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ObamaCare: What In Blazes is Going On?

ObamaCare: What In Blazes is Going On?

The Patient Protection and Affordable Care Act, more popularly known as ObamaCare, is mired in the courts. A loose consortium of twenty-six state attorneys general filed a series of lawsuits challenging the courts constitutionality last year – and this year obtained a ruling from a federal judge in Tallahassee striking down the law as unconstitutional. The Obama administration plans to appeal, and this case is headed to the Supremes.

The Heart of the Matter

At issue: Does the Constitution allow the federal government to regulate and sanction Americans for refusing to purchase a product? Proponents of the law say yes: They rely on an expansive reading of the Commerce clause of the United States Constitution in Article I, Section 8, which grants Congress the authority “To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.” Proponents of the bill argue that given the compelling state interest in managing adverse selection, it is imperative to impose a mandate on individuals to purchase individual coverage. The administration and its supporters argue that the mandate is constitutional because it is “necessary and proper,” given Congress’s  public policy goals. The decision not to purchase insurance, they argue, is itself an act of commerce – and therefore the Constitution allows them to penalize those who refuse to do so.

The Case Against

Nonsense, argue opponents. The Constitution grants Congress the authority to regulate commerce among the several states. But refusing to buy health insurance is not an act of commerce. It is the decision not to engage in commerce. That cannot, by definition, be a commercial act. To allow federal power to reach into private activity – and the absence of private activity – would require an unprecedented expansion of federal authority. It would stretch the limits on federal authority, outlined in the Constitution, beyond all recognition. If Congress can regulate the decision NOT to purchase a service or good, then there is no longer any useful limitation on government power, they argue.

The federal court in Tallahassee ruled with the bill’s opponents.

No Severability Clause

Many times, Congress writes a severability clause into laws. This is a clause that states that if the courts strike down any part of the law, the remainder of the law will remain in force. But the Patient Affordability and Protection Act did not contain a severability clause. In fact, Congress made a point of removing it – causing the court a bit of a conundrum: Because there was no severability clause in the law, the court had to strike down the entire law – not just a portion of it. In any case, however, both sides acknowledge that the mandate to purchase coverage is a lynchpin of the whole exercise. Without a mandate, adverse selection would overwhelm the system, making the whole health care reform fiscally untenable. There is no separating the mandate from the rest of the bill – and so the judge had to strike down the whole thing.


Theory and reality are two different things. In theory, the law is dead – unless and until the federal court decision in Tallahassee is reversed by a higher court. But the Administration is continuing with the implementation, despite the judge’s order, in a colossal variation of the old salesperson’s tactic of “assuming the close. “ However, the Justice Department did go back to the Tallahassee court, requesting a clarification of the judge’s ruling: Is there a stay on implementing the law or not?

As of March 3rd, the Judge has put a stay on implementing the bill – but put a hold on the stay for a week, giving the Administration time to appeal to a higher court. The judge directed the Administration to seek expedited review.

Common arguments

Proponents of the bill point to two other federal court rulings, in which the mandate was held to pass constitutional muster. It is, of course, up to a higher court to reconcile the conflicting rulings. But legally, the government cannot enforce this law until the courts fully address the constitutional objections noted by the judge in Tallahassee. Even if there were 99 courts that upheld the law, and only one that found it unconstitutional, the executive branch cannot cherry pick from among the court rulings. It must deal with the court ruling that found the law unconstitutional.

So what to tell clients?

It’s business as usual. Nothing has changed. First of all, legally, it’s a jump ball. No one knows for sure how this will pan out, and this case is going to the Supreme Court. Second, even if the law is implemented as scheduled, universal coverage for adults does not become effective until 2014. Your clients must have coverage between now and then, because a major medical expense can still drive the family into bankruptcy, unless they carry a good catastrophic health plan. Keep the coverage in place. Protect insurability. Implement the coverage they need. And tell them we’ll meet again before 2014 – and do what makes sense at that time.

About Jason Van Steenwyk

Jason Van Steenwyk
Jason Van Steenwyk has been writing professionally about personal finance and investments since 1999. He first learned the trade as a staff reporter with Mutual Funds Magazine, part of the FORTUNE Group of magazines at Time, Inc. While there, he also served as managing editor of Investors’ Digest, a monthly compilation of the best in investment newsletter writing, published by the Institute for Econometric Research. He was also a contributing editor to Market Logic, Income Fund Outlook, Mutual Fund Buyers Guide and The Insiders. He holds a life and health license in Florida, (inactive). In addition to his work for Mutual Funds, Jason has published feature articles in many financial consumer and trade publications, including Wealth and Retirement Planner, Registered Representative, Annuity Selling Guide,, Senior Market Advisor, and and many more. Jason is a full-time freelance writer and editor, an avid guitarist and fiddle player. He currently receives no sales or production-based compensation from any insurance or financial services company. Jason lives in Fort Lauderdale, Florida.

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