On Friday, Judge Reed O’Connor issued an Opinion in Texas v. United States that turned the ACA into the baby being thrown out with the bathwater.
Here are some articles that I think do a good job of highlighting the problems with the Opinion:
- GOP Feels Heat in Wake of Obamacare Ruling
- There is no “mandate”
- Health Law Could Be Hard to Knock Down Despite Judge’s Ruling
- The Latest ACA Ruling is Raw Judicial Activism and Impossible to Defend
And here is my bulleted “summary.” It’s obscenely long, itself, but shorter than the 55-page Opinion O’Connor issued. Also – I wrote fast. Apologies for typos/grammar errors, changes in tense, etc.
Here the Court runs through the history of the ACA, NFIB, and the TCJA.
- Became law in 2010 with the purpose of achieving “near universal” health coverage and lowering health insurance premiums through the creation of effective health insurance markets.
- Required minimum coverage (Individual Mandate) and imposed a tax on people who were subject to the requirement but chose to disobey ($695 or 2.5% percent of family’s household income, whoever was higher).
- Exceptions to the mandate included those who had a religious exemption, non-citizens, legal aliens, and people in jail.
- Also five categories of people exempted from the shared responsibility tax but not the individual mandate (i.e., must maintain minimum coverage but not taxed for a failure to do so).
- Protects people with preexisting conditions – by requiring healthy people to have health insurance and including them in the risk pool, insurance premiums across the board were to decrease.
- Includes the “guaranteed-issue” and “community-rating” provisions. The first requires insurers to “accept every employer and individual in the State that applies for . . . coverage;” the latter prohibits insurers from charging higher rates to individuals based on age, sex, health status, or other factors.
- Requires employers with more than 50 employees to provide insurance or pay a penalty.
- Allows dependent children to remain on their parents’ insurance until age 26.
- Reduced hospital reimbursements by more than $200 billion over 10 years.
- Created health insurance exchanges and expanded the scope of Medicaid, covering millions more.
B. NFIB (National Federation of Independent Businesses v. Sebelius (2012))
- After ACA was enacted, 26 states, individuals, and an organization of independent businesses challenged its constitutionality.
- Main argument was the ACA’s Individual Mandate and the Medicaid expansion exceeded Congress’s powers.
- Supreme Court sort of agreed and said the Individual Mandate was beyond the Interstate Commerce Power BUT fell under Congress’s power to impose taxes.
- Incredibly complicated, splintered decision from SCOTUS.
- Part III-A: Roberts stated that the Interstate Commerce Power does not factor in here, because it regulates “activity” not “inactivity” (i.e., people NOT buying insurance is an inactivity). Roberts said that the Constitution gave Congress the power to regulate commerce, not compel it.
- No other Justice joined this particular part of Justice Robert’s opinion, BUT the dissent found the same on the Interstate Commerce Clause (ICC) question, so the majority of SCOTUS found that the Individual Mandate was unconstitutional under this particular Clause.
- Part III-B: Roberts found that because the Individual Mandate was impermissible under the ICC, SCOTUS had to consider whether it was constitutional under the Tax Power.
- Part III-C: Joined by Ginsburg, Breyer, Sotomayor, and Kagan. Found that the Individual Mandate and associated shared-responsibility payment was indeed a constitutional exercise of Congress’s Tax Power. The analysis here focused mainly on the payment rather than on the Mandate.
- Part IV: Roberts was joined by Breyer and Kagan in finding that the Medicaid-expansion unconstitutionally coerced States in compliance, but because there was a sever ability clause in the law, the unconstitutional portion of the Medicaid provision could be severed. Ginsburg and Sotomayor disagreed that tis was unconstitutionally coercive, but agreed that IF the provision was unconstitutional, it could be severed.
- Then there was a joint dissent!
- In it, Scalia, Kennedy, Thomas, and Alito agreed with Roberts that the Individual Mandate exceeds Congress’s powers under the Interstate Commerce and Necessary and Proper Clauses, but they felt that it could NOT be characterized as a tax.
- This is primarily because (according to them), Congress had rejected an earlier version of the ACA that “imposed a tax instead of a requirement-with-penalty.” Therefore, characterizing the Mandate as a tax ran afoul of Congressional intent.
