Jurisprudence

Appeals Court Lets Obamacare Survive—At Least Until After the 2020 Election

Pelosi, flanked by Steny Hoyer and other Democrats, speaks at a podium that has a "Protect Our Care" sign on it.
House Speaker Nancy Pelosi holds a news conference in D.C. on March 26 about the Department of Justice’s attack on Obamacare.
Tasos Katopodis/Getty Images

The U.S. Court of Appeals for the 5th Circuit does not want to strike down the entire Affordable Care Act less than a year before the election. But it may still invalidate the whole law—from Medicaid expansion to tax credits to protections for preexisting conditions—if given the right opportunity down the road.

That’s the main takeaway from the court’s long-awaited decision on Wednesday, which marches the ACA to the gallows, places a noose around its neck, and declines to open the trapdoor just yet. The majority accepted the plaintiffs’ argument that the law’s individual mandate has become unconstitutional, but stopped short of ruling that the remainder of the act must fall with it. Instead, the majority delayed the execution, sending the case back down to the district court to decide whether more than 20 million Americans will lose their health insurance.

Wednesday’s ruling in Texas v. United States embraces a bizarre theory that conservatives cooked up after Congress repealed the individual mandate’s tax penalty in 2017. The Supreme Court upheld that mandate, which imposed a tax on individuals who lack insurance, under Congress’ taxing power. But Congress zeroed out the tax penalty in the Tax Cuts and Jobs Act of 2017, maintaining the mandate while ensuring that nobody who violated it would have to pay a dime.

A coalition of red states led by Texas then sued, arguing that Congress had rendered the whole law invalid. These states argued that if the mandate no longer collects any revenue, then it can no longer be sustained as a tax. And if it’s not a tax, it’s not constitutional. Then the states went further, insisting that if the mandate is struck down, the rest of the law must be nullified as well. The mandate, they claimed, is “inseverable” from everything else, meaning Congress would not have wanted the ACA to stand without its mandate. It is therefore the courts’ duty to kill every provision of the complex law.

U.S. District Judge Reed O’Connor agreed with this argument in late 2018 and ruled the entire ACA unlawful. His decision was widely panned by scholars across the political spectrum. Yet Donald Trump’s Department of Justice told O’Connor that it agreed the ACA had become unconstitutional. The task of defending the law fell on a coalition of blue states who didn’t want the federal judiciary to strip their residents of health care.

Five months after reviewing O’Connor’s decision, the 5th Circuit has issued its verdict, which is deeply muddled. On the one hand, the majority—Jennifer Walker Elrod, a George W. Bush appointee, and Kurt D. Engelhardt, a Trump appointee—agreed that the mandate is unconstitutional. In her majority opinion, Elrod wrote that the mandate has become “a command to purchase health insurance” and that zeroing out the penalty “does not render the provision any less of a command.” In fact, the mandate has become more burdensome by compelling individuals to buy health insurance instead of letting them pay a tax instead. This theory defies logic, since the penalty for violating this “command” does not exist. As Judge Carolyn Dineen King, a Jimmy Carter appointee, explained in dissent, “it boggles the mind to suggest that Congress intended to turn a nonmandatory provision into a mandatory provision by doing away with the only means of incentivizing compliance with that provision.”

Still, it shouldn’t really matter whether the mandate is unconstitutional, since it is already inoperative. The real action in this case involves severability: how much of the law must fall with the mandate. And here, the 5th Circuit punts. O’Connor’s severability analysis was cursory: He wrote that when Congress passed the ACA in 2010, it viewed the mandate as “essential,” so it cannot be severed. This reasoning, Elrod wrote, is “incomplete.” First, O’Connor ignored the fact that when Congress amended the ACA in 2017, it decided the mandate was no longer essential, because it rendered it inoperative while the rest of the law lived on. Second, O’Connor didn’t even bother to explain “how particular segments” of the ACA “are inextricably linked to the individual mandate.”

Thus, Elrod instructed O’Connor 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.” But she refused to provide guidance about which provisions might survive, giving O’Connor carte blanche to kill it all if he so chooses. Her only hint is a passage asking how an ACA rule directing restaurants to disclose the calories in menu items relates to the individual mandate. That hint insinuates that only the law’s minor sections can stand, while its chief provisions—Medicaid expansion, the exchanges, tax subsidies, nondiscrimination rules—must go.

Elrod’s decision kicks the can down the road, giving O’Connor another chance to ceremonially incinerate the ACA, which he will surely do. Then the 5th Circuit will review his work once again. Given Elrod and Engelhardt’s apparent hostility toward the law, they may well decide, when there is no longer a presidential election around the corner, that O’Connor is right to demolish it. Wednesday’s opinion is either an act of cowardice or a stalling tactic. The majority may be waiting until after the 2020 election before finishing off the ACA.

If that is indeed the majority’s plan, it is a risky one. The ACA’s defenders will likely now appeal to the Supreme Court, where five justices—the liberals and Chief Justice John Roberts—will probably reject this cockamamie plot to repeal the law by judicial fiat. Some justices might be inclined to wait and see where the lower courts land on severability before wading in. But this nonsense has already gone on for far too long. Elrod and Engelhardt had an opportunity to be the adults in the room, and they failed. It’s now time for the chief justice to step in, once again, and quash this latest lawless assault on the ACA.