A Mandate or a Choice?

Solicitor General Hawkins's exchange with Justice Kagan illustrates the foundational disagreement about what NFIB held.

NFIB v. Sebelius is more than eight years old. To this day, a disagreement exists over what precisely the case held. Did NFIB hold that the ACA provides people with a lawful "choice" to purchase insurance or pay a tax? Or did NFIB hold that the ACA imposes an unconstitutional mandate that could be saved by reading the statute as giving people a lawful "choice" to purchase insurance or pay a tax? During oral argument in California v. Texas, Justice Kagan took the former view. And Texas Solicitor General Kyle Hawkins took the latter view.

Consider this colloquy:

JUSTICE KAGAN: Yes, Mr. Hawkins, continuing on, on the merits, I --I'm not sure I understand the position. In NFIB, we held that the ACA --that the ACA was not an unconstitutional command. So I would think that that has to be the starting point. Now, since then, there has been the change --this change, and --and --and --and in this change where Congress reduces the penalty to zero, Congress has made the law less coercive. So how does it make sense to say that what was not an unconstitutional command before has become an unconstitutional command now, given the far lesser degree of coercive force?

MR. HAWKINS: Well, Justice Kagan, I --I'd like to start with the premise of your question about the holding of NFIB. That holding is an alternative reading of the statute, a savings construction, predicated on the fact that at the time the individual mandate could possibly be read as glued together with the penalty provision to -

JUSTICE KAGAN: Well, I think you have to --excuse me, if I might interrupt, General. I think you have to accept that holding, because that holding is what allowed the ACA to remain in existence all this time. I mean, so, however it was, that it was four plus one and what exactly that one said, the holding of the Court was that the ACA was not an unconstitutional command.

MR. HAWKINS: And --and we would submit this Court is not bound by that holding today because the underlying predicate of that holding is no longer in the United States Code today. When Congress--

JUSTICE KAGAN: Well -- the only thing that's changed is something that made the law less coercive, is what I'm suggesting.

MR. HAWKINS: Well, Your Honor, what -

JUSTICE KAGAN: If you make a law less coercive, how does it become more of a command?

MR. HAWKINS: Well, Your Honor, the law was always best read as a command, as III-A of the Chief Justice's opinion makes clear.

JUSTICE KAGAN: --you're just disputing the premise of what we held in NFIB, which has, you know --which I --I don't think you can dispute, but let me go on.

Kagan said that Hawkins had to "accept that holding" and he could not "dispute" the premise of NFIB. Hawkins disagreed with Kagan's reading of the case. The entire case turns on this colloquy. If Kagan is right about NFIB, this case should be dismissed outright. Most people who say the case is frivolous take the Kagan view. But if Texas is right, then Texas should prevail on the merits. I have held Texas's view since 2012, but admit I may be wrong. And the Cato Institute brief articulated this position. Thankfully, Kagan is not the arbiter of NFIB. The Chief Justice may be the only person who can adjudicate this dispute. Indeed, I think that the Chief got a little miffed at how former SG Verrilli characterized NFIB.

I will have much more to say about the case when I have had time to fully digest the transcript.

Comments

[Jimmy the Dane]

(Man with gun pointed at me:) You have a choice to hand over your wallet, I'm not forcing you...

[Sebastian Cremmington]

^^^this comment is proof Trump is by far the best Republican. In Trump’s best state of West Virginia Obamacare is very popular and Trump signed the Democrats’ coal miners union pension fund bailout to help out not only the coal miners but their communities.

David Perdue is the true personification of the Republican Party, a man who spent his career creating jobs in China and then is made CEO of a dollar store company in order to create more Chinese jobs and then exploit the carnage left behind by selling the poor saps off brand “beef” stew made with Chinese stray dog meat! #MASA!! Make America Shitty Again!!

[Josh R]

Did NFIB hold that the ACA provides people with a lawful "choice" to purchase insurance or pay a tax? Or did NFIB hold that the ACA imposes an unconstitutional mandate that could be saved by reading the statute as giving people a lawful "choice" to purchase insurance or pay a tax?

