Federal Judge Upholds Health Care Law

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By JOSH GERSTEIN | 10/7/10 5:37 PM EDT

A federal judge in Michigan has upheld as Constitutional a provision in the health care reform bill requiring uninsured individuals to purchase insurance.

U.S. District Court Judge George Steeh ruled Thursday that the so-called individual mandate — a requirement President Barack Obama opposed during the presidential campaign but later embraced as part of sweeping changes — falls squarely within Congress’s ability under the Constitution to regulate interstate commerce.

“The decision whether to purchase insurance or to attempt to pay for health care out of pocket is plainly economic,” Steeh wrote in a 20-page opinion. “These decisions, viewed in the aggregate, have clear and direct impacts on health care providers, taxpayers and the insured population, who ultimately pay for the care provided to those who go without insurance.”

Steeh’s ruling represents a major legal victory for the Justice Department since the decision rejects the central legal argument against the landmark health care reform bill Obama signed in March and a provision that has become a focus of popular anger on the right.

The decision stemmed from a lawsuit brought by a Christian legal group, the Thomas More Law Center, and four individuals who objected to a provision in the law that imposes a penalty on those who fail to buy or otherwise obtain health insurance. The judge rejected their arguments that Congress has no authority to regulate those who opt out of the medical insurance market.

“The health care market is unlike other markets. No one can guarantee his or her health or ensure that he or she will never participate in the health care market. Indeed, the opposite is nearly always true,” wrote Steeh, who was appointed by President Bill Clinton. “Far from ‘inactivity,’ by choosing to forgo insurance, plaintiffs are making an economic decision to try to pay for health care services later, out of pocket, rather than now through the purchase of insurance.”

Opponents of the health law say Congress doesn’t have the authority to regulate the purchase of insurance — let alone the act of not purchasing insurance. Steeh agreed with the government’s contention that the clause covers “economic decisions” and not just “economic activity.”

The administration argued that if the Commerce Clause isn’t enough, the law is sound because it relies on Congress’ power to tax — an argument that ruffled Republicans who say that the “tax” would be a violation of President Barack Obama’s promise not to tax people earning less than $250,000 per year.

“This ruling marks the first time a court has considered the merits of any challenge to this law, and we welcome the court’s decision upholding the health care reform statute as constitutional,” a Justice Department spokesperson said. “The court found that the minimum coverage provision of the statute was a reasonable means for Congress to take in reforming our health care system. The department will continue to vigorously defend this law in ongoing litigation.”

However, the government’s legal position may not fare as well in two other major lawsuits pending in other federal courts challenging the individual mandate.

In August, a federal judge in Virginia refused to dismiss a lawsuit the state brought against the legislation that critics deride as Obamacare. That judge said the legal questions in the case were too close to dismiss at an early stage.

Another suit, brought by 20 states and a small-business group, is pending in Florida. No ruling has been issued yet, but after arguments last month, many observers said the judge seemed receptive to arguments that the health care reform law is unconstitutional.

A lawyer for the Thomas More Center, Rob Muise, said Steeh’s decision will be appealed. If an appeal goes forward immediately, it’s possible the Michigan case will be the first health reform challenge to reach an appellate court, in this instance the U.S. Court of Appeals for the Sixth Circuit.

“This thing is set up quite nicely, actually, for an appeal,” Muise told POLITICO.

Muise said Steeh’s decision is wrong, in part, because it would open almost any decision of private individuals to federal control.

“The trouble, if you think about it, is if Congress has authority to regulate nonactivity then it has the ability to regulate anything,” Muise said. Congress can “tell you to exercise three times a week, to take certain vitamins, to refrain from eating certain foods because, at some point, costs are going to be incurred to the health care market. I find that very troubling when we have a federal government that’s supposed to be of limited, enumerated powers,” he said.

A separate part of the Michigan suit relating to abortion funding in the new health care scheme has yet to be ruled upon by Steeh. The plaintiffs are arguing that the mechanism the legislation uses to finance abortion coverage violates their rights to religious freedom.

Jennifer Haberkorn contributed to this report.

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