Lawsuit exposes fatal flaw in ObamaCare’s individual mandate

The most recent challenge to the Affordable Care Act, a Texas-led, 20-state lawsuit, made news when the U.S. Department of Justice conceded the unconstitutionality of the individual mandate. This action aroused passion, including concern even from groups opposed to the ACA. 

But, no one who dislikes the ACA as a policy should worry about the legal process of this new challenge. The paper-thin justification for upholding the ACA in the first place is no longer credible.

{mosads}The new ACA challenge is quite simple. The Supreme Court held that individual mandate was only constitutional because it was a tax, and in doing so, salvaged the remainder of the ACA. It was only a tax because it produced “some revenue.” Now, the individual mandate produces no revenue. On December 22, 2017, Congress eliminated the tax penalty. Because it produces no revenue, it can’t be described as a tax. Thus, Congress has no constitutional authority to support the individual mandate.

By removing the revenue seeking portion of the individual mandate, Congress may have knocked out the keystone and made the argument for the ACA’s rickety constitutional structure collapse.

Some criticize potential action by the court in this case as “judicial activism.” That is, the courts would be taking over a hot political debate by settling an issue more rightly left to the elected branches. This critique correctly points out that the repeal of the ACA is something that Congress has failed to do even under a change parties and administrations. Why then can the courts come in and do something that Congress has demonstrated no political will to see done? 

The familiar refrain of “judicial activism” is often trotted out almost as an unthinking reflex whenever courts strike down a bit of legislation.

In fact, it was by an act of judicial activism by which the Supreme Court saved the ACA the first time, an observation correctly made by the dissenting four justices. By taking what was not, and could never be a tax, and characterizing it as one in sharp contrast to the views of the people who actually wrote the law, the Supreme Court instead created “a debilitated, inoperable version of a health-care regulation that Congress did not enact and the public did not expect.” Now that even the shaky rationale of the majority is no longer plausible, the courts would be anything but activist by simply saying so.

Not changing positions

The second frequent criticism accuses the Department of Justice of changing its position. In short, the accusation is the Department of Justice under President Obama spent years defending the ACA. The political appointees under the new administration are refusing to defend a law they don’t like but couldn’t get changed in the regular process. And so they are choosing to lay down instead, much the same way that the previous administration refused to defend the Defense of Marriage Act.

It is different, but in a way that works out in this administration’s favor. The only basis for the mandate’s constitutionality no longer remains. In other words, the facts materially changed, but the Department of Justice’s legal position hasn’t changed. So, when the only argument for a law’s constitutionality no longer exists, it would only be natural to admit it. It is fairly unusual that a constitutional argument would be so black and white but there it is.

In that sense then, this administration is not changing its position on the law’s constitutionality. Rather, it is maintaining it. If the administration’s lawyers suddenly argued that there was another reason why the individual mandate was unconstitutional then that would be a new position. But maintaining the argument that the mandate was a tax but is no longer, is actually the consistent approach.

Should be struck down for legal and policy reasons

If the courts agree — and it seems like they must — that the individual mandate is no longer constitutional, then they should not hesitate to strike down the unconstitutional law.

All the other major and minor provisions of the ACA are inseverable from the mandate. The ACA’s insurance regulations and taxes include the “essential health benefits” requirements, limits on “cost-sharing,” and the elimination of coverage limits. Congress designed the mandate and the forced Medicaid expansion to offset these regulations. Furthermore, these regulations were not designed to work without the mandate.

Severability is belied by the text, which specifically states that “the other provisions of the Act” work “together with” the “individual responsibility requirement” to achieve the ACA’s goals. The mandate, “together with the other provisions of th[e] [ACA], will significantly reduce [health care’s] economic cost,” “lower health insurance premiums,” and “reduce administrative costs.” Those statements are unqualified and so encompass all provisions of the ACA.

The ACA originally “require[d] each State” to establish exchanges, with individual policies offset by federal subsidies valued in relation to premium costs.” Congress designed the mandate, community-rating, and guaranteed-issue provisions to checks the cost of these premiums. Without them, the subsidies would increase unchecked,“break[ing]down” the “shared responsibility” between the “[insurance] industry and the federal budget.” Thus, these provisions are inseverable, because the very premise of the ACA only works with the individual mandate.

In conclusion, the state-led lawsuit strikes at the core of what remains of the ACA. In doing so, this lawsuit exposes a fatal flaw in that the individual mandate currently exists as an unconstitutional exertion of federal power. The court should now declare the entire ACA unconstitutional.

Robert Henneke (@RobHenneke) is the general counsel and litigation director for the Texas Public Policy Foundation and represents the Individual Plaintiffs challenging the ACA. Braden H. Boucek is the Director of Litigation at the Beacon Center of Tennessee.