NEW ORLEANS — Federal appeals court judges expressed skepticism Tuesday that the nearly decade-old law that refashioned the nation’s health-care system should remain intact after Congress eliminated a tax penalty for Americans who fail to carry health insurance.
During oral arguments in a case with momentous stakes for consumers and politicians ahead of the 2020 elections, two members of a three-judge panel of the U.S. Court of Appeals for the 5th Circuit grilled lawyers representing Democratic-led states and the U.S. House to explain why the Affordable Care Act remains valid.
“If you no longer have the tax, why isn’t it unconstitutional?” asked Judge Jennifer Walker Elrod, who was appointed by President George W. Bush. She and the other GOP appointee, Judge Kurt Engelhardt, named by President Trump last year, repeatedly noted that the law was written without an explicit feature guaranteeing that if one part were ever removed by Congress or the courts, the rest would remain in place.
At stake in the panel’s decision is insurance coverage for millions of Americans who gained it under the law through expansions of Medicaid in three dozen states and a new insurance marketplace, as well as consumer protections for most people with private health plans. Whatever the circuit court decides, its ruling could well be appealed to the Supreme Court, catapulting those issues to the forefront of the 2020 presidential and congressional elections.
The Democratic lawyers fighting to preserve the law argued that the Republican Congress had tried and failed to repeal the ACA two years ago and that by eliminating the penalty in late 2017 as part of broad tax changes, it had not touched any other parts of the sprawling statute. They also said that Congress did not eliminate the penalty but simply lowered the amount to zero — an assertion challenged by the panel’s Republican appointees.
Kyle Hawkins, solicitor general for the Texas attorney general who initiated the lawsuit in February 2018, countered: “I am not in position to psychoanalyze Congress . . . what Congress intended.”
Despite such pointed questioning, the hearing did not clearly foreshadow how the panel will rule in the appeal of a December opinion by a federal district judge in Texas who said the entire ACA is unconstitutional. Nor did the panel members say when they expect to issue an opinion, though the court says in general that its judges will try to do so within a few months.
Engelhardt, the Trump appointee, primarily grilled attorneys representing California Attorney General Xavier Becerra, a score of other Democratic-led states and the Democratic House. Elrod peppered both sides with questions. The third and only Democratic appointee on the panel, Judge Carolyn Dineen King, a former chief judge of the court who was appointed by President Jimmy Carter, was silent during the 90-minute-plus hearing.
Tuesday’s arguments were the latest step in the law’s sinuous path through the courts since its passage in 2010. The Supreme Court has twice upheld its constitutionality, in 2012 and 2015.
But fresh tremors about the ACA’s future reverberated in December when U.S. District Judge Reed O’Connor ruled against the entire statute in a lawsuit that even some of the law’s critics regarded as legally weak. The law remains in place during appeals.
The case’s outsize significance was evident from the television crews outside the marbled courthouse in downtown New Orleans and the lines standing in the heat, hoping for a seat in the courtroom, as well as from the broadsides issued from Washington in the hours before the hearing.
Pro-ACA groups warned of the peril to consumers if the law were struck down. The Democratic Senate Campaign Committee launched attack ads, accusing vulnerable Republicans of not working hard enough to protect patients with preexisting medical conditions. On the other side, conservative groups proclaimed that an end to the ACA would usher in a new era of more-affordable insurance and greater choice of health plans.
For all the drama, much of the presentations by attorneys and judges’ questions turned on technical points, focusing largely on the matter of “severability” — whether the elements of the law can exist independent of one another — and whether the various parties to the case have legal standing to take part.
At one point, Engelhardt suggested that it was up to Congress to forge a solution to the disputes that have dogged the law since its passage, when Democrats controlled Congress and President Barack Obama was just over a year into his tenure. Engelhardt questioned whether the judiciary should be “taxidermist for every legislative big-game accomplishment that Congress achieves.”
Douglas Letter, general counsel for the House, replied to the judge, “You cannot and should not draw any meaning from the fact Congress has not done any additional legislating” on the ACA.
Many of the points and counterpoints laid out at the hearing have been part of the case since it began. But August Flentje, special counsel to the Justice Department’s civil division, advanced an argument the administration only recently has begun to make.
Flentje contended that if the 5th Circuit agrees with the lower court that the entire ACA is unconstitutional, the only states that would be affected are Texas and the 17 GOP-led states that have joined with it. He said the legal remedy for those states would involve only the parts of the law that have harmed them.
Asked by Elrod to elaborate, Flentje did not. “The issue is complicated and would need to be sorted out,” he said.
In an unusual break with tradition, the Trump administration announced about a year ago that it would not defend the ACA in court. Justice Department officials argued at the time that the law’s insurance requirement and consumer protections were no longer valid without any penalty but that other parts of the law should stand. This spring, the administration changed its position mid-appeal, with the Justice Department telling the 5th Circuit it now agrees with the district court that the entire law is invalid.
With Justice Department officials sidestepping the role of defending an existing federal statute, a coalition of Democratic state attorneys general, led by Becerra, moved into that position. And when the House switched back to Democratic control at the start of this year, it intervened in the case to side with the Democratic states.