All the hue and cry over what her nomination might mean to Obamacare is empty talk.
All the hue and cry over what her nomination might mean to Obamacare is empty talk.
E ver since Ted Kennedy’s “Robert Bork’s America” speech in 1987, Democrats have talked about the Supreme Court as if it were a legislature that should be judged solely on whether or not it gives their desired policy outcomes. The actual written Constitution and laws that the Court interprets are, to them, merely window-dressing. Their latest argument, which we should expect to hear a lot of at Amy Coney Barrett’s confirmation hearings, is that Judge Barrett should not be confirmed because she will strike down Obamacare in the middle of a pandemic.
This is a pretense. I discussed previously why Democrats want to turn the conversation in this direction. But everyone involved in the process also knows that it is exceptionally unlikely to happen. The current Obamacare lawsuit, California v. Texas, will be heard by the Supreme Court shortly after the election. The challengers might score some victories, but the case is almost certain to leave the operational provisions of the Affordable Care Act intact. The Trump administration has not helped itself by the solicitor general telling the Supreme Court that the suit should invalidate the entire statute, but there is no reason to think the justices will bite. The little evidence we have of Judge Barrett’s thinking on the case suggests that she is unlikely to change that.
2009-10: The Affordable Care Act
The Affordable Care Act is a famously sprawling and complex statute, applying a variety of regulations, subsidies, and taxes to the American health-care system. The statute covers a number of key areas, including (1) creating exchanges to sell individual health-insurance policies, which may be federally subsidized; (2) expanding Medicaid, making more people above the poverty line eligible; (3) regulating what health-insurance policies must cover; and (4) expanding who employers must cover in employer-provided health care (e.g., employees who work more than 30 hours a week and the children of employees up to age 26).
The ACA also imposed a triangle of rules designed to compel both buyers and sellers of individual insurance policies into unwilling exchanges:
- First, the individual mandate, which compels every American to buy insurance if he does not already have it. Without the mandate, healthy people may rationally choose not to buy overpriced insurance, leaving the insurers forced to cover a small, self-selected pool of the sick and the elderly.
- Second, guaranteed issue, which compels insurers to cover people with pre-existing conditions. This drives up the insurers’ costs, which is why healthy people need to be compelled to buy their policies to keep the system solvent.
- Third, community rating, which compels insurers to charge premiums without regard to whether an individual has a pre-existing condition. Instead, it requires insurers to price individual policies by looking at the risk of the entire pool rather than just the individual. Community rating shifts and socializes the cost of pre-existing conditions onto younger, healthier policyholders.
2012: NFIB v. Sebelius
In the 2012 NFIB v. Sebelius case, the Supreme Court upheld the constitutionality of the triangle against a challenge to the individual mandate, while ruling that Obamacare’s Medicaid expansion had unconstitutionally forced states to accept it — a ruling that led many states to voluntarily opt out.
The reasoning of NFIB on the mandate is crucial. Five members of the court (including Chief Justice John Roberts) ruled that the individual mandate was an unconstitutional use of Congress’s power to regulate interstate commerce. But Roberts then joined the four liberal justices to hold that Congress had the power to tax anyone who failed to comply with the individual mandate. Because the only identified penalty for violating the mandate was found in a separate section requiring a payment of money, Roberts wrote, it should be read as a tax: “A lawful choice to do or not do a certain act, so long as he is willing to pay a tax levied on that choice.” This was a highly dubious ruling, given that Democrats had argued to the voters, in the procedural fights in Congress, and even in court that the mandate was not a tax.
Indeed, Roberts himself admitted that a tax on a “lawful choice” was not how Congress had written the statute: “The most straightforward reading of the mandate is that it commands individuals to purchase insurance.” For example, the mandate and the penalty were contained in different statutory provisions, and some people covered by the mandate were always exempted from the penalty. The mandate exempted illegal aliens, prisoners, and religious objectors, while the penalty also exempted members of Indian tribes and people with various economic hardships. Roberts thus admitted that he was applying a “saving construction,” effectively rewriting the two provisions as if they were a single rule. At the time, the Court did not say what should happen to the mandate as it applied to people already exempted by the penalty; none of them were involved in the NFIB lawsuit.
As things stood from 2012 to 2017, the mandate was enforced as if it was a tax. The current lawsuit, however, does not seek to overturn NFIB’s ruling that the mandate should be read as if it was a tax when it was originally implemented. Nor does it challenge any other part of the ACA as unconstitutional. Instead, it challenges the mandate based on changes to the penalty made by Congress in 2017.
