Outside the Beltway

Fifth Circuit Strikes Down PPACA Individual Mandate

The Fifth Circuit Court of Appeals ruled the PPACA''s individual mandate unconstitutional but left the fate of the rest of the law unresolved.

Doug Mataconis · Friday, December 20, 2019 · 2 comments

In a ruling that could have a significant impact on the 2020 General Election, and which seems inevitably to be headed to the Supreme Court, the Fifth Circuit Court of Appeals has upheld one portion of a Federal District Court Judge’s ruling finding the individual mandate in the Patient Protection And Affordable Care Act (PPACA), otherwise known as Obamacare, to be unconstitutional, but left the ultimate fate of the entirety of the PPACA:

A federal appeals court on Wednesday struck down a central provision of the Affordable Care Act, ruling that the requirement that people have health insurance was unconstitutional.

But the appeals panel did not invalidate the rest of the law, instead sending the case back to a federal district judge in Texas to “conduct a more searching inquiry” into which of the law’s many parts could survive without the mandate.

The 2-1 decision, by a panel of the United States Court of Appeals for the Fifth Circuit in New Orleans, left the fate of the nearly decade-old health law in limbo even as access to health care has become a central issue in the presidential race. Republicans, for whom a decision to throw out the law heading into the presidential election year could have been a political nightmare, seemed relieved, while Democrats issued a flurry of statements emphasizing that the law was still in grave danger.

The ruling was issued almost exactly a year after Judge Reed O’Connor of the Federal District Court in Fort Worth struck down the entire law, saying the individual mandate could not be severed from the rest of the Affordable Care Act because it was “the keystone” of the law, essential to its regulation of the health insurance market. With Judge O’Connor now facing a time-consuming assignment from the appellate court, the case is unlikely to be resolved before next year’s presidential election.

But Xavier Becerra, the California attorney general who led 21 states that intervened in the case and argued to preserve the law, made clear that he planned to challenge the appeals court decision by petitioning the Supreme Court to take the case.

“For now, the president got the gift he wanted — uncertainty in the health care market and a pathway to repeal,” Mr. Becerra said in a call with reporters on Wednesday night.

In a statement that showed just how consequential the issue is for him, President Trump tried to appeal both to opponents of the law and voters concerned about losing their health care. He described the ruling as “a big win for all Americans,” but said it would not alter the health care system. Mr. Trump also said he wanted to protect people with pre-existing conditions, as the Affordable Care Act that he has repeatedly sought to kill does.

“Providing affordable, high-quality health care will always be my priority,” he said.

More from The Washington Post:

A federal appeals court Wednesday struck down part of the Affordable Care Act, ruling that its requirement that most Americans carry insurance is unconstitutional while sending back to a lower court the question of whether the rest of the law can remain without it.

The long-awaited decision by a three-judge panel of the U.S. Court of Appeals for the 5th Circuit has little immediate practical effect on consumers because Congress already has removed the penalty for people who flout the insurance requirement. But the panel’s 2-to-1 ruling leaves the rest of the sprawling statute in limbo, catapulting questions of insurance coverage and consumer health-care protections to the forefront of the 2020 presidential and congressional campaigns.

The panel’s one Democratic appointee dissented from the 98-page opinion, writing that the Republican states challenging the law did not have standing to do so. If they did, she wrote, she would find the mandate constitutional.

A federal appeals court Wednesday struck down part of the Affordable Care Act, ruling that its requirement that most Americans carry insurance is unconstitutional while sending back to a lower court the question of whether the rest of the law can remain without it.

The long-awaited decision by a three-judge panel of the U.S. Court of Appeals for the 5th Circuit has little immediate practical effect on consumers because Congress already has removed the penalty for people who flout the insurance requirement. But the panel’s 2-to-1 ruling leaves the rest of the sprawling statute in limbo, catapulting questions of insurance coverage and consumer health-care protections to the forefront of the 2020 presidential and congressional campaigns.

The panel’s one Democratic appointee dissented from the 98-page opinion, writing that the Republican states challenging the law did not have standing to do so. If they did, she wrote, she would find the mandate constitutional.

