California v. Texas: Another Challenge to the Affordable Care Act

In 2012, the Supreme Court decided NFIB v. Sebelius, which involved the Patient Protection and Affordable Care Act (“Obamacare”), originally passed by Congress in 2010. Specifically, its “individual mandate” (Section 5000A) has been highly controversial because it forced many Americans to either buy a minimum amount of health insurance or pay a “shared responsibility penalty.” In NFIB, the Court invalidated the individual mandate under Congress’s commerce powers but upheld it as part of Congress’s taxing powers.

In 2017, a Republican-controlled Congress set the individual mandate to zero dollars but left the rest of the ACA intact. Texas and other states sued, generating another constitutional challenge to the individual mandate. They additionally argued that if it is unconstitutional, then the entire ACA is invalid because it is impossible to sever the individual mandate from the rest of the law. California and other states have defended the ACA in response. 

Oral arguments for California v. Texas were heard on November 10, 2020, but the Supreme Court has not yet released a verdict. Arguments have centered around three main questions- whether the plaintiffs have standing, whether the individual mandate is unconstitutional, and, most significantly, whether the entire ACA is invalid if the individual mandate is unconstitutional. 

The Arguments 

The Plaintiffs do NOT have Standing: The Petitioners (California) argue that in setting the individual mandate to zero, Congress did not change the structure of 5000A but instead made it unenforceable. An unenforceable provision is inoperative which implies that violations of the law cannot occur. 

Based on past Court precedent (see Poe; American Book Sellers; Lujan) there must be a legitimate enforcement threat and plaintiffs must present a specific injury. Texas has not adequately demonstrated material harm and Congress has ensured that 5000A cannot be enforced. The 2017 CBO report did state that even with the individual mandate set to zero, a small number of people will enroll in order to comply with the law. However, it was unspecific and lacked supporting data. Furthermore, any paperwork burdens will remain regardless of the constitutionality of 5000A because this paperwork is necessary for other provisions as well. 

If the Court rules that the plaintiffs do have standing, it will create a massive loophole whereby any individual will be able to challenge provisions in statutes on the basis that they are regulated or harmed by other parts of the statute without adequately showing that they have been harmed by the provision in question. 

The Plaintiffs DO have Standing: The Respondents (Texas) argue that plaintiffs suffered an injury because they are currently unable to obtain their pre-ACA insurance plans. Additionally, in both 2008 and 2017, the CBO stated that the mandate would lead to Americans signing up for insurance who would not have otherwise done so. Even if only one person signs up (which is likely), states incur at least one dollar of injury.

There is also a paperwork burden on the states. Even though these forms are independent of 5000A, it is reasonable to conclude that if the individual mandate is deemed unconstitutional the federal government will reduce this burden. 

Lastly, ruling that the plaintiffs have standing in this case will not create loopholes because it is very difficult to exhibit the textual evidence necessary to overcome a presumption of severability.

The Individual Mandate IS Constitutional:  Petitioners state that the Court, in NFIB, characterized 5000A as a choice between buying a minimum amount of insurance or paying a tax. Congress used this structure to set the tax to zero and make 5000A inoperative. Therefore, it is unreasonable to conclude that Congress created a command deemed unconstitutional in NFIB, given their knowledge of the ruling. Congress also informed Americans that they were attempting to make this provision inoperative rather than impose a command. Additionally, Congress zeroing the tax can be somewhat analogized to congressional tax laws that suspend a tax for some years. 

The Individual Mandate is Unconstitutional:  Respondents argue that the individual mandate is a command to purchase the Government’s prefered health insurance. III-A of Chief Justice Roberts’s opinion in NFIB stated that the best reading of the individual mandate is as a command. 

However, in NFIB, the individual mandate was deemed constitutional because, as described in III-B and III-C of the Chief Justice’s opinion, it could be read as a tax due to its revenue-raising function (which is an essential feature of a tax). In California v. Texas, it can no longer be deemed a tax because it does not raise any revenue and cannot raise revenue. Furthermore, the language of the provision uses the word “shall” as opposed to words of encouragement such as “should” and includes exemptions for certain groups which would make little sense if it was truly just a request. Therefore, it is a naked command and falls outside of the scope of Congress’s enumerated powers. 

The individual mandate also does not read like other congressional suspended or delayed tax laws. If every law can be defended as a potential tax or one that Congress may choose to enact in the future, there will be no functional limit on congressional power. 

The Individual Mandate IS Severable: The Petitioners argue that even if the individual mandate is unconstitutional, the proper solution is to hold it unconstitutional but allow the rest of the ACA to remain. There is a strong presumption of severability (Barr v. AAPC) especially because there is no inseverability clause.

It is also clear that Congress does not want the entire ACA invalidated given that efforts to entirely repeal it failed in the Senate. It should not be assumed that Congress violated their constitutional oath by voting to set the individual mandate to zero in order to strike down the entire ACA through a theory of inseverability. 

While the 2010 Congress believed the individual mandate to be essential to the rest of the ACA, they have changed their view based on more recent CBO findings. Congress could not have truly viewed the tax as essential in 2017 because they eliminated it, and congressional members and the President all praised this functional “repeal” of the individual mandate and the new flexibility citizens are afforded as a result.

The Individual Mandate is NOT severable: The Respondents argue that the Obama Administration’s DOJ referred to U.S Code 18091 (the findings that the individual mandate is essential) as a functional inseverability clause and Congress emphasized its essential nature when passing the ACA in 2010. In 2017, Congress could have removed the legislative findings in 18091 but chose not to. Consequently, the individual mandate remains essential and if it is unconstitutional then the entire ACA is invalid.  

Implications 

The Affordable Care Act received a lot of criticism when it was first passed, but there is no doubt that the implications of repealing it over a decade later are much more significant. Since its passage, over twenty million Americans have received health care coverage and thirty-six states have expanded Medicaid, increasing enrollment by sixteen million. But, states that have expanded Medicaid could lose significant federal funds if the ACA is repealed. All of this is likely to lead to millions of Americans losing their coverage. 

Of course, the ACA has its flaws, including higher deductibles and premiums, but regardless of whether the ACA is truly sound policy, its repeal, either by Congress or the Supreme Court, will have notable consequences, especially if there is no replacement plan.

Megan Gerges is from Warren, NJ, studying Political Science and Psychology.

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