EServing
UCLID MANAGERS
the independent agent since 1976
®
A Legislative Review Service by Euclid Managers
April 2011
EUCLID MANAGERS®
has served the independent agent
since 1976, offering a portfolio
of group health, professional
liability, individual life, health,
annuity and long-term
care products.
We proudly represent many
fine carriers including
Group Products:
UnitedHealthcare of Illinois
Delta Dental of Illinois
MetLife
Individual Products:
American General Life Companies
AXA/Equitable
Banner Life
Genworth Financial Insurance Co.
Guarantee Trust Life
HumanaOne
John Hancock Life
Lincoln National Life
MetLife
Prudential Financial
Transamerica
West Coast Life
…and many more!
Contact Information
Reflections
Health Reform - The Courts Weigh In
Efforts to amend or repeal the Affordable Care Act continue in Congress. In the
meantime, action has moved to the Courts. There have been about two dozen
challenges to the ACA. This issue of Reflections discusses two recent Court
decisions – one that found the Act to be constitutional and one that did not.
Overall Results to Date
A number of lawsuits have been thrown out of the Courts on procedural
grounds. One judge, U.S. District court Judge Roger Vinson threw out the
entire law. Three judges have upheld the entire law.
continued on page 2
A letter from Karen Knippen
Federal reform is like watching a tennis match. The players on the first
court represent Congressional action. Center court is state action. And, on
the far court the Courts are in a match that has moments of intense action
followed by long and tedious rallies. If you take your eyes off any game ,
you are likely to miss something important! And, you must keep your eyes
on the ball – in each game.
As brokers you know there is yet another important game in this match .
That game is the vitality of the insurance market and the quality of the
products and services available to your clients. That’s the game that will
have impact today. And, that’s the game that Euclid Managers never takes
an eye off of!
Sincerely yours,
234 Spring Lake Drive
Itasca, Illinois 60143
Phone: (630) 238-1900
Outside Chicagoland:
(800) 345-7868
Fax: (630) 773-8790
Visit us at:
www.euclidmanagers.com
Karen Knippen, RHU, REBC, CLTC
EUCLID MANAGERS® has been serving the independent agent since 1976 with a portfolio of group health, professional
liability and individual life and health, annuity and long-term care products. We proudly represent UnitedHealthcare,
Delta Dental of Illinois, MetLife and HumanaOne. We encourage your feedback and suggestions. Please call your
EUCLID MANAGERS® Marketing Representative or Marcy Graefen at (630) 238-2915 for more information. Outside
Chicagoland, call (800) 345-7868. Website: www.euclidmanagers.com
A federal judge in Virginia provided a split decision.
He ruled that the provision requiring that individuals
purchase health insurance was unconstitutional. He
upheld the rest of the law.
The consensus has been that the United States Supreme
Court will have to weigh in to settle the issue. In the
meantime, courts of appeals are on next to act. In fact,
the court of appeals for the District of Columbia has
decided to fast-track the challenges to the law. The
first round of briefs is due in May of this year. Oral
arguments before the panel of judges are scheduled
for September 2011.
The Michigan Case in Favor of ACA
In a case heard in Michigan, plaintiffs sought a
“declaration that Congress lacked authority under
the Commerce Clause to pass the Health Care Reform
Act, and alternatively a declaration that the penalty
provision of the Act is an unconstitutional tax" among
other alleged violations of law. The Court found that
these arguments failed on the merits.
The argument made by the plaintiffs is that the
federal government is attempting to regulate inactivity
with the individual mandate. The argument is that
if the individual mandate and the Act are found to
be constitutional, then Congress would have the
authority to regulate every aspect of Americans’
lives, “including the choice to refrain from acting."
The Court found that individuals without insurance
have made “a choice regarding the method of payment."
The government has the authority to regulate economic
decisions "regarding the way in which health care
services are paid for."
The Court goes on, in the decision, to note that absent
insurance, someone is electing to pay out of pocket for
care and that this drives up the cost of insurance. And,
to the extent that people remain uninsured and don’t
pay for care, they drive up costs for everyone else in
the system.
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Reflections
The argument continues that uninsured individuals are
still prone to need health care services at some point
in their lives. Therefore, they cannot “opt out of the
market." Therefore, the Court notes that the plaintiffs
speak of economic activity. But, the government’s
"characterization of the Commerce Clause reaching
economic decisions is more accurate."
The decision goes on to note that “The minimum
coverage position, which addresses economic
decisions regarding health care services that everyone
eventually, and inevitably, will need, is a reasonable
means of effectuating Congress’s goal."
