Appeals Court Shows Uncertainty Over Constitutionality of ACA's Individual Mandate

Following oral arguments heard by a federal appeals court panel, it seemed likely that the judges will uphold a lower-court ruling that the Affordable Care Act (ACA)’s individual mandate is unconstitutional. However, it remained less clear if the 3-judge panel would overturn the entire law.

Throughout the hearing at the 5th Circuit Court of Appeals in New Orleans, the 2 Republican-appointed judges, Judge Jennifer Elrod—appointed by President George W. Bush in 2007—and Judge Kurt Engelhardt—appointed by President Donald Trump in 2018—voiced their skepticism over the constitutionality of the individual mandate without the tax penalty, which was removed by Congress in 2017. Meanwhile, Judge Carolyn Dineen King—appointed by President Jimmy Carter in 1979—did not ask any questions or make any comments about the case.

The arguments during the hearing circled back to the landmark 2012 Supreme Court decision in National Federation of Independent Business v Sebelius, when Chief Justice John G. Roberts Jr declared the mandate legal as a tax.

“If you no longer have the tax, why isn’t [the mandate] unconstitutional?” asked Elrod.

California Deputy Solicitor General Samuel Siegel, representing a coalition of Democratic states, argued that according to the 2012 decision, despite using the word “shall,” the provision does not have to be read as a standalone command.

However, according to Elrod, Chief Justice Roberts said that the most natural reading of the provision was a command. “How can it be precatory if the most natural reading of it is a command that does require action by the federal government telling someone to buy insurance?” she asked.

Douglas N. Letter, a lawyer for the House of Representatives, asserted that the Supreme Court concluded the individual mandate was a choice: either maintain health insurance or pay a tax. According to Letter, reducing the tax to $0 still upholds that choice: either maintain insurance or pay no tax.

The decision on the constitutionality of the individual mandate also lends itself to another, much bigger issue: Can the rest of the ACA stand without the provision?

In December 2018, District Court Judge Reed O’Connor ruled that the ACA’s individual mandate was unconstitutional after Congress removed the tax penalty and that the rest of the law must fall. The lawsuit was brought by 20 Republican states, led by Texas. The coalition of states is now down to 18 after the midterm elections brought Democratic governors to Maine and Wisconsin, which then withdrew from the lawsuit. In March, the Department of Justice switched its course and backed the ruling.

The outcome of the lawsuit threatens the health coverage of millions of Americans, including those with pre-existing conditions. Whichever way the court rules, there will likely be an appeal, bringing the case up to the Supreme Court amid the 2020 election.

During the arguments, both Samuel and Letter argued that Congress did not want the entire ACA to fall when it eliminated the individual mandate.

Engelhardt questioned why Congress couldn’t step in and pass legislation stipulating that the rest of the law could stay in place without the penalty, asking, “Couldn’t Congress have said, ‘Oh by the way, we think all of these provisions are such excellent ideas and helpful to the public that if any of them go by the wayside, we would want the remainder to continue to apply?’”

Siegel argued that Congress’ silence was just silence and that it does not create a presumption against severability, and Letter told the panel that “the burden is on the other side to show Congress wanted this entire statute to be struck down.”

The arguments also brought to light a rift between the states in the case and the government. Responding to a question from Englehardt regarding the Department of Justice brief that said the ruling from O’Connor does not extend past the 18 Republican states in the case, Texas Lawyer Kyle D. Hawkins called the interpretation a disappointment and inconsistent with what was presented during the case.