By Rosalind S. Helderman and Amy Goldstein
Washington Post Staff Writers
Tuesday, December 14, 2010; 12:49 AM
RICHMOND - A federal judge in Virginia ruled Monday that it is unconstitutional for the government to compel Americans to buy health insurance, marking the first time a court has struck down any facet of the massive new law to overhaul the nation's health-care system.
Although the opinion by U.S. District Judge Henry E. Hudson gives significant political ammunition to the law's opponents, it does not invalidate the entire law or force federal and state officials to stop the work of putting it into effect - steps Virginia had asked him to take.
The ruling by Hudson, named to the bench by George W. Bush, sets up a conflict with opinions by two Democratic-appointed judges who have concluded recently that the law is constitutional. The cases are among two dozen in federal courts across the country that challenge many aspects of the law. The final word is widely expected to come from the U.S. Supreme Court.
In his 42-page opinion, Hudson concluded that requiring most people to get insurance or pay a fine - as the law mandates starting in 2014 - is an unprecedented expansion of federal power and cannot be justified under Congress's authority to regulate interstate commerce.
The ruling elated Virginia's Republican governor and Attorney General Ken Cuccinelli II (R), who brought the case, and GOP leaders on Capitol Hill, who are vowing to try to take apart all or pieces of the law. "I am gratified we prevailed," Cuccinelli said in a statement. "This won't be the final round . . . but today is a critical milestone in the protection of the Constitution."
But the opinion is a partial win and a partial loss for the law's foes and supporters alike, according to legal and health-policy specialists. Its immediate practical effects - on patients, the health-care industry or regulators writing the fine print of how the statute will be carried out - will probably be slight, specialists say.
"It's important to distinguish between the theater and the politics, and the implementation [of the law], which is still being carried out," said Drew E. Altman, president of the Kaiser Family Foundation, a health-care research and policy organization.
White House officials played down the ruling's impact. They hinted that they will appeal to the 4th U.S. Circuit Court of Appeals but did not indicate how quickly they might act. Meanwhile, Virginia Gov. Robert F. McDonnell has begun trying to enlist fellow governors to press the Justice Department to skip over the customary step of bringing the case before federal circuit judges - and take it directly to the nation's highest court.
The lawsuit challenged the 2,000-page legislation that Congress adopted in March at the urging of President Obama, setting in motion the broadest changes to the U.S. health-care system in 41/2 decades. The legislation is designed to widen access to private and public health insurance and, to some degree, slow medical spending. Heralded by Democrats as a signature advance in domestic policy, the law continues to be disputed by Republicans, who will gain power in the new Congress in January, and GOP-led statehouses, as well as in the courts.
Hudson's ruling largely traced the reasoning he had followed when he issued an opinion over the summer, declining to dismiss the case at an earlier stage.
In the Virginia case, as in others across the country, the constitutionality of the individual insurance mandate, as the provision is known, hinged primarily on an interpretation of the clause in the U.S. Constitution that relates to the government's powers to regulate commerce.
Virginia argued that people who choose not to carry health insurance are not engaging in any type of commerce. For that reason, the commonwealth contended, Congress exceeded its powers by enacting a law that requires most Americans to buy coverage.
The Obama administration countered that health care - and health insurance - are unlike any other form of commerce because everyone will, at some point, need care. As a result, the Justice Department argued, the government has a stake in that decision because the costs of caring for the uninsured will ripple into the insurance market and the rest of the health-care system.
Hudson sided with Virginia, finding that "an individual's personal decision to purchase - or decline to purchase - health insurance from a private provider is beyond the historical reach of the Commerce Clause" and that the mandate "is neither within the letter nor the spirit of the Constitution." The judge also sided with Virginia on a secondary argument, that the law's fine for people who refuse to buy coverage is a penalty not a tax and thus illegal.
