Notice & Comment

Silver bullets, blue pencils, and the future of the ACA

Yesterday, the Fifth Circuit heard oral argument in Texas v. United States. It was pretty brutal: consistent with the reporting, the two Republican-appointed judges on the panel appeared receptive to the argument that the Affordable Care Act should be declared invalid. (The Democrat-appointed judge was silent.) Just how receptive is hard to say, and it’s always hazardous to read too much into oral argument. But it’s safe to say that the ACA’s defenders had a tough day in court.

Much of the argument turned on fairly arcane questions about the scope of district court’s judgment. Does it apply nationwide or only in the red states? Does it matter that the court entered only declaratory relief and no injunction? Do the answers to those questions affect the rights of California and the other blue states to intervene and appeal?

These are the kinds of questions that might matter a lot to a judge who has to write an opinion invalidating all or part of the ACA. For anyone else, however, I think they’re a distraction. If the panel holds that all or part of the ACA is invalid, this case is likely headed to the Supreme Court. Out of respect for a co-equal branch, the Trump administration will adhere to the Supreme Court’s judgment across the whole United States, even if no injunction is entered and the judgment in a formal, technical sense only binds the plaintiffs who brought the suit.

So set that aside. Turning to standing, neither Judge Elrod and Judge Engelhardt appeared troubled about whether the red states could bring the lawsuit. And they were downright hostile to the argument that the ACA should be understood to leave people a choice about whether to buy insurance. Doesn’t the law say that people “shall” buy coverage? And doesn’t Congress know how to repeal or amend a law when it wishes to?

The judges listened respectfully when the lawyer for the House of Representatives patiently explained that the Supreme Court has authoritatively interpreted that language to give people a choice about whether to buy insurance or not. And Marty Lederman is right that the argument is embarrassing on its own terms. But they appeared unmoved.

Naturally, then, the judges spent a lot of time discussing whether the mandate could be severed from the rest of the law. Judge Engelhardt didn’t think it could, and referred repeatedly to King v. Burwell, where Chief Justice Roberts explained that the individual mandate was part of a comprehensive scheme to regulate the private insurance markets. Engelhardt didn’t seem to mind that Roberts was talking about an enforceable mandate, not toothless one. Nor was he moved by the argument that Congress, in 2017, was perfectly free to revisit Congress’s prior judgment that the individual mandate was essential to the ACA’s operation.

Judge Elrod’s questions also reflected antipathy to the project of taking “a blue pencil” to legislation: how could the courts possibly know what Congress would have done had it known that the naked mandate was unconstitutional? She even expressed openness to the insane argument that maybe some members of Congress who voted to repeal the penalty thought, “Aha, this is the silver bullet that’s going to undo Obamacare.”

At times, however, Elrod seemed dubious that the entire ACA had to go—wondering, for example, whether the part about menu labeling in chain restaurants had to be invalidated. And, towards the end, she raised the possibility of remanding the case to Judge O’Connor, perhaps with instructions for him to take another crack at severability.

That said, it’s not at all clear what guidance Elrod would offer to O’Connor. Should he excise only those parts that regulate the individual insurance market, including the protections for people with preexisting conditions? Or also the entire private insurance market, even as to employer-sponsored coverage? What about the Medicaid expansion? The Medicare cuts? The Part D doughnut hole? The biosimilar program?

Still, a remand for greater clarity on the scope of the judgment—to whom does it apply? can’t some parts of the ACA be severed?—may be in the cards. That wouldn’t preclude the parties from asking the Supreme Court to immediately review the Fifth Circuit decision. But it might affect the Court’s willingness to take the case. At least some of the justices won’t relish the prospect of hearing a case about the invalidation of the ACA in the heat of the 2020 presidential election. Maybe they’d prefer to wait to hear what Judge O’Connor says.

But now I’m getting ahead of the facts. I don’t know how the Fifth Circuit will dispose of the case, and there’s still a chance that the court will conclude that the plaintiffs lack standing or that the toothless mandate can be severed from the rest of the Act. It does seem to me, however, that yesterday’s argument went about as badly as it could’ve gone. Instead of scoffing at the frivolousness of the red states’ legal arguments, two judges on the panel appear open to holding that the ACA is wholly or partly invalid. We could be in for a long, bumpy ride.


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