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CINCINNATI (Reuters)—A U.S. appeals court on Wednesday upheld a key provision in the health care reform law that will require most U.S. residents to enroll in a qualified plan or pay a fine.
The ruling was the first by an appeals court, and legal experts have said they expect the issue to ultimately be addressed by the Supreme Court later this year or next year, a critical time for President Barack Obama as he seeks re-election in 2012.
The 6th U.S. Circuit Court of Appeals, based in Cincinnati, ruled Wednesday that the “minimum coverage provision is a valid exercise of legislative power by Congress under the Commerce Clause” of the U.S. Constitution.
The law, which aims to extend coverage to more than 30 million uninsured U.S. residents, has wide ramifications for the health care sector, affecting health insurers, drugmakers, device companies and hospitals.
It requires U.S. residents to enroll in a health care plan starting in 2014 or face a fine. Republicans have sought to repeal the law in Congress, state legislatures and federal courts.
While Wednesday's decision is an initial victory for the Obama administration, there are still other significant legal challenges pending, including two in which federal judges ruled the insurance mandate unconstitutional. Decisions in those cases are expected in the coming weeks.
The decision Wednesday stemmed from a lawsuit filed by The Thomas More Law Center in Michigan on the day President Obama signed the measure into law. It argued that Congress could not regulate how U.S. residents pay for health care services and insurance.
A federal judge in Michigan upheld the law as legal and the group appealed.
By a 2-1 vote, the appeals court affirmed that ruling. It said those who opt out of buying health insurance were still engaging in commerce because they were paying for health care services on their own and thus the law was constitutional.
“Congress had a rational basis for concluding that, in the aggregate, the practice of self-insuring for the cost of health care substantially affects interstate commerce,” the court majority ruled.
“The provision regulates active participation in the health care market, and in any case, the Constitution imposes no categorical bar on regulating inactivity,” wrote Judge Boyce Martin, who was appointed by President Jimmy Carter in 1979.
A Justice Department spokeswoman welcomed the ruling and said, “We will continue to vigorously defend the health care reform statute in any litigation challenging it.”
One of the judges on the panel dissented from the decision, arguing that despite runaway costs being a national problem, that “does not mean that Congress can try to solve them in any fashion it pleases.”
“If the exercise of power is allowed and the mandate upheld, it is difficult to see what the limits on Congress' Commerce Clause authority would be. What aspect of human activity would escape federal power?” wrote Judge James Graham, appointed in 1986 by President Ronald Reagan.
The other panel member who upheld the law was Judge Jeffrey Sutton, who was appointed in 2003 by President George W. Bush.
WASHINGTON—The Internal Revenue Service is asking for comments on a health care reform law provision that will impose a small special assessment on employers with self-funded health care plans.