Fifth Circuit Appears Skeptical Of Constitutionality Of PPACA

The Fifth Circuit Court of Appeals heard argument yesterday in a case that could radically impact health care coverage for millions of Americans.

As I made note of previously, the Fifth Circuit Court of Appeals heard argument yesterday in a case involving the constitutionality of the Affordable Care Act in light of the effective nullification of the individual mandate. Based on the reports regarding that argument, it appears that the three-judge panel hearing the case is skeptical of the ability of the PPACA being able to survive Constitutional review with the mandate now a dead letter:

NEW ORLEANS — A panel of federal appeals court judges on Tuesday sounded likely to uphold a lower-court ruling that a central provision of the Affordable Care Act — the requirement that most people have health insurance — is unconstitutional. But it was harder to discern how the court might come down on a much bigger question: whether the rest of the sprawling health law must fall if the insurance mandate does.

In 90 minutes of oral arguments on whether a federal district judge in Texas was correct in striking down the Affordable Care Act in December, two appellate judges appointed by Republican presidents peppered lawyers with blunt questions while the third judge, appointed by President Jimmy Carter, remained silent.

The two Republican appointees, Jennifer Walker Elrod, appointed by President George W. Bush in 2007, and Kurt Engelhardt, appointed by President Trump in 2018, seemed particularly skeptical of the Democratic defendants’ argument that Congress had fully intended to keep the rest of the law when it eliminated the penalty for going without insurance as part of its 2017 tax overhaul.

The arguments in the United States Court of Appeals for the Fifth Circuit were a stark reminder of the enormous stakes of the case, not only for millions of people who gained health insurance through the law but for the political futures of Mr. Trump and other candidates in the 2020 elections.

The case, which could make its way to the Supreme Court ahead of those elections, threatens insurance protections for people with pre-existing medical conditions and many other sweeping changes the 2010 law has made throughout the health care system.

It was filed by a group of Republican governors and attorneys general against the federal government, which carries out the law. But the Trump administration refused to defend the full law in court, initially saying only its provisions protecting people with pre-existing conditions should be struck down. Then, this spring, it said it agreed with the ruling that the law’s requirement for people to buy insurance was unconstitutional now that Congress eliminated the penalty for going without it, and that as a result, the entire law must be dismantled.

That has left a group of 21 states with Democratic attorneys general to intervene to defend the law, along with the House of Representatives, which entered the case after Democrats won control of the chamber last fall.

A question at the heart of the case that was much discussed during Tuesday’s arguments is whether the Affordable Care Act’s mandate requiring most Americans to buy health insurance or pay a tax penalty remained constitutional after Congress eliminated the penalty. When the Supreme Court upheld the mandate in its landmark 2012 ruling that saved the law, its decision was based on Congress’s power to impose taxes.

If the mandate is indeed unconstitutional, the next question is whether the rest of the Affordable Care Act can function without it. In December, Judge Reed O’Connor of the Federal District Court in Fort Worth said it could not and declared that the entire law must fall.

On Tuesday, Douglas N. Letter, a lawyer for the House of Representatives, was particularly insistent that Judge O’Connor had been wrong, telling the appeals panel that “the burden is on the other side to show Congress wanted this entire statute to be struck down.”

The arguments did reveal some tensions between the Republican states that brought the case, led by Texas, and Mr. Trump’s Justice Department. For example, a lawyer for Texas took issue with a puzzling new Justice Department position — revealed in a May brief — that the ruling should apply only in the 18 plaintiff states, not nationwide. The Republican states would need to evaluate if they had “been the victim of a bait and switch,” said the Texas lawyer, Kyle D. Hawkins.

In another wrinkle, August E. Flentje, a lawyer for the Justice Department, appeared reluctant to answer questions from Judge Elrod about how applying the ruling only to the plaintiff states would work. He was also vague about another new and surprising position the administration mentioned almost in passing in its May brief: that some pieces of the health law, though not its insurance provisions, should be preserved.

“A lot needs to get sorted out and it’s complicated,” Mr. Flentje replied.
Judge Elrod also asked how the federal government would respond if a stay issued by the lower court after Judge O’Connor’s decision was lifted and its order striking down the law took effect.

