https://www.commonwealthfund.org/blog/2019/fifth-circuit-court-ruling-future-aca

The future of the Affordable Care Act (ACA), the millions of Americans who depend on it, and, frankly, the American health care system, every part of which is touched by the ACA, were on the line in a federal courthouse in New Orleans on Tuesday. The Fifth Circuit United States Court of Appeals heard 106 minutes of oral argument in the case of Texas v. U.S., in which a district court judge ruled that the entire ACA was invalid. The case is being pursued by 18 Republican states and two individuals, joined by the United States on the appeal. Twenty-one Democratic attorneys general (AGs) and the U.S. House of Representatives have intervened to defend the ACA.

The plaintiffs argue — in a decision accepted by district court Judge Reed O’Connor — that:

• the Supreme Court in 2012 held that the ACA’s individual mandate was unconstitutional as a command, and constitutional only as a tax
• Congress in 2017 zeroed out the tax, leaving the mandate entirely unconstitutional
• the mandate is essential to the rest of the ACA, which must be invalidated once the mandate is struck down.

The defendants contest each of these claims and further argue that the plaintiffs lack standing to bring the case since they have not been injured by the mandate.

The case was heard by three judges: Carolyn Dineen King, appointed by President Jimmy Carter; Jennifer Walker Elrod, appointed by President George W. Bush; and Kurt D. Engelhardt, appointed by President Donald Trump. Judges Elrod and Engelhardt questioned the parties vigorously; Judge King did not speak during the proceeding.

Nearly half of the argument focused on the question of the plaintiffs’ standing to bring the action and of the Democratic AGs and House to appeal the judgment. Under the Constitution, federal courts can only hear a case challenging a law if at least one of the plaintiffs is actually injured by the law and can only hear an appeal if at least one of the appellants is affected by the judgment.

Judge Elrod seemed skeptical of the argument made by the appellant Democratic AGs that the zeroing out of the tax made compliance with the mandate optional and therefore incapable of harming the plaintiffs. Judges Elrod and Englehardt seemed to accept the plaintiffs’ argument that the mandate remains a legal command, and as such harms the individual plaintiffs by requiring them to buy insurance they do not want. Judge Elrod also suggested that the Republican states might have standing because they had to fill out tax forms related to the mandate.

All the parties agreed that the court had jurisdiction to hear the appeal and did not contest the fact that the invalidation of the ACA would cost the Democratic states a substantial amount of money, although Judge Elrod questioned whether the lower court’s order applied to the Democratic states.

Judges Elrod and Engelhardt also greeted skeptically the argument of the Democratic AGs and House that the 2017 tax bill did not affect the constitutionality of the mandate. The Democratic AGs and House argued that the Supreme Court held in 2012 that the ACA merely gave individuals subject to the mandate a choice between buying insurance or paying a tax. The tax bill did not change this; it simply made the tax optional. The plaintiff–appellees argued that with the tax zeroed out, the mandate was wholly unconstitutional. Judges Elrod and Englehardt seemed sympathetic to this argument, although Judge Elrod prodded the plaintiffs on their position.

The court seemed a bit more uncertain, however, on the consequences of holding the mandate unconstitutional on the rest of the ACA. The Republican AGs argued that the findings section of the ACA created an “inseverability clause” by declaring that the mandate was “essential” to — and thus not severable from — other sections of the ACA. The Democratic AGs and House disagreed, arguing that when Congress adopted the 2017 tax bill it clearly intended to affect no other provisions of the ACA.

The judges seemed unimpressed with the statements made by members of Congress to this effect, asking why Congress did not repeal the mandate or the findings if it meant to preserve the rest of the law. (In fact, Congress couldn’t have done so, since the tax bill was a budget reconciliation bill that could only address provisions with financial impact.) Judge Elrod suggested that some members of Congress might have seen the zeroing out of the mandate tax as a “silver bullet” to bring down the ACA, even though there is no evidence of this and it would impute to Congress the intent to create an unconstitutional law. Judge Engelhardt asked why the Senate was not involved in the case if their intent not to harm the law was so clear.

The position of the Department of Justice (DOJ) on severability was quite murky, frustrating the court. On one hand, the DOJ argued that the entire ACA was inseverable from the mandate and thus invalid. On the other, the DOJ contended that as a matter of remedy, the court (or the district court on remand) should only enjoin compliance of provisions that directly affected the plaintiffs; perhaps only in the states that had sued. Remanding to the district court would likely be a futile exercise. Judge O’Connor has already concluded that the entire statute is inseverable. At one point, as the court pressed the DOJ attorney to clarify his position, he responded, “A lot needs to get sorted out and it’s complicated.”

Judge Englehardt seemed to think the problem was essentially political and should be left to Congress to determine which provisions were invalidated and which survived. Accusing Congress of not taking responsibility to clean up the mess that would be caused by invalidation of the statute overlooks, however, the responsibility of the judiciary not to create the mess in the first place, as the district court has done in its sweeping decision. This is one of the reasons why existing law on severability directs courts to invalidate only so much of a law as is necessary when a provision is found to be unconstitutional.

Listening to the argument, one may conclude that judges Engelhardt and Elrod do not understand the scope of the ACA and the serious trouble that invalidating it in its entirety would cause for the American health care system. Suggesting that Congress could readily “fix” the problems caused by the lower court’s decision or that a supposed “fix” other than reversal is even needed — or possible — reveals a lack of understanding of the scope of the ACA and a frightening degree of irresponsibility.

There seems to be a real possibility, however, that the Fifth Circuit may affirm the lower court’s judgment. It will then again be up to the Supreme Court to sort things out. In the meantime, a Fifth Circuit decision invalidating the ACA will likely become a major issue in the 2020 election. We should see by the fall whether the questions pressed by the court today presage its conclusions.