Argument analysis: ACA seems likely to survive, but on what ground?

After roughly two hours of oral argument in the Supreme Court on Tuesday, it appeared likely that the Affordable Care Act will survive yet another effort in the courts to dismantle it. Although there may be five votes to strike down the ACA’s individual mandate – the provision in the law that directs virtually all Americans to buy health insurance – a majority of the court in California v. Texas seemed to agree with the ACA’s defenders that even if the mandate is unconstitutional, the rest of the ACA can survive. That determination would effectively leave in place the status quo, because Congress in 2017 eliminated the penalty for failing to obtain insurance, and the ACA has continued to operate without any enforceable individual mandate.

It’s not even clear if the court will get that far. Any ruling on the constitutionality of the mandate – or the rest of the law – will hinge on whether at least five justices believe that the challengers in the case have a legal right to sue.

State Solicitors General Michael Mongan of California and Kyle Hawkins of Texas (Art Lien)

Tuesday’s oral argument was the second time that the justices heard argument in a challenge to the constitutionality of the mandate. In 2012, a divided court upheld the mandate in National Federation of Independent Business v. Sebelius, with Chief Justice John Roberts and the court’s four more liberal justices reasoning that it imposed a tax on individuals who do not obtain health insurance. But in December 2017, Congress reduced the penalty for failing to obtain health insurance from $695 to $0. That prompted Texas and other states with Republican leaders, along with two individuals, to file a new lawsuit against the ACA. They argued that without a penalty for noncompliance, the mandate is merely a command to buy health insurance and is therefore unconstitutional. And without the mandate, they contended, the remaining provisions of the ACA are also invalid.

U.S. District Judge Reed O’Connor agreed with the challengers and threw out both the mandate and the other provisions of the ACA. California and other Democratic-controlled states, which entered the case to defend the mandate after the Trump administration declined to do so, appealed to the U.S. Court of Appeals for the 5th Circuit, which agreed with O’Connor that the current version of the mandate is unconstitutional. The 5th Circuit then sent the case back to O’Connor for him to take another look at whether the entire ACA must also be invalid as a result. But before that could happen, California and the House of Representatives, which had also joined the case to defend the ACA, asked the Supreme Court to weigh in, and the justices agreed to do so.

“Standing” – A right to sue

The question of whether plaintiffs have a legal right to sue, known as standing, is a threshold question in the case: If the court ultimately determines that no challenger has standing, it could throw the case out without ruling on substantive constitutional questions. Although the question of standing can sometimes be a formality, it was front and center for much of Tuesday’s argument, and the justices appeared divided.

The two individuals challenging the mandate, Neill Hurley and John Nantz, maintain that they have standing because they have to spend money every month to comply with the mandate’s command to buy insurance. Arguing on behalf of the Democratic-controlled states, California Solicitor General Michael Mongan contended that Hurley and Nantz lack standing because the mandate does not create a legal command and, in any event, there is no threat that it will be enforced against them – in short, it does not require them to do anything.

Chief Justice John Roberts and Justice Clarence Thomas peppered Mongan with hypotheticals to test that assertion. What if, Roberts asked, Congress passed a law requiring everyone to mow the lawn once a week, but the fine for violating the law is $0. Would anyone have standing to challenge it?

Mongan replied that it would not be enough for someone to say that he was injured by having to comply with the law’s requirement. An individual would also have to show a real threat that the law would be enforced – and in the case of the mandate, Mongan continued, Congress eliminated that threat.

Thomas asked about a legal right to challenge mask-wearing mandates, which have been enacted in some form by many states during the coronavirus pandemic. If there is no penalty for not wearing a mask, Thomas queried, but “some degree of opprobrium” results from not wearing a mask, what happens if someone violates the mandate? Would that individual have standing to challenge the mask mandate?

The court’s newest justice, Amy Coney Barrett, wondered aloud whether the individual challengers had sued the right defendants. Even if their additional costs are a result of the individual mandate, she asked, how can those costs be attributed to the defendants in this case – for example, the Internal Revenue Service or the Department of Health and Human Services – given that those agencies have no legal way of enforcing the mandate? Doesn’t it seem, Barrett continued, like Congress is actually responsible for the additional costs, even if the individual challengers can’t sue Congress?

The state challengers, represented by Texas Solicitor General Kyle Hawkins, claimed that they have standing to contest the mandate’s constitutionality because the mandate increases their costs – for example, when people comply with the mandate by enrolling in Medicaid, as well as the additional paperwork required by the IRS. Mongan responded that even if that might theoretically be enough to establish standing, the states had not shown that their costs had actually increased.

Representing the House, former U.S. Solicitor General Donald Verrilli – who successfully defended the ACA back in 2012 in NFIB – was less willing to acknowledge that the states might, in some circumstances, have a legal right to sue because of the paperwork burdens imposed by the mandate. He told Roberts that those reporting requirements flow from other provisions of the ACA.

But much of the discussion of standing focused on a theory suggested by the Trump administration, which argued that the challengers have a right to sue because they are injured by other provisions in the statute that are tied to the mandate. And if the mandate is unconstitutional, the government contended, then the other provisions would have to be invalidated as well.

Roberts appeared skeptical of the government’s argument, telling Acting Solicitor General Jeffrey Wall that such a theory would “really expand[] standing dramatically.”

