From Medscape Medical News

Legal Challenge to Healthcare Reform to Move Forward

Robert Lowes

September 15, 2010 — A legal challenge to the new healthcare reform law filed by officials from 20 states appears to have legal legs, even as the first major provisions of the legislation are scheduled to take effect 8 days from now.

Yesterday, US District Judge Roger Vinson in Pensacola, Florida, suggested that he would dismiss some, but not all, of the counts contained in the multistate lawsuit that seeks to overturn the new law on constitutional grounds, according to published reports. He made these remarks after hearing oral arguments over a motion by the US Department of Justice (DOJ) to dismiss the lawsuit.

Vinson will issue a formal ruling on the DOJ's motion to dismiss by October 14. If he decides to let the case go forward, he has scheduled December 16 for any oral arguments on motions by either side for summary judgment, which a court can issue without a trial when the facts of the case are not in dispute and 1 party is entitled to judgment as a matter of law.

The lawsuit filed by the states takes specific aim at the requirement in the healthcare reform law — known as the Affordable Care Act (ACA) — for individuals to obtain insurance coverage or else pay a penalty. The plaintiffs contend that by compelling individuals to buy goods or services, and penalizing them if they do not, ACA oversteps the power of the federal government under the constitution's Commerce Clause, which authorizes it to regulate interstate commerce. In essence, the law punishes an individual for commercial inactivity, according to the plaintiffs, who add that the mandate encroaches on the sovereignty of states.

The lawsuit also argues that the ACA unfairly imposes staggering costs on state governments by expanding Medicaid eligibility to include millions of individuals above the poverty line. The Medicaid program is funded jointly by states and the federal government.

The DOJ has countered that the individual mandate regulates economic behavior that has a major and dysfunctional effect on interstate markets in healthcare and health insurance. The decision to forgo insurance, the DOJ maintains, is tantamount to many individuals getting a "free ride," because they receive medical care free of charge — in hospital emergency departments, for example. The cost of that care gets shifted to providers, insurers, governments, and ultimately, insured individuals and taxpayers, according to the DOJ.

The DOJ also states the Medicaid provisions of healthcare reform do not represent government coercion, as the plaintiffs maintain, because states have the option of not participating in the program.

Second Federal Court Challenge Moving Ahead

The plaintiffs in the federal court case in Pensacola, Florida, include the attorneys general of Alabama, Alaska, Colorado, Florida, Idaho, Indiana, Louisiana, Michigan, Nebraska, North Dakota, Pennsylvania, South Carolina, South Dakota, Texas, Utah, and Washington, and the governors of Arizona, Georgia, Mississippi, and Nevada. Except for James Caldwell, the attorney general of Louisiana, who is a Democrat, all the state officials are Republicans. Other plaintiffs are 2 individuals who object to the individual mandate and the National Federation of Independent Business.

The attorney general of Virginia, another Republican, filed a similar suit in a Virginia federal court challenging the ACA. Last month, the judge in that case turned down a DOJ motion to dismiss it.

Legal experts say either case could be fought and appealed all the way to the Supreme Court. The stakes are high.

"If the individual mandate is struck down, it could derail the whole healthcare reform law, because the mandate is so integral to it," Lawrence Gostin, a health law professor at Georgetown University, in Washington, DC, told Medscape Medical News.

The ACA, said Gostin, is more likely to appear on the Supreme Court docket if the 2 federal court cases reach conflicting endpoints — a loss for the federal government in 1 case, and a victory in the other. Gostin said he considers the law constitutionally sound.

Signed into law by President Barack Obama in March, the ACA will extend insurance coverage to more than 30 million Americans through 2019. On September 23, a number of key provisions kick in. Insurers, for example, will no longer be able to rescind an individual's coverage if he or she becomes ill. Neither will they be able to deny coverage to children with preexisting conditions. And young adults will be able to stay on their parents' plan until age 26 years.