However, the judge did not take two important actions that Virginia had sought. He ruled that the unconstitutionality of the mandate did not spill over to the rest of the law. And he did not grant an injunction, which would have halted the government's work to implement the law, reasoning that none of those steps "are irreversible" because most provisions do not go into effect until 2014.
One senior administration official, speaking on the condition of anonymity about the ruling, said: "The implementation of the act in all its phases can continue on the same path we've been moving on so far. . . . The real-life impact is virtually nil."
Clint Bolick, director of the Scharf-Norton Center for Constitutional Litigation at the conservative Goldwater Institute in Arizona, said the judge's opinion "blows a hole" in the health-care law. "The individual mandate is a crucial part of the overall house of cards upon which Obamacare is built."
Some leading health-policy specialists said that even if Hudson's ruling is upheld by higher courts, the inability to require Americans to buy coverage would not necessarily cause the rest of the law to collapse.
Proponents of the requirement argue that without it, other parts of the law could drive up the cost of insurance for patients, employers and the government. The law specifies, for instance, that insurers will not be able to refuse coverage to people who already are sick or to charge much higher prices to some customers than to others. The only way to make such changes affordable, advocates of the mandate say, is to spread the cost of insurance across almost the entire population - healthy and sick alike.
Paul B. Ginsburg, president of the Center for Studying Health System Change, said insurance also could be kept affordable if people were prevented from getting insurance only when they get sick - by limiting how often consumers have a chance to buy coverage or by charging higher prices to people who wait.
But Ginsburg said such changes "probably mean legislating again, which means [Democrats] working with Republicans" in a congressional environment that has become increasingly acrid.
America's Health Insurance Plans, the industry's main lobbying group, did not comment directly on the lawsuit's impact but reiterated its long-standing contention that the insurance requirement is needed if changes the law envisions in the insurance market are to work.
Critics of the law predicted that Monday's ruling would embolden other courts to find the law unconstitutional. Administration officials said most rulings in the legal challenges around the country have sided with them. Despite Hudson's opinion, "the litigation scoreboard now shows two victories on the merits" in another Virginia lawsuit and one in Michigan, said Ron Pollack, executive director of the liberal consumer lobby Families USA.
Cuccinelli filed the commonwealth's suit March 23, the day Obama signed the bill into law. In doing so, Cuccinelli decided not to join other attorneys general in litigation filed in Florida. Even some Republicans grumbled at the time that he was an opportunistic maverick and they feared that if he lost the case, it could create a public impression that such challenges were frivolous. Instead, the ruling has leapfrogged ahead of the multi-state effort based in Florida and catapulted the attorney general, a darling of the tea party movement, into position as a leading voice against the law.
At a news conference at his Richmond office two hours after the midday ruling, Cuccinelli said, "Even the president and Congress must act within the boundaries set by the Constitution." Like the governor, he urged the Obama administration to join him in calling for an expedited review of the case by presenting it directly to Supreme Court. But he declined to say whether he would seek the court's permission on his own.
In an interview Monday, McDonnell said that a relatively rapid review by the Supreme Court "is about creating certainly and finality. . . . If we go through the normal process, it's going to be years. And that's just unacceptable for business, for doctors and for states."
On Capitol Hill, Republicans immediately grabbed the ruling as ammunition for their efforts. "Republicans have made a pledge to repeal this job-killing health-care law, and that's what we're going to do," said Rep. John A. Boehner (Ohio), the incoming House speaker. "The individual mandate . . . puts the federal government in the business of forcing you to buy health insurance and taxing you if you don't. This is unwise, unaffordable and as we have argued all along, unconstitutional."
Altman, of the Kaiser foundation, said Monday's ruling would, in the long run, prove less significant to the law's fate than the overall political climate. "There are going to be a lot of twists and turns," he said. "Ultimately, if President Obama is reelected in 2012, the law will be pretty much as it is." A change in administration, he said, could pose the biggest threat.
Staff writer N.C. Aizenman contributed to this report.