Legal Experts Wrong; Court Case a Threat to ACA

By Noah Feldman

Could key portions of the Affordable Care Act be declared unconstitutional – years after the Supreme Court upheld them? The Trump administration’s Department of Justice has just filed a brief saying so in a suit by several states that aims to take down the whole program.

Most mainstream legal commentators think the government’s arguments are unconvincing. But it’s crucial to remember that this was exactly the reaction of the same set of people in 2010, when the original argument was made against the individual mandate by libertarian law professor Randy Burnett. Just two years later, five justices of the Supreme Court embraced Barnett’s argument.

Given the excitement for judicial activism building among conservatives, the Trump administration may have more than a 50 percent chance of success.

Just in case you haven’t thought much about the individual mandate and the Constitution in the last six years, let me provide an update and a brief refresher. The update is that, in 2017, Congress passed the Tax Cuts and Jobs Act. In the law, Congress repealed the tax penalty associated with the individual mandate that everyone have health insurance.

In other words, the ACA still says you have to have insurance. But if you don’t, nothing happens to you.  1

You may remember that the Obama team was worried about the interaction between the individual mandate and the popular ACA provisions that say insurance companies can’t refuse to cover anybody because of pre-existing conditions and can’t charge you more if you are already sick.

The theory went something like this: If you aren’t compelled to buy insurance when you’re healthy, but you’re allowed to buy it when you find out you are sick, then only sick people would buy health insurance. That in turn would create a “death spiral” for insurance under the ACA, as insurance costs went up.

Crucially, President Barack Obama’s Department of Justice relied on this argument in trying to convince the Supreme Court to uphold the individual mandate. This death spiral doesn’t seem to have happened yet, however.

Now comes the new constitutional challenge to the ACA, filed by a group of states led by Texas. Their argument begins with the fact that, when the Supreme Court upheld the individual mandate, it did so in a very strange way. The five conservative justices all agreed that, under the commerce clause of the Constitution, Congress did not have the authority to make people buy insurance.

Their reasoning was borrowed from Prof. Barnett, who had proposed in his article that while the Congress has the power to regulate existing commercial activities, it can’t force people to undertake a commercial activity they are not already engaged in. This was the famous broccoli hypothetical: the conservatives argued that the commerce clause wouldn’t allow Congress to pass a law requiring everyone to buy and eat broccoli, even though Congress could lawfully regulate broccoli prices.

Despite this conclusion about the commerce clause, however, Chief Justice John Roberts joined the four liberals to uphold the individual mandate on the ground that it was a tax, and therefore fell within Congress’s separate taxing power. The other four conservatives were clearly frustrated with Roberts, but his vote carried the day.

The states are now arguing that once Congress repealed the tax penalty for the individual mandate in the 2017 law, no more constitutional authority exists for Congress to keep the individual mandate in place. The commerce clause is already excluded by the Supreme Court, and now the tax rationale is gone. Trump’s Department of Justice has agreed with this claim.

The states say that without the individual mandate, the whole ACA should be struck down as unconstitutional. Trump’s Justice Department didn’t go quite that far. But it did say that the ACA provisions on pre-existing conditions are so linked to the individual mandate that it should now be struck down.

Legal observers are pretty upset about this -- but not all for the reason you’d think. Some are focused on the strange circumstance that Justice is arguing that the law is unconstitutional. It’s not supposed to work that way. The executive branch is supposed to argue in favor of the constitutionality of laws currently on the books.

That’s bad, without a doubt. But it seems less worrisome than the possibility that courts, including the Supreme Court, might actually adopt the Trump administration’s view and strike down the ACA provisions on pre-existing conditions.

Legally, I don’t think that would be the right decision. I don’t think that the repeal of the penalty means that the no-penalty individual mandate is necessarily unconstitutional, since there is no sanction for violating it, so it isn’t really much of a law at all.

And even if the no-penalty mandate were unconstitutional, it doesn’t follow that the mandatory coverage provisions need to go. They are logically separate from the individual mandate. The mandate may have been thought been necessary to make those provisions work in practice, but it turns out that, so far at least, they are operating without it, and the death spiral hasn’t happened.

But it is entirely possible that five justices would follow the chain of formal logic laid out by the states and adopted by the Justice Department. The best argument in favor of that position is that the Obama Department of Justice told the Supreme Court years back that these provisions were interlinked – “inseverable” in legal jargon.

There is therefore a real and indeed significant chance that the most popular part of the ACA could be struck down. You may have thought that the whole ACA-and the-courts topic was over. But as it turns out, it keeps coming back, like a figure from a horror movie. Don’t turn your back.