Is there a substantive difference in these two options? Either way, the Court will interpret the statute as a choice.

[Bubba Jones]

It's a difference in path, not in outcome. Was it always a choice, or did SCOTUS deem it to be a choice?

The outcome remains that the ACA is a lawful choice.

Given that ACA is a lawful choice, then it is even less coercive now.

Given that congress made the affirmative choice to zero the mandate rather than repeal it, it seems ludicrous for SCOTUS to do anything other than ratify that view.

[bernard11]

Is there a substantive difference in these two options?

No.

[Kazinski]

Kagen is trying to have her cake and eat it too. She's trying to say that a mandate was never struck down, because it was a tax not a mandate.

But there were 5 votes holding a mandate unconstitutional, and 5 votes saying that it could be saved ONLY by construing it as a tax.

I'm hoping that Roberts has learned a little bit of a lesson about being too cute. Perhaps the opinion can dismiss the suit on standing because NFIB struck the mandate dead, leaving no possiblity of injury. Or strike the mandate dead, and say that that provision is severable.

I personally do not think any legislation should be severable. But I'm not going to win that argument.

[Josh R]

I disagree that Kagan is saying a mandate was never struck down. Also, the holding was it could be saved by construing it as a tax, but the holding was not that was the only way to save it.

[ReaderY]

Kagan could easily be wrong and the plaintiffs still lose on standing

Perhaps Congress intended to command rather than give advice. But Article III standing is based on the objective existence of a concrete injury, not subjective intent. It just doesn’t matter what Congress intended subjectively. No injury, no standing, no case.

[Brett Bellmore]

I don't think there's any question about whether they intended to command in the original instance: They literally called it a "penalty", that is NOT the language of choice. That's the language of command.

You can certainly argue that in zeroing out the penalty, the later Congress converted the mandate into a choice. Except that the remaining language is still the language of command: "Requirement to maintain essential coverage." "An applicable individual shall" It goes on and on in this vein; No person not engaged in motivated reading would read this to provide you with a choice. It's a command.

So it absolutely is a command, and the question is, who has standing to challenge it. Presumably nobody who, failing to obey the command, would see no consequences.

Who would face consequences, potentially, for failing to comply with a command in a law whose penalty had been reduced to zero?

I suppose you'd have to go looking for someone where the consequences would flow from some other law or obligation. Somebody on parole, who might go back to jail if they were to break a law. Somebody in a profession with good conduct requirements. I'm sure you could find somebody, even if it took a set up job.

[Brett Bellmore]

Thinking a bit more, I can see one more argument for standing.

The ACA mandates this action, it is illegal to refrain from it.

Currently, the penalty for being found to have refrained is zero.

Hypothetically, Congress could restore that penalty. Set it at $1,000 instead of the current $0.

Now, the tricky thing here is that, if the Court had acknowledged that the penalty for violating the mandate WAS a "penalty", it would have been subject to the ex post facto clause. Congress could not, today, subject you to a penalty of $1,000 for having violated the mandate last year, when the statutory penalty was $0.

But the Court did NOT acknowledge that it was a penalty. The Court construed it to be a tax. Taxes are not subject to the ex post facto clause. So, Congress could, constitutionally, get vengeful, and subject everybody who didn't comply to the new penaltytax for their prior years of non-compliance.

Upholding the mandate, even at zero penalty, is causing everyone subject to it to accumulate potential liability.

Now, I think this is a bit goofy, but not nearly as goofy as Roberts calling the ACA's penalty a tax, even though the law came right out and said it was a penalty.

[Sebastian Cremmington]

At its core the individual mandate is a CBO trick...and Obama irresponsibly supported its inclusion (after vocally opposing it while running) so as to make the enrollment numbers look bigger for his re-election campaign.

