The Constitutionality Of Obamacare

NDU Audio Visual (left) and Gage Skidmore (right) | Flickr Creative Commons

Although it has been eight years since the Supreme Court ruling on Obamacare, the question of its constitutionality has been in question since. That being said, it has increased tenfold since the district court of Fort Worth, Texas ruled the entire Affordable Care Act (ACA) unconstitutional in a lawsuit last December. What is interesting about the recent ruling is that it relies entirely on whether or not the elements of the ACA are severable or not. If it is severable, and some pieces of the law are found unconstitutional, they can be repealed while the rest of the law remains. If inseverable, one piece of the law found unconstitutional takes down the entire legislation. This case is yet to be resolved by higher courts, but it is a different matter than the ruling in 2012. The brief history of ACA court rulings is important in understanding the arguments presented in the current matter.

In 2012, the Affordable Care Act was ruled constitutional by the Supreme Court in National Federation of Independent Business (NFIB) v. Sebelius over a 5-4 majority. The most significant piece of this ruling is that the Individual Mandate in the law is held up, not through the interstate commerce clause, but through Congressional power to tax and spend. It was concluded that Congress cannot force individuals to purchase health insurance, but it can tax those that refuse to do so. The ruling had, therefore, overturned the previous decision in 2011 by the US Court of Appeals Eleventh Circuit, which had ruled the ACA unconstitutional, in the opinion that the Individual Mandate is not covered under the interstate commerce clause nor as a simple tax. However, more importantly, the Eleventh Circuit ruled that there exists severability between the pieces of the healthcare law. This means that if one part of the law, like the mandate, is found unconstitutional it can be repealed while the rest of the law, like protections for pre-existing conditions, insurance regulations, tax credits, and Medicaid expansion, can remain in effect. Although this 2011 ruling of unconstitutionality of the law was reversed by the Supreme Court the next year, it remains significant because NFIB v. Sebelius also reversed the opinion on severability, making the ACA inseverable.

Moving forward from the 2012 resolution, the Individual Mandate is not severable from the rest of the law, and this notion has become significant after the Tax Cuts and Jobs Act (TCJA) in 2017 which reduced the tax penalty of the mandate to $0. In effect, the Republican law managed to pass through Congress repealing only that specific piece of the Affordable Care Act. This fact formed the basis of the ruling in December of 2018 by Judge Reed O’Connor, which says that since the Individual Mandate is gone, the rest of the law must go as well. This can be established by the fact that severability was rejected by the Supreme Court in 2012, so then the ACA is inseverable. The case in the district court of Fort Worth came from a lawsuit filed by a group of Republican governors and state attorney generals, who had to be aware of this non-severability, waiting until the mandate was repealed. Since the Texas-coalition won the lawsuit in 2018 and the ACA was ruled unconstitutional, the matter has moved up to the US Court of Appeals Fifth Circuit, where the next ruling will be made. To counter the Republicans, 21 Democratic state attorney generals have been granted an appeal and have provided a letter countering Judge Reed O’Connor’s opinion. The last important event happened on Monday, March 25, when the Department of Justice told the US Court of Appeals that the entire ACA is unconstitutional.

Before the ruling by the Fifth Circuit, it is imperative to understand the argument from the Republican, Texas-led coalition. As a predisposition to the case of severability, they give a similar opinion to the minority in the 2012 Supreme Court Case, that the Individual Mandate is not constitutional on its face value, and it is not excused by the interstate commerce clause nor Congressional power to tax. The majority opinion states that although the mandate does not fall under the former, it does pass as a tax, to which Congress has the authority. However, since the Tax Cuts and Jobs Act the “tax” is now at zero percent. Therefore, according to the lawsuit, it is unconstitutional because it is no longer a tax, which was the excuse for letting it pass the ruling. In other words, a tax at zero is not a tax. Furthermore, the Supreme Court found in 2012 that the Individual Mandate is inseverable from the rest of the law. Congress had backed this up at the time of the Affordable Care Act’s passing, with the intent to “establish the Individual Mandate as the ACA’s ‘essential’ provision.” From NFIB v. Sebelius, they make the case that elements of the law still remain inseverable, and therefore, the repealing of the Individual Mandate by reducing it to nothing makes the entire law unconstitutional.

To counter the argument from the lawsuit, a coalition of Democratic state attorney generals have filed an appeal with the Fifth Circuit of the US Court of Appeals. Arguments are currently scheduled to take place in the future and the details of the California-led coalition are not yet known. Many of the attorney generals and Democratic politicians have cited the negative effects a repeal of the ACA will have on society and access to healthcare. Although this is not a legal case yet, it makes up a large part of the appeal. Others have made the case to oppose the Texas court ruling with legislation that simply reforms healthcare, or in other words, use the legislative branch instead of the judicial, as the Republicans did with the TCJA. The lawsuit makes the case that a zero percent tax penalty for failure to purchase health insurance invalidates its constitutionality, so some have suggested raising it to $1 through legislation. This would be hard to do in reality, but the function of this argument is to show the weakness in the unconstitutional opinion since a tax penalty above zero explodes the entire case. Regardless of these pontifications though, the strongest legal case for the Democrats is to fight for the idea that the 2010 healthcare law is severable. It can likely be shown that the connection between the Eleventh Circuit ruling, NFIB v. Sebelius in 2012, and the lawsuit in 2018 is quite a questionable stretch to make the ACA “unseverable”. As the California attorney general commented, “The Texas Lawsuit is based on a dubious legal claim with the sole goal of stripping Americans of their healthcare”.

The decision by the Department of Justice recently has stirred the impending case by the Fifth Circuit in the media, however, it will be a long time before a final ruling is made. It is also likely that the case will extend past the US Court of Appeals and end up at the Supreme Court. If this is the case, it will face a completely different court than it did in 2012, given the conservative majority. A ruling in affirmation with Judge Reed O’Conner from Texas could potentially scrap the entire law. This includes a number of insurance regulations, compulsory protections for applicants with pre-existing conditions, tax credits, and Medicaid expansion. Until this case is resolved though, this portion of the law will remain in effect.

Until the 2020 election, the lawsuit seems to be the only way for the Republicans to repeal Obamacare since they have recently discarded the idea of passing a healthcare law in this time period. Partially because some GOP  politicians have begun to support the law as well as increased government involvement of health insurance over time, and over the fear of losing voters for election season. It is undeniable that Republicans have shifted from “repeal Obamacare” to “repeal and replace Obamacare”,  to finally “keep most of the law but don’t call it Obamacare”. Also true is the fact that they know repealing the law would be political suicide for their battle to control government. President Trump still attacks the Affordable Care Act and has shown support or the Texas coalition in its battle to rule the law unconstitutional. The party plans to focus on more populist issues like lowering prescription drug prices and opposing national healthcare proposals from the left. An interesting point of view throughout the recent court rulings is that this policy fight should be changed through legislation, and this could be done by either party in the upcoming years.