Michigan Judge Upholds Affordable Care Act Insurance Mandate

A federal judge in Michigan recently issued a ruling (pdf) that upholds the Patient Protection and Affordable Care Act’s (“Affordable Care Act” or PPACA) insurance coverage mandate. The lawsuit filed by a public interest law firm and individual parties – like several other such ongoing suits across the country – challenged the new health care law on various Constitutional grounds. Notably, the lawsuit argued that Congress overstepped its bounds when it required most Americans, starting in 2014, to purchase health insurance or pay a penalty. In his ruling, U.S. District Judge George Caram Steeh found that issuing this mandate was well within Congress’s power to regulate interstate commerce, and dismissed the plaintiffs’ motion to declare the Affordable Care Act unconstitutional and to enjoin its enforcement.

In finding the insurance mandate lawful, Judge Steeh agreed with the Obama Administration’s position that the PPACA regulates economic decisions regarding the way in which health care services are paid for in order to reduce the number of uninsured. According to Judge Steeh:

There is a rational basis to conclude that, in the aggregate, decisions to forego insurance coverage in preference to attempting to pay for health care out of pocket drive up the cost of insurance. The costs of caring for the uninsured who prove unable to pay are shifted to health care providers, to the insured population in the form of higher premiums, to governments, and to taxpayers. The decision whether to purchase insurance or to attempt to pay for health care out of pocket, is plainly economic. These decisions, viewed in the aggregate, have clear and direct impacts on health care providers, taxpayers, and the insured population who ultimately pay for the care provided to those who go without insurance. These are the economic effects addressed by Congress in enacting the Act and the minimum coverage provision.

Steeh rejected the plaintiffs’ claim that Congress was forging new ground by attempting to regulate individuals’ decisions not to participate in an activity. In the ruling, Steeh reasoned: “[f]ar from ‘inactivity,’ by choosing to forgo insurance plaintiffs are making an economic decision to try to pay for health care services later, out of pocket, rather than now through the purchase of insurance, collectively shifting billions of dollars . . onto other market participants.” Steeh reasoned that “this cost-shifting is exactly what the Health Care Reform Act was enacted to address . . .”

Without the minimum coverage provision, Steeh states, individuals would lack the incentive to purchase insurance until they became sick, which would wind up shifting market costs and increase health care premiums. Thus, the mandate, “which addresses economic decisions regarding health care services that everyone eventually, and inevitably, will need, is a reasonable means of effectuating Congress’s goal.”

While validating the individual mandate provision, Judge Steeh rejected the Administration’s argument that the plaintiffs’ lacked standing to sue, since there was no evidence that they have been harmed by a provision that has yet to take effect. The judge ruled that the plaintiffs’ present decisions to forego certain spending in order to plan for future health care expenses were enough to establish the right to bring the current lawsuit.

The Michigan lawsuit is just one of many court challenges to the health care bill. In August, a federal court in Virginia denied the Administration’s motion to dismiss a similar lawsuit challenging the Affordable Care Act’s Constitutionality, thus allowing the case to proceed. Arguments on the merits of the Virginia case are scheduled for this month. Twenty other states are also challenging the Affordable Care Act’s constitutionality in a joined suit filed in a Florida court. In addition to the constitutionality argument, the Florida case alleges that the Act’s requirement that states expand their Medicaid programs violates state sovereignty by unlawfully commandeering state resources. The differing opinions from these various cases will no doubt set the stage for an inevitable Supreme Court challenge.

This entry was written by Ilyse Schuman.

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