The Patient Protection & Affordable Care Act
United States Court of Appeals for the Sixth
Circuit (2011)

Regulations on the Health Insurance Industry
◦ Coverage cannot be denied based on pre-existing
conditions.
◦ Limitations on rate increases based on risk factors
◦ Students can maintain coverage on a parent’s policy
until age 26.
◦ Creates online state health insurance marketplaces
for individuals to easily compare and purchase
policies.



The Act mandates individuals purchase a
minimum amount of healthcare coverage, or
incur a penalty.
Plaintiffs argue the minimum coverage
mandate harms them financially.
The plaintiffs argue the penalty for not
purchasing the minimum coverage is an
unconstitutional tax.

Does Congress have the power to pass a law
mandating individuals purchase insurance?
◦ Yes – Under the powers granted to Congress under
the Commerce Clause of the Constitution.

Does Congress have power to regulate
inactivity using this power?
◦ Yes – Congress has a “rational basis” to believe
purchasing insurance, or lack thereof, effects
interstate commerce.



Congressional studies show an individual’s
decision to buy health insurance affect
commerce as a whole.
The decision to self-insure affects commerce
as well.
Self-insured as a class are unable to pay for
the services they receive.

Wickard v. Filburn (1945)
◦ The Supreme Court upheld Congress’s power to
regulate non-economic activity or inactivity when
the action has a substantial effect on interstate
commerce.

Gonzales v. Raich (2005)

United States v. Lopez (1995)
◦ “Those activities having a substantial relation to
interstate commerce, . . . i.e., those activities that
substantially affect interstate commerce.”



The U.S. spends largest percent of GDP on
health care in comparison to other major
countries.
The U.S. spends the most money per capita
on health care compared to other OECD
countries.
In 2000; the U.S. ranked 37th for quality of
care according to the World Health
Organization.
Dollars in Billions:
5.2%
7.2%
9.2%
12.5% 13.8% 14.5% 15.4% 15.9% 16.0% 16.0% 16.1% 16.2% 16.6% 17.6%
Source: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at
http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; NHE summary including share of GDP, CY 1960-2009; file nhegdp09.zip).
Total Health Expenditure as a Share of GDP,
U.S. and Selected Countries, 2008
18%
16%
As Percentage of GDP
14%
12%
10%
8%
16.0%
6%
4%
8.1%
8.5%
8.5%
8.7%
9.0%
9.1%
9.4%
9.9%
10.4%
10.5%
10.5%
10.7%
11.1%
11.2%
2%
0%
Source: Organisation for Economic Co-operation and Development (2010), "OECD Health Data", OECD Health Statistics (database). doi: 10.1787/data-00350en (Accessed on 14 February 2011).
Notes: Data from Australia and Japan are 2007 data. Figures for Belgium, Canada, Netherlands, Norway and Switzerland, are OECD estimates. Numbers are
PPP adjusted.




Individuals are not aware of the cost upfront.
Individuals do not determine their own needs,
a physician does.
It’s not easy to compare prices.
Everyone wants the best care, regardless of
cost.

Cost-Shifting
◦ Treating uninsured patients shifts costs to
insurance companies and households.
◦ Emergency care is more costly than preventative.
◦ In 2008 Congress found providing health care to
uninsured cost over $48 billion dollars.
◦ A 2009 study showed 62% of bankruptcies are due
to medical expenses. 75% of those are insured
individuals.

Encouragement to participate in the market
◦ Increase in market participants will lead to a
decrease in price.
◦ Attempting to achieve “near-universal” coverage.

Opening the market to individuals who could
not previously afford insurance.
◦ State online marketplaces match consumers with
plans they can afford.
◦ More consumers purchasing in a group will reduce
cost.

Remains private