The underlying cae nvolves a lawsuit that was filed last March by a group of conservative-leaning states who contended that the PPACA was unconstitutional, an argument that we last heard in 2011 when the matter was seemingly decided by the Supreme Court. In response to that lawsuit, the Trump Administration informed the Court that it would not defend the lawsuit and noted that it agreed with the contention of the Plaintiff states that the law was unconstitutional. In response, Congressional Democrats stepped in to defend the lawsuit, a move that was accepted by the Federal Judge presiding over the case. In December, that same Federal Judge essentially agreed with the arguments of the states and declared the PPACA unconstitutional and, as it had a year earlier, the Trump Administration informed the Circuit Court of Appeals that it would not defend the case on appeal.

The states’ lawsuit and the ruling below by District Court Judge Reed O’Connor is essentially rooted in the basis upon which the law was upheld by the Supreme Court back in June 2012 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 Congress’s power under the Interstate Commerce Clause. The Court went on, however, to rule 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. For the most part, this was the end of the legal challenges to the PPACA and the law went on to take full effect in 2014.

In December 2017, though, Congress took a step which provided a legal opening for those opposed to the law when it passed the tax reform bill.  When Congress turned its attention to tax reform, which was always guaranteed to be much easier to pass both chambers of Congress, Republicans included in the bill the aforementioned provision that effectively eliminated the penalty for failure to obtain insurance. At the time, many analysts warned that this provision would ultimately have a negative impact on health care markets due to the fact that it would likely lead younger, healthier Americans to either drop their health insurance coverage if it wasn’t already provided to them via an employer. Whether or not that is true remains to be seen, especially since the penalty itself was almost always lower than the cost of private insurance coverage for most Americans so there was almost always a greater economic incentive for people to opt-out of insurance coverage and simply pay the penalty.

In essence, the case deals with two separate issues. The fist is whether or not the individual mandate, which remained in the law even though the 2017 tax law essentially made it unenforceable, was unconstitutional. On this argument, it’s clear that Texas and the other Plaintiffs are on the right track. Without the tax penalty to enforce it, there is nothing left in the Constitution to support the existence of the mandate. As noted above, in its 2012 decision, the Supreme Court specifically ruled that the mandate could not be justified under the Interstate Commerce Clause, for example. That is why Chief Justice Roberts had to use the general welfare/tax clause of Article I, Section 8 to uphold the PPACA in his opinion.

The second question is the more consequential one. It deals with the question of whether or not the rest of the PPACA, including politically popular provisions such as the ban on denying coverage and charging higher premiums to people with pre-existing conditions, can survive without the individual mandate. During the period before the Supreme Court’s opinion in June 2012, Federal Courts that accepted the Plaintiff’s 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 forces the court to deal directly with it, especially given the ruling on the mandate.

The Plaintiffs argue that, with the mandate gone, the entire law must be declared unconstitutional, and this deals with a legal issue called severability which deals with the question of whether or not the unconstitutional provision can be severed from the rest of the law. The major problem with the state’s argument is that it seems as though Congress has already answered the question of whether or not the mandate can be severed from the rest of the PPACA.

While it failed in its effort to repeal Obamacare in its entirety, Congress succeeded in making the mandate a nullity simply by putting a small section in the tax bill that provides that the penalty for failure to abide by the mandate is $0.00 while leaving the rest of the law in place. This means that all of the law’s other provisions, including the parts that bar discrimination based on pre-existing conditions, extending parental plans to cover young Americans up to their 26th birthday, and elimination of lifetime caps on coverage, remain in place. In other words, Congress has shown that the mandate, or at least the ability to enforce it, is now a dead letter but the rest of the law remains in place. Because of that, it seems clear that the best the tats can get here is a rather meaningless ruling that the mandate, which is already unenforceable, is also unconstitutional.. While this may mean that the law itself becomes economically unsustainable in the future, that isn’t really a relevant consideration for the courts.

As noted, the Fifth Circuit has remanded the case back to the District Court for a more thorough examination of the severability issue. Despite that, California and the group of blue states that intervened in the case on behalf of the law are apparently going to attempt to get the Supreme Court to review the Fifth Circuit decision. This seems like an effort that will ultimately not work because the Justices will most likely decline to take the case because there is not a complete decision on the underlying issues in the case. This means that it could be a year or more before the case is ripe for Supreme Court consideration, something that will no doubt be a relief to Republicans who no doubt recognize that there could be a vulnerability for them if there were a court decision striking down the entire PPACA prior to the 2020 election. In that sense, then, the Fifth Circuit decision cut the GOP a break and left for 2021 or 2022 the question of the ultimate fate of the PPACA as a matter of law.

Texas Et Al v. United State… by Doug Mataconis on Scribd