- This dissent addressed whether the entire ACA should fall on the basis of the Mandates’ and expansion’s unconstitutionality.
- They said yes, because there was no way for the ACA to function without its (according to them) unconstitutional parts.
C. The TCJA (Tax Cuts and Jobs Act)
- Passed and signed into law in 2017.
- Reduced the ACA’s shared-responsibility payment to zero, effective January 1, 2019 but took no other action pertaining to the ACA.
II. Procedural Background (of THIS case)
- Plaintiffs: Alabama, Arizona, Arkansas, Florida, Georgia, Indiana, Kansas, Louisiana, Mississippi, Missouri, Nebraska, North Dakota, South Dakota, Tennessee, Texas, Utah, West Virginia, Wisconsin, Governor Paul LePage of Maine, and individuals Neill Hurley and John Nantz.
- Defendants: USA, US Department of Health and Human Services, Alex Azar (in his capacity as Secretary of HHS), the IRS, and David Kautter (as Acting Commissioner of the IRS).
- Intervenor Defendants: California, Connecticut, Delaware, Hawaii, Illinois, Kentucky, Massachusetts, Minnesota, New Jersy, New York, North Carolina, Oregon, Rhode Island, Vermont, Virginia, Washington, and Washington D.C.
- Plaintiffs: Wanted a declaration the Individual Mandate – as amended by the TCJA – is unconstitutional and thereby makes the rest of the ACA void (due to not being severable).
- Their theory is that because the TCJA removed the tax payment, the tax-based saving construction developed in NFIB no longer applies. They adhere to the joint dissenters in the NFIB case, who argued that the Individual Mandate is inseverable from the rest of the ACA.
- Federal defendants agree with the Plaintiffs.
- The Intervenor Defendants disagree with both of the above.
- Plaintiffs wanted a Preliminary Injunction; Federal Defendants wanted a judgment.
- Court was down to resolve the issues on summary judgment.
- Plaintiffs said that even though they WANT a preliminary injunction, they’d be okay with the court “simultaneously considering [their] application as a motion for partial summary judgment on the constitutionality of the ACA’s mandate.”
- The Intervenor Defendants opposed converting the preliminary injunction briefing to a summary judgment ruling because they wanted to more fully brief the issues implicated: Article III standing, the Interstate Commerce Clause, and the scope of injunctive relief.
- Federal Defendants asked the Court to wait to do anything until AFTER the enrollment period had concluded so there was no disruption.
- The Court [was an ass, in my opinion] and decided that the Intervenor Defendants had adequately briefed their issues and decided to construe the application as a motion for partial summary judgment.
III. Legal Standards (Gonna whiz through this stuff – read the Opinion for more)
A. Article III Standing
- Plaintiffs must demonstrate that they have met the requirements of standing because they are the party invoking the Court’s jurisdiction.
B. Summary Judgment
- Moving party must show that the pleadings and evidence show “that there is no genuine dispute as to any material fact” and that they are “entitled to judgment as a matter of law.”
- Court has to construe all reasonable doubts and inferences in favor of nonmoving party.
- If there is conflicting evidence or inferences, court must deny the motion.
- Three inquiries and conclusions:
1) Parties satisfy the applicable standing requirements.
2) The Individual Mandate can no longer be seen as an exercise of Congress’s Tax Power; it is unconstitutional.
3) The Individual Mandate is essential to and inseverable from the remainder of the ACA.
A. Article III Standing
[Skipping over this because it’s not the meat and potatoes of this Opinion, or what most people are particularly interested in.]
B. Individual Mandate
- TL;DR in this section is “The Court finds that both plain test and Supreme Court precedent dictate that the Individual Mandate is unconstitutional under either provision [Tax Power and Interstate Commerce Clause]”
- The Court frames this is flowery language pulled from iconic past SCOTUS cases like Marbury v. Madison and McCulluch v. Maryland. I’ve not done full due diligence yet, but I’m raising an eyebrow at the litany of contextless quotes.
1. Tax Power
- The Court sets forth the following characterization of the problem: “The question here is whether an eliminated shared-responsibility exaction continues to justify construing the Individual Mandate as an exercise of Congress’s Tax Power to implement Section 5000A [of the ACA].”
