ObamaCare Struck Down? Not Quite

In case you didn’t hear, a federal judge in Virginia struck down a key portion of ObamaCare today. This ruling was made in response to a lawsuit brought by the Commonwealth of Virginia in defense of a new state law that prohibits the government from forcing state residents to buy health insurance. What does this ruling mean for ObamaCare? Well, don’t get excited. On a practical level, this ruling means nothing. Here’s what you need to know.

First, this ruling struck down the part of ObamaCare that allows the federal government to compel individuals to buy insurance. I’ve spoken before about why this will probably ultimately be found to be unconstitutional (click me).

Secondly, this ruling was issued by Federal District Court Judge Henry E. Hudson, a Republican appointee. He sits in Richmond, and thus, the scope of his reach is only Virginia. In other words, this ruling does not affect anyone in any other state. Moreover, other courts have already gone the other way on this provision, finding it constitutional, including courts in Michigan and Virginia.

So what does this mean? It means there is a conflict, and those need to be resolved, right? Actually, no. As strange as it may sound, conflicts are allowed under federal law, though they are not preferred. They are usually resolved by the appeals process, but not always. And when they aren’t resolved, different parts of the country will find themselves living under federal laws that have been interpreted differently -- you often see this in tax cases.

Still, as I said, conflicts are not preferred. And here is what is likely to happen.

The way the federal courts work, the District Court is the lowest level (excluding certain specialty courts). The scope of their power is the district within which they sit. Most states are broken into two districts. Thus, for example, you have the Eastern District of Virginia and the Western District of Virginia. These two districts can (and often will) conflict.

To fix the conflict, an appeal is made to a higher court -- the appellate courts. In the case of Virginia, the appellate court is the Fourth Circuit Court of Appeals. That court happens to sit in Richmond, but it oversees all of the District Courts in Virginia, West Virginia, Maryland and the Carolinas. When the Fourth Circuit issues a ruling, its ruling becomes the law in each of those states and any conflicts are erased.

But this doesn’t necessarily end the conflict because the country is broken into thirteen Circuit Courts, and they can conflict with each other. Thus, the Sixth Circuit in Ohio may disagree with the Fourth Circuit in Virginia or the Second Circuit in New York. When such a conflict exists, the only way to resolve it is to appeal to the Supreme Court. A Supreme Court ruling will become the law of the land and will apply to all Circuit Courts automatically, no matter which Circuit Court the appeal came from.

BUT appeals to the Supreme Court are not mandatory, nor are they guaranteed. In other words, the Supreme Court can refuse to hear an appeal, even when there is a conflict in the Circuits, and that will leave the conflict in place. That said however, it is unlike the Supreme Court will allow a significant conflict to continue. One Circuit striking down ObamaCare while another affirms it would be the kind of conflict the Supreme Court is unlikely to leave in place.

Since the Fourth Circuit is the most conservative Circuit Court in the country, and will likely affirm Judge Hudson's decision, and Circuits like the Sixth and Ninth will go the other way, a conflict is more likely now than before. Thus, the real meaning of today’s ruling is that this decision makes it more likely that the Supreme Court will hear this case. . . but that's it.

Also, as an aside, don't expect much to come from this ruling because the case everyone is watching is the lawsuit filed in Florida by the twenty state Attorney's General. So expect nothing to happen in the Supreme Court until that case makes it there.

All in all, today's ruling is nice and it makes it somewhat more likely that the Supreme Court will hear this case, but it doesn’t mean much more than that.