Symposium: Sufficient is sufficient: The protection provision remains to be constitutional and the courtroom ought to reject this newest pretext for attacking the ACA

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This article is part of a symposium previewing California versus Texas.

Brietta Clark is Professor of Law and a J. Rex Dibble Fellow at Loyola Law School at Loyola Marymount University in Los Angeles.

In California v Texas, two people and 18 states are calling on the Supreme Court again to do what it refused to do against Sebelius eight years ago in the National Federation of Independent Business. You want the court to find the minimum insurance requirement in Section 5000A of the Patient Protection and Affordable Care Act unconstitutional and invalidate the entire ACA as inseparable from the provision.

To justify a second bite of that apple, plaintiffs rely on the Tax Cut and Jobs Act of 2017, which amended Section 5000A to zero the penalty for lack of insurance. Paradoxically, they claim the TCJA converted the minimum insurance requirement into an unconstitutional mandate to take out insurance, even though it removed the only way to enforce the provision. Indeed, President Donald Trump and lawmakers have described the TCJA as an effective mandate waiver so that no one would be forced to take out insurance.

Unlike the questions the Supreme Court first faced at the NFIB, this case is not a difficult one. The TCJA’s waiver of the fine has only removed any credible basis for claiming that there is a legal mandate to obtain insurance. Although the language for the coverage obligation is technically still “in the books” due to a Senate rule that restricts what could be changed by the budget reconciliation, the lifting of the fine makes the determination only provisional. Without an enforcement mechanism, this provision is sensibly interpreted as a moral mandate, which at best promotes participation in the insurance market. Since the TCJA does not require insurance to be taken out, the Supreme Court should unanimously reject this latest attack on the ACA.

What is really at stake in California against Texas?

Although plaintiffs claim the TCJA created an unconstitutional mandate, this case is not about state coercion. Finally, the TCJA has clearly made the minimum coverage regime unenforceable. The administration has not and has not been able to take any enforcement action against the insured. And the means of successfully challenging a mandate would be to make the provision unenforceable, which the TCJA has already done.

The challenge for determining the coverage is a pretext: The plaintiffs try to do in court what reform opponents have not achieved through the political process – to overthrow the ACA. Not only do they claim that the currently unenforceable cover provision is an unconstitutional mandate; They argue that Congress saw this provision – which Congress itself made unenforceable without repealing the rest of the ACA – as so essential to the ACA that it would have to drop all of the law.

This would degrade a system that millions rely on for health care – a need that has become even more urgent given the dire health and economic consequences of the COVID-19 pandemic. For example, the ACA’s Medicaid extension covers the millions of workers who have lost their jobs and their work-related health insurance. And the ACA’s private insurance coverage ensures that the millions of people who have been infected with the coronavirus cannot be denied coverage or charged higher prices.

This threat to the health care safety net is real. A federal district court in Texas ruled that the TCJA created an unconstitutional mandate and on that basis invalidated the entire ACA. On appeal, the U.S. 5th Circuit Court of Appeals upheld the unconstitutional mandate but referred to a more thorough investigation of the entire ACA to determine which provisions Congress should be inseparable. Eventually, the federal government has refused to fully defend the ACA and has urged other states and the US House of Representatives to step in to defend the law.

Why the mandate decision of the 5th circuit should be repealed

In deciding that the TCJA had created an unconstitutional mandate, the 5th Circle sought to take into account the fact that both the intent and the practicality of the TCJA were to do the opposite. Instead, the 5th Circuit claimed that its conclusion was dictated by the NFIB. In particular, she interpreted NFIB to mean that the possible interpretations of the challenged coverage provision were limited to only two: a constitutional tax or an unconstitutional mandate. After finding that the TCJA eliminated the tax option by reducing potential tax revenue to zero, it concluded that the mandate must be an unconstitutional mandate. For further support, the court referred to statements in the NFIB, according to which the cover obligation is most simply to be read as an order to take out insurance.