Furthermore, because Republicans used ithr repeal of it during reconciliation to get more tax cuts the Court should repeal the related specific tax cut...but because this case is so absurdly dumb I bet the Republican justices just ignore that inconvenient fact. 😉

[Kazinski]

On what possible statutory or constitutional grounds could the supreme court strike the zeroing out the ACA mandate "tax".

Have you completely given up on pretending the Supreme Court should follow the constitution and the law, and they should just implement your policy preferences with whatever fig leaf they can come up with?

[ReaderY]

But Congress next year could pass a retroactive tax on brushing ones teeth or doing anything not currently taxed. It’s allpossible. But the possibility that it might do somethng next year - a tax or anything else for that matter - and give it retroactive effect, doesn’t give me standing to sue this year.

[Brett Bellmore]

Yes, that's part of the goofiness, reading the ex post facto clause as only applying to criminal laws, not ALL laws with retroactive application.

But there IS a difference between the mandate, and your hypothetical tax on not brushing your teeth: The mandate is actually an existing law.

[Sarcastr0]

Invalidating current laws based on hypothetical different future laws is a bold legal argument.

[Brett Bellmore]

Nah, just demonstrating standing based on the law creating jeopardy. Wouldn't get you anywhere on invalidating it, just get your foot in the door at the court.

[Tilted]

"I suppose you’d have to go looking for someone where the consequences would flow from some other law or obligation. Somebody on parole, who might go back to jail if they were to break a law. Somebody in a profession with good conduct requirements. I’m sure you could find somebody, even if it took a set up job."

But, according to NFIB v Sebelius (specifically section IIIC of Chief Justice Roberts' opinion, with 4 justices concurring), one isn't breaking the law if they fail to have coverage. If they make the shared responsibility payment (which is now $0), they are in full compliance with the law. There are no negative legal consequences.

I think a plaintiff has to establish standing based on that reality, as dictated by NFIB v Sebelius. I don't think they should be able to successfully argue, effectively, that... they have standing to challenge the constitutionality of the individual mandate because... if they win their challenge then it will no longer be a lawful choice to not have coverage (because the mandate and SRP will have been reinterpreted based on the tax having been zeroed out) and thus.... they might suffer harm from not complying because they will be doing something illegal.

As it is, they aren't doing anything illegal. So they shouldn't suffer harm based on their doing something illegal. So they shouldn't have standing to challenge the mandate in an attempt to have it reinterpreted such that not having coverage would amount to doing something illegal.

[TwelveInchPianist]

"But, according to NFIB v Sebelius (specifically section IIIC of Chief Justice Roberts’ opinion, with 4 justices concurring), one isn’t breaking the law if they fail to have coverage. If they make the shared responsibility payment (which is now $0), they are in full compliance with the law. There are no negative legal consequences."

But that construction only makes sense if the shared responsibility payment is non-zero.

[Brett Bellmore]

NFIB v Sebelius doesn't make sense at any value of the "shared responsibility payment", because it isn't just the penaltax making it mandatory. It's a "requirement" to maintain coverage, not "option". Applicable individuals "shall", not "may", maintain it. The contribution is "required".

There is no reasonable way to interpret this language as giving you a choice. Roberts exposed himself as a hack with that ruling.

[Josh R]

How about a new construction that the mandate is hortatory, and thus doesn't need an enumerated power, when the penalty is zero?

If you don't accept that construction, then we are left with the illogic that the five classes of people who were exempt from the penalty have from day one been violating the law by not carrying insurance, while everyone else who does not carry insurance but pays the penalty is not violating the law.

[Tilted]

We’re talking about standing. And that construction is in force in the reality in which the plaintiff needs to demonstrate standing - i.e., they need to demonstrate, among other things, an injury in fact that is concrete and particularized, and actual or imminent rather than conjectural or hypothetical.

The earlier post suggested that injury might follow somehow from someone (e.g., a parolee) breaking the law by not having coverage. But in the reality in which they need to demonstrate standing, they aren’t breaking the law by not having coverage.

