NU Online News Service, Feb. 1, 3:45 p.m.EST

The Obama administration said it plans to fight a federaldistrict court decision that found the health care reform lawunconstitutional, while others maintain the ultimate decision willrest with the U.S. Supreme Court.

The ruling by Judge Roger Vinson, in Pensacola,Fla., has opened an avenue for 26 states to stop implementation ofthe Patient Protection and Affordable Care Act (PPACA).

The Obama administration said it will ask the 11th U.S. CircuitCourt of Appeals, based in Atlanta, to stay the ruling.

"We are analyzing this opinion to determine what steps, ifany—including seeking a stay—are necessary while the appeal ispending to continue our progress toward ensuring that Americans donot lose out on the important protections this law provides," TracySchmaler, a spokeswoman for the U.S. Justice Department, said in astatement.

And, in an Internet posting, Stephanie Cutter, a White Houseadvisor, said, "The judge's decision contradicts decades of SupremeCourt precedent that support the considered judgment of thedemocratically elected branches of government that the act'sindividual responsibility provision is necessary to preventbillions of dollars of cost-shifting every year by individualswithout insurance who cannot pay for the health care theyobtain."

Analysts at Washington Analysis said in a note to investors thatthey do not expect the lawsuits to reach the Supreme Court untillate 2012, for the 2012-13 docket. 

Ira Loss and Beth Mantz-Steindecker, the analysts, also said,"In the end, we give slight odds that the Supreme Court upholds thelaw's individual mandate as constitutional."

However, they cautioned, "If the Supreme Court were to render itunconstitutional, we still contend that the rest of health carereform would endure, unlike the ruling from Judge Roger Vinson, inPensacola, Fla."

The analysts explained, "Under that scenario—where theindividual mandate is found unconstitutional but the rest of thelaw stands—insurers, drug makers, providers, PBMs and distributorswould suffer because they would fail to see the expected increasedbusiness from higher volumes, while some sectors would still besubject to the excise fees and reimbursement cuts required by thelaw."  

Joel Wood, senior vice president for government affairs at theCouncil of Insurance Agents and Brokers, said the insurance agentindustry's efforts "are aimed at legislative fixes to the [medical loss ratio]formula and other aspects of the law that gravely threaten theemployer-provided group health insurance marketplace."

The agents want their commissions exempted from the MLR formulaand also want a role ensured for them when the health exchangesystem goes into effect in 2014.

Mr. Wood added, "However, one aspect we do like in JudgeVinson's ruling, is that there is a complete linkage to theindividual and employer mandates, and to insurance marketreforms. Without a working mandate, the law's universalcoverage aspirations will never be achieved, and adverse selectionwill make the private health insurance marketplace implode."

He said, "Pulling out the individual mandate isn't sufficient tocorrect the very significant defects of this law."

In comments before an insurance trade group,Sen. Ben Nelson, D-Neb., said the mandate that everyone buy healthinsurance in 2014 or pay a fine "is the biggest sticking point" inthe health care reform law and one he will seek to change.

Sen. Nelson also called for repeal of the health care provisionthat requires businesses that make payments of $600 a year forgoods or services to file a 1099 form.

Sen. Nelson told the gathering of members of the NationalAssociation of Insurance and Financial Advisors, "There's no doubtthere needs to be reform of the reform," he said.

Commenting on the decision, Peter Marathas, a lawyer withProskauer in Boston, said, "While the Obama Administration wouldlike to cast Judge Vinson's decision as 'over-reaching', thereality is that his decision is thoughtful andwell-considered."

He said, "In the end, the decision is less about health carethan it is about federalism and states' rights."

But Mr. Marathas acknowledged that Judge Vinson's decision "issomewhat meaningless to business owners. It is but one decision onthe way to the ultimate decision."