Labor & Employment Law Daily Court will mull fate of ACA on November 10
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Monday, August 24, 2020

Court will mull fate of ACA on November 10

By Pamela Wolf, J.D.

Does the crippling of individual mandate take the whole Affordable Care Act down?

The Supreme Court has released the argument calendar for its October 2020 opening session, which begins October 5, and the following session, which begins November 2. Of particular interest are the consolidated Patient Protection and Affordable Care Act (ACA) cases that will be heard on November 10. Depending on the outcome, the entire ACA could fall.

Individual mandate. The ACA contains a provision giving individuals a healthcare choice—either purchasing health insurance or paying to the IRS a “shared responsibility payment.” The mandate was written into the law to expand the health insurance risk pool to include the young and healthy.

In 2017, the Republican Congress enacted the Tax Cuts and Jobs Act, which included a provision amending the ACA to zero out the shared responsibility payment. Thus, the payment remained on the books, but the amount to be paid to the IRS was always $0. Shortly thereafter, two private citizens and 18 Republican-controlled states filed suit against the United States to have the ACA declared unconstitutional on the ground that the shared responsibility payment was no longer a tax because it was set at $0.

(In its 5-4 ruling on June 28, 2012, the Supreme Court had upheld the individual mandate as constitutional (National Federation of Independent Business v Sebelius) because the mandate, codified as Sec. 5000A of the Internal Revenue Code, was within Congress’s power under the Taxing Clause).

The positions in the Fifth Circuit litigation became murky because the defendant U.S., now under President Trump, agreed with the position taken by the 18 plaintiff states (that the ACA should be declared unconstitutional). As a result, 16 Democratic-controlled states, plus the District of Columbia, intervened in the case to try to save the ACA.

Fifth Circuit. In December 2019, the Fifth Circuit, in a 2-1 opinion, upheld the Texas federal district court’s ruling that the individual mandate in ACA was unconstitutional. The Fifth Circuit agreed with the lower court that the individual mandate was no longer a constitutional exercise of congressional power after the amount specified in the ACA changed to zero. It found the issue of severability much more difficult, however, noting that the lower court failed to carry out “the inherently difficult task of severability analysis in the specific context of this case.”

The intervenor states argued that every provision was severable from the individual mandate. Ultimately, the appeals court remanded the issue and ordered the lower court to “employ a finer-toothed comb on remand and conduct a more searching inquiry into which provisions of the ACA Congress intended to be inseverable from the individual mandate.”

On January 3, 2020, California and the other intervening states filed a petition for certiorari.

Certiorari granted. The Court granted certiorari on March 2, 2020, and consolidated the case with Texas v. California (19-1019), allotting one hour of oral argument for two cases.

The questions raised in California v. Texas are:

  • Whether the individual and state plaintiffs in this case have established Article III standing to challenge the minimum coverage provision in Section 5000A(a).
  • Whether reducing the amount specified in Section 5000A(c) to zero rendered the minimum coverage provision unconstitutional.
  • If so, whether the minimum coverage provision is severable from the rest of the ACA.

Texas v. California raises the questions whether (1) the unconstitutional individual mandate to purchase minimum essential coverage is severable from the remainder of the ACA; and whether the district court properly declared the ACA invalid in its entirety and unenforceable anywhere.

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