Insurance News

U.S. appeals court rules against health care reform law

Posted on: August 15, 2011

ATLANTA (Reuters) – A U.S. appeals court ruled Friday that a key provision in the health care reform law requiring Americans to enroll in a health care plan or face a penalty was unconstitutional, a blow to the White House.

The 11th U.S. Circuit Court of Appeals, based in Atlanta, found that Congress exceeded its authority by requiring Americans to buy coverage, but also ruled that the rest of the wide-ranging law could remain in effect.

The legality of the so-called individual mandate, a cornerstone of the 2010 health care law, is widely expected to be decided by the U.S. Supreme Court. The Obama administration has defended the provision as constitutional.

The case stems from a challenge by 26 U.S. states which had argued the individual mandate, set to go into effect in 2014, was unconstitutional because Congress could not force Americans to buy health insurance or face the prospect of a penalty.

“This economic mandate represents a wholly novel and potentially unbounded assertion of congressional authority: the ability to compel Americans to purchase an expensive health insurance product they have elected not to buy, and to make them re-purchase that insurance product every month for their entire lives,” a divided three-judge panel said.

President Barack Obama and his administration had pressed for the law to help expand insurance coverage to the more than 30 million Americans who are without it.

It argued that the requirement was legal under the Commerce Clause of the U.S. Constitution. One of the three judges of the appeals court panel, Stanley Marcus, agreed with the administration in dissenting from the majority opinion.

The majority “has ignored the undeniable fact that Congress’ commerce power has grown exponentially over the past two centuries and is now generally accepted as having afforded Congress the authority to create rules regulating large areas of our national economy,” Judge Marcus wrote.

Many other provisions of the health care law are already being implemented.The decision contrasts with one by the 6th U.S. Circuit Court of Appeals, based in Cincinnati, which had upheld the individual mandate as constitutional. That case has already been appealed to the Supreme Court.

The 4th U.S. Circuit Court of Appeals, based in Richmond, Va., has yet to rule on a separate challenge by the state of Virginia.

Copyright 2011 Reuters Limited.

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