Contrary to his claims, the decision of the 5th district is not supported by the NFIB, let alone required. While the NFIB court considered only two interpretations of the coverage rule as mandate or tax, this was based on interpretations offered by the government to match the original coverage rule – fine-enforceable. This does not restrict the range of possible interpretations for the amended provision. For the same reason, Circuit 5’s reliance on the NFIB language, which describes the simplest reading of the provision as a mandate, is false. In adopting the mandate framework, the 5th Circuit wrongly disregarded the TCJA’s annulment of the original enforcement mechanism – a mechanism that appeared to be of vital importance both for the constitutional analysis of the majority and for the dissident opposition in the NFIB .

The analysis of the coverage requirement by the NFIB revealed a broken opinion with changing majorities. Five judges did not believe that Congress’ powers to regulate international trade enabled it to compel individuals to take out insurance. Judges Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor and Elena Kagan believed that Congress had the power to issue such a mandate. Still, they endorsed Chief Justice John Roberts in the majority opinion and upheld the provision on an alternate basis – as a constitutional tax. Judges Antonin Scalia, Anthony Kennedy, Clarence Thomas, and Samuel Alito disagreed.

In maintaining the coverage provision, the NFIB majority showed a willingness to look beyond the straightforward reading of the statute as a “mandate enforced by a penalty” to see whether there is an alternative reasonable construction that is a constitutional matter would save. The majority focused on how the provision actually worked, noting that the reasonableness of the amount, the factors used to determine the amount, and the way it was levied by the IRS made the “penalty” look more like a tax. The lack of more punitive legal consequences, such as criminal sanctions, and the government’s estimates that around four million people would forego insurance, led the majority to conclude that the provision of a tax on a lawful decision to forego insurance rather than a punishment is like illegal behavior. In this case, however, the 5th Circuit has disregarded the fact that by removing the fine, the TCJA maintained the lawful decision to forego insurance that is crucial for the NFIB majority.

The approach of the 5th circuit is not even supported by the dissent of the NFIB, which rejected the tax theory and took over the mandate framework. In contrast to the 5th Circuit’s apparent disregard for the intent and effect of the TCJA, the NFIB dissent repeatedly pointed to the financial enforcement mechanism as a critical support for the mandate framework. It was stressed that the coverage requirement was punished with a fine, that this exaction should be understood as a punishment for breaking the law and that this reflected the government’s expectation that participation in the insurance market would be required. This heightened the dissident’s fundamental concern about expanding federal power to legally force individuals to trade – a concern that no longer exists after the TCJA.

Why the changing composition of the Supreme Court shouldn’t matter

After the death of Ginsburg, who was part of the narrow majority in the NFIB, there were significant concerns as to whether there would be enough votes this time around to save the ACA. In particular, commentators point to statements in an essay by recently confirmed Judge Amy Coney Barrett that suggest a consensus with NFIB dissidents on the mandate issue. However, it is important to remember that we are not re-litigating the NFIB.

In this case, the TCJA has removed the element of government coercion that animated the NFIB Dissident and Barrett’s view of the original minimum coverage requirement as unconstitutional. Now that the provision is provisional, it no longer implies the tension between federal power and individual freedom that raises difficult constitutional issues and deep ideological divisions. Indeed, people across the ideological spectrum have largely criticized the decisions of the 5th Circle and the District Court. Barrett’s appointment to the Supreme Court shouldn’t determine the fate of the ACA – at least not in this case – as it shouldn’t be a close call.

Posted in California v Texas, Texas v California, pre-hearing symposium in California v Texas, Featured

Recommended citation:
Brietta Clark, Symposium: Enough is Enough: The coverage provision is still constitutional and the court should reject this latest pretext for attacking the ACA.
SCOTUSblog (November 6, 2020, 10:26 am), https://www.scotusblog.com/2020/11/symposium-enough-is-enough-the-coverage-provision-is-still-constitutional-and-the – court-should-reject-this-latest-excuse-to-attack-the-aca /