There used to be a time when federal courts were very reluctant to invalidate federal legislation as unconstitutional, and the Department of Justice’s Office of the Solicitor General shared that reluctance by defending the constitutionality of federal laws where reasonably possible even when those laws had fallen out of the favor with the new administration. The course of recent litigation over the fate of the Patient Protection and Affordable Care Act (ACA), Pub. L. No. 111-49, 124 Stat. 119 (2010) (colloquially referred to as Obamacare) illustrates how things have changed.
On December 14, 2018, the U.S. District Court in Texas v. United States, 340 F. Supp. 3d 579 (N.D. Tex. 2018), held that that the ACA’s individual-mandate provision, 42 U.S.C. § 5000A, requiring all those who do not have “minimum essential [healthcare] coverage” to secure such coverage or make a “shared responsibility” payment to the IRS, was unconstitutional, because it was not authorized as an exercise of Congress’s taxing power or its power to regulate commerce.
The path to this holding reflects Obamacare’s tumultuous history in Congress and the courts. In 2012, the Supreme Court in National Federation of Independent Business v, Sebelius, 567 U.S. 519 (2012) (NFIB), by a 5-4 vote, upheld the individual mandate as a tax measure. Chief Justice Roberts cast the tie-breaking vote, rejecting the commerce rationale for the provision on the ground that Congress cannot under the Commerce Clause force the purchase of insurance—in effect, forcing participation in commerce and then regulating it—but sustaining the measure under the taxing power.
After several unsuccessful attempts by largely Republican ACA opponents to “repeal and replace” the ACA, Congress on December 22, 2017, enacted the Tax Cuts and Jobs Act of 2017 (Jobs Act), Pub. L. No. 115-97, 131 Stat. 2054, which, in pertinent part, kept the ACA in place but reduced the required-shared responsibility payment down to zero.
Texas v. United States is a direct consequence of the Jobs Act amendment to section 5000A of the ACA. Since monetary payment would no longer be required for failure to purchase minimum essential healthcare coverage, the district court ruled that the provision could no longer be justified as an exercise of Congress’s taxing power and could not be justified as a commerce measure for the reasons given by Chief Justice Roberts and the dissenters in NFIB. Having struck down an essential part of the ACA, which reduced the incentive to “free ride,” i.e., to delay the purchase of insurance until medical conditions developed confident that, under other ACA provisions, insurers could not discriminate against individuals with preexisting conditions, the trial court further held that the unconstitutional individual mandate was inseverable from the ACA as a whole and thus the entire statute was invalidated.
The Trump administration’s initial position in the case, communicated in Attorney General Sessions’s letter of June 7, 2018, to the Speaker of the House of Representatives, was to state it agreed with the plaintiffs that the individual mandate was unconstitutional but disagreed on the scope of its inseverability from the rest of the legislation. In the attorney general’s view, except for the ACA’s “guaranteed issue” provisions (42 U.S.C. §§ 300gg-1, 300gg-3, 300gg-4(a)), which precluded insurers from denying coverage because of a preexisting condition, and its “community rating” provisions (id. §§ 300gg(a)(1), 300gg-4(b)), which barred insurers from charging a higher premium because of an individual’s medical history or condition—the rest of the ACA was severable from the unconstitutional portion. This initial position was not unreasonable as a case could be made, relying on the ACA’s findings section (id. § 18091(2)(C), that the three provisions worked together to address the free-rider problem. In its filing to the U.S. Court of Appeals for the Fifth Circuit on March 25, 2019, however, the Government decided to go the full distance, indicating it would not defend any part of the ACA. Its brief to that effect was filed on May 1, 2019.
There are essentially three problems with the district court’s ruling, now backed by the Justice Department: its determination that (1) the private plaintiffs had standing under Article III of the Constitution (the standing of the state parties had been rejected below); (2) the individual mandate could not be justified as an exercise of Congress’s commerce power; and (3) the void individual mandate was inseverable from the rest of the ACA.
Article III Standing
On standing to sue, the private plaintiffs cannot show they are harmed by the individual mandate because, after the Jobs Act amendment, they face no penalty of any sort if they refuse to purchase healthcare coverage or purchase only insurance that does not meet the ACA’s definition of “minimum essential coverage.” The plaintiffs’ “injury,” if any, is largely symbolic, almost metaphysical, that they should not be subjected to an obligation that is beyond Congress’s power, even if they cannot be coerced in any way to comply with it. The district court reasoned that imposition of the unconstitutional obligation alone is enough to satisfy Article III. The Government agrees (p.25; emphasis in original), adding:
assuming the individual plaintiffs are correct on the merits, they are directly subject both to the ACA’s mandate that unconstitutionally compels them to purchase insurance they do not want and also to the ACA’s inseverable insurance reforms that increase the costs and decrease the options of the insurance they can choose to buy.
