SCOTUS Skeptical of ‘Obamacare’ Challenge – It Will Survive

A word of caution: one should never draw conclusions from oral argument because justices frequently play devil’s advocate and test attorneys on their theory of the case.

That being said, however, there is reason for optimism after oral argument in California v. Texas today, the lawsuit brought by Republican Attorneys General and joined by the Trump administration seeking to invalidate the Affordable Care Act aka “Obamacare” in its entirety, and leaving millions of Americans without health insurance coverage.

Jonathan Cohn reports at Huffington Post, Obamacare Lawsuit Gets Skeptical Reception At The Supreme Court:

A challenge to the Affordable Care Act got a relatively hostile reaction at a virtual Supreme Court hearing on Tuesday, offering hope for the millions of people who depend upon the law for their health care.

In oral arguments, both Chief Justice John Roberts and Associate Justice Brett Kavanaugh expressed skepticism about a key argument in the lawsuit ― specifically, that if one part of the Obamacare law is unconstitutional, then the entire law has to come off the books.

The plaintiffs, who are Republican attorneys general representing 18 states [including Arizona AG Mark Brnovich], say that eliminating the fine turned the mandate into a coercive command ― and that, as a result, all of Obamacare has to go. The Trump administration is backing their lawsuit.

Democratic officials representing 20 states and the District of Columbia, along with the U.S. House, are defending the law. They dispute the idea that the mandate is now a coercive, unconstitutional command.

But even if the mandate is now unconstitutional, they say, the rest of the Affordable Care Act can stand. And during oral arguments on Tuesday, both Roberts and Kavanaugh made statements suggesting they agree.

“It does seem fairly clear that the proper remedy would be to sever the mandate provision and leave the rest of the act in place,” Kavanaugh said to Kyle Hawkins, the Texas solicitor general arguing to strike the law down.

Questions from the justices don’t always indicate how they will later vote, in part because justices sometimes change their minds.

But legal analysts from across the political spectrum thought the statements were hints at how Roberts and Kavanaugh would likely vote. And that could save the remainder of the Affordable Care Act, given that the three Democratic appointees on the bench are also expected to vote to uphold the rest of the law, even if the mandate itself comes off the books.

“While it isn’t clear where they stand on the constitutionality of the mandate, based on their questions today ― which of course cannot predict anything with certainty ― it seems likely they would vote to uphold the rest of the ACA even if the mandate is struck down,” Abbe Gluck, a Yale University law professor, told HuffPost.

“The argument made clear the plaintiffs’ attempt to upend the ACA will fail,” said Jonathan Adler, a Case Western University law professor who supported previous challenges to the Affordable Care Act. “The only question is ‘how.’ There seemed to be five solid votes for severability of the mandate as both the Chief Justice and Justice Kavanaugh expressed profound skepticism of plaintiffs’ claims here.”

“The Chief and Justice Kavanaugh are both expressing strong skepticism of the red states’ position on severability,” Joseph Palmore, a former assistant to the U.S. solicitor general who is now co-chair of Morrison & Foerster’s Supreme Court practice group, wrote on Twitter. “If they stick with that position, the #ACA will survive.”

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[I]n 2017, Congress understood that the rest of the law would remain in place when it zeroed out the mandate’s penalty and did so anyway. Democrats have said that’s the most relevant indicator of congressional intent, as Donald Verrilli, the former U.S. solicitor general now representing the U.S. House, argued during his portion of oral argument on Tuesday.

Verrilli pointed out that by 2017, Congress could see that the Affordable Care Act’s new insurance markets would work even without a penalty in place. “Congress is allowed to learn from empirical experience in the world and adjust its policy choices,” Verrilli said.

A few minutes later, in a question to Hawkins, the chief justice signaled that he agreed.

“I think it’s hard for you to argue that Congress intended the entire act to fall if the mandate were struck down,” Roberts said. “Congress left the rest of the law intact. … That seems to be compelling evidence on the question.”

Kavanaugh, for his part, kept coming back to the broader principle that courts should start with a presumption of severability ― i.e., that the rest of a law can survive when one part is found to be unconstitutional. He raised it three separate times, the last in a question to acting U.S. Solicitor General Jeffrey Wall, who was arguing on behalf of the Trump administration.

“We have a strong background presumption of severability, which reflects a long-standing understanding of how Congress works and our respect for Congress’ legislative role,” Kavanaugh said.

When questioning the Affordable Care Act’s defenders, the justices spent the bulk of their time on the matter of whether the plaintiffs ― the Republican states ― have “standing” to sue. There was also discussion of the merits of the argument on the mandate ― that is, whether it’s an unconstitutional command now that the penalty is zero.

Justice Elena Kagan, one of the three more liberal members of the high court, said it was hard to see how removing a penalty could make the mandate more onerous than it was in 2012 when the court last upheld it.

“If you make a law less coercive, how does it become more of a command?” she said.

It wasn’t clear whether other justices were inclined to agree. But practically speaking, it won’t matter as long as there are at least five votes to uphold the law regardless of the mandate’s constitutionality. The Affordable Care Act will then keep functioning like it does today.

Ilya Somin at the Libertarian Reason came away with a similar take after oral argument. Thoughts on Today’s Oral Argument in California v. Texas—the Obamacare Severability Case:

Earlier today, the Supreme Court heard oral arguments in California v. Texas, a challenge to the legality of the Affordable Care Act filed by a coalition of Republican-controlled state governments, and in large part supported by the Trump administration. I described the history of the case and the issues at stake here.

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After the 2017 tax reform bill eliminated the monetary penalty attached to the mandate, twenty red states filed a lawsuit arguing that what’s left of the mandate was no longer constitutional, because it could not be a tax, if it doesn’t raise any revenue. Much more controversially, they also contended that the rest of Obamacare must fall with the mandate, because the latter is such an important part of the statute that it cannot be “severed” from it. This “severability” issue is the key to the case as a whole.

