Friday, August 12, 2011

The 11th Circuit Rules That HCR Individual Mandate Provisions Are Unconstitutional

The 11th Circuit Court of Appeals handed down a decision that will ultimately be decided by the US Supreme Court. It ruled that the individual mandate portion of the health care reform package is unconstitutional.
The divided three-judge panel of the 11th Circuit Court of Appeals struck down the so-called individual mandate, which is considered the centerpiece of the law, siding with 26 states that had sued to block the law. But the panel didn't go as far as a lower court that had invalidated the entire overhaul as unconstitutional.

Government attorneys can — and likely will — ask the full 11th Circuit to review the panel's ruling. They also can appeal to the U.S. Supreme Court, which many legal observers expect to have the final say on the issue.

White House adviser Stephanie Cutter said the administration strongly disagreed with the ruling and was confident it would not stand.

"Individuals who choose to go without health insurance are making an economic decision that affects all of us — when people without insurance obtain health care they cannot pay for, those with insurance and taxpayers are often left to pick up the tab," Cutter said.

The states and other critics argued the law violates people's rights, while the Justice Department countered that the legislative branch was exercising a "quintessential" power.

The decision, penned by Chief Judge Joel Dubina and Circuit Judge Frank Hull, found that "the individual mandate contained in the Act exceeds Congress's enumerated commerce power."
So, what exactly is the importance of the individual mandate provisions? Well, it acts as a tax/penalty to get people to buy insurance who might otherwise opt out because they're in good health.

This is a not insignificant sum of money we're talking about. This provision is expected to raise several billion dollars every year it is in operation beginning in 2014, and is part of the revenue side of reforming the health care funding across the country. It is also seen as a critical tool to getting people into the health care insurance pools so that they can help spread the costs of health care for those who are more likely to utilize the insurance policies.

These are set forth at 26 USC 5000A (the Internal Revenue Code). It imposes an annual penalty of $95, or up to 1% of income, whichever is greater, on individuals who do not secure insurance in 2014, which rises to to $695, or 2.5% of income, by 2016 and after (and adjusted for inflation). Families are hit with higher penalties. There are exemptions to the "fine" in cases of financial hardship or religious beliefs.

The Circuit Court website has been unavailable for most of the day, as people try to access the decision. When I'm able to obtain a copy of the decision, I'll post it here with additional comments.

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