January 2017: Judge Barrett’s Book Review
The principal piece of evidence cited as proof that Judge Barrett would rule against Obamacare in California v. Texas is a January 2017 book review she wrote of Randy Barnett’s 2016 book Our Republican Constitution, before she was appointed to the federal bench. Notably, the review — while respectful — was critical of Barnett’s expansive view of the judiciary’s role in supervising the work of legislatures. Barrett warned that judicial review is every bit as much an exercise of power as legislation, and even less accountable to the people: “The feeling of infallibility that accompanies finality is a force to be guarded against.” Barrett then addressed Barnett’s arguments against NFIB, making clear that she did not think much of Roberts’s reasoning, and would probably have voted against treating the mandate as a tax:
Deference to a democratic majority should not supersede a judge’s duty to apply clear text . . . [A] judge who adopts an interpretation inconsistent with the text fails to enforce the statute that commanded majority support. If the majority [i.e., Congress] did not enact a “tax,” interpreting the statute to impose a tax lacks democratic legitimacy. . . . To the extent that NFIB v. Sebelius expresses a commitment to judicial restraint by creatively interpreting ostensibly clear statutory text, its approach is at odds with the statutory textualism to which most originalists subscribe.
She explained NFIB’s outcome by noting that Roberts is not a committed textualist, unlike Justice Antonin Scalia, who dissented. Barrett, a former Scalia law clerk and self-described adherent to Scalia’s philosophy, clearly sided with her old boss. Her disagreement with Roberts, however, is less about the Constitution or judicial restraint than about how he misread the statute in order to fit it into the box of the taxing power. But California v. Texas is not principally about the taxing power, or even the meaning of the ACA. It is mainly about questions of standing to sue and remedies for violations of the Constitution.
December 2017: Congress Removes the Penalty
In 2017, congressional Republicans tried, and failed, to repeal Obamacare. A major obstacle was the need for 60 votes in the Senate to change laws, whereas only 50 votes (plus the vice president) would be needed to change tax and spending rates. So, when congressional Republicans came back later to pass a tax bill, they could not eliminate the mandate, but they did the next best thing: set the “penalty” to zero. As things stand now, if you do not carry health insurance, you are still in violation of federal law, but there is no penalty applied.
California v. Texas: Who Sues, and Over What?
This brings us to California v. Texas. The lawsuit was brought against the federal government by two individuals and a group of states, led by Texas. The individuals say that they still maintain Obamacare insurance policies because the law mandates it, even without the penalty. The states argue that the individual mandate imposes costs on them, mainly in two ways. One, it causes more people to sign up for Medicaid, thus increasing state spending (an argument backed up by CBO reports in 2008 and 2017 finding that more people will buy insurance if the law tells them to, even without a tax penalty). Two, the individual mandate forces the states to spend money on IRS reporting requirements aimed at enforcing compliance. Those reporting requirements were not eliminated when the penalty was set to $0 in 2017; employers are still required to file Form 1095-C, and the IRS has thus far only temporarily suspended the use of Form 1095-B. A South Dakota human-resources official submitted testimony that the state spends $100,000 a year just on Forms 1095-C.
The Trump administration, running the federal defense of the suit, has sided with the plaintiffs on most of their arguments. The House of Representatives joined the suit’s defense after Democrats took over, as have several states, led by California. The Trump administration has not only followed the Obama administration’s improper precedent of refusing to defend a federal law in court, but it has also repeatedly taken highly aggressive stances siding with the plaintiffs. That has proven a rhetorical gift to Democrats in casting the suit as an end run around repealing the ACA in Congress, but the decision remains with the judiciary.
The theory of the suit calls Roberts’s bluff. A tax, after all, is supposed to raise revenue. Article I, Section 8 empowers Congress to “lay and collect Taxes . . . to pay the Debts and provide for the common Defense and general Welfare of the United States.” If the mandate is valid only as a tax, and it is impossible for anyone to pay it and contribute to any of those federal expenses, then how can it be a tax? Yet the mandate itself is still on the books as a regulation. If the regulation is not a tax, it can only be justified as an exercise of the commerce power — the very thing that a majority of the Supreme Court previously said was unconstitutional.
This is a compelling argument as far as it goes, but it has two legal problems. The first is standing. If there is no penalty, who is harmed enough to have a federal case? And two, the question of remedy and severability: Even if the plaintiffs win, does the Court just strike down a mandate that isn’t being enforced? If that’s the only thing that is unconstitutional, why should the Court interfere with anything else in the ACA? If the only thing the Supreme Court does is strike the mandate, the case is hardly worth the energy Democrats are expending on it.