[Mike Adamson]

It's good to have choices

[Bubba Jones]

I think this just proves that lawyers are financially illiterate.

A tax of $0 is still a tax. $0 is a number.

[wnoise]

Correct.

[Stephen Lathrop]

Bubba, if zero is a number, why can't you divide by it?

[TwelveInchPianist]

Kagan: "If you make a law less coercive, how does it become more of a command?"

From Sebelius: "The Federal Government may enact a tax on an activity that it cannot authorize, forbid, or otherwise control."

So the question is not to what extent the command is coercive, it's to what extent the coercion raises revenue for the government. So the feds could tax you $10000 for not buying health insurance, but not make you do an hour of community service for not buying health insurance, even though the former is more coercive than the latter.

But the fact that there's no penalty at all means that there's no need for courts to redress it.

[Sarcastr0]

That's a misreading.

Revenue need not be the purpose of every exercise of the taxing power.

[TwelveInchPianist]

"That’s a misreading.
Revenue need not be the purpose of every exercise of the taxing power."

No, you're misreading. If you read carefully you'll see that the words "purpose" or "every" are not in my post.

[Sarcastr0]

Then who cares to what extent revenue is raised for the government? Could be lots, could be little, could be none. It's not material.

[Brett Bellmore]

There's Supreme court precedent to the effect that a measure must be capable of raising at least SOME revenue, to be constitutional as an exercise of the taxing power.

[TwelveInchPianist]

All I'm saying is that the "coercion" has to come in the form of taking your money in order to be an exercise of the taxing power.

[Sebastian Cremmington]

Per the CBO the individual mandate COST $300 billion over the amount of revenue it raised.

[TwelveInchPianist]

Sure. It doesn't have to raise net revenue, that is correct.

[Armchair Lawyer]

Gosh...

Imagine if the government just decided on a $100,000 tax per incidence of sodomy. That wouldn't possible be illegal. It's just a tax.

[TwelveInchPianist]

Sigh. It doesn't say that the government can tax any activity that it can't forbid.

[Josh R]

From NFIB

in Drexel Furniture, we focused on three practical characteristics of the so-called tax on employing child laborers that convinced us the “tax” was actually a penalty. First, the tax imposed an exceedingly heavy burden—10 percent of a company’s net income—on those who employed children

Thus, there is a threshold question of the degree of coercion and I doubt a tax of $10,000 would pass muster.

[Don Nico]

What makes sense is denying standing and being done with the matter.

[bernard11]

But doesn't that leave open the possibility of other "creative" ways to seek standing?

We know that it's possible to find judges who will clear the path to SCOTUS for further challenges.

[Ruqt]

Didn't anyone else listen to Justice Kagan question Verrilli on standing:
She elicited government has not taken a position; and
she referred to contrary to long standing policy, explosion of cases,
which made Verrilli react as a scolded schoolboy.
Will one or more "conservative" justices recognize that an explosion of cases is not a desired result? I say, yes; human nature.

[bernard11]

Leaving semantics aside, it seems to me that one difference between a penalty and a tax is that paying a penalty does not authorize you to continue doing what you were doing.

If you are stopped for speeding you don't get to say, "I paid a fine for speeding last month, so I'm good until the end of the year." Similarly, if a factory is fined for violating emission rules, or safety standards, or whatever, that doesn't authorize continued violations.

But the payment for not having insurance does cover you for the year. Indeed, you don't even pay it until the year is over. It's more in the nature of a license fee than a penalty.

Of course, all this is pointless with the fee at zero. It beggars belief that someone could claim that a $.01 fee would make the mandate constitutional, whereas a zero fee invalidates it.

[Brett Bellmore]

I would say that neither made it constitutional, because Congress simply lacked any enumerated power to compel economic transactions, let alone, as here, intrastate transactions.

THAT was the ACA's original sin: Compelling you to purchase something whether you wanted it or not. The "broccoli mandate" argument.

[Sebastian Cremmington]

It’s been gone a while...has your life improved??