In a kind of Rube-Goldberg chain of reasoning, an abstract ideological injury provides a path to challenge on inseverability grounds otherwise constitutionally valid provisions even where there is no plausible argument that these provisions are tied up with the individual mandate in any way. In other words, even though the individual plaintiffs are not required to purchase insurance, they have standing because they object to an unconstitutional but enforceable obligation to buy insurance and that gives them standing to challenge as nonseverable all of the ACA, even those aspects of the law that do not relate to the individual mandate or the problem of free-riding.
Commerce Clause Power
The district court’s ruling that the individual mandate, though denuded of coercive power after the Jobs Act, is beyond Congress’s Article I authority is even more problematic. After the Jobs Act, it is admittedly difficult to argue that the individual mandate is a tax measure; some revenue may be generated but that would be highly speculative. But why is the provision not justified as a commerce-clause measure now that Congress has stripped the provision of any coercive power to require participation in commerce? Indeed, it may not even be a regulatory measure requiring an express grant of authority altogether.
In view of Justice Scalia’s insistence during the NFIB oral argument that Congress cannot use it commerce power to force individuals to buy asparagus simply because it is good for them, it would seem that Congress could pass a law declaring “as a matter of federal policy that, eating asparagus is good for you” and even providing resources to promote that message. As long as no government coercion is involved in requiring the production, sale, or eating of asparagus, why would such a declaration of public policy—similar in effect to concurrent or joint resolutions of Congress that are not presented to the President for his approval or veto—be beyond Congress’s power to regulate commerce, particularly when that declaration is part of an enactment that in its indisputably constitutional parts regulates an industry accounting for about one-eighth of our GDP?
Severability
The severability issue is the most vulnerable part of the district court’s ruling and the Government’s brief. There is no express severability clause in the ACA, and ordinarily the absence of such a clause propels the reviewing court into a counterfactual setting to determine what Congress would have intended had it been aware that the individual mandate would be struck down. Here, the task is made considerably easier because we in fact know, without speculation, what Congress would have done, as we know what it did. In the Jobs Act amendment, Congress left intact the entire ACA but for its effective elimination of the required shared-responsibility payment by reducing it to zero. Congress confronted the very dilemma identified by the district court and the Government—would it keep in place the ACA if free-riding could not be significantly reduced by requiring all covered individuals to have or purchase minimum essential healthcare coverage? That is what Congress did by amending section 5000A simply to reduce the required payment to zero while leaving the rest of the legislation in place.
The lower court and the Government’s counter is that the Jobs Act amendment occurred during the reconciliation process, which does not authorize substantive amendments without the required fiscal nexus. But the procedure Congress used to enact the Jobs Act does not change the fact that Congress faced a choice between repealing the entire ACA and repealing only the mandate penalty; it only shows that Republicans lacked the votes to do anything but repeal the penalty. Reconciliation is a matter governed by the rules of the Houses of Congress. It does not bear on legislation that is enacted. The fact that reconciliation was used to avoid a probable Senate filibuster does not alter the fact that Congress left the ACA wholly intact knowing that the individual mandate and its incentivizing impact on the purchase of insurance would, as a result of its amendment, be reduced to a nullity as a practical matter.
For the same reason, the district court and Government’s reliance on the findings provision in section 18091 is unavailing. Congress in that provision expressed no view at all on severability. It stated that what it called that the “individual responsibility requirement” would have a substantial effect on interstate commerce. In its absence, “some individuals would make an economic and financial decision to forego health insurance coverage and attempt to self-insure, which increases financial risks to households and medical providers.” In addition, “[t]he requirement, together with the other provisions of this Act, will add millions of new consumers to the health insurance market, increasing the supply of, and demand for, health care services, and will increase the number and share of Americans who are insured.” (Emphasis supplied) What the findings provision tells us is that the individual mandate “together with the other provisions of this Act” were important to the legislation. It does not tell us whether Congress would have kept the enactment intact if the financial penalty or tax for not purchasing insurance was a nullity. The Jobs Act amendment gives us that information. The “relevant question” for severability is not whether the legislature would prefer (A+B) to B,” but whether the legislature would prefer not to have if it could not have A as well.” Leavitt v. Jane L., 518 U.S. 137, 143 (1996). The Jobs Act amendment gives us the answer.
It is particularly troubling that the Government abandoned its initially more limited approach to now urge complete nonseverability. Many provisions of the ACA, for example, those involving the restructuring of healthcare insurance markets and the provision of subsidies to purchase insurance, are not in terms or as a practical matter dependent on the continued existence of an individual mandate with penalties for nonpurchase of minimum essential coverage. Those provisions reflect a difficult-to-achieve legislative compromise that should not be lightly swept aside. What was politically possible in 2010 faces a very difficult constellation of forces today. Policy-based unease with legislation should not lead to wholesale invalidation without appropriate justification.
