Why Was The Patient Protection and Affordable Care Act (PPACA), aka”Obamacare” Challenged?

There’s been a lot of press about the new health care law, The Patient Protection and Affordable Care Act (PPACA), often called “Obamacare.” The Supreme Court is currently considering whether parts of it are constitutional; a decision is expected next month.

Many of you may be wondering why the law is being challenged. After all, the government already regulates health care, and in fact provides health care itself through its Medicare and Veterans Administration programs. In a nutshell, here’s what the case is about.

Although the Court is considering a number of different challenges to the law, the central issue is the so-called “individual mandate.” PPACA requires insurers to offer insurance to eligible applicants, regardless of health status (“guaranteed issue”), and restricts the ability of insurers to charge applicants different rates based on their health status (“community rating”). The law also imposes new coverage requirements.

While these all sound like welcome improvements, they come at a cost. If insurers are required to cover more sick people, and pay more benefits for those people, the price of insurance will be driven up. Congress’s solution, as embodied in PPACA, is the individual mandate. The individual mandate requires everyone to participate in the health care insurance market, or be subject to a fine if they do not. The idea behind this mandate is that if everyone is in the market – healthy as well as unhealthy – the cost will average out to a reasonable level.

However, those opposed to PPACA claim that this mandate is unconstitutional. The key to understanding their argument is the interaction of two clauses in the Constitution: the “commerce clause” and the “necessary and proper clause.” The commerce clause grants Congress the power “to regulate commerce . . . among the several States,” and the “necessary and proper clause” grants Congress the ability “to make all laws which shall be necessary and proper for carrying into execution” all its powers, including the power to regulate commerce.

Opponents of PPACA argue that the commerce clause only allows Congress to regulate commerce that already exists, and does not give Congress the power to require people to engage in commerce. Thus, while Congress may have the power to regulate the health care market, it cannot make people participate in that market. Opponents also argue that the individual mandate is not “necessary and proper,” because it is too intrusive into the affairs of citizens by making them buy insurance.

Those in favor of the law argue that the health care industry is a huge part of interstate commerce, and that the mounting costs and problems of health care require an individual mandate. They further argue that without the individual mandate, costs will skyrocket, people will be unable to get coverage, and more claims will be denied. Proponents also note that unlike most markets, everyone is a participant in the health care market, and therefore it only makes sense to ensure that everyone is paying a fair price for that care.

Legal experts mostly agree that PPACA took quite a beating during the Court’s oral arguments in March. However, the Court has surprised us before, so no one can be sure what their decision will be. One thing is certain, however: it will be a very close vote.

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