- The Plaintiffs and Federal Defendants answered that question with “no.”
- The Intervenor Defendants argued that because, among other things, the previously paid shared-responsibility payments would make their way into the treasury for years to come, Section 5000A could still be fairly read as a tax.
- Important to note that Section 5000A has several subsections.
- 5000A(a) is the Individual Mandate. 5000A(b) is the shared-responsibility payment. 5000A(c) is the subjection that actually sets the amount of the payment and it is the subsection that was actually affected (zeroed-out) by the TCJA.
- To recap: Plaintiffs are challenging the Individual Mandate. Not the payment. Not the amount of the payment.
- The Plaintiffs argue that with the passage of the TCJA, the only part of 5000A that stands is the Mandate and, standing alone, it is unconstitutional.
- In order to get to its ultimate the decision, the Court has to spend a lot of time trying to thread a needle: acknowledging the close relationship/interdependence between the Individual Mandate and the shared-responsibility tax while also trying to hammer home the idea that the Individual Mandate and the payment are “two very different animals.”
- In sum, the Court’s opinion is that because the Individual Mandate no longer triggers a tax, because the shared-responsibility payment is zero, the Individual Mandate is unconstitutional. [But the Court conveniently never acknowledges that fact that a directive with no consequences is hardly a directive at all. Law says “buy insurance.” Person does not. Nothing happens. There is no constitutional violation anywhere in that equation.]
- [Worth noting also that the Court ALSO ignores precedent from the 5th Circuit that holds that “an unused power to tax” doesn’t make an exercise of the taxing power unconstitutional. And that’s exactly what this is: Congress didn’t eliminate the Mandate or any of the subsections. Instead, it changed the AMOUNT of tax to $0. Arguably, that is very much an “unused power to tax” and constitutional in the 5th Circuit, WHERE TEXAS IS.]
2. Interstate Commerce Power
- Intervenor Defendants argued that because there is no longer a tax, the Individual Mandate can be read as constitutional under the Interstate Commerce Clause. Remember, SCOTUS had an issue with the fact that Congress was ordering people to spend money. That Court found that while Congress can regulate the commerce stream, it can’t force participation in it.
- However, now – arguably – there is no forced participation. It’s dead in the water. The Intervenor Defendants argued that people still have a choice they’ve always had – buy insurance or pay the tax. But now the tax is zero, so the choice is, effectively, buy insurance or don’t. *shrug*
- The Court basically brushes this off and finds that the Intervenor Defendants’ position is illogical.
- Oddly, the Court essentially concedes the point that the Individual Mandate doesn’t do anything in its (the Court’s) attempt to argue that the mandate can’t possibly fall under the regulation of commerce because to regulate is “to govern direct according to rule” and to “bring under the control of law or constituted authority” and the mandate falls short of all of this actions.
- The Court also defers to the Plaintiffs’ statement that they “feel compelled” to comply with the law. Why? Simply because it exists, not because there are any penalties. [Sounds like a personal problem to me.]
- The Court finds the Plaintiffs’ feelings unsurprising and says, “It is the attribute of law, of course, that it binds; it states a rule that will be regarded as compulsory for all who come within its jurisdiction.” (This is a quotation, not from a law book, but from “First Things: An Inquiry Into the First Principles of Morals and Justice.”)
- The Court then says that law “has an enormous influence” on norms and conduct. [But again, neatly skirting the fact that there ARE NO CONSEQUENCES for ignoring this section of the ACA.]
- The Court acknowledges that undoubtedly more people will choose not to comply with the Individual Mandate, but says that nonetheless, it is still law and people will feel bound.
- [Mind you, nowhere in this entire section of the Opinion thus far does the Court quote any type of legal precedent. For anything.]
- Finally, towards the end, the Court acknowledges that the Individual Mandate is essentially empty verbiage. However, because the words are still in the law and Congress didn’t eliminate them when it changed the shared-payment amount, they are still law.
- The Court does us the favor of whipping out the dictionary again and defining some words like “requirement” and “shall” over the course of two paragraphs.
- Then the Court primarily relies on NFIB for its argument that the Individual Mandate is still binding law and quotes Justice Roberts that the mandate “reads more naturally as a command to buy insurance.”
