Federal Appeals Court Upholds Health Care Reform Act

Today, a federal court of appeals upheld the health care reform legislation. The plaintiffs argued that Congress lacked the authority to pass the legislation and, specifically, to penalize individuals for not purchasing health insurance. A majority of the appeals panel held that the Commerce Clause gave Congress the power to enact the legislation. Although one judge dissented, none of the judges seem bothered by the "action"/"inaction" distinction that opponent of the legislation have asserted. None of the judges agreed that the penalty was a tax.

Opponents of the law have argued that while Congress can regulate economic "activity" under its Commerce Clause authority, it cannot regulate "inactivity" -- or the status of being uninsured. The court ruled that the penalty allows Congress to regulate activities including self-insurance, which drives up the price of medical services and insurance in the interstate markets. I have made a similar argument on this blog (see, e.g., here). Ruthann Robson at Constitutional Law Prof Blog provides a nice summary of the ruling.