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As I’m sure you know, several states and others have sued to try to stop the health reform law from taking full effect. If you’re not a lawyer, it’s hard to follow exactly what’s going on, so I thought I’d give you a quick summary of the status of the major cases.
The main argument against the law is that the Constitution does not allow the federal government to require people to buy insurance. Starting in 2014, under the health reform law, everybody is required to have insurance or pay a penalty. There will be expanded Medicaid to help low income consumers, and subsidies to help the middle class afford to buy insurance. The penalty for not buying insurance is only $95 in the first year.
The theory behind the requirement to buy insurance, called the “individual mandate", is that when you open the insurance market to people with pre-existing conditions, you have to make sure all of those people are balanced out by young, healthy people. If only sick people race to buy insurance as soon as they can, premiums will go through the roof because the market will be dominated by the most expensive consumers-- people with pre-existing conditions. So to try to get as many of those young, healthy people into the market to balance out that cost and keep premiums balanced, you have an individual mandate.
The challenge to the law is that the federal government can’t make you buy something – anything. Under the Commerce Clause of the Constitution, the federal government has the right to regulate things in commerce. There is a limit, though, to federal authority. Things that are not in commerce – private things – cannot be regulated by the federal government. Instead, those things can be and are regulated by the states.
But where, exactly, that line is drawn has been the subject of Supreme Court case law for a very long time. Child labor? Yup, the feds can regulate. Gun-free school zones? Nope, the feds cannot regulate because nothing was crossing state lines and schools are generally locally regulated. But none of those cases tells us for sure what the answer is here.