The Supreme Court will hear oral arguments Tuesday on a challenge to the Affordable Care Act that has high stakes for the landmark law and the healthcare industry.
Oral arguments in California v. Texas will provide valuable insight into which issues the justices are interrogating most seriously, including the perspective of newly confirmed Justice Amy Coney Barrett. It’s impossible to extrapolate how the court will decide based solely on the questioning, but legal experts say the intensity with which justices scrutinize each of the following issues will offer clues.
All ears during the remotely held arguments will be on Chief Justice John Roberts, who sided with liberal justices to uphold the individual mandate as a tax in the 2012 case National Federation of Independent Business v. Sebelius, and the three new Trump appointees to the court since the last major ACA case was heard, especially Barrett and Justice Brett Kavanaugh.
The court will examine several key questions: whether the plaintiffs have standing to challenge the lawsuit; whether the individual mandate without a financial penalty can still be considered a tax; and whether an unconstitutional mandate means the rest of the law must be struck down as well.
The arguments have high stakes because the court’s decision could destabilize the framework the healthcare industry has operated under for a decade.
“It’s still a big deal, particularly with divided government. If Senate remains under GOP control and (President-elect Joe) Biden takes office, it will be difficult to get bipartisan agreement on a whole realm of health reform issues if everything is off the table,” said Richard Zall, a Proskauer Rose partner and healthcare practice chair.
Severability
If the justices focus on issues of constitutionality, it may signal some inclination to reconsider two lower-court decisions that ruled the individual mandate is unconstitutional without a financial penalty. If they turn straight to severability, it could bode poorly for the mandate’s constitutionality.
“If much of the hearing is about severability, that could be an indication that they will find the mandate to be unconstitutional and then it’s a question of how much, if any, of the ACA gets struck down,” said Georgetown University health law professor and ACA expert Katie Keith.
GOP attorneys general argue that legislative findings on the Affordable Care Act say the individual mandate is “essential to creating effective insurance markets” in tandem with guaranteed protections for people with preexisting conditions. The states characterize the phrase as signaling Congress’ intent that the individual mandate should be inseverable from the other insurance market policies.
But Yale University law professor Abbe Gluck says the legislative findings don’t constitute an inseverability clause, and Congress deliberately chose not to include one with standard boilerplate language. The findings were part of an explanation of Congress’ authority under the Commerce Clause to implement the individual mandate, which the Supreme Court found invalid in 2012.
“Those findings have no relevance anymore, and it’s really misleading to say otherwise,” Gluck said.
GOP states are relying on finding some textual reference because the practical argument that the individual markets cannot function without an enforceable individual mandate is difficult to substantiate given the markets’ stability since the mandate was zeroed out, experts said.
“The individual mandate was not as essential as people thought it would have been. Subsidies as a carrot are doing a lot of the heavy lifting,” said Cynthia Cox a Kaiser Family Foundation vice president and its ACA program director.
Congressional intent
As the court gained another originalist with Barrett, it will be worth watching whether the justices probe the nature of congressional intent, and whether they examine it in 2010 when the ACA was originally passed or also consider the reasoning for lawmakers’ actions in 2017 when they zeroed out the mandate.
The federal government said in its brief to the Supreme Court that “nothing the 2017 Congress did demonstrates it would have intended the rest of the ACA to continue to operate in the absence of these three integral provisions,” as lawmakers did not technically repeal the individual mandate.
Defenders of the law countered that Congress voted multiple times to repeal the entire law in 2017 and failed.
The 5th U.S. Circuit Court of Appeals also criticized District Judge Reed O’Connor for focusing too much on Congress’ 2010 intent compared with its 2017 actions that triggered the lawsuit.
“The opinion gives relatively little attention to the intent of the 2017 Congress, which appears in the analysis only as an afterthought despite the fact that the 2017 Congress had the benefit of hindsight over the 2010 Congress: it was able to observe the ACA’s actual implementation,” the 5th Circuit said.
Scope of the scalpel
The federal government argues in California v. Texas that the entire ACA should be declared invalid, but that the court should allow the government to keep enforcing some parts that don’t directly injure the individuals or states.
“In a way, they’re trying to have their cake and eat it too,” Keith said.
But at the district court level, the federal government had argued that only the ACA’s measures to protect individuals with preexisting medical conditions should be slashed with the individual mandate.
“If the government can’t specify which provisions they want to keep, how can they expect courts to do it?” Gluck asked.
Roberts in a prior opinion in Seila Law v. Consumer Finance Protection Bureau said the severability doctrine should be considered “a scalpel rather than a bulldozer.” It will be worth watching whether the justices ask specifically about how the individual mandate relates to the two policies that protect individuals with preexisting conditions, or other more ancillary policies.
University of Pennsylvania law professor Kermit Roosevelt said he doubted that Roberts would agree with the theory that a largely ineffectual individual mandate is so essential to the law’s functioning that the entire law must be struck down.
“I am very confident that Roberts will not go for that theory—he could have invalidated the ACA with less damage to the court as an institution before if he had wanted to,” Roosevelt said.
Standing
Lower courts have ruled that the two individuals and the states challenging the ACA have standing to sue. But Keith argues in an article for the website SCOTUSblog that the individuals in the case don’t face injury because there is no financial penalty for not purchasing health insurance since Congress zeroed out the individual mandate.
States argue they have standing because the individual mandate increases Medicaid costs and administrative reporting burdens.
“The challengers face no injury, and the court should reject their invitation to judicially repeal the ACA on that basis alone,” Keith wrote.
However, Josh Blackman, a South Texas College of Law Houston professor, and Ilya Shapiro, director of the Robert A. Levy Center for Constitutional Studies at the Cato Institute, argue from the opposite perspective that even without a negative penalty, the individual mandate without the penalty still institutes a legal requirement that the challengers are obligated to follow.
If the justices inquire about the challengers’ injury or harm from the zeroed-out individual mandate, it could signal that they are giving more weight to the issue than lower courts.
The court is expected to rule on California v. Texas by June 2021.