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Health Care Law: Are Attorney Generals Pandering On the Individual Mandate Suits?

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Is politics trumping good governance in Virginia (VA), and many other states? One could make such a claim. Republican VA Attorney General Ken Cuccinelli filed a lawsuit against the federal government over the individual mandate enacted with the new health care reform law (with the blessing of Republican Governor Bob McDonnell). Twelve other state attorney generals also filed suit.

The individual mandate goes into effect on January 1, 2014 and will require most Americans to obtain health insurance. If they choose not to be insured, they will face a penalty of “the greater of $95 or one percent of income in 2014, $325 or two percent of income in 2015 and $695 or 2.5 percent of income in 2016, up to a cap of the national average bronze plan premium,” according to a summary document of the health care law. Families will pay half the amount for children up to a cap of $2,250 for the entire family. After 2016, the penalty will increase with an annual cost of living adjustment.

To read the full text of the health care law, entitled the Patient Protection and Affordable Care Act (H.R. 3590), click here.

On the surface, it appears Attorney General Cuccinelli, and the other attorney generals, have a sound constitutional argument against the individual mandate. I mean, how can the federal government force us to buy insurance, or anything for that matter?

Details of the New Health Care Law "Individual Mandate"

Here’s the problem…

The individual mandate isn’t really a mandate. First and foremost, if the cost of health insurance premiums amounts to more than 8 percent of your monthly income, you are exempt from the mandate (though you qualify for subsidies to purchase insurance). If you receive your health insurance through an employer, are on Medicare or Medicaid, are a dependant who is on a parent’s health insurance policy, or if you object for religious reasons, you’re exempt from the mandate (refer to Section 1501 of the law).

What if you can afford health insurance and simply choose not to purchase insurance out of personal objection to the mandate? Well, there is no enforcement measure stated in the law. In fact, the law explicitly states (reference page 131):

“In the case of any failure by a taxpayer to timely pay any penalty imposed by this section, such taxpayer shall not be subject to any criminal prosecution or penalty with respect to such failure…The Secretary shall not (i) file notice of lien with respect to any property of a taxpayer by reason of any failure to pay the penalty imposed by this section, or (ii) levy on any such property with respect to such failure.”

No matter, many pundits on television are claiming that the IRS will be coming after us all. Its simply not true, under the new law’s provisions. However, the law does state that “the Secretary [of Health and Human Services] shall prescribe rules for the collection of the penalty imposed by this section in cases where continuous periods include months in more than 1 taxable year.” This means if a huge wave of citizens ignores the mandate, changes will probably be made to enforce the provision. Nevertheless, at this moment, the so-called mandate has very little, if any, enforcement power.

Attorney General Cuccinelli cites three cases – United States v. Lopez, United States v. Morrison, and Gonzales v. Raich – to buttress his complaint (read the official complaint here). He argues that these decisions struck down potential regulations for non-commercial activities based upon the interstate commerce clause (Article 1, Section 8 of the U.S. Constitution).

What Attorney General Cuccinelli fails to mention is a Supreme Court case – United States v. South-Eastern Underwriters Association – which clearly states that insurance is interstate commerce subject to Federal regulation. The Supreme Court stated:

“Ordinarily courts do not construe words used in the Constitution so as to give them a meaning more narrow than one which they had in the common parlance of the times in which the Constitution was written. To hold that the word "commerce," as used in the Commerce Clause, does not include a business such as insurance would do just that. Whatever other meanings "commerce" may have included in 1787, the dictionaries, encyclopedias, and other books of the period show that it included trade: business in which persons bought and sold, bargained and contracted. And this meaning has persisted to modern times. Surely, therefore, a heavy burden is on him who asserts that the plenary power which the Commerce Clause grants to Congress to regulate "Commerce among the several States" does not include the power to regulate trading in insurance to the same extent that it includes power to regulate other trades or businesses conducted across state lines. The modern insurance business holds a commanding position in the trade and commerce of our Nation.

Most legal scholars predict the Courts will side with the federal government on this issue. Nevertheless, it makes you wonder why these Attorney generals decided to file suit in the first place given the fact that a simple Google search will obtain the South-Eastern Underwriters Association decision and all of the various exemptions of the individual mandate. The answer is simple – politics.

Out of the 13 attorney generals who filed suit against the federal government, 12 are Republicans (the lone Democrat is Louisiana Attorney General James Caldwell). The health reform law was passed on a partisan basis with zero republican votes.

It’s clear what we’re witnessing – a political stunt. Most of these AGs probably know their case is weak and are just trying to stir up controversy and fire up their base.

Republicans Came Up With the Individual Mandate Idea

What’s truly surprising is the blatant hypocrisy surrounding this issue. Let’s make this very clear – the individual mandate was a Republican creation. In the late 1980s, a conservative economist named Mark Pauly wanted to create a health care reform proposal to combat the Democratic idea of an employer mandate. Mr. Pauly developed a proposal that would ensure universal coverage while preserving the private insurance market. That proposal was the individual mandate and it received broad support by the Republican Party along with President George H.W. Bush, according to NPR.org. In fact, back in 1993, Republicans included an individual mandate in their health care alternative proposal to counter President Clinton’s proposal.

It’s also hypocritical given the fact that many Republican lawmakers railed against “junk lawsuits” in medical malpractice cases and wanted to amend the health care law to include arbitrary caps for victims who were seriously injured or killed due to medical negligence–under the guise of tort reform. One problem – tort laws are state-based laws. If these lawmakers had their way, the federal government would have been given a mandate to implement sweeping changes to tort laws which would have trumped and impeded state powers. Out of the other sides of their mouths, these same lawmakers are complaining about growing federal power over health care.

Which side are these lawmakers on — states rights or more federal powers? Furthermore, lawyers who defend big insurance companies routinely argue that federal laws preempt and trump contrary state laws in order to reduce or nullify civil injury claims (Note: VA Governor McDonnell was a lawyer with a law firm that represented insurance companies on a regular basis).

I hope these attorney generals eventually realize that playing politics with such an important public position is unwise and only cheapens their legitimacy as unbiased protectors of the public good at the state level. Not to mention that they are wasting the taxpayer’s money–contrary to one of the core Republican principles.

About the Editors: Shapiro, Cooper, Lewis & Appleton personal injury law firm (VA-NC law offices ) edits the injury law blogs Virginia Beach Injuryboard, Norfolk Injuryboard, and Northeast North Carolina Injuryboard as a pro bono service to consumers.