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.