Healthcare reform law challenges move closer to the Supreme Court

The Obama administration on Tuesday defended the insurance mandate in healthcare reform as constitutional as the legal battle over the law moved one step closer to the U.S. Supreme Court.

The 4th U.S. Circuit Court of Appeals held back-to-back hearings Tuesday in two lawsuits challenging the healthcare law’s requirement that most U.S. citizens purchase insurance.

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Critics say the mandate is unconstitutional. Although Congress can regulate commerce, they argue, it can’t require people to engage in a particular “economic activity” just because they live in the U.S.

Acting Solicitor General Neal Katyal argued no one truly abstains from the market for healthcare. The insurance mandate simply regulates how people pay for healthcare services, he said, using the hypothetical example of people who go without insurance and then end up in a car accident. The people in the accident would be treated, Katyal said, and the only question would be whether the cost of that care is passed on to the public.

That kind of cost-shifting is unique to healthcare, Katyal said. So a ruling in favor of the mandate would not open the door for the government to make citizens buy other products, as opponents have charged.

The panel of federal judges seemed receptive to the government’s defense of the mandate. All three of the judges were Democratic appointees — two were appointed by Obama — but legal experts said the questioning probably would have been the same with any panel.

Richmond University law professor Kevin Walsh, who attended the arguments, said the court seemed to be leaning in the government’s favor. The three-judge panel seemed skeptical of the argument that the uninsured are not participating in commerce, he said. Other observers echoed that view.

The panel heard arguments in a suit brought by Liberty University, followed by the high-profile suit that Virginia Attorney General Ken Cuccinelli filed almost immediately after President Obama signed the healthcare law. A coalition of 26 other states has challenged the insurance mandate in a separate case.

Randy Barnett, a Georgetown University law professor who is arguing against the mandate in the 26-state lawsuit, said the issue is still on track for a Supreme Court decision in the summer of 2012. He expects federal appeals courts to begin ruling this summer, clearing the way for the Supreme Court to hold a hearing early next year.

But Cuccinelli’s case might not be the one that makes it all the way to the high court. People who watched Tuesday’s arguments said the judges might well decide that Virginia does not have a legal right to sue over the healthcare law.

The Supreme Court has said states cannot sue the federal government on behalf of their residents. Cuccinelli based his suit on a state law that says Virginians cannot be forced to buy insurance. The federal mandate conflicts with his ability to enforce that statute, he argued.

Former Solicitor General Walter Dellinger said the 4th Circuit panel seemed wary of allowing the suit to proceed on those grounds. The judges said it could raise the possibility of states passing their own laws any time they disagree with the federal government — for example, saying that none of their residents can serve in a particular war, or pay Social Security taxes.

The judges seemed worried that Cuccinelli’s argument would “open up the courts to political challenges,” Dellinger said on a conference call organized by the pro-healthcare reform group Families USA.

The issue would still end up before the Supreme Court even if the 4th Circuit tosses out Cuccinelli’s suit, observers said. The other 26 states have used different arguments, and there are also the challenges filed by private parties.