A closer reading of Judge Henry Hudson's 42 page opinion reveals that it is a thorough rejection of the Obama Administration's efforts to defend the health care law's individual insurance mandate.
On almost every point, Hudson sides with Virginia's contention that the mandate goes beyond the bounds of the Constitution. In short, Hudson concludes that "[t]he unchecked expansion of congressional power to the limits suggested by the Minimum Essential Coverage Provision would invite unbridled exercise of federal police power. At its core, this dispute is not simply about regulating the business of insurance-or crafting a scheme of universal health insurance coverage-it's about an individual's right to choose to participate."
The major legal argument presented to the court was whether the mandate violates the Constitution's Commerce Clause which allows the federal government to regulate the financial activities between the states.
"Every application of Commerce Clause power found to be constitutionally sound by the Supreme Court involved some form of action, transaction, or deed placed in motion by an individual or legal entity," Hudson declared on page 23. "The constitutional viability of the Minimum Essential Coverage Provision in this case turns on whether or not a person's decision to refuse to purchase health care insurance is such an activity."
Hudson explains the precedents involving the Commerce Clause and its requirement that an activity be regulated. But in this case, it is the INACTIVY of people who choose NOT to buy insurance and get penalized for that decision that Hudson deemed to fall outside federal authority. "[T]he Minimum Essential Coverage Provision appears to forge new ground and extends the Commerce Clause powers beyond its current high water mark."
The ruling rejects the government's view that a decision not to buy health insurance is economic activity subject to regulation under the Commerce Clause and that the mandate is critical to the overall law. It is what Hudson calls a theory of aggregation in which the collective individual decisions of all people impacts interstate commerce.
NECESSARY AND PROPER CLAUSE
A corollary argument from the government is that the insurance mandate also falls under the Constitution's Necessary and Proper Clause. This clause allows Congress to implement measures that as Chief Justice John Marshall said in 1819 are "within the scope of the Constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consistent with the letter and spirit of the Constitution, are constitutional."
But Judge Hudson thought the government's argument here was lacking. "Although the Necessary and Proper Clause vests Congress with broad authority to exercise means, which are not themselves an enumerated power, to implement legislation, it is not without limitation."
On page 19 Hudson concludes that, "[i]f a person's decision not to purchase health insurance at a particular point in time does not constitute the type of economic activity subject to regulation under the Commerce Clause, then logically an attempt to enforce such a provision under the Necessary and Proper Clause is equally offensive to the Constitution."
GENERAL WELFARE CLAUSE
Judge Hudson spends considerable time breaking down the arguments made by the government that the mandate is permissible under the General Welfare Clause which gives the federal government the power to tax.
While Hudson does not deny the taxation authority he says the language Congress used in crafting the legislation shows the penalty for non-compliance is just that-a penalty-not a tax and therefore not subject to the General Welfare Clause.
The $4 billion distinction is that Congress specifically called for taxes in other parts of the law including on so-called "Cadillac plans," medical devices, high-income taxpayers and indoor tanning salons. But on the mandate Congress used the word "penalty" instead.
"Although purportedly grounded in the General Welfare Clause, the notion that the generation of revenue was a significant legislative objective is a transparent afterthought," Hudson wrote. "The legislative purpose underlying this provision was purely regulation of what Congress misperceived to be economic activity."