Courts: California V. Texas – The Constitutionality Of The Affordable Care Act
Joe Raedle
Last month the Supreme Court heard oral arguments regarding the constitutional validity of the (ACA) Affordable Care Act’s individual mandate provision. It might not come as a surprise that much of the happenings leading up to the November 10th hearing have been confusing and unusual even from a legal standpoint. So, let’s start with a basic overview of the events leading up to November.
The suit was originally filed in February 2018 as a response to the 2017 Tax Cuts And Jobs Act (TCJA) which zeroed-out the tax penalty option for individuals opting to forgo a minimal health coverage plan. The Supreme Court had previously upheld the validity of the ACA’s individual mandate penalty as an appropriate exercise of Congressional taxing power in the 2012 case NFIB v. Sebelius. Following, in December 2018, the entire ACA was struck down in trial court on the basis that the individual mandate provision was no longer constitutional in its post-TCJA form and inseverable from the act.
The federal government originally argued that only the individual mandate and certain protections or provisions should be struck down as unconstitutional, but that the rest of the ACA should remain enforced. They later substantially changed their position by agreeing with the trial court’s decision while the case was on appeal in the 5th Circuit Court. The federal government has since argued to effectively “limit the scope of relief” so that any court injunction would affect only those provisions that injure the plaintiffs and only in the plaintiff states.
December 2019, the 5th Circuit finds the individual mandate to be unconstitutional and sends the case back to trial court so to further determine the fate of the remaining ACA provisions. The Supreme Court soon thereafter agrees to review the case in 2020.
The unusual aspect of this case comes largely from the fact that the federal government is not arguing to prove the constitutionality of federal law, but rather to seek a narrow resolution to the agreed upon unconstitutional condition of the individual mandate provision. The November 10th hearing illustrated an exceptional ambiguity regarding the intentions of Congress and others involved in the conception and evolution of the Affordable Care Act.
The Texas 20, Plus Two
The twenty states and two individuals challenging the ACA, led by Texas, are ultimately seeking to strike down the act in its entirety. Their argument rests on the interpretation that the penalty involved with the individual mandate provision, when zeroed-out, is no longer a tax as it does not raise revenue for the federal government. In its current form, it is a “naked command” for individuals to engage in commerce and thus outside the bounds of congressional authority.
The challenging states argue that this command even without an enforced penalty would induce people to register for Medicaid who otherwise would not have done so. If the plaintiff states can provide persuasive evidence, then this would constitute a “pocketbook injury” directly flowing from the individual mandate provision. The plaintiff states also argue that the regulatory burden of having to file information with the federal government regarding the coverage of their employees also constitutes an injury, although it isn’t clear that this flows directly from the individual mandate provision at issue.
The most pressing factor at hand in this case has to do with the individual mandate provision’s severability. The plaintiffs argue that the Obama administration’s Department of Justice had acknowledged a “functional inseverability clause.” They also provided numerous examples of Congress regarding the provision as essential and inseverable from the ACA. If the court justices agree with this interpretation, then the unconstitutional quality of the individual mandate provision would strike down the whole of the ACA.
The plaintiffs encouraged the court to focus on the text of the code itself and ignore non-textual considerations which amount to a “game of what different legislators might have been thinking.” Their argument seems to focus on what has been explicitly stated in the past regardless of changing circumstances, intentions, or the often-ambiguous nature of legal interpretation.
The Interveners
The Trial Court and 5th District allowed 21 states led by California to intervene in the case and defend the ACA. Their defense takes issue with the interpretation that zeroing-out the individual mandate provision’s penalty transformed it into a “command.” They insist that this is at odds with how the Supreme Court interpreted this text in NFIB v. Sebelius and how both Congress and the President understood it.
They urged the court to consider that it could not have been Congress’s intention to throw “23 million people off their insurance” as well as end other protections provided by the ACA. If Congress intended to dismantle the entirety of the ACA by zeroing-out the tax penalty, then they would have knowingly voted for an unconstitutional amendment. This is not an interpretation that the court should indulge.
During the hearing they point out that regardless of what had been stated in the past, there is no effective inseverability clause. Reports from the Congressional Budget Office had confirmed that the “carrots” of the bill “worked without the stick,” and Congress should be allowed to “learn from experience” and “adjust its policy choices.” Allowing the adjusted individual mandate provision to take down the ACA in its entirety wouldn’t match the understanding and intentions of those involved in the bill’s evolution.
Essentially, the defense wants the court to acknowledge the practical applications of the bill as it stands and not dismantle it based on adherence to one rigid or outdated perspective. Their argument focuses on a presumption of severability – A clear request for compromise.
Conclusion
The plaintiffs seem to take an approach more concerned with toppling the whole of the ACA rather than remedying any injuries and this may be to their disadvantage. It’s at least slightly ironic that the plaintiffs argue against considering ‘what legislators were thinking’ while also asserting that the individual mandate is inseverable based on the intentions of legislators in the past. The stubborn inconsistencies in their arguments are strikingly obvious even to someone rather unfamiliar with court proceedings and legal jargon.
If the ACA is found unconstitutional in its entirety the implications would – as the defense points out – create chaos in the healthcare sector and cause extensive disruption to markets overall. Some of the effected ACA benefits would include expansion of Medicaid eligibility, required preventive services in private insurance, Medicare and national initiatives promoting public health and quality of care. It’s important to note that the amount of people eligible for health coverage because of the ACA has been increasing with 2.3 million people acquiring health coverage between 2016 and 2019.
Judging by the Supreme Court Justices probing it seems there is a strong case in favor of severability. Justice Kavanaugh firmly explains to the plaintiffs that “inseverability clauses usually are very clear.” Congress as well “knows how to write an inseverability clause” and that looking at precedents “it does seem fairly clear that the proper remedy would be to sever the mandate provision and leave the rest of the act in place.” It will be interesting to see how the justices interpret this case and whether or not our existing maze of a healthcare industry will be thrown into further disarray.
