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Analysis

Appellate Court Rules ACA Individual Mandate Unconstitutional But Stops Short of Tossing Entire Law

By Steven Porter  
   December 18, 2019

The highly anticipated decision sends the dispute back to the lower court to further analyze which provisions of the law, if any, may be severed from the central mandate.

The Fifth Circuit Court of Appeals ruled in a split decision Wednesday that the Affordable Care Act's individual mandate is unconstitional, but the judges stopped short of invalidating the entire law.

Instead, they sent the case back to the District Court for further proceedings to analyze whether any of the sprawling Obama-era legislation's provisions are severable from the mandate.

Judges Jennifer Walker Elrod and Kurt Engelhardt, the two members on the three-judge panel who were appointed by Republican presidents, wrote the decision for the 2–1 majority. After a more granular review, the courts might determine that some provisions of the ACA should survive after all, they wrote.

"It may still be that none of the ACA is severable from the individual mandate, even after this inquiry is concluded. It may be that all of the ACA is severable from the individual mandate," Elrod and Engelhardt wrote. "It may also be that some of the ACA is severable from the individual mandate, and some is not."

"But it is no small thing for unelected, life-tenured judges to declare duly enacted legislation passed by the elected representatives of the American people unconstitutional," they added. "The rule of law demands a careful, precise explanation of whether the provisions of the ACA are affected by the unconstitutionality of the individual mandate as it exists today."

Related: ACA Ruling Dismays Hospitals, as Law's Defenders Look to Supreme Court

The appellate decision faulted the lower court—which ruled a year ago that the entire ACA is invalid because the individual mandate is invalid—for failing to dissect what lawmakers had intended to do when they zeroed out the mandate's tax penality in 2017 and for failing to explain how particular segments of the post-2017 ACA are inseverable from the mandate.

"Severability doctrine places courts between a rock and a hard place," the appellate decision states. "On the one hand, courts strive to be faithful agents of Congress, which often means refusing to create a hole in a statute in a way that creates legislation Congress never would have agreed to or passed. [...] On the other hand, courts often try to abide by the medical practitioner's maxim of 'first, do no harm,' aiming 'to limit the solution to the problem' by 'refrain[ing] from invalidating more of the statute than is necessary."

Related: Invalidating ACA Would Undercut Parts of Trump's Own Health Policy Agenda

"Severability analysis is at its most demanding in the context of sprawling (and amended) statutory schemes like the one at issue here," the decision adds. "The ACA's framework of economic regulations and incentives spans over 900 pages of legislative text and is divided into ten titles."

Considering the complexity of this legislation, the courts must take a "careful, granular approach to carrying out the inherently difficult task of severability analysis in the specific context of this case," the decision states.

Nicholas Bagley, a law professor at the University of Michigan who has argued the ACA should survive this legal challenge, accused the Fifth Circuit of "a remarkable mix of hubris and cowardice."

"It's hubris to say that the *unenforceable* individual mandate is an unconstitutional *command.* And it's cowardice to remand without grappling with what that means for the rest of the law," Bagley wrote in a series of tweets.

The U.S. Supreme Court ruled in 2012 that the ACA's individual mandate was constitutional as an exercise of the congressional power to tax, but the same mandate is now unconstitutional because it no longer generates revenue for the government and cannot be justified under any other legislative power, according to the appellate decision.

The third judge, Carolyn King, wrote a dissenting opinion, reasoning that a $0 penalty doesn't render the mandate unconstitutional.

"Without any enforcement mechanism to speak of, questions about the legality of the individual 'mandate' are purely academic, and people can purchase insurance—or not—as they please. No more need be said; it has long been settled that the federal courts deal in cases and controversies, not academic curiosities," King wrote.

The full decision is below.

California: We're Ready for Supreme Court

California Attorney General Xavier Becerra, who has led a coalition of states that intervened in the lawsuit, to defend the ACA, signaled Wednesday that his office is ready to take the dispute to the nation's highest court.

"[W]e are prepared to file a cert petition with the U.S. Supreme Court to challenge this ruling to uphold the Affordable Care Act in all respects, and to continue to protect the health care that millions of Americans have received and rely on, in order to stay healthy and ensure that they, their families can move forward, knowing that they are safe," Becerra said Wednesday evening during a press conference.

Becerra declined to outline a timeframe for his next steps but said he plans to move quickly.

Related: DOJ Drops Its Partial ACA Defense, Argues Entire Law Should Fall

HealthLeaders finance editor Jack O'Brien contributed to this report.

Fifth Circuit Rules ACA Individual Mandate Unconstitutional, Remands by HLMedit on Scribd

Steven Porter is an associate content manager and Strategy editor for HealthLeaders, a Simplify Compliance brand.


KEY TAKEAWAYS

The mandate can't be justified as a tax because it no longer generates revenue for the government, according to the 2–1 decision.

The dissenting judge contends that the ACA's individual mandate is unenforceable but still constitutional, despite the $0 penalty.


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