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Health Reform Wins Another Round in Court

Learn more about another victory for the Affordable Care Act in federal court.

After the Affordable Care Act became law, opponents of reform lined up at courthouses nationwide to file lawsuits challenging the constitutionality of health reform. These kinds of challenges often happen after major legislation is enacted. In fact, legal challenges to the Social Security Act, the Civil Rights Act, and the Voting Rights Act were all filed – and all failed. 

Now, lawsuits challenging the constitutionality of the Affordable Care Act are losing in federal court. Today, a federal judge in New Jersey who was appointed to the bench by President George W. Bush granted the Justice Department’s motion to dismiss a case challenging the constitutionality of the health reform law. You can read media coverage of the decision here.

The case dismissed in New Jersey can now be added to a longer list of cases challenging the Affordable Care Act that have been dismissed by the courts. That list includes:

Sollars v. Reid -dismissed 4/2/10
Taitz v. Obama - dismissed 4/14/10
Archer v. U.S. Senate - dismissed 4/12/10
Heghmann v. Sebelius - dismissed 5/14/10
Mackenzie v. Shaheen - dismissed 5/26/10
Fountain Hills Tea Party Patriots v. Sebelius - dismissed 6/2/10
Coalition for Parity Inc. v. Sebelius - dismissed on 6/21/10
U.S. Citizens Association v. OMB - dismissed 8/2/10
Baldwin v. Sebelius – dismissed 8/27/10
Burlsworth v. Holder - dismissed 9/8/10
Schreeve v. Obama - dismissed 11/4/10

And the decision in New Jersey comes after two previous victories for health reform in the Western District of Virginia and Eastern District of Michigan where judges ruled on the merits of the arguments brought by the opponents of reform. In Virginia, the judge wrote:

“I hold that there is a rational basis for Congress to conclude that individuals’ decisions about how and when to pay for health care are activities that in the aggregate substantially affect the interstate health care market…Nearly everyone will require health care services at some point in their lifetimes, and it is not always possible to predict when one will be afflicted by illness or injury and require care…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. As Congress found, the total incidence of these economic decisions has a substantial impact on the national market for health care by collectively shifting billions of dollars on to other market participants and driving up the prices of insurance policies.”

And in Michigan, a federal judge issued a similar ruling and upheld the law. 

The Affordable Care Act falls well within Congress’s power to regulate under the Commerce Clause, the Necessary and Proper Clause, and the General Welfare Clause. In order to make health care affordable and available for all, the law regulates how to pay for medical services – services that account for more than 17.5% of the national economy. This law came into being precisely because of the interconnectedness of our health care costs, and we need every American to act responsibly to strengthen our health care system.  When people seek medical care without health insurance and don’t pay for it, it adds more than $1,000 per year to the premiums of American families who act responsibly by having coverage.  To lower the cost of health care for everyone, we have to stop making those who act responsibly pick up the health care tab for those who don’t – and that means we need everyone to be a part of the health insurance marketplace.  Just as you can’t wait to get car insurance until you get into a car accident or rely on others to pay for the damages, you can’t wait until you get sick to get health insurance, or rely on the fact that emergency rooms won’t turn you away even if you can’t pay.    

To fix the problem of uncompensated care and the shifting of costs to those who have insurance, the Affordable Care Act requires people who can afford it to carry minimum health coverage beginning in 2014.  For the 83% of Americans who have coverage today, this means they are already taking responsibility for their health care, and will need to do very little.  Many of the 17% of Americans living without health insurance either can’t afford it or have been denied coverage because of a preexisting condition.   The Affordable Care Act provides tax credits to people who need help paying for insurance and hardship waivers to individuals or families who can’t afford it at all.   And the Act expands Medicaid coverage for many lower income Americans.  Those who can afford it, but refuse to buy it, will face a penalty.

The Affordable Care Act also bans insurance companies from discriminating against people with preexisting conditions.   However, unless every American is required to have insurance, it would be cost prohibitive to cover people with preexisting conditions.  Here’s why:  If insurance companies can no longer deny coverage to anyone who applies for insurance – especially those who have health problems and are potentially more expensive to cover – then there is nothing stopping someone from waiting until they’re sick or injured to apply for coverage since insurance companies can’t say no.  That would lead to double digit premiums increases – up to 20% – for everyone with insurance, and would significantly increase the cost health care spending nationwide.  We don’t let people wait until after they’ve been in a car accident to apply for auto insurance and get reimbursed, and we don’t want to do that with healthcare.  If we’re going to outlaw discrimination based on pre-existing conditions, the only way to keep people from gaming the system and raising costs on everyone else is to ensure that everyone takes responsibility for their own health insurance.  If a court strikes down the individual responsibility provision, then protection for people with preexisting conditions will fall with it. 

In the weeks ahead, there will be additional court cases examining this matter and the health reform law. No one knows how each case will be decided, but in the end, we are confident that health reform will prevail.

Stephanie Cutter is Assistant to the President for Special Projects