The Volokh Conspiracy

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Why the Individual Mandate Part of the New Obamacare Case Matters

Most of the attention on the twenty state lawsuit against Obamacare understandably focuses on the "severability" issue, which could lead to the demise of the entire Affordable Care Act. But the individual mandate part could also set an important precedent.


Most of the commentary on the new anti-Obamacare lawsuit filed by twenty "red" states focuses on the severability issue, and the Trump administration's refusal to defend the the Affordable Care Act against the lawsuit. But the part of the suit challenging the constitutionality of the newly revised individual health insurance mandate is also significant. It could set an important precedent, even if its elimination would have little impact on health care policy.

The states argue that the individual mandate requiring most Americans to purchase health insurance can no longer qualify as a "tax"—as Chief Justice John Roberts ruled in the first Obamacare case in 2012, because, in the December 2017 tax reform act, Congress zeroed out the monetary fine imposed on violators. But their main goal is to use the mandate as a lever to eliminate the entire ACA, which they argue is so closely connected to the mandate that the two cannot be "severed." Like the vast majority of legal academics, I believe the states' severability argument (now, in large part, backed by the Trump administration), is weak, and might well have dangerous implications for future cases. For that reason, I joined an amicus brief signed by a cross-ideological group of law professors, including Volokh Conspiracy co-blogger Jonathan Adler, which urges the court to reject the states' position on that issue. I authored an amicus brief against the Obamacare individual mandate, and also wrote a coauthored book and various articles arguing that it and some other parts of the law are unconstitutional. But that is no reason for the courts to botch the severability issue in the present case.

But unlike most other commentators, I believe the individual mandate part of the states' lawsuit is significant entirely apart from its potential impact on the rest of the ACA. If they prevail on this issue, they would set a valuable precedent. I explained why in my initial post about the case, back in February. While the post was cited by a number of scholars and media commentators, all of them focused on my critique of the severability argument, while ignoring the points about the mandate itself. So I am reprinting the latter here, in hopes of generating more interest in this aspect of the litigation:

[T]he state plaintiffs in the newly filed case argue that the mandate can no longer be considered a tax. In the absence of a financial penalty, it no longer "produces" any "revenue for the Government." Indeed, it no longer even tries to do so. And if the mandate is not a tax and is not authorized by the Commerce Clause or the Necessary and Proper Clause (as the Court ruled in NFIB), then it is no longer within the proper scope of federal power authorized by the Constitution.

The plaintiffs are absolutely right on this point. A tax that does not require anyone to pay anything is like a unicorn without a horn. It is pretty obviously not a tax at all. In fairness, the requirement of a monetary payment was not the only circumstance that Chief Justice Roberts considered in determining that the mandate qualifies as a tax. He also claimed that several other factors were relevant, such as that the mandate did not include a scienter requirement, that the penalty was not so high as to be "prohibitory," and that those who violate the mandate were not considered to be lawbreakers if they paid the fine. But, while the requirement of a monetary payment may not have been sufficient to prove that the mandate was a tax, it surely was necessary. You don't have to be a constitutional law scholar to understand that there can be no taxation without some kind of payment.

In my view (see here and here), Roberts was wrong to conclude that mandate qualifies as a tax, even when it did impose a fine on violators. It was more akin to a penalty imposed for violation of a law, similar to fines imposed for violating any number of other laws, such as those banning speeding or jaywalking. But it is even more clear that the mandate cannot be considered a tax once the fine is removed and violators no longer have to pay anything….

If all this lawsuit is likely to achieve is the removal of the already essentially neutered individual mandate, one might ask whether there is any point to it. It is indeed true that such an outcome would have little or no impact on health care policy. But it would help establish an important constitutional principle: the federal government cannot use its tax power to impose mandates unless that mandate includes a monetary fine that raises some revenue for the government. Otherwise, the mandate is unconstitutional, unless it is authorized by one of Congress' other powers. Congress cannot enforce otherwise unconstitutional mandates by means other than financial penalties. Making that clear would limit the damage caused by Roberts' ill-advised ruling in NFIB, concluding that the ACA individual mandate (in its original form) qualifies as a tax. If courts conclude that the mandate qualifies as a tax even if there is no monetary fine, that might open the door to the imposition of mandates backed by other kinds of penalties.

If the mandate can qualify as a tax without requiring any payment or raising any revenue for the government, it could open the door to future mandates backed by nonmonetary sanctions, such as probation, community service, and various regulatory restrictions. Prison sentences are likely precluded by parts of John Roberts' NFIB opinion indicating that violation of a "tax" mandate cannot be backed by penalties so severe that they preclude a meaningful choice. But other types of sanctions might not be, so long as they are not considered criminal penalties (also clearly precluded by Roberts' opinion, which rules out "criminal sanctions"). In my view, Roberts' opinion should be interpreted as precluding nonmonetary "tax" penalties of any kind because it ruled that the mandate can be considered a tax at least in part because "neither the [ACA] nor any other law attaches negative legal consequences to not buying health insurance, beyond requiring a payment to the IRS." But the significance of this language would be gutted if the courts now rule that the mandate can be a tax, despite no longer requiring any kind of payment.

I hope—and very tentatively expect—that the twenty state-lawsuit will result in a decision invalidating the residual individual mandate, while also rejecting the plaintiffs' severability argument. That would be a victory for both proper severability analysis and constitutional limits on federal power.