antitrust Act, and ruled that insurance was interstate commerce when conducted across state lines and subject to federal regulation.

In response to the SEUA decision, the federal government passed the McCarran-Ferguson Act in 1945 that stipulated that it was in the public interest to have the states regulate insurance. The McCarran–Ferguson Act does not itself regulate insurance, nor does it grant the states the right to regulate insurance. Instead, it allows that if Congress does not itself regulate insurance then State law will take precedence.

The main purposes of insurance regulation is to maintain insurer solvency; to protect consumers; to make insurance available to people who, because they are poor risks, might otherwise be unable to get it; and to regulate rates. The states have failed on all four counts with regard to Healthcare. Further, most consumers have no meaningful choice in their insurance coverage. Two firms control at least 50 percent of the market in 39 states, and one firm controls at least 75 percent in nine others.

It is no longer “in the public interest” to have states regulate Health insurance.

Nov 08, 2011 12:08pm EST  --  Report as abuse
USAPragmatist wrote:
Another victory for sanity. Where are all the rightie comments now? I love how you all ignore facts/stories that do not support your ideology.

Nov 08, 2011 12:13pm EST  --  Report as abuse
abkisa wrote:
If people would take the time to know the new health care legislation and the changes it makes to care in our country they would be pleasantly surprised. Most changes are very positive, especially those to be implemented in 2014. The only people who should be upset are health insurance companies, agents for health providers and those who feel freedom to say “no” is more important than social programs and their own security!

Nov 08, 2011 12:14pm EST  --  Report as abuse
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