- [Remember, NFIB was case that was decided when there were actual penalties for the Individual Mandate being ignored. The mandate was unconstitutional under the Interstate Commerce Clause because it forced people to spend money. The root of SCOTUS’s entire discussion of the mandate in NFIB was colored by the reality of the law as it existed THEN. Essentially, the Court here applies the context of 2012 to the current state of affairs in 2017 and appears to presume perfect application despite starkly different facts.]
- Again, the Court does not quote from any legal decision in its analysis here – only NFIB and allusions to the text of the ACA.
- The Court finds, “the Individual Mandate is no longer fairly readable as an exercise of Congress’s Tax Power and continues to be unsustainable under Congress’s Interstate Commerce Power. The Court therefore finds the Individual Mandate, unmoored from a tax, is unconstitutional.”
- It then granted the Plaintiffs’ claim for declaratory relief as to Count I.
- TL;DR: Because the mandate is out, so is the whole ACA!
1. Severability Doctrine
- Essentially, the Court determined that the Individual Mandate was not severable from the rest of the ACA.
- The Plaintiffs argued that it was inseverable. The Intervenor Defendants argued that it was severable.
- The severability rule: Severability is only possible where “an act of Congress contains unobjectionable provisions, separable from those found to be unconstitutional.”
- Interestingly, despite this case arising from the activities of the 2017 Congress, the Court instead primarily looks at and analyzes the actions of the 2010 Congress – the Congress that passed the law (a law which has now been altered by a different Congress).
2. Intent of the 2010 Congress
- I’m not going to summarize everything the Court said about 2010’s Congress’s intent, but the discussion starts on page 37 and you should read it if you have time.
a. ACA’s Plain Text
- Chief quotes: Congress intended to “significantly increas[e] healthcare coverage, lower health insurance premiums,” ensure that “improved health insurance products that are guaranteed issue,”and ensure that such health insurance products “do not exclude coverage of pre-existing conditions.”
- And: Congress knew that “[i]n the absence of the requirement, some individuals would make an economic and financial decision to forego health insurance coverage and attempt to self-insure, which increases financial risks to households and medical providers.”
- I.e., the Court highlights that the 2010 Congress intense to use the Individual Mandate and the shared-responsibility cost to achieve the above goals. The Individual Mandate was also intended [by the 2010 Congress] to reduce the number of uninsured, lower health insurance premiums, and improve financial security for families.
- This, the Court, argued, is proof that the Individual Mandate is inseverable from the rest of the ACA. Greater proof still is the following [from the 2010 Congress]: “The requirement is an essential part of this larger regulation of economic activity, and the absence of the requirement would undercut Federal regulation of the health insurance market.”
- The Court concludes this section by saying “on the unambiguous enacted text alone, the Court finds the Individual Mandate is inseverable from the Act to which it is essential.”
b. SCOTUS’s ACA Decisions
- Again, looking back in time this Court finds that all nine Supreme Court Justices agreed that the Individual Mandate is inseverable from at the least the pre-existing condition provisions.
- We rehash NFIB again. We address interceding cases between then and now. (As before, I’m not going to summarize all of this – it starts on page 41.)
- Important quotation from this Court: “As did the Chief Justice, then, Justices Ginsburg, Breyer, Kagan, and Sotomayor all understood what Congress understood: Without the Individual Mandate, the guaranteed-issue and community-rating provisions ‘could not work.’” [We are back in 2010-2012 land again, where there was actually a tax being levied.]
- Then the Court brings up King v. Burwell, a 2015 case, and points to elements of that Opinion that reinforce the Justices’ severability conclusions in NFIB: “The Supreme Court stated unequivocally: ‘Congress found that the guaranteed issue and community rating requirements would not work without the coverage requirement.’” [2010 Congress, mind you.]
- In conclusion, this Court reiterates the Supreme Court’s finding on what was ostensibly a different law and finds “The Individual Mandate is essential to the ACA.”
c. The Individual Mandate is Inseverable from the Entire ACA
- “The ACA’s text and the Supreme Court’s decisions in NFIB and King thus make clear the Individual Mandate is inseverable from the ACA. . . . [T]he Individual Mandate was essential to the ACA’s architecture.”