Wall countered that the government’s theory would not open the floodgates to a large number of additional claims because it will be very hard in most cases to make out a claim that the entire law must fall. No one, he observed, has pointed to another statute like the ACA.

Justice Elena Kagan echoed Roberts’ sentiment. She told Wall that because the federal government is usually “pretty stingy” about standing, she was surprised that he was offering a theory “that threatens to explode” standing doctrine. Congress frequently passes legislation in “huge packages” that involve “a thousand different subjects,” Kagan noted, so it would be a problem if a plaintiff could point to an injury from one provision in a massive statute and “concoct” an argument that would allow a challenge to any other provision of the statute.

Justice Samuel Alito was more sympathetic. When Mongan told him that Texas has to show an injury from the mandate and questioned whether Texas’ reliance on injuries from other provisions of the ACA can establish standing to challenge the mandate, Alito pushed back. He told Mongan that there is a “logic” to that theory of standing. Why, Alito asked, is it unsound?

But Justice Sonia Sotomayor was more dubious. She suggested to Mongan that, if Texas had claims challenging other provisions of the ACA, it should have brought those claims directly.

Constitutionality of the mandate

When the justices eventually turned to the question at the heart of the case – whether the individual mandate is still constitutional now that Congress has reduced the penalty for failure to obtain insurance to zero – several justices pressed Mongan and Verrilli to explain how the mandate could still be valid. Justice Brett Kavanaugh noted that, in NFIB, the majority ruled that the mandate was justified as an exercise of Congress’ taxing power, but since the 2017 amendment it no longer raises revenue.

Gorsuch made the same point. With the mandate no longer raising revenue, he told Verrilli, its defenders are left to rely on provisions in the Constitution that didn’t win last time.

Justice Stephen Breyer saw things differently. He suggested that many laws have statements exhorting people to do things – such as “buy war bonds” or “plant a tree” – without any mechanism to enforce them. Are all of those statutes, he asked Hawkins, suddenly open to challenge?

Hawkins agreed that the government could make suggestions about activities it wants to encourage, but he maintained that the individual mandate is different. It isn’t a suggestion, he stressed, but instead a law requiring everyone to buy health insurance.

Kagan appeared to side with California and the House on this point. In NFIB, she told Hawkins, the court ruled that the mandate was not an unconstitutional command, and the 2017 amendment made it “less coercive” by eliminating the penalty for failure to obtain insurance. So how does it make sense, Kagan inquired, to say that what was not an unconstitutional command before the amendment is now unconstitutional when it is less coercive?

The doctrine of “severability”

With the fate of the mandate hanging in the balance, the question of severability – whether the mandate can be separated from the rest of the ACA – took on increased importance. Some of the court’s more conservative justices, including Roberts, noted that, in NFIB, the ACA’s defenders had argued that the mandate was the cornerstone of the ACA. The mandate compelled people to buy insurance so that the rest of the system could survive, Roberts recalled, but now the law’s defenders say the law is operating successfully without an enforceable mandate. Referring back to hypotheticals about whether, if Congress could require everyone to buy health insurance it could also force Americans to eat broccoli, Roberts joked to Verrilli, “We spent all that time talking about broccoli for nothing?”

Thomas agreed, noting that the mandate used to be considered “the heart and soul” of the ACA.

Verrilli explained that the 2017 Congress asked the Congressional Budget Office what would happen if it reduced the penalty to zero, and the CBO responded that the effect on the insurance market would be the same as if Congress eliminated the mandate altogether. The contemporaneous history of the 2017 amendment is clear, Verrilli declared. Congress intended to give everyone the flexibility to decide whether to buy health insurance, and there is no sign that Congress would have preferred the whole ACA to fall if the mandate were deemed unconstitutional.

Alito appeared unconvinced, telling Verrilli that his comments about Congress’ intent in 2017 shows the problem with trying to figure out what Congress might have wanted. “I don’t know what we can make of what was done in 2017,” Alito concluded.

Perhaps most significantly for the ACA’s defenders, both Roberts and Kavanaugh made statements suggesting that if the mandate were struck down, they were inclined to leave the rest of the law in place. Kavanaugh told Verrilli that he would “tend to agree with you that it’s a very straightforward case for severability”; he later remarked to Hawkins that “it does seem fairly clear that the proper remedy” is to sever the mandate and leave the rest in place. When Hawkins responded that the text of the ACA reflected Congress’ intent that the whole law should fall, Kavanaugh pushed back, telling him that Congress had not made clear that it wanted to achieve such a result. Instead, Kavanaugh concluded, it “sure seems like” Congress wanted to maintain protections for people with pre-existing conditions.

Roberts told Hawkins that, in light of the 2017 amendment, it would be hard for the challengers to argue that Congress intended the entire ACA to fall when that Congress did not formally repeal the rest of the act. Some lawmakers may have wanted the Supreme Court to invalidate the ACA, Roberts posited, “but that’s not our job.”

As the oral argument and subsequent decision in NFIB demonstrated, it’s always risky to make predictions about the outcome of a case based on oral argument. But by the time Roberts finally announced, shortly after noon on Tuesday, that the hearing was over, it seemed more likely than not that the ACA – if not the mandate itself – would ultimately survive.

A decision in the case is expected sometime next year.

This post was originally published at Howe on the Court.