Obamacare Returns to the Supreme Court—Yet Again

My take on today's decision to consider the Obamacare severability case.

(Zimmytws/Dreamstime.com)

Earlier today, the  Supreme Court decided to take yet another case involving the Affordable Care Act (AKA Obamacare). By my count, this is the fourth time the Court has considered a case challenging the legality of some portion of the ACA. I agree with most of what co-blogger Jonathan Adler writes about the case here. As Jonathan indicates, the core argument made by the plaintiffs—that all of Obamacare should fall if the now-largely neutered individual health insurance mandate is unconstitutional—is badly wrong. I doubt there will be five votes on the Court for that position.

To briefly recap, this case arose because, in December 2017, the then-GOP-controlled Congress passed a tax reform law that zeroed out the monetary penalty attached to the Obamacare health insurance mandate, but left the mandate itself on the books. The ACA still officially has a provision requiring most Americans to purchase government-approved health insurance. But violators suffer no penalty if they choose not to follow this requirement.

In  its controversial 2012 ruling in NFIB v. Sebelius, the Court narrowly rejected a previous challenge to the constitutionality of the mandate. But Chief Justice John Roberts' controlling opinion for the Court only reached this conclusion by reinterpreting the mandate as a tax, thereby saving it from being declared unconstitutional.

After the 2017 tax reform bill eliminated the monetary penalty attached to the mandate, twenty red states filed a lawsuit arguing that what's left of the mandate was no longer constitutional, because it could not be a tax, if it doesn't raise any revenue. Much more controversially, they also contended that the rest of Obamacare must fall with the mandate, because the latter is such an important part of the statute that it cannot be "severed" from it.

In 2018, federal district Judge Reed O'Connor issued a highly dubious ruling embracing the plaintiffs' arguments on both points. In December 2019, a 2-1 decision by the US Court of Appeals for the Fifth Circuit upheld O'Connor's decision on the unconstitutionality of the mandate, but vacated and remanded his ruling on the severability issue, in effect requiring him to redo that analysis almost from scratch.

The Supreme Court's decision to hear the case cuts short what might have been prolonged further litigation in the lower courts. We will probably have a definitive resolution of the case sometime within the next year or so.

In my view, what's left of the individual mandate is indeed now unconstitutional under Roberts' reasoning in NFIB v. Sebelius, Unlike most other commentators, I think this part of the case is actually important. I explained the reasons why here.

But I certainly understand why nearly everyone else is focused almost exclusively on the severability question. That is what will decide the future of the ACA. The status of the residual mandate may be an important constitutional question, but it has little if any significance for the immediate future of health care policy.

On the severability issue, I think the plaintiffs are badly wrong. I explained the reasons why here, and in my analyses of the trial court ruling and the Fifth Circuit decision. There are a number of different plausible ways to address severability issues. But none of them can justify the conclusion that a virtually toothless mandate is somehow so essential to the ACA that it cannot be severed from the rest. Along with a cross-ideological group of other legal scholars, Jonathan Adler and I addressed this point in greater detail in two amicus briefs we have filed in the case (see here and here). We may well file an updated version in the Supreme Court.

Why did the Court decide to hear this case rather than follow the more usual procedure of letting the lower court reach a final decision on the key issue (in this case severability)? I think Jonathan is probably right to think that it's because of the political importance of the issue rather than because the legal arguments are particularly strong. The justices may want to avoid prolonging the uncertainty about the future of the health care system that this litigation unavoidably causes so long as it continues.

Like Jonathan, I also doubt that the plaintiffs will prevail on the severability question, though it's entirely possible they will win on the issue of whether the residual mandate is now unconstitutional. At the same time, I am not as confident about these conclusions as many other commentators seem to be.

The history of Obamacare litigation is littered with erroneous predictions by academics and other experts. I myself have a mixed track record in that regard.

In the original Obamacare litigation, I correctly predicted that the case on the constitutionality of the mandate would be a very close decision (at a time when many experts thought it would be a slam dunk for the Obama administration), but did not expect the administration's tax argument to succeed, and also did not expect the plaintiff states to prevail  on the Medicaid aspect of the case (even though I favored their position myself). In the present case, I was surprised by Judge O'Connor's decision to embrace the plaintiffs' severability claim, but the Fifth Circuit's reluctance to do so was much more consistent with my expectations, as was both courts' willingness to rule that the residual mandate is now unconstitutional.

Given this history, a degree of humility is in order. It would be foolish to ignore the possibility that I —and other commentators—might turn out to be wrong about some of our predictions again.

Regardless of how the case turns out, the Supreme Court's decision to take it ensures that Obamacare—and the Trump administration's support for the plaintiff states' lawsuit—will be in the news more often during the 2020 election year. Political conventional wisdom suggests that is good news for the Democrats, as Trump's and the GOP Congress' inept efforts to repeal the law have helped make the ACA's popularity great again—indeed, greater than it ever has been before.

NOTE: Although I have joined two amicus briefs in this case, the opinions expressed in this and other posts about it reflect only my own views, not necessarily those of the other scholars who joined the briefs.

This is also a good place to point out that I did not join these briefs because I am a fan of Obamacare. Much the contrary. I authored an amicus brief against the Obamacare individual mandate in the initial 2011-12 challenge to its constitutionality, and also wrote a coauthored book and various articles arguing that it and some other parts of the law are unconstitutional.