Meanwhile, in a Texas Courtroom, Is the ACA in Trouble?

While all eyes focused on the Kavanaugh hearings (and an "anonymous" op-ed), a court heard argument in the latest ObamaCare challenge.

On Wednesday, while Judge Brett Kavanaugh was fielding questions from the Senate Judiciary Committee, a district court in Texas heard oral arguments in Texas v. Azar, the latest effort to invalidate the Affordable Care Act (ACA). Here's coverage of the argument from Politico, the LA Times, and NYT.

Filed by 20 state attorneys general, the suit claims that Congress's decision to zero out the tax penalty owed by those who fail to obtain qualifying helath insurance requires courts to invalidate the entire ACA. According to the states' argument, this is because when Congress zeroed out the tax penalty, it eliminated the factual predicate upon which Chief Justice Roberts' opinion in NFIB v. Sebelius was based. If there is nothing to be paid, the mandate does not operate as a tax, the states argue, so the mandate is no longer subject to a "saving construction" under which the mandate can be upheld as an exercise of the federal taxing power. Further, they maintain, because the mandate was a central part of the ACA, invalidating the mandate requires invalidation of the entire law. It's a clever argument, but it's also wrong, for reasons I explained in this post (and in this podcast debate). (See also Ilya's post here.)

Texas v. Azar has attracted concern because the Trump Administration has conceded large parts of the states' arguments. In particular, the Justice Department has accepted that a mandate without an accompanying tax levy is unconstitutional, and that invalidating the mandate would require invalidating the ACA's core insurance regulations requiring guaranteed issue without regard for pre-existing conditions and community rating. After all, this had been the Obama Administration's position on severability in NFIB, and the ACA contained findings suggesting the mandate was essential to the proper operation of the ACA's insurance reforms.

As a result of the DOJ filing, several more liberal states intervened in the suit to defend the ACA in its entirety. (It also prompted me to file this amicus brief with several other legal scholars representing a range of views on the ACA, as I noted in this post.)

According to the news reports linked above, Judge Reed O'Connor seemed somewhat sympathetic to the Texas argument, and pressed the blue states' attorney on why he should disregard the 2010 findings. The answer to Judge O'Connor's query is quite simple. First, the findings are just findings, not operative provisions. Second, and more important, the 2010 finding are about the law passed in 2010, not the changes Congress has made subsequently. The ACA in 2017 is not the ACA Congress enacted in 2010. It has been revised by Congress and by the Court. It is no longer the law the 2010 findings addressed. Finally, Congress chose to zero out the mandate penalty without making other changes. Whether this was because the 2017 Congress intended for the ACA to operate differently than the 2010 Congress, or because the 2017 simply lacked the votes to do more is immaterial. It did what it did. It took a tax penalty and reduced it to zero.

These aren't the only problems with the states' suit. As I explained here, there are also serious standing problems in Texas v. Azar. Inexplicably, the Justice Department did not raise standing and (according to the press reports above) it does not appear Judge O'Connor was particularly interested in them. This is a shame, as it could prolong a lawsuit that really has no legs on which to stand. After all, if the mandate is unenforced and unenforceable -- because it imposes no penalty or consequence on anyone -- how do the states (or anyone else) have standing to complain about it?

Some activist groups have tried to suggest the Kavanaugh nomination creates a risk that the states could prevail. Such concerns are groundless. First, whether or not Kavanaugh is confirmed, there are at least five votes to reject the states' claims. In order to rule in favor of the plaintiff states (or to accept the DOJ's concessions), the Chief Justice would have to reject his longstanding views of standing (as expressed most recently in Gill v. Whitford), the individual mandate itself (which he said imposes no obligation on anyone beyond any tax payment imposed), and severability (which is decidedly minimalist across the board, including in NFIB). This is not going to happen.

Even if the Chief Justice's vote were in play, there's no reason to think a Justice Kavanaugh would find the states' arguments any more appealing. First and foremost, Judge Kavanaugh has an established track record of applying the same narrow approach to severability as the Chief. He also tends to pay attention to standing and other justiciability concerns.

Writing in The New Yorker, Jeffrey Toobin claimed "there is every reason to believe that Kavanaugh" would accept the states' claims. According to Toobin, "Kavanaugh's approach to the interpretation of statutes suggests that he would rule against mandatory coverage for preëxisting conditions."

When I asked Toobin to substantiate this claim, he came up empty (both on Twitter and in an e-mail). He failed to offer any citation to any judicial opinon, any speech, or anything else from Judge Kavanugh suggesting anything that remotely aligns with the state's claims. There's a good reason for this, as Kavanaugh's approach to statutory interpretation actually suggests the opposite.

Instead of offering something from Kavanaugh's record, Toobin suggested that simply because other conservatives hate the ACA, and the Trump Administration hates the ACA, we should assume Kavanaugh would vote to knee-cap the ACA. Funny thing, then, that Judge Kavanaugh has repeatedly rejected anti-ACA claims. Not only did he believe the constitutional challenge to the individaul mandate was premature (due to the anti-injunction act), he has rejected other anti-ACA suits, including a constitutional challenge based upon the Origination Clause, a challenge to the the ACA's effect on Medicare, and a lawsuit brought by state AGs to challenge the Obama Adminstration's implementation of the law. In each of these cases, Kavanaugh applied or accepted fairly standard legal arguments and interpretations. Thus there is nothing in Kavanaugh's record to suggest would be at all sympathetic to the states' outlandish claims in Texas v. Azar.

I am on record saying this lawsuit will ultimately fail, and may never reach the Supreme Court. Indeed, the only scenario under which the states' claims get to SCOTUS is if they somehow prevail (in whole or in part) before the U.S. Court of Appeals for the Fifth Circuit -- and then the states would be lucky to get two votes. The suit is clever, but is ultimately too clever by half.

Given all of the problems in the states' case, there's little reason to believe their claims can prevail, and little reason to believe the confirmation of Kavanaugh would have any effect on the outcome of the case. The immediate question is whether the states can obtain a temporary victory in district court. On that we'll have to see.