Appeals Court Rejects Health Insurance Rule: Why?

Is the new health care law unconstitutional? On Friday a federal appeals court panel struck down the law's requirement that virtually all Americans must carry health insurance or face penalties.

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By CBS/AP

Story Created: Aug 13, 2011 at 2:54 PM AKDT

Story Updated: Aug 13, 2011 at 2:54 PM AKDT

(CBS/AP) Is the new health care law unconstitutional? On Friday a federal appeals court panel struck down the law's requirement that virtually all Americans must carry health insurance or face penalties.

The three-judge panel of the U.S. Court of Appeals for the Eleventh Circuit gave a thumbs-down to the so-called individual mandate of the Affordable Health Care Act, siding with 26 states that had sued to block the law.

The decision, written by Chief Judge Joel Dubina and Circuit Judge Frank Hull, found that "the individual mandate contained in the Act exceeds Congress's enumerated commerce power."

"What Congress cannot do under the Commerce Clause is mandate that individuals enter into contracts with private insurance companies for the purchase of an expensive product from the time they are born until the time they die," the opinion said.

The 11th Circuit isn't the first appeals court to weigh in on the law critics have dubbed "Obamacare." The federal appeals court in Cincinnati upheld the government's new requirement that most Americans buy health insurance, and an appeals court in Richmond has heard similar legal constitutional challenges to the law.

But the Atlanta-based court is considered by many observers to be the most pivotal legal battleground yet because it reviewed a sweeping ruling by a Florida judge.

The Justice Department has argued that Congress had the power to require most people to buy health insurance or face tax penalties because Congress has the authority to regulate interstate business. It said the legislative branch was exercising its "quintessential" rights when it adopted the new law.

During oral arguments in June, the three-judge panel repeatedly raised questions about the overhaul and expressed unease with the insurance requirement. Each of the three worried aloud if upholding the landmark law could open the door to Congress adopting other sweeping economic mandates.

HealthCare.gov has more on the Affordable Health Care Act.

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