[Brett Bellmore]

I was actually worrying more about "Cadillac tax", but that got repealed last year. No, the mandate offended me on an ideological level, but being commanded to do something you were already doing has little in the way of practical consequences.

Other features of the ACA did significantly degrade my insurance coverage, and increase the cost.

[Sebastian Cremmington]

The Cadillac Tax was a conservative idea. The 2010 was the New Deal Democrat crafted employer based health care system which was suboptimal for my family...so you are on the side of liberalism with respect to health care.

[Brett Bellmore]

Democrats like to pretend the whole thing was a conservative idea. Which goes to show how proud they are of it.

[Sebastian Cremmington]

Nope, it was actually a conservative idea. If you want to get health care costs under control it makes sense to treat health care benefits like we treat salary.

[bernard11]

Nonsense.

First, I personally think the N&P clause works, but leaving that aside, we routinely use the tax code to create incentives for all sorts of things and nobody thinks twice about constitutionality.

There's no substantive difference here. You can throw around words like "compel" all you want, but they don't get you anywhere. "Buy health insurance and you pay tax than you will if you don't." No different than "Expand your R&D and pay less tax than if you don't."

That the whole thing isn't phrased to suit you doesn't change the substance.

[Brett Bellmore]

"we routinely use the tax code to create incentives for all sorts of things and nobody thinks twice about constitutionality."

Well, nobody who matters, anyway, at this point.

Step 1: We obviously can't do that.
Step 2: But we can do this, which has some of the same effects.
Step 3: We can do things that have the same effect, so who cares what we say we're doing?
Step 4: Where did you get the crazy idea we can't do this?

We're at step 4 now, enumerated powers doctrine is dead.

But now we're pioneering new territory: Erasing the differences between taxation and penalties, so as to cut the judiciary out of the loop.

Step 1: You can't penalize people without due process.
Step 2: But you can tax them, which looks a lot like a penalty.
Step 3: Who cares if we called it a penalty, when it has the same effect as a tax?
Step 4: Of course we can penalize people without due process, are you crazy?
Step 5: (Coming soon.) We can offer people a choice of paying a fine or spending time in jail. Since we can fine them, and they're volunteering to go to jail instead, no due process.
Step 6: We can crank up the fine to the point where almost everybody will chose jail.
Step 7: Why offer them a choice when nobody (who matters) is picking the fine?
Step 8: Where did you get the crazy idea we can't imprison people without trials?

Am I not allowed to object to this progression before the last step?

[bernard11]

Couple of leaps there, Brett.

Do you contend that the various business and personal tax credits in the Internal Revenue Code are unconstitutional?

When did due process disappear? (Step B4)

When did paying a small extra tax become equivalent to being imprisoned? (Step B5)

No distinction between penalties (pay up and stop what you're doing) and taxes (pay up,unless you're doing X).

Lots of slippery-slopeism.

[Brett Bellmore]

My point is that all slopes become slippery if you refuse to regard distinctions as important. And eventually people stop thinking twice about the constitutionality of actions they'd at one time have admitted were clearly unconstitutional.

Congress enacted the ACA with a penalty clause. It doesn't constitutionally have the power to penalize inaction. But Roberts had to take step 3, and now you're firmly at step 4, and refusing to think about what the next steps will be.

But the slope IS slippery, and we haven't reached bottom yet.

[bernard11]

all slopes become slippery if you refuse to regard distinctions as important.

Which is a giant economy-sized "if."

[Stephen Lathrop]

Brett, when my son was in elementary school, he encountered a bad substitute teacher. She threatened to punish the entire class—by suspending recess—if any students misbehaved. My son was both outraged and terrified.

Reasoning the way you do (and you do it all the time) my second-grade son concluded that:

1. If someone else misbehaved, he was innocent.
2. If he was innocent, but could still be punished, then justice was powerless to protect him.
3. If justice was powerless to protect him, the teacher could do anything, and get away with it.
4. If the teacher could do anything and get away with it, then she could murder him, and nobody would object.