The case might end with the standing question, although defenders of the ACA are right to be concerned that the conservative justices could easily find that the individuals and/or the states have standing. Oddly, none of the parties defending the suit has cited any case where a federal law unquestionably made something illegal, but nobody had standing to challenge it because there was no penalty. The closest thing cited is Poe v. Ullman, a 1961 case in which a plurality of the Supreme Court found no standing to challenge a state statute when the state showed that it had agreed for decades not to enforce it. Poe would end the case for the individual plaintiffs if the Supreme Court thinks it is still a controlling precedent here and that the situations are analogous. But it is not hard to see why Poe might not apply, even if its plurality opinion is still good law: Congress only just reduced the tax three years ago, and Americans may legitimately fear that it would be easier for a subsequent Congress to hit them with retroactive penalties if they knowingly violate the statute now. As Laurence Tribe asked in 2012: “What if somebody for example is on probation, and is asked, ‘Have you violated any federal law lately?’ could the person truthfully answer, ‘No, I haven’t,’ even though the person didn’t purchase the required insurance but merely paid the penalty?”
Moreover, even if the individual plaintiffs do not have standing, California and the House are clearly grasping at straws to challenge the sufficiency of the evidence submitted by the states to show compliance costs and increased Medicaid enrollment.
What if the California Plaintiffs Win?
While California v. Texas has been met with a lot of scorn from commentators, it is not unreasonable to think that the Supreme Court will agree with the plaintiffs that they have standing to sue and that the individual mandate is now unconstitutional. That is what a divided panel of the Fifth Circuit did, with a George W. Bush appointee and a Trump appointee voting in favor. But unlike the trial court, which ruled that this made the entire Affordable Care Act unenforceable, the Fifth Circuit blanched at going that far, and sent the case back for a better explanation on what to do next.
The Supreme Court’s three remaining liberal justices, like the Carter appointee who dissented in the Fifth Circuit, will presumably be uniformly hostile to the plaintiffs’ case. The five current Republican-appointed justices, however, are also likely to share the skepticism of the Fifth Circuit majority about arguments for using the 2017 tax change as leverage to tear down the entire statute. The reason why is the severability doctrine, which governs how courts decide how much to strike down when they find that a law does something unconstitutional.
The Constitution itself, which does not explicitly discuss how judicial review works, gives courts no guidance on what to do when only part of a statute is unconstitutional. There are very longstanding arguments about this. The courts typically treat the question as one of asking what Congress wanted, or would have wanted: Would it have passed the statute without this piece? When Congress inserts a clause in a statute saying what parts to sever, that decision can be easy. But often, as with the ACA, it doesn’t.
For the challengers, there are two immediate problems besides the court’s three liberals: Chief Justice Roberts and Justice Kavanaugh. Roberts, who has previously bent himself into pretzels in several cases to salvage the ACA from its own drafters, is also a great believer in striking down as little of Congress’s work as possible. In this spring’s Seila Law decision, Roberts concluded that Congress had violated the Constitution by insulating the CFPB director from presidential removal. The independence of the CFPB director from politics was one of the major selling points for the statute’s drafters (mainly Elizabeth Warren, who had intended to become the director herself) in giving it so much power, yet Roberts used what he called “a scalpel rather than a bulldozer” to rewrite the statute to permit presidential removal and leave the rest of the agency’s structure in place. This is consistent with how Roberts has approached severability in other cases.
Justice Kavanaugh, for his part, wrote a Harvard Law Review article in 2016 urging courts to adopt “a new default rule” of “sever[ing] an offending provision from the statute to the narrowest extent possible unless Congress has indicated otherwise in the text of the statute.” This July, in Barr v. AACP, a Telephone Consumer Protection Act case, Kavanaugh wrote: “Constitutional litigation is not a game of gotcha against Congress, where litigants can ride a discrete constitutional flaw in a statute to take down the whole, otherwise constitutional statute.” Kavanaugh was defending the Court’s decision in Barr to strike down a provision of the TCPA that exempted robocalls to collect government debts. The plaintiffs in Barr argued that this violated the First Amendment by discriminating against their political robocalls. But instead of striking the entire ban and allowing the plaintiffs to make their calls, the Court simply struck the government exemption.