“We think it’s great the stay is in place,” Mr. Flentje said. “Those things don’t need to get sorted out until there’s a final ruling.”

Over all, though, the panel spent the most time on the question of whether the rest of the law should fall if Judge O’Connor was correct in scrapping the insurance mandate — and Judge Elrod and Judge Engelhardt, based on their questioning, seemed to firmly believe he was. Judge Engelhardt asked Mr. Letter, the House lawyer, why Congress could not remedy the situation by writing a new health law or set of laws.

“They could do this tomorrow,” Judge Engelhardt said, leading Mr. Letter to dryly point out that Mr. Trump would need to sign off on new laws, too.

“And obviously the president would sign this, right?” he asked sardonically. “No, obviously not.”

“You can fix this, and the Supreme Court has told you how to do it,” Mr. Letter told the panel, referring to legal precedent that directs courts to limit damage to major statutes when considering which provisions to throw out. “Maintain everything you can that can stand on its own.”

But Judge Engelhardt and Judge Elrod kept referring to past statements, including from Supreme Court justices in an earlier case questioning the constitutionality of the health law, King v. Burwell, suggesting that the law’s other insurance provisions cannot work without the mandate.

Those provisions include one that requires insurance companies to sell health coverage to anyone who wants to buy it, including people with pre-existing medical conditions, and another that requires the companies to charge the same price to everyone who is the same age.

More from The Washington Post:

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.

As I’ve noted before, it’s generally inadvisable to draw conclusions from the questions that are asked at oral argument. While they can often be a signal as to which way a particular Judge is leaning in a particular case, that isn’t always the case. In some cases, the questions that Judges ask can be based on a desire for counsel for one side or the other to clarify some point set forth in the briefs that have been filed in the case, or to more fully address an issue that has been raised in the briefs of the parties or the amicus briefs filed by outside parties who may have an interest in the case. On other occasions, it can be looked at as a means for one of the Judges to try to address concerns expressed by one of their fellow Judges on the bench. On still other occasions, a question asked may simply be based on intellectual curiosity on the part of one of the Judges.

Putting those caveats to the side, though, it does appear from the questioning that all of the Judges agree that the individual mandate can no longer survive Constitutional scrutiny. The basis for this ruling, of course, would reside in the Supreme Court’s ruling in National Federation of Independent Business v. Sebelius. In that case, Chief Justice John Roberts wrote, in an opinion in which he was joined by the Court’s four liberal Justices, that the individual mandate that was at the core of the law could not be justified by the Congress’s power under the Interstate Commerce Clause. The Court went on to rule, though, that the PPACA’s constitutionality could be upheld pursuant to the broadly interpreted power granted by the Constitution to tax for the “general welfare.” The main reason for this was due to the fact that the PPACA provided that the mandate would be enforced via a penalty imposed on those who did not have insurance via the income tax. This case was, generally, the end of the legal challenges that posed an existential threat to the PPACA.

In 2017, though, Congress passed the Tax Cuts and Jobs Act, part of which eliminated the Federal tax penalty for not having insurance. For those Americans who did not have insurance, this meant an end to the tax penalty, but it also spurred a new legal argument against the PPACA. Basically, that argument is that the individual mandate can no longer be considered Constitutional because the Supreme Court based the constitutionality of the mandate on the fact that it included a tax penalty for non-compliance. In the end, this seems axiomatic.

The question the Court faces is what happens after you declare the mandate unconstitutional. Texas and its sister states argue that without the mandate the entire structure of the PPACA must fall. During the period before the Supreme Court’s opinion in June 2012 when the Supreme Court finally upheld the PPACA, Federal Courts that accepted the arguments against the mandate were of different minds on the issue of whether the mandate can be severed from the PPACA as a whole. The Supreme Court itself never addressed the issue because it ultimately upheld the mandate, but this lawsuit, if it makes it that far, would force them to either face the issue head-on or reverse that portion of their 2012 ruling that held that the mandate could not be upheld as an exercise of Congressional power pursuant to the Commerce Clause, which seems unlikely given the current makeup of the Court.