That's you in a nutshell. My son got over it.

[Brett Bellmore]

The only reason she couldn't murder him and get away with it, is because at some point people refuse to follow the logic. Not because the logic doesn't lead there. And there would be a heck of a lot of people who didn't get genocided in the 20th century if you could rely on people not following the logic.

If you're going to refuse to follow the logic at some point, why not do it at the first step?

[bernard11]

If you’re going to refuse to follow the logic at some point, why not do it at the first step?

Because it's not "logic."

Among other things, as I pointed out, we are not erasing the distinction at all. You are simply playing word games.

Also, I don't see where due process comes into it. You have all sorts of ways to challenge your taxes. You can go to court, of course, but there are even steps you can take before you do that.

[Allutz]

The problem for Mr. Hawkins here is he has to avoid insulting the Chief Justice when the appropriate response to all these questions is, "NFIB was a trash decision that makes no sense."

[Brett Bellmore]

Spot on.

[TangoDelta]

It strikes me that the death penalty would require that someone, at the command of the government, kill another person. How does that law become less of a command if we don't coerce people to kill because the government wills it? See conscientious objector.

[bernard11]

Who is commanded? No one.

I don't think executioners are drafted.

[Pacific]

Ten years of different ways to say “we hate health care.”

[ReaderY]

What I don’t understand about the standing argument is the numerous precedents thaf have held that absent not just a penalty but a concrete, particularized likelihood of enforcement, there is no standing to sue. Poe v. Ullman was occassionally mentioned. But for the most part, it seemed like most of the litigants were going as if this were a matter of first impression.

I would expect oeople arguing in the Supreme Court to at least acknowledge the existence of precedents against them and make some sort of argument that they should be overruled, not simply pretend they don’t exist.

I think the plaintiffs case depends on pretending the court’s precedents don’t exist and hoping nobody remembers and asking about them. It’s a bit like Monty python’s “Stake Your Claim.”

https://m.youtube.com/watch?v=3WaumqE7gug

[Mike Hansberry]

The holding was that the penalty can be read as a tax and as such is within Congressional authority under the taxing power. Four justices claimed that was a straightforward reading of the act (after claiming that the penalty was well within the commerce power). One justice said reading the penalty as a tax required a saving construction to reach that view -but he did reach that view.

PPACA mandated persons to make a choice to pay X or pay Y. The choice provided does not negate the mandate. SCOTUS struggled only with what to call it: a penalty for failure to meet a regulation of commerce or a tax for failing to have insurance while earning a living.

Who can forget the Dems claim in Obamacare that they control our economic decisions? Apparently a whole lot of people.

From PPACA:
EFFECTS ON THE NATIONAL ECONOMY AND INTERSTATE
COMMERCE.—The effects described in this paragraph are the following:
(A) The requirement regulates activity that is commercial and economic in nature: economic and financial decisions about how and when health care is paid for, and when health insurance is purchased

Judge Gladys Kessler (Mead v. Holder):
For the foregoing reasons, the Court finds that Congress had a rational basis for its conclusion that the aggregate of individual decisions not to purchase health insurance substantially affects the national health insurance market. Consequently, Congress was acting within the bounds of its Commerce Clause power when it enacted § 1501

Justice Ginsberg et al (NFIB):
First, Congress has the power to regulate economic activities “that substantially affect interstate commerce.” Gonzales v. Raich, 545 U. S. 1, 17 (2005). This capacious power extends even to local activities that, viewed in the aggregate, have a substantial impact on interstate commerce. See ibid. See also Wickard, 317 U. S., at 125 (“[E]ven if appellee’s activity be local and though it may not be regarded as commerce, it may still, whatever its nature, be reached by Congress if it exerts a substantial economic effect on interstate commerce.”

(and)

Given these far-reaching effects on interstate commerce, the decision to forgo insurance is hardly inconsequential or equivalent to “doing nothing,” ante, at 20; it is, instead, an economic decision Congress has the authority to address under the Commerce Clause.