It is likely that Kavanaugh will be as hesitant as Roberts, therefore, to go much further than striking the mandate itself, even if there are five votes to get that far. Back in 2011, when sitting on the D.C. Circuit, Kavanaugh argued that there was no federal jurisdiction to challenge the ACA unless and until the tax was enforced, and that it was possible that a “minor tweak to the current statutory language would definitively establish the law’s constitutionality under the Taxing Clause (and thereby moot any need to consider the Commerce Clause).” In the name of judicial restraint, Kavanaugh was arguing that courts should wait to see if Congress amended the statute to impose more or less the same “tweak” that Roberts himself later wrote into it judicially. Between the standing and severability arguments, Kavanaugh seems a most doubtful vote to take this lawsuit as an opportunity to rule broadly against the ACA. If the plaintiffs lose Roberts and Kavanaugh on the severability question, they have probably already lost the case.
Things get worse for them on severability. Two of the current justices (Clarence Thomas and Samuel Alito) were prepared to strike down the entire ACA in NFIB, joining Justice Scalia’s dissent. Scalia argued that, between the individual mandate and the Medicaid expansion both being unconstitutional, the Supreme Court would have to rewrite so much of the statute’s entire design that it would amount to illegitimate judicial legislation to just assume Congress would have passed it that way. By now, however, the revised Medicaid expansion (which Roberts rewrote to turn into an option for states) has been functioning for seven years. And the severability question now presents a complicating factor: Is the Supreme Court supposed to inquire only into what Congress intended in 2009–10 when it passed the ACA, or also consider what Congress did in 2017 in itself severing the penalty from the rest of the mandate?
The Obama administration, in NFIB, argued that the mandate could not be severed from guaranteed issue and community rating; if one went, all three had to go. On this issue of severability, there is no question that striking the mandate in NFIB would have amply justified striking guaranteed issue and community rating. But a new Congress changed the law since then. However central the mandate was to Congress in 2009–10, the current lawsuit is about the ACA after Congress decided in 2017 to stop charging a penalty when people violated the mandate. While we know the actual political background, the Supreme Court is entitled to conclude that Congress decided that the mandate was not all that necessary to anything else. Surprisingly, this also seems to be a new question: None of the litigants has cited any precedent squarely presenting a situation where severability turned on the intention of two successive Congresses.
This is a practical question of the sort that an original, historical analysis of the Constitution does not easily answer. Except that justices Thomas and Neil Gorsuch now think that it does. Thomas has spent the past several years building an originalist case against the Supreme Court’s entire body of severability jurisprudence. In Thomas’s view, severability is the wrong question: The Court should not be in the business of announcing what parts of a law are enforceable, but only in the business of deciding cases. If a plaintiff asks for relief that a statute prevents, and the statute unconstitutionally prevents that, the plaintiff should win. If punishing a defendant requires the unconstitutional operation of a statute, the defendant should win. This, according to Thomas, is how courts dating back to the Founding era handled these questions. Marbury v. Madison, for example, did not consider which parts of the Judiciary Act of 1789 were still valid, other than the one it was asked to apply. Thomas’s recent opinions calling for a wholesale reconsideration of severability doctrine along these lines have been joined by Justice Gorsuch, so there are two votes to analyze severability this way.
In some cases, the Thomas–Gorsuch view leads to striking down more of a statute than what Roberts or Kavanaugh would do, particularly in separation-of-powers cases such as Seila Law. But in California v. Texas, it would almost certainly lead to a much more limited decision than the plaintiffs want. As Thomas argued in Murphy v. NCAA, his rule limits courts to deciding the constitutionality of those parts of a statute that actually inflict a constitutional injury on the parties to the case — thus, it is closely tied to the questions of standing and injury:
The severability doctrine often requires courts to weigh in on statutory provisions that no party has standing to challenge, bringing courts dangerously close to issuing advisory opinions. . . . If one provision of a statute is deemed unconstitutional, the severability doctrine places every other provision at risk of being declared nonseverable and thus inoperative; our precedents do not ask whether the plaintiff has standing to challenge those other provisions. . . . True, the plaintiff had standing to challenge the unconstitutional part of the statute. But the severability doctrine comes into play only after the court has resolved that issue — typically the only live controversy between the parties. In every other context, a plaintiff must demonstrate standing for each part of the statute that he wants to challenge. . . . The severability doctrine is thus an unexplained exception to the normal rules of standing, as well as the separation-of-powers principles that those rules protect.
