Update on the Federalization of Health Insurance: The Virginia Lawsuit Dismissal

     A three-judge panel of the United States Federal Court of Appeals dismissed Virginia’s lawsuit against the individual mandate to purchase health insurance, which is the key piece of the federalization of health insurance signed into law by President Barak Obama. The ruling by the all-Democratically-appointed judges conflicts with a ruling by a separate Appeals Court that ruled the mandate unconstitutional.

     The Virginia case is different from the case being brought by 26 other states led by Florida. Virginia argues that its state law that prohibits its citizens from being required to purchase health insurance makes with the federal mandate to purchase health insurance unenforceable in that state. The Florida case is about the violation of the constitutional principle of federalism that is violated by the federal mandate because the federal government lacks authority to regulate an activity that is not interstate commerce.

     Regardless, the Virginia lawsuit was decided on narrow grounds. The Court ruled that the Commonwealth lacked standing because the federal law did not conflict with the state law. In other words, a state could prohibit itself from requiring its citizens to purchase health insurance, whether or not the federal government required them to purchase it. The merits of the case – whether or not the individual mandate is constitutional – was not decided.

     The conflicting opinions by the Courts of Appeals increase the likelihood the U.S. Supreme Court will rule on the question by hearing at least one of the appeals of these two cases.