On Thursday, the Supreme Court rejected, in California v. Texas, a challenge to the Affordable Care Act brought by a coalition of Republican-controlled state governments. The 7-to-2 decision is a notable setback for Obamacare opponents, and another indication that several of the Supreme Court’s conservative justices are willing to rule against conservative Republican causes.
It also highlights some key weaknesses of this particular lawsuit — weaknesses that led many people who supported previous legal challenges to Obamacare to oppose this one. I fall into that category myself, having supported the original 2012 lawsuits against the constitutionality of several parts of the ACA, but having largely rejected the arguments in this one.
The case was complicated, but hinged on the infamous mandate requiring most Americans to buy government-approved health insurance. Originally, the ACA included a financial penalty if people failed to buy such insurance, In its 2012 ruling in NFIB v. Sebelius, the Supreme Court narrowly rejected a challenge to the constitutionality of the mandate. In that case, the government had argued that it could impose the mandate — and the related penalty — under the powers given it by the Commerce Clause of the Constitution, which grants Congress the power to regulate “commerce … among the several states.” But Chief Justice John G. Roberts Jr.'s controlling opinion in NFIB rejected this argument; instead, he argued, the mandate could be interpreted as a tax, thereby saving it from being ruled unconstitutional.
Then, in December 2017, the then-GOP-controlled Congress passed a tax-reform law that eliminated the financial penalty. The states challenging the ACA in California v. Texas argued that a mandate that no longer raises any money cannot be considered a tax, and is therefore unconstitutional. Much more controversially, the states also contended that the rest of Obamacare must fall along with the mandate, because the mandate is such an important part of the statute that it cannot be “severed.”
This is where even many people like myself — those who thought the mandate should have been ruled unconstitutional in 2012 — believed the new argument ran off the rails. I agree that what’s left of the mandate is unconstitutional. But it makes no sense to argue that a now-toothless requirement is so essential to the structure of the ACA that the rest of the act must fall with it. It especially makes no sense when you consider Congress’s intent, as the court usually does in severability cases. If Congress believed that the mandate was an essential part of the ACA — to the point that eliminating it would make the law unworkable — it would not have zeroed out the penalty while leaving the rest of the law untouched.
Somewhat surprisingly, Thursday’s ruling did not directly address the merits of the case. Instead, it dismissed the states’ lawsuit because the plaintiffs don’t have “standing” — namely, they didn’t suffer a concrete injury caused by the action they claim is illegal.
The states argued that the mandate imposes expenses on them by incentivizing some citizens to enroll in state-run health-care programs. But those burdens weren’t caused by the individual mandate, Justice Stephen G. Breyer argued for the majority. As Breyer points out, “the States have not demonstrated that an unenforceable mandate will cause their residents to enroll in valuable benefits programs that they would otherwise forgo.” The states also argued that they are burdened by provisions of the ACA requiring them to provide information to beneficiaries of state health insurance plans, and also to report related information to the IRS. Breyer notes that “these other provisions … operate independently of” the insurance mandate, and would exist even without it. (For similar reasons, the court also denied standing to two individual citizen plaintiffs, who had joined the lawsuit.)
Issues of standing aside, the court’s emphasis on the lack of connection between the now-toothless mandate and other parts of the ACA highlights the weaknesses of the substantive argument at the heart of the plaintiffs’ case. It is hard to claim that the mandate is inseverable from the rest of Obamacare if it has little or no practical effect. I would have preferred that the court simply decide the case on the merits entirely, rather than dismiss based on standing. But the two are interconnected.
In a dissenting opinion joined by Justice Neil M. Gorsuch, Justice Samuel A. Alito Jr. contested each of the conclusions of the majority: He argued that the state plaintiffs did have standing (because the ACA imposed substantial burdens on them), that the residual mandate is unconstitutional and that much of the rest of the ACA is inseverable from it — largely because Congress included findings claiming that the mandate is an essential part of the law when it originally enacted the ACA in 2010.
The problem with this theory is that the 2010 legislative findings obviously refer to the mandate as originally enacted: the version that included a penalty for noncompliance. Since 2017, that version of the mandate no longer exists.
Alito himself recognized this during the oral argument, where he pointed out that in the original 2010 law, “there was strong reason to believe that the individual mandate was like a part in an airplane that was essential to keep the plane flying. If the part was taken out, the plane would crash.” But, Alito continued, “the part has been taken out and the plane has not crashed.” If, as Alito put it, Congress “took out” the mandate in 2017, that’s a strong sign that it believed the ACA could function without it.
Many people — I among them — believe Roberts was wrong to rebrand the individual mandate as a tax in NFIB. There’s a strong argument that Congress lacks the power to penalize people for failing to buy health insurance, and that even a penalty-less mandate is unconstitutional. But the plaintiffs in this case greatly overreached in arguing this tiny tail wags the giant dog of Obamacare.
All but two justices joined the majority — which is good news for observers worried that the two wings of the court always vote along partisan lines. Four conservatives voted with the three liberals, including newly appointed Justice Amy Coney Barrett, who some Democrats expected to vote to strike down the ACA. It’s yet more evidence — along with rulings such as the 2020 election case and Trump-era litigation over sanctuary cities — that conservative judges are not simply Republican politicians in robes.
For technical reasons, today’s decision may not put a final end to the severability challenge to the ACA. But after today, it is hard to see how a majority would ever be willing to rule that the residual mandate is essential to the law as a whole. If the ill-conceived severability argument is not completely dead, it is at least on life support. That’s good news for those who value the rule of law, including those of us who aren’t fans of the Affordable Care Act.