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Federal Judge Rules Obamacare Mandate Unconstitutional in VA Challenge

A federal judge has ruled Monday that a key part of Obamacare to be unconstitutional. U.S. District Judge Henry E. Hudson declared the Obama administration’s health care law unconstitutional, siding with Virginia’s attorney general in a dispute that both sides agree will ultimately be decided by the U.S. Supreme Court.

Virginia Republican Attorney General Kenneth Cuccinelli filed a separate lawsuit in defense of a new state law that prohibits the government from forcing state residents to buy health insurance. However, the key issue was his claim that the federal law’s requirement that citizens buy health insurance or pay a penalty is unconstitutional.

Judge Henry E. Hudson ruled for the state’s claim that the requirement for people to purchase health care exceeds the power of Congress under the Constitution’s Commerce Clause.

Hudson’s eagerly awaited decision invalidates the requirement that all Americans purchase health insurance by 2014 or face a federal fine. Hudson’s decision is the first striking down part of the controversial legislation.

“It is not the effect on individuals that is presently at issue — it is the authority of Congress to compel anyone to purchase health insurance,” wrote Hudson who was appointed to the federal bench in 2002 by President George W. Bush. “An enactment that exceeds the power of Congress to adopt adversely affects everyone in every application.”

The Obama administration is likely to appeal Monday’s ruling to the Richmond-based Fourth Circuit U.S. Court of Appeals. It is widely expected that no matter the outcome before that court, the case will ultimately go before the Supreme Court, perhaps by this time next year.

In his ruling, Hudson wrote that he is severing that portion of the law, known as Section 1501, but is not granting an injunction against the entire law.

But Section 1501 is the portion of the law that collects most of the money that is supposed to flow into the system from millions of additional participants. Without it, the law’s execution could be severely compromised and could rock the foundation of other provisions in the legislation.

The lawsuit is just one of nearly two dozen challenges filed in federal courts across the country. Another high-profile suit filed in Florida and joined by 20 states and the National Federation of Independent Businesses will go before Judge Roger Vinson on Thursday.

While the individual mandate to buy insurance is just one part of Obamacare, it is definitely a crucial aspect to it, since the requirement that everyone be part of it is what ensures a sufficiently diversified risk pool.

Administration officials told reporters last week that a negative ruling would have virtually no impact on the law’s implementation, noting that its two major provisions—the coverage mandate and the creation of new insurance markets—don’t take effect until 2014.

The central issue in Virginia’s lawsuit was whether the federal government has the power under the constitution to impose the insurance requirement. The Justice Department said the mandate is a proper exercise of the government’s authority under the Commerce Clause.

Cuccinelli argued that while the government can regulate economic activity that substantially affects interstate commerce, the decision not to buy insurance amounts to economic inactivity that is beyond the government’s reach.

The central issue in Virginia’s lawsuit was whether the federal government has the power under the constitution to impose the insurance requirement. The Justice Department said the mandate is a proper exercise of the government’s authority under the Commerce Clause.

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