I’ve addressed the issue of severability before, most recently in the preview post I wrote yesterday, and I won’t repeat them here. From the descriptions of the oral argument, though, it appears that at least two of the Judges appear skeptical of the argument that the mandate is severable from the underlying law. If that is the route they take in their opinion, then it would mean an end to some of the most popular parts of the PPACA, including provisions barring discrimination against persons with pre-existing conditions and requirements that plans cover the children of insured persons up to the time they turn 26. This would result in significant disruptions for millions of Americans and would completely up-end the health insurance marketplace absent action by Congress.

The Court of Appeals will likely hand down a ruling in this case sometime early in the fall. This means there would be more than sufficient time for the losing party to appeal to the Supreme Court and for the Court, presuming it accepts the appeal, to hear oral argument during the term that begins in October. That should make the 2020 Presidential campaign very interesting to say the least.

You can listen to the Court’s oral argument at this link. Take note that the link is to an MP3 file that will begin playing when the window opens. There is also an option to download the MP3 file.

FILED UNDER: Campaign 2020, Congress, Donald Trump, Health Care, Law and the Courts, Politicians, U.S. Constitution, US Politics
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010. Before joining OTB, he wrote at Below The BeltwayThe Liberty Papers, and United Liberty Follow Doug on Twitter | Facebook

Comments

  1. SKI says:

    Honestly, they weren’t even trying to hide their partisanship. The arguments are inane.

    If they proceed to uphold the District Court hack, Trump and the GOP will be the idiotic dog that caught the car and is now being dragged for a ride.

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  2. Dave Schuler says:

    The 5th Circuit has jurisdiction over Mississippi, Louisiana, and Texas. If the 5th Circuit does strike down the PPACA as unconstitutional, it will take place at just about the time that open enrollment begins. Expect a speedy appeal and expedited hearing.

  3. Daryl and his brother Darryl says:

    …it would mean an end to some of the most popular parts of the PPACA, including provisions barring discrimination against persons with pre-existing conditions and requirements that plans cover the children of insured persons up to the time they turn 26. This would result in significant disruptions for millions of Americans and would completely up-end the health insurance marketplace absent action by Congress.

    Emphasis, mine.
    This will be another case of the dog catching the car and not knowing what to do.
    Republicans in Congress have no health care plans…except to go back to the pre-Obamacare system.
    A huge gift to Democrats. Health care polls as one of the most important issues…and Republicans are about to get their wish and blow up the system…hardly a Conservative approach.

  4. Just Another Ex-Republican says:

    @Daryl and his brother Darryl: Exactly. It’s amazing evidence of how so many Republicans today live in an information bubble. They are so convinced that Obamacare is “bad” because of all the propaganda and mis-information out there, that they are prepared to throw out all the popular bits heading into an election season just so they can get rid of the black guy’s plan. It’s…insane.

    From a political point of view, nothing will make Obamacare more popular than if these idiots succeed.

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  5. wr says:

    You’d think there would be more of these right-wing hacks besides Roberts who understand that the entire judicial system depends on the majority of the American people believing that it is impartial and rules on the law and not on partisan preferences. But more and more — partially thanks to the current overload of Federalist Society fanatics — they are ruling based on whatever polls well on Fox News.

    Our nation’s government is built on the idea of the consent of the governed. If that goes away, we are in for a long period of true ugliness.

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  6. Raoul says:

    To hold the AHCA law unconstitutional because it was amended would mean that every law that is amended is unconstitutional since obviously the amendment was not part of the original act. Essentially every law in the country is unconstitutional under this logic.

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  7. Neil Hudelson says:

    @Raoul:

    Well, no. That would be true only if every amendment of every law cut out the provision of the law upon which its constitutionality rests.

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  8. Stormy Dragon says:

    Can someone please explain why the states have standing in this case, but not in the emoluments case?

  9. wr says:

    @Stormy Dragon: “Can someone please explain why the states have standing in this case, but not in the emoluments case?”

    Because it helps the Republican party this way.

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  10. Jen says:

    @Stormy Dragon: It’s just a guess, but states regulate insurance, which I believe would give them standing.

