Obamacare

Whoops, We Forgot to Include A Severability Clause in a Law That Was Sure to Be Challenged in Court

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So it turns out that the ongoing state-based legal challenges to ObamaCare might not be mere courtroom irritations, even before the Supreme Court get involved. Depending on how the rulings go, they could end up making implementation very, very difficult.

Here's the issue: Judges in both Florida and Virginia have indicated that they may accept some of the key constitutional arguments against the law's individual mandate, which requires everyone to purchase health insurance or pay a fine. As The New York Times reported over the holiday, if either of those judges eventually rules that the mandate is unconstitutional, then the judge will have to choose whether or not to let implementation of the rest of the law proceed:

Virginia's attorney general, Kenneth T. Cuccinelli II, a Republican who filed the Richmond lawsuit, argues that if Judge Hudson rejects the insurance requirement he should instantly invalidate the entire act on a nationwide basis.

Mr. Cuccinelli and the plaintiffs in the Florida case, who include attorneys general or governors from 20 states, have emphasized that Congressional bill writers did not include a "severability clause" that would explicitly protect other parts of the sprawling law if certain provisions were struck down.

An earlier version of the legislation, which passed the House last November, included severability language. But that clause did not make it into the Senate version, which ultimately became law. A Democratic aide who helped write the bill characterized the omission as an oversight.

Without such language, the Supreme Court, through its prior rulings, essentially requires judges to try to determine whether Congress would have enacted the rest of a law without the unconstitutional provisions.

The first thing to note from this passage is that the severability clause was left out by mistake—despite the absolute certainty that the mandate would be challenged—indicating the haste with which the bill was cobbled together, and the overall sloppiness of its construction. The law we got was not a polished, considered piece of legislation. It was a rush job with a lot of glitches. As I've written before, in software terms, the legislation that passed was still in beta form.

The second point to make here is that it is very difficult to imagine that Congress would have passed the rest of the law without the mandate. For one thing, the mandate was the least popular part of the law throughout the debate, so based purely political calculus, if members of Congress could have left it out, they presumably would have. (It was so unpopular, in fact, that Obama ran against it during his campaign.) 

The mandate was also a key part of the bill's construction, because, at least in theory, it mitigates the negative effects of two of the law's biggest goodies—the provisions requiring insurers to sell insurance to anyone and to set premium rates without taking individual preexisting health conditions into account.

The problem with those provisions is that, if enacted by themselves, they set up a system in which many individuals have little incentive to maintain health insurance. So the healthiest people opt out, which causes insurance premiums to rise, which in turn causes more healthy people to opt out, and so on and so forth until pretty soon you have a very small pool of very sick people.

The idea behind the mandate is that you can prevent that sort of spiral by requiring everyone to purchase health insurance. Now, it's not clear that the mandate will actually stop individuals from waiting until the last minute to purchase health insurance—for many folks, it may be cheaper to pay the fine. Regardless, though, the law certainly wouldn't work the way it's intended to work without a mandate, meaning that it would be something of a stretch, at best, to assert that Congress would have passed the rest of the law without it.

We don't yet know how either of the judges will rule on the constitutional merits of the mandate—rulings are expected by the end of the year—so the point may ultimately be moot. But if either does decide that the mandate doesn't pass constitutional muster, it will be quite difficult to make a compelling case that Congress would've passed the rest of the law anyway and that those other pieces should therefore continue to stand.