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Affordable Care Act

Thoughts on Today's Oral Argument in California v. Texas—the Obamacare Severability Case

It is not clear how the Court will ultimately resolve the case. But it is obvious that a majority of justices oppose invalidating the entire Affordable Care Act.



Earlier today, the Supreme Court heard oral arguments in California v. Texas, a challenge to the legality of the Affordable Care Act filed by a coalition of Republican-controlled state governments, and in large part supported by the Trump administration. I described the history of the case and the issues at stake here.

To briefly summarize, the 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.

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. This "severability" issue is the key to the case as a whole.

Much remains uncertain after today's oral argument. We don't yet know how exactly the Court will resolve the case. But the one thing that is clear is that a large majority of justices (at least six, by my count) reject the plaintiff states' position on severability. Thus, whatever happens to the residual individual mandate, Obamacare as a whole is going to survive.

The three liberal justices are near-certain votes against the plaintiffs, and nothing they said today should change that impression. As co-blogger Jonathan Adler points out, Chief Justice John Roberts and Justice Brett Kavanaugh also expressed great skepticism about the plaintiffs' severability theory. At one point, Roberts said that it is "not our job" to strike down the ACA as a whole, merely because the residual mandate might be unconstitutional. Kavanaugh said that the severability issue in the case is "rather straightforward"  and repeatedly emphasized that it is clear that, if the mandate is now unconstitutional, the Court should just strike down that provision and leave the rest alone.

I would add that Justice Samuel Alito also seems hostile to the positions espoused by the plaintiffs and the Trump administration. In an exchange with administration lawyer Jeffrey Wall, he noted the "sea change" in the role of the mandate since the original enactment of the ACA in 2010. In the original 2010 version of the law, "there was strong reason to believe that the individual  mandate was like a part in an airplane that was essential to keep the plane flying. If the part was taken out, the plane would crash." Thus, it was inseverable from the rest of the law (a conclusion Alito and three other conservative justices advocated in their dissenting opinion in NFIB v. Sebelius). "But now," Alito continued, "the part has been taken out and the plane has not crashed."

This plane analogy has obvious negative implications for the plaintiffs' position. If the original mandate is like a "part" that Congress itself decided to "take out," then Congress has effectively made the decision on whether it is essential to the act as a whole. That's true if you view severability as a matter of divining congressional intent (as current Supreme Court precedent requires). But Alito indicates here that he would reach the same conclusion from the standpoint of asking whether the residual mandate is objectively essential to the operation of the rest of the ACA (whether or not members of Congress thought it was). The fact that "the plane has not crashed" suggests it didn't really need this "part" in the first place.

The other three conservative justices—Gorsuch, Thomas, and the newly appointed Amy Coney Barrett—didn't really tip their hands on severability. Barrett's previously stated views—including her testimony at her Supreme Court confirmation hearings—suggest her position may be similar to Kavanaugh's. But the oral argument gave us no additional insight into her thinking on this subject. It is also not clear where Gorsuch and Thomas stand.

But it's notable that all three largely avoided the subject of severability in the questions they posed to the lawyers representing California (leading a coalition of blue states) and the Democratic-controlled House of Representatives (the parties that intervened to defend the ACA after the Trump administration refused to do so). If they have serious objections to California's and the House's severability analysis, I would have expected them to raise them in oral argument.

In sum, there is, I think, at least a 6-3 majority against the plaintiffs' take on severability, and very possibly more than that. This result was entirely predictable based on various conservative justices' previous statements on severability (as well as the very weak nature of the plaintiffs' case). I in fact predicted it myself, as did a number of other legal commentators.

It is less clear what will happen on the other two issues in the case: standing and the constitutionality of the residual mandate. If I interpret the argument correctly, I think there probably is a majority of justices inclined to conclude that the mandate is now unconstitutional, because it can no longer be considered a tax, now that it doesn't raise any revenue. For reasons I explained here, I believe that would be the right conclusion, and would set a valuable precedent for future cases (though it would have very little if any impact on the ACA).

But I admit I could be wrong on this point. It's possible that some conservative justices (as well as all three liberals) will be persuaded by the argument that the residual mandate is constitutional because it is now merely a suggestion, or simply a nullity that doesn't do anything. To my mind, that is incorrect because the text of the law still states a command, even if that command is not backed by any kind of penalty or fine. It says that "applicable individual[s] shall" purchase ACA-compliant health insurance. "Shall" is the kind of language courts generally interpret as a command.

There is nothing inherently implausible about the idea of a command not backed by a penalty. For example, like most parents, I sometimes give commands to my children in situations where they and I know perfectly well that there will be no meaningful punishment for disobedience. That doesn't mean my and other parents' statements in such cases are mere suggestions or meaningless nullities. If I tell my five-year-old that I want her to go to bed right now, it's a command that I intend for her to obey, even though it's highly unlikely she will face punishment if she procrastinates.

At one point, Justice Kavanaugh asked Texas Solicitor General Kyle Hawkins whether there are any other naked mandates in the US code that aren't backed by any penalties. Hawkins couldn't name any. I would suggest the Flag Code might be an example. One part of that code,  4 USC Section 8, outlines a variety of instructions for the care and display of the flag, such as that "The flag should never be carried flat or horizontally, but always aloft and free." This strikes me as a command, but one not backed by any threat of punishment for violators. Admittedly, however, the word "should" is a less definitive mandate than "shall." The former is more easily dismissed as a mere suggestion than the latter.

Finally, as Jonathan Adler explains, it is entirely possible that the justices will end up dismissing the entire case without reaching the merits, by concluding that the plaintiffs lack standing. Indeed, the justices spent much more time on this issue than any other. I would oppose resolving the case in this way, in large part because I am skeptical of constitutional standing requirements generally. But I admit that there's an entirely plausible argument that the plaintiffs lack standing under current Supreme Court precedent, and that a holding like this might be attractive to various justices who would like to get rid of this case without dealing with any substantive issues.

However, as Jonathan also notes, it may not be easy for the various justices interested in this issue to cobble together an opinion on standing that they can all agree on.

To me, it was striking that there was little discussion of the "special solicitude" on standing issues that the Supreme Court held applies to state governments in Massachusetts v. EPA (2007), over a vehement dissent by Chief Justice Roberts. Despite this  neglect, the justices surely realize that denying standing to the states in this case might have important implications for their ability to bring other lawsuits against the federal government. It is hard to tell whether they view such constraints as a feature or a bug. I, of course, lean to the latter view. The states should have wide latitude to challenge potentially unconstitutional federal government policies.

In sum, it is clear that Obamacare will survive yet another legal challenge. And it will do so with much less in the way of scars than it got in NFIB v. Sebelius,  where the Court limited the potential reach of the individual mandate by interpreting it as a tax (thus foreclosing some potential increases of the associated fine, which would make it large enough to qualify as a penalty that no longer offers any meaningful choice), and invalidated part of the Medicaid expansion.

The only remaining question is how the Court will preserve the ACA: by denying standing, by holding that the residual mandate is not unconstitutional, or by striking down the mandate while simultaneously ruling that it is severable from the rest of the law. We will learn the answer soon enough, perhaps within just a few months.

NOTE: I have joined an amicus brief on the severability issue in this case, along with co-blogger Jonathan Adler and several other legal scholars who were on different sides in previous ACA-related cases. The "strange bedfellows" united on this issue reflects the way in which the plaintiffs' severability argument has been rejected by most experts across the political spectrum. This is in sharp contrast to previous legal challenges to the ACA, which tended to divide experts along ideological lines.