Of course, Thomas and Gorsuch have still joined opinions applying traditional severability doctrine, on the grounds that the Court should not overrule its entire line of precedent until some party to a case asks it to. That is what they did in Murphy, concurring in an Alito opinion striking down an entire statute subjecting state laws on sports gambling to federal regulation. No party has asked for an overhaul of the doctrine here, although severability under Thomas’ approach is discussed in at least one of the amicus briefs. In 2012, Thomas was still developing this critique, and joined Scalia’s NFIB dissent, which treated Thomas’s current view as impractical:
To be sure, an argument can be made that those portions of the [ACA] that none of the parties has standing to challenge cannot be held nonseverable. The response to this argument is that our cases do not support it. . . . It would be particularly destructive of sound government to apply such a rule with regard to a multifaceted piece of legislation like the ACA. It would take years, perhaps decades, for each of its provisions to be adjudicated separately — and for some of them (those simply expending federal funds) no one may have separate standing. The Federal Government, the States, and private parties ought to know at once whether the entire legislation fails.
Still, given that Thomas and Gorsuch both see current severability doctrine as dubious, they may be less willing to extend it in a way that bulldozes whole sections of the statute that impose no constitutional injury on any party before the court. Even limiting the question to guaranteed issue and community rating, the individual plaintiffs and the states argue that they are injured by how these provisions distort the market and inflate the prices of policies, but these are not constitutional injuries caused by the mandate; they are injuries caused by bad legislation.
The solicitor general’s brief, while it nods in the direction of Thomas’s view of severability, argues on the basis of the positions of the litigants and the justices in NFIB that Obamacare does not work without the individual mandate:
This Court has repeatedly recognized that Congress viewed the guaranteed-issue and community rating provisions as necessarily intertwined with the individual mandate. All nine Justices indicated as much in NFIB. . . . Once the individual mandate and the guaranteed issue and community-rating provisions are invalidated, the remainder of the ACA should not be allowed to remain in effect. . . .This Court may consider the inseverability of, and award relief concerning, other ACA provisions only insofar as such provisions injure the plaintiffs. But the government will address the whole Act here, both because at least some other insurance reforms do injure the individual plaintiffs…and because an argument for the inseverability of those provisions likewise applies to other ACA provisions. . . .No further analysis is necessary; once the individual mandate and the guaranteed-issue and community-rating provisions are invalidated, the remainder of the ACA cannot survive.
But the statute does not work with or without the mandate; the fault for that lies with its being a bad idea. That is not the Supreme Court’s job, at this point, to fix. The case is back before the Supreme Court only because Congress isolated the most obvious constitutional violation and defanged it.
Conservatives should not get their hopes up, nor liberals their alarms up, for this lawsuit. There is a valid case on the merits for striking down the mandate, but little reason in to expect the current justices to go further.
Barrett and the Moot Court
All of this is to say that, as things presently stand, the Supreme Court may be divided 4–4 on a number of things, but striking down Obamacare is not one of them. Judge Barrett, if confirmed, is unlikely to tip the balance.
How would she rule in this case, if it was up to her? We do not know the answer for sure, but we have an unusually strong hint. Just days before Justice Ginsburg died, Judge Barrett participated in an academic moot court at William & Mary Law School hearing hypothetical arguments on California v. Texas. A panel of eight “judges” heard arguments by a pair of veteran Supreme Court advocates. The moot court was — much unlike real litigation — apparently heard based only on oral arguments, without briefing and without the panelists reading precedents or examining the pleadings. The law school’s website stresses that the arguments were “an educational, role-playing exercise only,” but of course, the rulings suggest at least a gut-level response by the panel. Besides Judge Barrett, the other seven panelists included two other federal judges, three William & Mary law professors, a lawyer, and CNN legal correspondent Joan Biskupic. The panel did not reveal how Judge Barrett or any other panelist voted, but not one member of the panel voted to strike down anything besides the mandate:
The decision came in 5-3 (with one dissent) that there was standing to challenge the individual mandate and a compelling argument that the provision was unconstitutional, but that the whole statute did not fall. The majority reasoned that because the mandate is now set to zero and is not functioning like a tax, it does not fall under one of Congress’s enumerating powers under Article One. Having said that, the court also found it was a severable provision of the ACA, leaving the rest of the law intact.
As the L.A. Times reported, “The other three judges would have thrown out the case, arguing that the conservative states challenging the law did not have standing to bring the suit.” Judge Barrett could change her mind after taking the case with the seriousness of a judge who has actually read the briefs and the cases, but this hardly suggests that she is champing at the bit to overturn the whole ACA. Which means that all the hue and cry over what her nomination might mean to Obamacare is empty sound and fury.