Obamacare

Preliminary Thoughts on California v. Texas

The Supreme Court ruled the right way, but arguably for the wrong reason.

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In today's 7-2 ruling in California v. Texas, the Supreme Court turned back yet another legal challenge to the Affordable Care Act. I will have much more to say about this case later. For now, I will offer a just a few brief observations.

This case arose because, in December 2017, the GOP-controlled Congress passed a tax reform law that zeroed out the monetary penalty attached to the Obamacare health insurance mandate. But they did not repeal the mandate itself.

In  NFIB v. Sebelius (2012) 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.

After the 2017 tax reform bill eliminated the  penalty, 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. More importantly, 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. The case eventually reached the Supreme Court after a Fifth Circuit ruling that cast serious doubt on the plaintiff states' severability theory, but did not categorically reject it.

Today's result was expected based on the serious flaws in the plaintiff states' case, and the oral argument in November, which strongly suggested a majority of justices were opposed to the plaintiffs' positions on key issues. What most observers (myself included) did not expect was that the states would lose based on standing. I thought that outcome was possible, but considerably less likely than a defeat on the merits. But lose on standing they did! It's yet another example of how expert predictions on Obamacare litigation have often been wrong.

I agree with much of what co-blogger Jonathan Adler has to say about the standing ruling, but not on the bottom line. Unlike Jonathan, I believe the states did have standing (even though they were largely wrong on the merits). That said, I have to admit today's ruling is consistent with the growing trend of Supreme Court decisions limiting state standing to challenge federal policies or those of other states.

Notable recent examples include Trump v. New York, the case where a group of state and local governments challenged the Trump administration's policy of excluding undocumented immigrants from congressional apportionment counts, and – of course –  Texas v. Pennsylvania, the red state lawsuit challenging the result of the 2020 election.

I am no fan of restrictive standing rules, and I think the plaintiffs likely should have been granted standing in all three of these cases (even though I oppose their positions on the merits in two of them). But today's result is consistent with previous precedent.

Along the same lines, it is also notable that, in this case, as in Trump v. New York and Texas v. Pennsylvania, the Court didn't even bother to consider the doctrine of "special solicitude" for state standing, under the Supreme Court's 2007 decision in Massachusetts v. EPA. None of the opinions even mentioned special solicitude, though Justice Alito does briefly cite Massachusetts v. EPA in his dissent. If "special solicitude" doesn't apply to this case or has been gotten rid of entirely, it would be nice for the Court to explain why. But I have complained about this before, and it seems clear the justices don't care enough to deal with it. Perhaps no one else does either.

Today's standing ruling rightly rejected a highly dubious lawsuit. But, as I see it, the Court did so for a problematic reason. A decision rejecting the severability argument on the merits would have been preferable.

But while today's the decision does not address directly the merits of the case, much of what the majority says about standing also implies that the plaintiff states are wrong to argue that the what's left of the individual health insurance cannot be severed from the rest of Obamacare. If, as the majority emphasizes, the now-toothless mandate has virtually no impact, and other provisions of the law can continue to operate independently of it, that makes it very difficult to argue that the post-2017 version of the mandate is an essential element of the ACA as a whole.

However, today's ruling may not completely put an end to the severability challenge to Obamacare. While the Court rejected the plaintiffs' main standing theories, the justices refused to consider the argument that the plaintiff states can get standing by arguing that the real harm they suffer is that caused by other provisions of the ACA that are inseverable from the mandate. This theory was not raised by the states until very late in the litigation; so the Court declined to consider it. Potentially, the plaintiff states cold file a new case raising this theory from the outset.

But while this avenue is potentially available, much of the Court's reasoning casts serious doubt on it. If, as the Court emphasizes, the now-toothless mandate has little or no practical effect, it is hard to argue that it is inseverable from the rest of the law, or that it meaningfully causes the injuries inflicted on the states by other parts of the ACA. Moreover, the oral argument revealed that a majority of the justices are likely reject the severability argument on the merits. Thus, I am far from certain the plaintiff states will try to pursue this issue. If they do try, it is unlikely they will have much chance of success.

I will likely have more to say about these issues later today. Stay tuned!

UPDATE: The Washington Post has published my op ed about the case here.

UPDATE #2: I have made a few minor additions to this post.

