District Court Upholds Health Insurance Mandate

Judge Gladys Kessler (D.D.C.) on Tuesday upheld the individual health insurance mandate in the federal health reform package, the Affordable Care Act.  Judge Kessler granted the government's motion to dismiss the case, Mead v. Holder, handing the government its third district court victory.  (We posted on the earlier two cases upholding the individual insurance mandate here and here.  We posted on the two earlier cases ruling the mandate unconstitutional here and here.  District court rulings are on appeal, but no federal appellate court has yet ruled on the constitutionality of the individual health insurance mandate.)

Plaintiffs in the case argued that they were outside the scope of congressional Commerce Clause authority, because they planned never to use the health care system.  And if they did, they'd pay out of pocket.  Moreover, they claimed, the individual mandate violates their religious freedom under the Religious Freedom Restoration Act.

Judge Kessler surveyed the Commerce Clause landscape in some detail and synthesized this three-part rule from Wickard v. Filburn, United States v. Lopez, United States v. Morrison, and Gonzales v. Raich:

• First, the Court must consider whether the decision not to purchase health insurance is an economic one.
• Second, if the decision is economic, the Court must determine whether Congress had a rational basis for concluding that such decisions, when taken in the aggregate, substantially affect the national health care market.
• Third, the activity may be found to be within the reach of Congress's Commerce Clause power if it is an essential part of a larger regulation of economic activity, in which the regulatory scheme could be undercut unless the interstate activity were regulated.

Op. at 35-36.  (Internal quotes and citations omitted.)

The first part--whether the (in)activity is economic--has perhaps received the most attention in the public debates and court cases.  But Judge Kessler had little trouble concluding that the activity was economic, ruling simply that "[b]oth the decision to purchase health insurance and its flip side--the decision not to purchase health insurance--therefore relate to the consumption of a commodity: a health insurance policy."  Op. at 38.  She dismissed the plaintiffs' related argument that the non-purchase is non-activity, not subject to Commerce Clause regulation: "It is pure semantics to argue that an individual who makes a choice to forgo health insurance is not "acting," especially given the serious economic and health-related consequences to every individual of that choice.  Making a choice is an affirmative action, whether one decides to do something or not to do something.  They are two sides of the same coin.  To pretend otherwise is to ignore reality."  Op. at 45.

Judge Kessler went on to rule that Congress rationally concluded that the decision not to purchase insurance substantially affected the health care market, and that the individual health insurance mandate was an essential part of the regulatory scheme--that it was a critical tool in preventing free-riding and cost-distribution by those who would opt out.

Judge Kessler ruled against the government on the General Welfare Clause: the penalty for not insuring was not a "tax," she ruled, because Congress never intended it to act as a tax. 

She rejected the plaintiff's RFRA claim.  She ruled that their argument that the mandate undermines their religion (because they believe that God will take care of their health, and the mandate forces them into a back-up plan) represented only a de minimis impact on their religious beliefs.  And moreover, she ruled, the mandate is the least restrictive way for the government to achieve its compelling interest.

SDS