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Appeals Court Considers Obamacare Constitutionality

August 30, 2019

A three-judge panel of the U.S. Court of Appeals for the Fifth Circuit is deciding the constitutionality of the 2010 Affordable Care Act (ACA) after hearing 90 minutes of arguments in a packed courtroom in New Orleans.

The panel will determine whether a federal district judge in Texas was correct in striking down the ACA because Congress eliminated the individual mandate penalty when it passed the Tax Cuts and Jobs Act of 2017. Nineteen states joined Texas in a February 2018 lawsuit arguing the ACA was no longer constitutional because the tax enforcing the mandate was central to the U.S. Supreme Court’s decision declaring parts of the law constitutional.

In December 2018, Judge Reed O’Connor agreed. In March 2019, the U.S. Justice department, which was defending the law at the trial level, told the appeals court it would not be challenging the decision. That left 21 states supporting the ACA to defend the law. The states are known as “state intervener-defendants” and were given court permission to defend the law during and after the trial court stage. 

Decision Hinged on Tax

The road to New Orleans began in June 2012 when Chief Justice John Roberts, in a surprise move, declared the individual mandate a tax that Congress had constitutional power to impose. If it was not a tax, the mandate would have violated the Commerce Clause, the majority of justices stated, and the ACA, widely known as Obamacare, would have been unconstitutional.

The current case hinges on whether the law can stand without the tax.

“If you no longer have the tax, why isn’t it unconstitutional?” asked Judge Jennifer Walker Elrod during oral arguments in New Orleans on July 9.

Big Issue: Severability

Texas and the 19 states argue the individual mandate cannot be “severed” from the rest of the statute and the law must therefore be struck down in its entirety. The Court frequently declares only parts of a statute unconstitutional, leaving the rest in place, “severing” the unconstitutional part.

On July 8, the U.S. Department of Justice filed notice with the Fifth Circuit stating the Trump administration agrees with the plaintiffs that the individual mandate is unconstitutional and non-severable and thus the entire ACA is unconstitutional.

Matter of Interpretation

Douglas N. Letter, attorney for the U.S. House of Representatives, argued for severability.

Letter told the appeals panel “the burden is on the other side to show Congress wanted this entire statute to be struck down.”

Judge Kurt Engelhardt, a Trump appointee, asked Letter twice why there was no Senate attorney at the hearing making that case if Congress really intended to keep the rest of the ACA after it eliminated the individual mandate penalty.

“What the constitutionality of the mandate really comes down to is how someone reads Chief Justice Roberts’ opinion in NFIB,” said Aaron Barnes, an attorney with the Texas Public Policy Foundation’s Center for the American Future.

“Those opposing [the] suit want to cherry pick quotes out of context, such as saying the provision offers people a ‘lawful choice,’” said Barnes. “But the Chief Justice only uses the ‘choice’ language when discussing the Taxing Clause, which no longer applies because the penalty now raises no revenue.

“In the part of the opinion that addresses the Commerce Clause, Roberts couldn’t be clearer: The individual mandate is just that, a mandate,” said Barnes.

Reading the Tea Leaves

Two weeks before the oral arguments in New Orleans, the Fifth Circuit Court threw a monkey wrench into the debate by requiring the parties on both sides to submit supplemental briefings on who had legal standing to appeal O’Conner’s lower-court decision.

Georgetown University health insurance reforms expert Katie Keith told Voxthe appellate decision could ride on this issue.

“Judge O’Connor’s decision didn’t address the standing of the plaintiff states and relied only on the standing of the two individuals [who joined Texas].” Keith said. “His conclusions on standing have been highly criticized, and there’s prior Fifth Circuit precedent on this issue that O’Connor largely dismisses.”

Whichever side loses in the Fifth Circuit is expected to appeal to the Supreme Court, where a decision would likely be handed down in late 2020 or early 2021.

 

Bonner R. Cohen,  Ph.D.,(bcohen@nationalcenter.orgis a senior fellow at the National Center for Public Policy Research and a senior policy analyst with the Committee for a Constructive Tomorrow (CFACT).

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Bonner R. Cohen is a senior fellow with the National Center for Public Policy Research, a position he has held since 2002.
bcohen@nationalcenter.org