Three judges – two of them appointed by Republican presidents – from the Fifth Circuit Court of Appeals heard oral arguments on July 9 in Texas v. Azar, a case brought by Republican attorneys general which aims at nothing less than the total destruction of the Affordable Care Act, aka “Obamacare.”
By most accounts the hearing, held in New Orleans, went badly for Obamacare’s advocates, as the two GOP-appointed judges appeared quite ready to strike down the entire ACA. If legal analysts are correct in that observation and the Fifth Circuit upholds a previous ruling striking down Obamacare, it would represent another stunning step forward for a legal argument that even avowedly anti-ACA scholars have called “ridiculous” and “dangerous.”
Now, legal experts on both sides of the aisle are warning that Texas v. Azar represents a serious threat to severability, the age-old legal requiring judges to leave the bulk of a duly passed law when striking down one element of it.
Most experts still believe the case will fail, should it reach the Supreme Court. But the history of Obamacare litigation is a chronicle of much-mocked cases being taken seriously by Republican judges and coming within a whisker of successfully striking down the controversial law.
The Legal Theory Behind the Case
As originally passed, the Affordable Care Act contained an insurance mandate – a provision requiring individuals to buy a qualifying health insurance plan or pay a fine of approximately $90. The mandate was immediately challenged as unconstitutional in a case that reached the Supreme Court in 2012.
When Chief Justice John Roberts cast the deciding vote to uphold the mandate that year, he argued that the mandate was not a “fine” or a “penalty” but, instead, a tax, and thus a legitimate exercise of Congress’ taxing authority under the Constitution.
Fast forward to 2017, when Republicans successfully passed their huge tax cut. While the main effect of the tax cut was to provide a staggering boon to the wealthiest Americans, the law included another provision – Republicans effectively eliminated Obamacare’s insurance mandate. While Republicans didn’t technically repeal the mandate, they “zeroed it out -” the mandate still exists under the law, but the penalty for violating it is now $0.
This prompted a group of red states, led, as usual, by Texas, to file a lawsuit in federal court in early 2018 alleging once again that Obamacare was unconstitutional. Their argument? Because there was no longer an actual fine associated with the mandate, it no longer qualified as a “tax.” And since the mandate was no longer a tax, it was no longer constitutional. Most explosively, the Republican attorneys general argued that the mandate could not be removed from the ACA and the whole law had to be struck down.
But while legal scholars of all ideological stripes immediately described the lawsuit as “absurd,” the case drew the right judge. District Court Judge Reed O’Connor, a conservative judge appointed by George W. Bush and sitting in Texas, agreed with the plaintiffs that the insurance mandate was unconstitutional and could not be severed from the rest of the law. As a result, he struck down the entire ACA, including the Medicaid expansion, insurance exchanges and every other aspect of the law.
A Question of Severability
The response to O’Connor’s ruling was explosive. Jonathan Adler and Abbe Gluck, who had previously been on the opposite side of Obamacare cases, wrote an op-ed for The New York Times calling the ruling “a mockery of the rule of law” and “an exercise of raw judicial power.”
Conservatives appalled by the success of the case so far are not suddenly fans of Obamacare. They are, instead, concerned about the effect the lawsuit will have on the legal principle of severability.
Under the principle of judicial review, federal courts have the power to strike down laws – or, relevantly, parts of laws – that they find to be unconstitutional. However, it is understood that unelected judges striking down laws passed by duly elected legislators is a tricky proposition, and judges – in theory – seek to minimize the disruption from their rulings.
Through the application of the severability principle, judges defer to legislators even when finding parts of a law unconstitutional. When at all possible, judges are supposed to leave as much of a law intact as they can, striking down only the provisions that they must in order to reconcile the law with the Constitution.
Several Democratic states stepped in to defend Obamacare after the Justice Department controversially endorsed the plaintiffs’ argument and stopped defending the law (they would go on to appeal O’Connor’s ruling to the Fifth Circuit). Lawyers for the blue states made clear at the July hearing that their priority is defending the severability of the insurance mandate. Since Congress zeroed out the mandate, its existence is more or less irrelevant. The Democratic attorneys told the Fifth Circuit judges that, if they agree with Judge O’Connor that the mandate with no penalty is unconstitutional, they should merely sever the mandate from the rest of the ACA.
Legal scholars believe that if the plaintiffs’ argument succeeds, it will deal a crippling blow to the severability principle. Judges of all ideological inclinations will have no compunction about overturning entire laws, abandoning attempts to preserve sections of laws in favor of simply striking them down in their totality.
That, in turn, threatens the separation of powers – Congress traditionally has the authority to pass laws without excessive judicial interference. Legal scholars argue that if courts abandon the severability principle, they will take on a lawmaking power for which they are poorly suited.
In the Obamacare case, attorneys defending the law – both in and out of court – argue that the zeroed-out mandate is easily severable from the rest of the law. They point out that if Congress wanted to repeal the entire ACA they could have done so – instead, Congress elected to effectively eliminate the mandate while leaving the rest of the law intact.
Judge O’Connor found that argument unpersuasive, and, in fact, claimed in his ruling that striking down the entire law was the only reasonable option available to a moderate, restrained judge. It was an argument that was met with profound hostility from observers. But it’s also an argument that might hold sway with the Fifth Circuit panel. If it does, Texas v. Azar will inevitably end up at the Supreme Court.