- The Court embarks on a somewhat long-winded reiteration of its point, saying that even if it were to poke at provisions of the ACA individually, text and precedent would be reinforced.
- It finds that upholding the ACA in the absence of the Individual Mandate would change the “effect” of the ACA “as a whole.”
- If the mandate falls, and especially if the pre-existing condition provisions fall [remember, that hasn’t happened yet; that’s not even the focus of this case], upholding subsidies and exchanges would “transform the ACA into a law that subsidizes the kinds of discriminatory products Congress sought to abolish at, presumably, the re-inflated prices it sought to suppress.” [To me this just reads as: healthcare would return to the way it was prior to the ACA.]
- The Court again beats on the drum of the 2010 Congressional intent – the Individual Mandate “is essential to creating effective health insurance markets that do not require underwriting and eliminate its associated administrative costs.” [What’s interesting to me about this is that, as laid out by this Court above, there were more goals to the ACA than creating this specific kind of health insurance market – see my list in the very first section of this summary regarding the ACA. The Court just kind of ignores all of that here and frames the ACA in a very narrow way.]
- “In sum, the Individual Mandate ‘is so interwoven with [the ACA’s] regulations that they cannot be separated. None of them can stand.’” [Also, note that the Court is quoting a 1922 case about a prohibitive tax on futures contracts for grain and filling it in with “the ACA” to make it work here.]
- From page 50 to 52, the Court goes BACK through 2010 Congress and again leans on Wallace (the 1922 case). Feel free to read.
3. The Intent of the 2017 Congress [HERE we go…oh wait]
- The Intervenor Defendants argued that because Congress only eliminated the shared-responsibility payment but left everything else about the ACA intact, the 2017 Congress intended to preserve the balance of the ACA.
- The Court responds with “But consider what Congress did not do in 2017 – or ever.” Here, it asserts that because the 2017 Congress did not repeal the mandate, it clearly recognized that the Individual Mandate was essential to the ACA. [Okay, pause. Has this judge not been paying attention to Congress over the past couple of years? Where it was regularly insisting that it wanted to throw-out the Individual Mandate? In fact, Congress absolutely meant to get rid of the mandate – and that’s exactly what it did when it eliminated the shared-responsibly payment that gave it teeth.]
- “The Court finds the 2017 Congress had no intent with respect to the Individual Mandate’s severability. But even if it did, the Court would find that ‘here we know exactly what Congress intended based on what Congress actually did.’” [Yes, it kneecapped the mandate, effectively removing it from the ACA…]
4. Severability Conclusion
- [Say it with me now] “The Court finds the Individual Mandate ‘is essential to’ and inseverable from ‘the other provisions of’ the ACA.”
- “For the reasons stated above, the Court grants Plaintiffs partial summary judgment and declares the Individual Mandate . . . UNCONSTITUTIONAL. Further, the Court declares the remaining provisions of the ACA . . . are INSEVERABLE and therefore INVALID. The Court GRANTS Plaintiffs’ claim for declaratory relief in Count I of the Amended Complain.”
First mistake: Thinking that if you don’t use the insurance marketplace for the ACA you’ll be unaffected by a repeal. Second mistake: Not spending some time sussing out the domino chain of what will fall with a repeal. (Third mistake: the 53% of self-identified Republicans who don’t realize that repealing Obamacare will eliminate the Medicaid expansion). The good? Insurance companies could do whatever they feel like! Also, people who choose not to have insurance will no longer have to pay $695 when they file their taxes. But the rest…not good.
The truth of the matter is, whether you love it or you hate it, Obamacare is affecting all of us in ways we’d probably miss if it disappeared. Far more than the 20 million people currently insured under the ACA would be feeling the effects of a repeal. Senior citizens pay less for Medicare coverage and for prescriptions. As a woman myself, I’m particularly tuned into the fact that now contraceptives, mammograms, pap smears, and other women’s health procedures must be fully covered by insurance. Colonoscopies? Covered. Cholesterol tests? Covered. Annual check-ups are covered. For all of us. And even small business employers have gained – they are no longer stuck with super high premiums for their employees who are older or sicker.
