He argues, "Congress has substantial power to regulate interstate commerce, but it may not compel individuals to enter into such commerce so that Congress may better regulate them."
At issue in this case is also the law's provision that expands the reach of Medicaid, a program enacted in 1965 in which the federal government provides financial assistance to the states so that they can serve the medical needs of low income individuals. According to the law, the federal government will initially fund 100 percent of the expanded benefits. State participation in the program has always been voluntary.
But Clement argues that the law will add significant administrative expenses to the states and force them to eventually cover more citizens.
"The added burdens, costs and liabilities from this new requirement -- particularly in the face of federal projections of severe provider shortages -- are incalculable but sure to be substantial, underscoring that the ACA transforms Medicaid well beyond anything the States volunteered to implement," he writes.
"The only means by which a State may avoid the ACA's substantial new burden is by withdrawing entirely from the Medicaid program, which is simply not possible given the amount of money at stake," Clement says.
Although Vinson found that the individual mandate was unconstitutional, he rejected the states' argument on Medicaid, noting that the states have the right to withdraw from participation if they don't agree with the funding terms.
The randomly chosen panel hearing the case consists of Chief Judge Joel F. Dubina, nominated to the bench by President George H.W. Bush, Judge Frank M. Hull, a nominee of President Clinton and Judge Stanley Marcus, who was nominated to the appeals court by Clinton but had been nominated to the district court by President Reagan. At the district court level the judges who have upheld the law were all nominated by Democratic presidents, and those who have ruled against the Obama administration were nominated by Republican presidents.
While the mostly Republican attorneys general or governors of the 26 states are challenging the law, 10 other states have filed briefs in support of the law.
Elizabeth Wydra, chief counsel of the Constitutional Accountability Center, filed a brief on behalf of state legislators in favor of the law.
"Not all states are opposed to the law. While the 26 states claim to represent the rights of the states in general using Tea Party-friendly states rights rhetoric, the truth is that there are many state leaders who think the act is constitutional, and that it will strongly benefit their states and constituents."
Wydra notes that this is the first appeals court that will hear arguments on the Medicaid provision.
"The expansion of Medicaid in the Affordable Care Act will enable millions of people to access affordable health care and represents federalism at its best in the sense that it continues the long-standing partnership between the states and the federal government in providing care for those who cannot afford it," she said.