Written by Alexandra Gladu DeSimone
Will it be, “Third time’s a charm,” or, “Three strikes, you’re out,” for the Affordable Care Act? The landmark health care overhaul became law in 2010, but it continues to draw substantial debate even eight years later. Challenges to the law have landed on the United States Supreme Court’s docket twice already, but a recent federal district court ruling in Texas could give rise to yet another petition for certiorari.
On December 14, 2018, Judge Reed C. O’Connor of the United States District Court for the Northern District of Texas declared the Affordable Care Act unconstitutional. The case, Texas v. United States, did not arise in a vacuum. Instead, the legal issue at the heart of the case has its roots in the previous Supreme Court decisions on the Affordable Care Act and Congress’s maneuvers since the law went into effect.
The Individual Mandate & Sebelius
The Affordable Care Act, also known as “Obamacare,” was President Barack Obama’s attempt to bring universal health care to the American people. The law sought to offer universal health care coverage by expanding Medicaid, creating coverage options for people with pre-existing conditions, and, most controversially, requiring all Americans to buy health insurance or pay a penalty fee. This final piece, known as the “Individual Mandate” has formed the basis for much of the debate and litigation around the law.
In 2012, the Supreme Court in National Federation of Independent Businesses v. Sebelius ruled the Individual Mandate constitutional under Congress’s tax power, grounded in Article I, Section 8 of the United States Constitution. Writing for the Court, Chief Justice John Roberts explained the tax power expansively. In his words, the power to tax granted by the U.S. Constitution “gives the Federal Government considerable influence even in areas where it cannot directly regulate.” The Court ultimately interpreted the penalty imposed on individuals who failed to purchase health insurance to be a tax, which brought the Affordable Care Act under the broad umbrella of Congress’s tax power. Although the Court’s decision in Sebelius upheld the Affordable Care Act, it did so only narrowly, with a 5-4 decision on the Individual Mandate issue. The Court upheld the law again in 2015 in the similar case of King v. Burwell.
A New Law & A New Case
Congress in 2017 passed the Tax Cuts and Jobs Act, which eliminated the penalty for failing to purchase health insurance. In this way, the 2017 law inevitably begged the question: If the tax disappears, can the Affordable Care Act still stand as a valid exercise of Congress’s tax power?
Texas v. United States asks that very question. In early 2018, twenty states, including Alabama, Georgia, North Dakota, and Texas, filed suit against the federal government to challenge the Affordable Care Act. Another sixteen states, including California, Delaware, North Carolina, and Virginia, plus the District of Columbia, intervened as defendants to oppose the suit. The states’ involvement is crucial. States carry out much of the Affordable Care Act’s policy through Medicaid administration and health care exchanges. What’s more, the federal government, under the Trump administration, has taken a much different stance on the Affordable Care Act than the previous administration, which defended the law in the 2012 case.
The plaintiffs have argued that the Affordable Care Act must fall for at least two reasons: First, the Individual Mandate, they say, cannot be a valid exercise of Congress’s tax power if it no longer imposes a tax. Second, the Affordable Care Act as a whole cannot stand without the Individual Mandate because the Individual Mandate represents an “essential” part of the law.
The defendants take different approaches that collectively attack both of the plaintiffs’ arguments. First, the federal government has argued that the Individual Mandate is unconstitutional without a tax component, but the other parts of the Affordable Care Act should stand. The states, on other hand, have argued that the Individual Mandate remains constitutional and, therefore, no part of the Affordable Care Act should fall.
Ultimately, Judge O’Connor agreed with the plaintiffs. His opinion calls the state-defendants’ argument “logically inconsistent” because the Individual Mandate is essentially toothless without the non-coverage tax. Judge O’Connor ruled that the Individual Mandate was no longer constitutional under Congress’s tax power because Congress no longer imposed a tax. Furthermore, Judge O’Connor found that Congress likely would not have passed the Affordable Care Act without the Individual Mandate, making the provision essential to the statute as a whole. Thus, if the Individual Mandate is unconstitutional, then the entire law is void.
The defendants have already promised to appeal Judge O’Connor’s decision to the United States Court of Appeals for the Fifth Circuit. Given the change in circumstances since the Sebelius and King decisions, it seems likely that the Supreme Court will eventually consider a petition for certiorari in Texas v. United States. The narrow decision rendered in Sebelius signals that some Justices who voted to uphold the law in 2012 may see things differently in the light of new circumstances.
In the meantime, the case represents a deep divide, not only at the federal level, but also between the states. Some 36 states, plus the District of Columbia have officially taken a stand as parties on either side of the litigation. Their participation serves as a reminder that whatever decision becomes final will drastically affect the way that states administer health care issues and the way that the American people seek coverage.
Julie Rovner, Texas Judge Rules Affordable Care Act Unconstitutional, But Supporters Vow To Appeal, NPR (Dec. 14, 2018).
Nat’l Fed’n of Indep. Bus. v. Sebelius, 567 U.S. 519 (2012).
Nicholas Gerbis, The History of the Affordable Care Act, How Stuff Works.
Tex. v. United States, 2018 U.S. Dist. LEXIS 211547 (N.D. Tex. 2018).
Photo courtesy of Huffington Post.