A panel's 2-1 ruling in Georgia would jeopardize the entire health reform package Congress passed in March 2010, but backers of the law expect the Supreme Court to have the final say on the issue.
South Dakota is one of 26 states suing the government over the individual mandate requiring all citizens to have health coverage by 2014. The states argue Congress has a role regulating economic activity, but it cannot regulate inactivity such as a decision not to buy insurance.
"Today is a huge victory for individual and states' rights," Marty Jackley, South Dakota's attorney general, said Friday.
Most South Dakotans carry coverage in employer plans. But about 50,000 residents have none, 9 percent of the adult population. Two-thirds live in poverty, but others in good physical condition choose not to buy it. The mandate would force them to buy insurance, probably $2,000 to $3,000 a year, or face a penalty starting at about $700 a year in 2014.
Judges Joel Dubina and Frank Hall of the 11th Circuit Court in Atlanta said that goes too far. Judge Stanley Marcus disagreed, as have other courts.
"This is just one in the series of conflicting rulings that lower courts have doled out. Most would agree it's just one step closer to the Supreme Court, which will be the eventual arbiter of the constitutionality of this legislation," said Sam Wilson, associate state director for advocacy for South Dakota AARP.
A panel of the Court of Appeals for the 11th Circuit, based in Atlanta, ruled 2 to 1 that Congress does not have the authority to force people to buy “an expensive product from the time they are born until the time they die.’’
The decision conflicts with the Court of Appeals for the Sixth Circuit in Cincinnati, which ruled in June that the requirement is constitutional because health care is an economic activity that Congress has the authority to regulate under the Constitution’s Commerce Clause.
The stark disagreement between the two courts means the legality of the law’s centerpiece, the individual mandate, will almost certainly be determined by the US Supreme Court, scholars said.
“Especially now that you’ve got a split in the circuits, the Supreme Court almost has to take it,’’ said Douglas Laycock, a law professor at the University of Virginia.
The Supreme Court could take up the issue as soon as its next session, which begins in the fall.
The 11th Circuit ruling has no immediate bearing on the health care overhaul, which is being implemented in stages. The insurance mandate is not set to take effect until 2014. Also, government lawyers are expected to appeal the divided decision to the full appeals court.
The decision was not a complete loss for the Obama administration. It had appealed a district court decision in Florida, where Judge Roger Vinson ruled that the entire overhaul was unconstitutional, in a suit brought by 26 states to prevent implementation of the law. But the appeals court panel said the rest of the law would be constitutional if the mandate was stricken.
The judges said Vinson, who ruled that the mandate was inextricably tied to the rest of the law, had overreached and that the “lion’s share of the act has nothing to do with private insurance, much less the mandate that individuals buy insurance.’’
It is unclear how the overhaul would fare with no mandate. Without a requirement that healthy Americans buy insurance, the law’s supporters say, a crucial funding mechanism is lost and people would game the system by waiting until they are sick to get insurance. The law requires insurers to accept them even with preexisting conditions.
Although the flagging economy and dizzying markets are expected to be key issues in the 2012 presidential elections, the health care overhaul - what Republicans have dubbed “Obamacare’’ - will play a central role.
Robert J. Blendon, a professor of health policy and political analysis at the Harvard School of Public Health, said that until the Supreme Court decides its constitutionality, the law will continue to give grist to Republican presidential candidates to criticize Obama and to motivate grassroots activists angered by the belief that the law infringes on individual rights.
“It allows the Republicans to challenge the president, to keep that alive as an issue,’’ Blendon said.
The appellate court’s rejection of the individual mandate could provide more ammunition to rivals of Mitt Romney, the early front-runner for the Republican nomination. As governor of Massachusetts, Romney backed such a mandate in the state’s health care overhaul, which Congress used as a model for the national law.
Romney has attempted to deflect criticism of his support of the state mandate by declaring changes to the problematic health care system a state’s-rights issue, not one that should be decided by the federal government.
A spokeswoman for Massachusetts Republican Senator Scott Brown, who won election last year partially because of his opposition to the law, reiterated his belief yesterday that Congress had no business requiring citizens to buy insurance.
“The senator believes a one-size-fits-all health care plan for the entire nation, with its higher taxes and increased spending, is wrong,’’ Marcie Kinzel said.
Senator John F. Kerry, a stalwart advocate for the law’s passage, called the ruling “curious’’ and said it “flies in the face of recent precedent and longstanding jurisprudence.’’
“As a practical matter, when you get right down to it, when people choose to go without health care, they’re shifting their costs onto average taxpayers and people who pay for insurance. That’s wrong and more practically, it’s awful economics,’’ Kerry said. “Health care reform worked here in Massachusetts, and it’s one of the reasons almost all of our citizens are protected by quality health insurance today.
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