The question of whether Congress has the power to
tax to enforce the individual mandate was also
considered. The Court found that Congress can
“impose a sanction" to regulate or constrain acts
that will harm commerce. The penalty is necessary to
achieve Congress’s goals to "increase the number of
insureds" and "decrease the cost of health insurance by
requiring individuals to maintain minimum essential
coverage or face a penalty for failing to do so."
The Florida Case – ACA Unconstitutional
A case brought by the State of Florida and others
including the National Federation of Independent
Business (NFIB) was recently upheld in the Northern
District of Florida by Judge Vinson. The order of
the Court held that the “individual mandate" was
unconstitutional. His finding that the entire ACA was
unconstitutional should have stopped implementation
of the Act.
The judge filed a clarification of his order because the
Obama administration continued to implement ACA
after his ruling. He noted that the practice has been
that a “declaratory judgment is the functional
equivalent of an injunction"… since federal officers
will follow the law. He has since allowed a stay of
his ruling, pending appeal.
The judge relied on the historical roots of the
Commerce Clause as the basis for his finding that
the individual mandate was unconstitutional. The
judge noted that the government’s arguments in
favor of the individual mandate made it hard “to
posit any activity by an individual that Congress is
without power to regulate."
He further adds that an argument that the health care
market is unique is without merit. This argument could
be used to "require that individuals buy (under threat
of penalty) virtually any good or service that Congress
has a ‘rational basis’ to conclude would help the
national economy from cars to broccoli." In fact, the
Judge noted that Congress’s own attorneys warned
that allowing the Commerce Clause to regulate activity
or inactivity "could be perceived as virtually unlimited
in scope."
Others have argued that Congress could not mandate
that everyone eat broccoli because they would not be
reelected if they did so. The Supreme Court rejected
the claim that Congress’s authority under the
Commerce Clause is limited only by such “political
accountability." Citing a prior case, Judge Vinson
noted in his clarification that ""The [Constitution]
protects against the Government; it does not leave us
at the mercy of noblesse oblige. We would not uphold
an unconstitutional statute merely because the
Government promised to use it responsibly."
The Judge also found that the individual mandate was
not severable from the rest of the ACA, therefore he
found the entire Act to be unconstitutional. He cited
numerous examples of Congress’s various bodies
pointing to the need to keep the individual mandate
as a component for the comprehensive Act to increase
coverage, availability of coverage and attain
affordability of coverage.
Many bills contain a “severability clause." This clause
typically allows that if a provision of a law is found
to be unconstitutional, the rest of the law remains in
force. Congress deleted the "severability clause" from
the ACA. Judge Vinson assumed that this was done
intentionally and that “Congress recognized that the
Act could not operate as intended if the individual
mandate was eventually struck down by the courts.
In further justification of striking down the entire
law, Judge Vinson discusses the complexity of the
legislation and how much of it is intertwined. As such,
he asserts that “Congress – and not the courts - should
… decide the quintessentially legislative questions of
which, if any, of the statute’s hundreds of provisions
should stay and which should go."
The Judge suggests that the very schedule of
implementation of the ACA contemplated that
the courts might act against it. He notes: “Indeed,
one could argue that was the entire point in frontloading certain of the Act’s provisions in the first
place. It could also be argued that the Executive
Branch seeks to continue the implementation, in part,
for the very reason that the implemented provisions
will be hard to undo one they are fully in place."
He concludes by noting that the Supreme Court will
have to weigh in on the issues raised by this suit and
other suits regarding the constitutionality of the
provisions of the ACA. He urges the administration
to file a notice of appeal with all haste for the good
of the nation.
Other Court Actions
Court decisions are pending in as many as a dozen
cases, with rumors that more cases are yet to come.
Questions are being raised regarding the process for
granting waivers from various provisions of ACA.
Lawsuits may be expected to follow.
Pundits predict that if the U.S. Supreme Court takes
up the case, action will occur in 2012. This would
mean that health reform will definitely be a part of
the dialogue during the next Presidential campaign.
Reflections
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EServing
UCLID MANAGERS
the independent agent since 1976
®
A Legislative Review Service by Euclid Managers
April 2011
Reflections
A service publication for brokers from
Euclid Managers®, proudly representing
UnitedHealthcare of Illinois, Delta Dental of Illinois,
MetLife and HumanaOne.
EServing
UCLID MANAGERS
the independent agent since 1976
®
Visit us online www.euclidmanagers.com.
Legislative Review is published by Euclid Managers®, 234 Spring Lake Drive., Itasca, IL 60143. For more information, contact your Marketing Representative or Marcy Graefen
at (630) 238-2915 or fax your request to (630) 773-8790. Outside Chicagoland: (800) 345-7868, Fax (877) 444-2250. © Permission to quote with credit to source.
Health Reform - The Courts Weigh In
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UCLID MANAGERS
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