 

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  1. Alito proved himself entirely lacking in principles of any kind other than a drive to be as evil as possible, once again in his dissent.

    He actually suggested taking a failed bill in the House as evidence of Congress’s intent in passing a different bill. Yes: he imported the intent of the legislators who voted for a bill that failed as the purported intent behind a different bill that succeeded. That’s right, the intent of Congress is something that was explicitly voted down.

    I don’t think you can get more lawless and results-oriented than that. The really surprising thing to me was that Gorsuch joined such nonsense.

    1. What’s evil is making people pay for other people’s health care.

      1. But you said below that you were ok with universal health care. Are you evil?

        1. As long as it’s not racially redistributive, yes.

          As written, it’ll end up being a wealth transfer from productive whites and Asians to unproductive blacks and mestizos.

          1. Any sort of universal health care system or even health insurance is radically redistributive. Most people need considerably less health care than they pay for; a few people get really serious diseases and need hundreds of thousands or millions of dollars of care–everyone else is hugely subsidizing them.

            1. That’s fine, as long as no race is disproportionately being subsidized or doing the subsidizing.

            2. I also saw “radically” when I read it the first time. No. Read it again.

          2. So wealth transfers are not evil so long as they don’t cross racial lines?

            1. This is a movement conservative blog. What did you expect?

        2. He is but for entirely different reasons.

    2. It’s pretty awesome that two Justices who are on record as opposing the use of legislative intent used the intent of a minority of the House that failed to get its way as controlling.

  2. If they do try, it is unlikely they will have much chance of success.

    UNLEASH THE KRAKEN!!!

  3. Maybe Congress could just pass universal health care and put Obamacare to bed.

    1. That is not inder the enumerated powers of Congress.

      This is a state issue.

      1. Considering all of the money necessary to fund a M4A program is being spent on health care in states like Vermont and Massachusetts AND our health care system is organized at the county/state level AND Canada’s health care system is organized at the provincial level…it makes perfect sense to implement M4A at the state level.

      2. The power to spend is enumerated.

      3. I could live with that if Congress passed a mandate requiring all the states to do it.

    2. Medicare for All makes more sense at the state level…so the fact Bernie and Warren haven’t taken the initiative to lead efforts in their respective states to implement M4A is evidence liberal state employees and liberal college professors and liberal medical professionals are satisfied with the status quo.

      1. It’s not possible to do M4A at the state level without substantial changes to the Medicare and Medicaid frameworks at the federal level (or at least waivers to the states that want to do it).

        FWIW, Bernie has been a strong advocate for Vermont adopting universal health care, so seems like your argument has a pretty faulty premise.

        1. It would take 5 years and Medicare and Medicaid would transfer over in year 5…and it wouldn’t be an issue because Romneycare involved changes to Medicaid that weren’t an issue because Ted Kennedy took the lead on implementing Romneycare.

          The governor of Vermont was critical of Bernie for not getting involved in a prior attempt at M4A.

    3. I’m okay with that as long as revenues and expenditures are split up by race, without deficits. Meaning that black health care can only be paid for with black taxes, white health care can only be paid for with white taxes, and so forth.

  4. I am far from certain the plaintiff states will try to pursue this issue. If they do try, it is unlikely they will have much chance of success.

    That depends on the definition of “success.” Was this case ever about anything but raising the profiles of the state AG’s?

  5. Liberals use the fact that the Affordable Care Act is “popular” as justification for it. But of course it’s “popular.” The people who are uninsurable get to force other people to pay for their insurance.

    It’s “popular” the same way that the “stimmy” checks were popular. People like getting free stuff, as long as they think someone else is paying for it.

  6. Congtess lacks that power either.

    You really should understand what a federal system is about.

    1. What does ‘provide for the common Defence and general Welfare’ mean?

    2. I’m not really interested in learning about what “a federal system is about” according to Michael Ejercito. What matters here is what our federal system is about, constitutionally. And constitutionally, the federal government has the power to tax and pay for health care. The alleged constitutional infirmity was never about the spending power, it was about commerce power. I’m not aware of anyone (besides you) arguing that Congress doesn’t even have spending power. And in fact that uncontroversial spending power was why a savings interpretation was appropriate in the first place. Why invalidate a law that was within Congress’s power on formalistic grounds? That would be unconstitutional, too.

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