PharmExec Blog

Federal Judge Declares Mandatory Health Insurance Unconstitutional

This new decision out of Virginia increases the prospect of a showdown between an elected Congress and President and the Supreme Court over the legality of this year’s health reform legislation affecting nearly one-fifth of the US economy. Resolution of the court case is unlikely before 2012—which is also an election year.

Earlier this week, a federal judge declared the foundation of President Barack Obama’s health care law unconstitutional, ruling that the government cannot require Americans to purchase insurance. The case is expected to end up at the Supreme Court.

US District Judge Henry E. Hudson based his ruling on grounds that the Constitution’s Commerce Clause regulating interstate commercial transactions could not be interpreted to allow the federal government to compel a person’s decision to buy or not to buy a product—in this case, health insurance.

In his order, Hudson said he will allow the law to remain in effect while appeals are heard, meaning there is unlikely to be any immediate impact on other provisions that have already taken effect. The insurance coverage mandate is not scheduled to begin until January 2014.

Hudson is the first federal judge to strike down a key part of the law, which had been upheld by fellow federal judges in Virginia and Michigan. Several other lawsuits have been dismissed and others are pending, including one filed in Florida by 20 states. In practical terms, the decision merely hands action off to the top court, in which the nine Supreme Court justices can decide whether to hear the case or not.

White House health reform director Nancy-Ann DeParle said the administration is encouraged by the two other judges who have upheld the law. She said the Justice Department is reviewing Hudson’s ruling but that implementation of the law will proceed on track.

Regardless, Hudson’s ruling injects another note of uncertainty that will complicate efforts by Pharma and other industries to move beyond the ideology of reform and focus on practical issues linked to implementation of the more than 900 provisions of the bill requiring follow-up regulatory action. At a time when China, other key emerging markets, and the industrialized bloc of nations are all focusing on healthcare as a key strategic sector, this lack of predictability represents a potential strain on US competitiveness. If in the unlikely event that court action scuppers reform, Big Pharma will suffer some unintended consequences, the most important of which is a lower potential customer base—i.e. the currently uninsured—as well as more pressure on the pricing front. Most economic analyses show that the absence of an individual mandate to purchase insurance drives up insurance premiums, raising the visibility of high drug costs and adding to compliance problems among patients.

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3 Comments

  1. hsr0601
    Posted December 16, 2010 at 3:24 am | Permalink

    1. Auto insurance mandate !

    Under historical interpretations of the Constitution, Congress can dictate the economic activity of citizens so long as that activity will have profound, large-scale effects on the national economy.
    ?
    2. Health insurance protects you PLUS all !
    ?
    ** Inaction cost, $9trillion over the next decade, ((Some of CBO analysis : While the costs of the financial bailouts and economic stimulus bills are staggering, they are only a fraction of the coming costs from Social Security, Medicare, and Medicaid. Over the next decade, the Congressional Budget Office (CBO) projects that each year Medicaid will expand by 7 percent, Medicare by 6 percent, and Social Security by 5 percent. These programs face a 75-year shortfall of $43 trillion–60 times greater than the gross cost of the $700 billion TARP financial bailout)).

    Among the thirty-three industrialized countries in the world, only America has no universal health care. Why do all the leading countries require participation in a universal plan? Because every other country understands that health care is not only a basic right, it is also a necessity, a sane policy protecting the country from plagues and epidemics but also from bankruptcy by providing modern and uniform health care for its people.

  2. Posted January 26, 2011 at 11:31 pm | Permalink

    Thank you for sharing the information with us. The health insurance is considered as the most important insurance for the people as well as car and other insurance. In every country, there are many insurance companies that could be selected by the clients. We should compare the benefits and choose the most suitable one for ourselves.

  3. Posted April 3, 2011 at 3:32 am | Permalink

    While other people’s health interests focus on keeping fit and healthy, and achieving 6 Pack Abs, most were aware of the importance of health insurance.Whether unconstitutional or not, having a health insurance is as important as securing the future. If they find it unconstitutional, then that would be their opinion, and it is highly respected.

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