For their part, the Republicans frankly seem to have no idea what they’re doing. They’ve backed off their plans for swift repeal slightly (as it became clear people were getting antsier and angrier about the prospect), but initially they’d planned to begin by eliminating the provisions that affect spending and revenues : Medicaid expansion, taxes, and mandates that all individuals obtain coverage and that large employers provide it. The federal subsidies would also be gone.
This is what a full repeal would look like:
- Post Obamacare, there would be higher premiums, deductibles, and cost-sharing for the almost 60 million senior citizens and disabled Americans enrolled. And welcome back, “donut hole.” Repealing Obamacare would increase Medicare spending by $802 billion over 10 years. (Fun fact: the Congressional Budget Office has published the budgetary and economic effects of repealing the ACA, and Congress voted to stifle the information.)
- The provision covering preventative benefits for Medicare enrollees would disappear.
- Since the ACA was passed in 2010, more than 11 million people have saved, on average, more than $2,100/person on prescription drugs. Wave by to this type of savings, too.
- That employer mandate that requires companies who employ at least 50 people provide their employees who work more than 30 hours a week with health insurance would be yesterday’s news.
- Now, to be fair, this wouldn’t have a major impact on the ~150 million workers who have insurance through their jobs because most large employers offer coverage for full-time workers, BUT…
- Setting the bar at 30 hours a week encouraged some employers to extend health insurance coverage to more staff members, as 30 hours had formerly been considered part-time. If repealed, those companies could go back to covering only those workers who work 40 hours a week, resulting in those newly insured employees losing their coverage.
- In the same vein, employers would no longer have to keep children on their parents’ plans until they turn 26. (When I worked immediately after undergrad it was at a tiny company that did not give me health insurance. If it hadn’t been for my dad’s insurance, I’d have been walking on a health tightrope for three years. Apparently there were 2.3 million of us who had insurance because of this.)
- Preventative care like mammograms and colonoscopies would no longer be included (back to paying copays or more).
- Companies will fewer than 50 employees would find themselves back where they began – insurance companies could refuse coverage to workers with preexisting conditions and opt not to cover maternity, mental health, and prescription drugs. Insurers can also go back to charging older workers premiums that are more than three times those charged to younger workers.
Individual Market (ALL insurance providers, not simply those gained through ACA):
- Have a preexisting condition? You might find yourself back out in the cold, sans insurance. If you’re sick, you may see your costs skyrocketing.
- Insurers can go back to imposing annual or lifetime caps on benefits, sooo….we could find ourselves “running out” of insurance. Not to mention, the ACA imposed limits on how much out-of-pocket spending would be required of an individual. Repeal the ACA and you’re looking at paying a LOT more out-of-pocket.
- With respect to the insurance exchanges, lower-income people will be looking policies costing more than their income. The ACA enabled lower and middle-income individuals to buy policies for less than 10% of their income.
- 10.4 million people purchased insurance through the exchanges as of June of last year. Another 6.9 million had purchased individual policies outside of the exchanges.
- A note: Trump has said that insurers will be required to cover pre-existing conditions as long as the individuals are continuously insured. No insurance or a brief uninsured period? You’re looking at higher premiums or applying for policies in state-based high risk pools.
Medicaid – This is a big one that people often don’t think about/forget was part of Obamacare:
- Prior to the ACA, Medicaid enrollees primarily consisted of low-income children, pregnant women, parents, the disabled, and the elderly.
- After the ACA, the program was opened to low-income adults with incomes of up to 138% of the poverty line ($16,400 for a single person*) in states that chose ot expand their Medicaid programs. [*Can we just take a minute to think about how crazy it is that $16,400 is 138% of the poverty line? Like, wtf.]
- 31 states plus D.C. have expanded their Medicaid, which has resulted in an increase of 17 million enrollees since 2013.
- A full repeal of Obamacare will be a huge “F you” to the poorest Americans who will have no insurance.
The Sources – in addition to those linked within the post (to get you started, but I encourage doing some digging of your own. There’s a lot I didn’t address. For example, I didn’t even get into the fact that although they are high, premiums under Obamacare rose much more slowly than they otherwise would have. I can totally get into that, though.):
Also just run a search on “cost of appealing Obamacare” and “effect of repealing the ACA” if you’re interested. And read the reports from the Congressional Budget Office.