  11. An Interested Party says:

    Not even Trump’s “fake news” lies will be able to save him or his party if these judges get rid of the ACA…particularly if many of his supporters lose their health insurance coverage as a result…

  12. Mister Bluster says:

    …if many of his supporters lose their health insurance coverage as a result…

    His feeble minded supporters will blame President Obama for writing a law that could be struck down by the courts.
    To his moronic base nothing is Pud’s fault.

  13. wr says:

    @Mister Bluster: “To his moronic base nothing is Pud’s fault.”

    Yes. There is no chance of winning over the hardcore Trumpies. But that’s going to be about 30% of the voting public, tops. No Democrat is running with the idea of winning over those people.

  14. gVOR08 says:

    @wr:

    You’d think there would be more of these right-wing hacks besides Roberts who understand that the entire judicial system depends on the majority of the American people believing that it is impartial and rules on the law and not on partisan preferences.

    Roberts has kept his fingerprints off the destruction of the ACA. I think that may be all he wanted.

  15. An Interested Party says:

    To his moronic base nothing is Pud’s fault.

    Hence, deplorables…Hillary was so right…

    There is no chance of winning over the hardcore Trumpies.

    I wasn’t referring to those people so much…I’m sure there are now more than a few other people who voted for him who now regret that vote and are looking for an alternative…

  16. Teve says:

    @An Interested Party:

    I wasn’t referring to those people so much…I’m sure there are now more than a few other people who voted for him who now regret that vote and are looking for an alternative…

    I bet this is correct.

  17. Gustopher says:

    So, the legal theory is that when the Republicans voted to lower the tax/fine to $0, they had their fingers crossed behind their backs, and they really meant to invalidate the entire act?

    That seems like a bit of a stretch.

  18. Mister Bluster says:

    @wr:.. There is no chance of winning over the hardcore Trumpies. But that’s going to be about 30% of the voting public, tops.

    You seem to be confident of this number.
    How do arrive at “…30% of the voting public, tops.”?

  19. wr says:

    @Mister Bluster: “How do arrive at “…30% of the voting public, tops.”?”

    Going by the standard 27% crazification factor and throwing him an extra few scumbags.

  20. greenlibertarian says:

    The American middle class does not like the mandate as it harms their ability to hold on to private property (their homes), takes money that could be spent to develop their children, subsidizes strangers, is a wealth redistribution scheme, some of which is probably kick-backed by insurance companies to government black budgets. The mandate was a tax per Scotus, and a tax can be repealed by US Congress.

  21. Mister Bluster says:

    @wr:..the standard 27% crazification factor…an extra few scumbags.

    I can’t argue with solid statistical research…

  22. Tyrell says:

    The penalty is no longer in force, but the Affordable Health Care Act keeps rolling along, so what is the problem? Why would that be unconstitutional?
    What needs to be done are some fixes. They should add a fourth plan option. The subsidy requirements should be lowered to let more people qualify. Some options and incentives could get more young people in. Even with some glitches the AHA seems to have worked out.
    The tax preparation companies have several different ways around the penalty.
    I like my health plan. Some candidates want to do away with it.

  23. Raoul says:

    @Neil Hudelson: Total misreading of Roberts opinion- the issue then was whether the mandate was constitutional not the entire act per se.

  24. Raoul says:

    @Raoul: Since Roberts decided it was constitutional he did not need to address severabilty. Congress by passing the mandate repeal answered that question (that it was and they did severe it).

  25. MarkedMan says:

    green libertarian, huh. So yet another poster with a thought provoking name who will post once, not respond to anyone who might raise an issue and who we will never hear from again. Almost like he was getting paid by the post….

  26. MarkedMan says:

    @Tyrell:

    What needs to be done are some fixes. They should add a fourth plan option. The subsidy requirements should be lowered to let more people qualify. Some options and incentives could get more young people in. Even with some glitches the AHA seems to have worked out.

    Tyrell! That actually makes sense!

  27. Teve says:

    @MarkedMan: Yeah, I actually had to upvote Tyrell. Fair is fair.