State challenges to healthcare reform law

Opponents of the new healthcare reform law notched two victories this week, one at the ballot box and one in court. On Tuesday, voters in Missouri overwhelmingly approved a ballot measure prohibiting residents from being compelled to participate in “any healthcare system.” The measure targeted the law’s mandate that almost all Americans obtain health insurance, starting in 2014. And on Monday, a federal judge in Virginia refused to dismiss a lawsuit brought by Virginia Atty. Gen. Ken Cuccinelli challenging the new law, setting the stage for a trial on the constitutionality of the so-called individual mandate.

Both of these developments may be just temporary setbacks for the Obama administration, however. We believe the two states’ challenges to the law ultimately will fail, because the mandate is a legitimate use of Congress’ power to regulate interstate commerce.

Missouri’s Proposition C, like the “healthcare freedom” measures in several other states, was rendered moot by Cuccinelli’s lawsuit and a similar complaint filed by more than a dozen state attorneys general. If the lawsuits prevail, the healthcare law is invalidated; otherwise, the law probably preempts the states’ efforts to opt out.

That’s how it should be. It’s up to the courts, not voters or lawmakers, to decide how to interpret the Constitution. And the objection by Missouri voters to the healthcare law boils down to a belief that the Constitution doesn’t empower Congress to penalize people who don’t carry health insurance.

As District Judge Henry E. Hudson’s preliminary ruling in the Virginia case makes clear, the constitutional question won’t be easy to answer. The Supreme Court ruled in 1944 that the insurance business was a form of interstate commerce subject to federal regulation. But Cuccinelli pointed out several potential constitutional problems with the way Congress asserted its regulatory power in the new healthcare law, Hudson said. According to Hudson, all of these issues “seem to distill to the single question of whether or not Congress has the power to regulate — and tax — a citizen’s decision not to participate in interstate commerce.” That’s a novel inquiry that Hudson rightly said merits a full hearing.

Yet Hudson’s preliminary ruling overlooked a unique feature of the U.S. healthcare system: the fact that no one can effectively withdraw from it or avoid its costs. Federal law bars anyone from being denied emergency medical care, regardless of their ability to pay. Meanwhile, the healthcare system is riddled with cost-shifting — taxpayers pay much of the cost of Medicaid, and insured and self-funded patients subsidize the care received by those with Medicaid, Medicare or insufficient insurance coverage. And insurers have actively tried to push the costliest patients onto the public’s tab by denying or rescinding coverage for those with preexisting conditions.

In that respect, health insurance is unlike virtually all other consumer products. Americans are affected by its influence over the healthcare system even if they don’t have policies. The new law tries to make the system function more rationally by requiring insurers to offer coverage to everyone, regardless of past illnesses or injuries. But this requirement could encourage people not to obtain insurance until they needed expensive treatment, leaving insurers with the costliest customers and forcing premiums to rise even faster. The individual mandate deters people from gaming the system in this fashion. That’s why it’s an essential part of the law’s insurance reforms and not an arbitrary intrusion into an individual’s ability to tend to his or her own interests.