Health Care Law: Appeals Court Seems Skeptical of Obama Administration's Argument

VIDEO: One Third of Employers May Drop Health Coverage

A lawyer for the Obama administration told a panel of federal judges on Wednesday that health care is a "universal feature of our existence" and that Congress was well within its authority in passing a sweeping health care law.

But the judges seemed, at times, skeptical of some of the key arguments made by Acting Solicitor General Neal Katyal on behalf of the government.

Twenty-six states are challenging the constitutionality of the law, the Affordable Care Act, and arguing that it should be struck down.

At the heart of the case is the key provision of the law, the individual mandate, that requires individuals, with few exceptions, to buy health insurance by 2014 or pay a tax penalty.

The case was heard by three judges from the 11th Circuit Court of Appeals, the third appellate court to hear a challenge to the law considered the signature legislative achievement of the Obama administration.

Paul Clement, representing the states, said that Congress exceeded its authority in passing the individual mandate because it forces people into the market place.

Clement said the case turns on "whether or not the federal government can compel an individual to engage in commerce."

The judges began by asking the government whether the case is unprecedented.

"I can't find any case that is just like this," said Chief Judge Joel G. Dubina.

Dubina asked the government whether there would be any limits to Congress' reach if the court upheld the individual mandate.

Katyal said that health care is a unique market because "every single person can't guarantee that they won't need health care," adding that the mandate was "all about financing" how health care could be paid for.

Judge Stanley Marcus pressed again on the issue of precedent.

"Is there any case out there," he asked, that involves the power "to compel the purchase of a product on the open market?"

Katyal said the case wasn't about the government forcing someone to buy a product. It was about how to regulate the payment of a product that every American will eventually need.

He noted that in 2008 the cost of the uninsured was $43 billion, and those costs were shifted to other participants in the health care system across the country. He said that the commerce clause of the Constitution empowers Congress to regulate such interstate commerce.

Clement argued that although Congress may have the right to regulate interstate commerce, it doesn't have the authority to "compel people to engage."

Judge Frank M. Hull challenged Clement's notion that a person choosing not to buy health insurance is involved in economic "inactivity," and thus outside of Congress' reach.

"The whole inactivity discussion doesn't get me very far" she said, noting that someone's choice to not participate in the market is still an "economic decision."

But Hull asked a long series of questions that would be of concern to the government regarding whether the law would be able to survive if its key provision, the individual mandate, was struck down.

The only way the court would need to reach the so called "severability" argument is if it threw out one or more provisions of the law.

Clement said that the individual mandate is the "driving force" behind the entire law and suggested the court should uphold the lower court decision that threw out the entire law after finding the individual mandate was unconstitutional.

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