Much remains uncertain after today’s oral argument. We don’t yet know how exactly the Court will resolve the case. But the one thing that is clear is that a large majority of justices (at least six, by my count) reject the plaintiff states’ position on severability. Thus, whatever happens to the residual individual mandate, Obamacare as a whole is going to survive.

The three liberal justices are near-certain votes against the plaintiffs, and nothing they said today should change that impression. As co-blogger Jonathan Adler points out, Chief Justice John Roberts and Justice Brett Kavanaugh also expressed great skepticism about the plaintiffs’ severability theory. At one point, he said that it is “not our job” to strike down the ACA as a whole, merely because the residual mandate might be unconstitutional. Kavanaugh said that the severability issue in the case is “rather straightforward”  and repeatedly emphasized that it is clear that, if the mandate is now unconstitutional, the Court should just strike down that provision and leave the rest alone.

I would add that Justice Samuel Alito also seems hostile to the positions espoused by the plaintiffs and the Trump administration. In an exchange with administration lawyer Jeffrey Wall, he noted the “sea change” in the role of the mandate since the original enactment of the ACA in 2010. In the original 2010 version of the law, “there was strong reason to believe that the individual  mandate  was like a part in an airplane that was essential to keep the plane flying. If the part was taken out, the plane would crash.” Thus, it was inseverable from the rest of the law (a conclusion Alito and three other conservative justices advocated in their dissenting opinion in NFIB v. Sebelius). “But now,” Alito continued, “the part has been taken out and the plane has not crashed.”

This plane analogy has obvious negative implications for the plaintiffs’ position. If the original mandate is like a “part” that Congress itself decided to “take out,” then Congress has effectively made the decision on whether it is essential to the act as a whole. That’s true if you view severability as a matter of divining congressional intent (as current Supreme Court precedent requires). But Alito indicates here that he would reach the same conclusion from the standpoint of asking whether the residual mandate is objectively essential to the operation of the rest of the ACA (whether or not members of Congress thought it was). The fact that “the plane has not crashed” suggests it didn’t really need this “part” in the first place.

The other three conservative justices—Gorsuch, Thomas, and the newly appointed Amy Coney Barrett—didn’t really tip their hands on severability. Barrett’s previously stated views—including her testimony at her confirmation hearings—suggest her position may be similar to Kavanaugh’s. But the oral argument gave us no additional insight into them. It is also not clear where Gorsuch and Thomas stand. But it’s notable that all three largely avoided the subject of severability in the questions they posed to the lawyers representing California (leading a coalition of blue states) and the Democratic-controlled House of Representatives (the parties that intervened to defend the ACA after the Trump administration refused to do so). If they have serious objections to the California’s and the House’s severability analysis, I would have expected them to raise them in oral argument.

In sum, there is, I think, at least a 6-3 majority against the plaintiffs’ take on severability, and very possibly more than that. This result was entirely predictable based on various conservative justices’ previous statements on severability (as well as the very weak nature of the plaintiffs’ case). I in fact predicted it myself, as did a number of other legal commentators.

It is less clear what will happen on the other two issues in the case: standing and the constitutionality of the residual mandate. If  I in interpret the argument correctly, I think there probably is a majority of justices inclined to conclude that the mandate is now unconstitutional, because it can no longer be considered a tax, now that it doesn’t raise any revenue. For reasons I explained here, I think that would be the right conclusion, and would set a valuable precedent for future cases (though it would have very little if any impact on the ACA).

But I admit I could be wrong on this point. It’s possible that some conservative justices (as well as all three liberals) will be persuaded by the argument that the residual mandate is constitutional because it is now  merely a suggestion, or simply a nullity that doesn’t do anything. To my mind, that is incorrect because the text of the law still states a command, even if that command is not backed by any kind of penalty or fine. It says that “applicable individual[s] shall” purchase ACA-compliant health insurance. “Shall” is the kind of language courts generally interpret as a command.

At one point, Justice Kavanaugh asked Texas Solicitor General Kyle Hawkins whether there are any other naked mandates in the US code that aren’t backed by an penalties. Hawkins couldn’t name any.

[F]inally, as Jonathan Adler explains, it is entirely possible that the justices will end up dismissing the entire case without reaching the merits, by concluding that the plaintiffs lack standing. Indeed, the justices spent much more time on this issue than any other. I would oppose resolving the case in this way, in large part because I am skeptical of constitutional standing requirements generally. But I admit that there’s an entirely plausible argument that the plaintiffs lack standing under current Supreme Court precedent, and that a holding like this might be attractive to various justices who would like to get rid of this case without dealing with any substantive issues.

However, as Jonathan also notes, it may not be easy for the various justices interested in this issue to cobble together an opinion on standing that they can all agree on.

[I]n sum, it is clear that Obamacare will survive yet another legal challenge. And it will do with much less in the way of scars than it got in NFIB v. Sebelius,  where the Court limited the potential reach of the individual mandate by interpreting it as a tax (thus foreclosing some potential increases of the associated fine, which would make it large enough to qualify as a penalty that no longer offers any meaningful choice), and invalidated part of the Medicaid expansion. The only remaining question is how the Court will preserve the ACA: by denying standing, by holding that the residual mandate is not unconstitutional, or by striking down the mandate while simultaneously ruling that it is severable from the rest of the law. We will learn the answer soon enough, perhaps within just a few months.

The plaintiffs’ severability argument – that the entire ACA must fall – has been rejected by most legal experts across the political spectrum. This case should never have made it as far as the Supreme Court. It only did so because of conservative political activist judges in the federal district court of Texas, and the Fifth Circuit Court of Appeals.