Court Strikes Down Individual Mandate

♦ June 17, 2021, the Supreme Court, on a 7-to-2 vote, turned aside the latest effort by Republicans to kill the healthcare law.

Continue reading to learn how this all played out.

Court declines to rule if Obamacare is lawful

The 5th Circuit Court of Appeals ruled against part of the Affordable Care Act. It ruled that the Individual Mandate is unconstitutional now that Congress eliminated the penalty for not having health insurance.

♦ The court did not rule on any other parts of the Affordable Care Act. The judges wore blinders to avoid making the hard decisions.

President Trump and his Republican allies are jumping with glee but the ruling does not overturn the 2010 healthcare law.

The court’s decision came as a surprise. Legal scholars had called it a case without merit. The ruling that was handed down came from two GOP-appointed judges.

• The case has been described as a partisan stunt. The ruling was quickly condemned by lawyers on both sides of the aisle. It should’ve been laughed out of contention long ago.

The opinion from the U.S. Court of Appeals for the Fifth Circuit is an embarrassment, both to the Republican-appointed judges who put their names to it and to the federal judiciary as a whole. The third judge on the panel dissented vehemently.

Two judges agreed with Texas-based U.S. District Judge Reed O’Connor’s 2018 finding that the law’s insurance requirement - the Individual Mandate - was rendered unconstitutional when Congress, in 2017, reduced a tax on people without insurance to zero.

The judges then played chicken and said they could not decide if any other parts of the Affordable Care Act were unconstitutional.

♦ The case will be returned to Judge O’Connor in Texas for further proceedings; while this happens, Obamacare remains fully in effect.

The Fifth Circuit’s decision may be strategic. By refusing to say if any other parts of the law are affected the court avoids creating an immediate headache for Republicans going into the 2020 election. It may also reduce the odds that the Supreme Court will review the case right away. The Court doesn’t normally like to hear cases before they’re wrapped up.

• Judge O’Connor is instructed to consider Congress’s intent when lawmakers voted to zero out the penalty for not having health insurance. To date, no senator has said they believed they were voting to repeal Obamacare when they cast their vote to zero out the penalty.

Judge O’Connor is not expected to take the Appeals Court’s instructions seriously. He has already indicated he won’t change his initial opinion. It is almost certain Judge O’Connor will hold off issuing a ruling until after next year’s presidential election.

♦ In dissent, Judge Carolyn King said her colleagues were prolonging “uncertainty over the future of the healthcare sector.” King would have found the mandate constitutional, although unenforceable, and would have left the rest of the law alone.

California Attorney General Xavier Becerra, who is leading state efforts to defend the law, promised a quick appeal to the Supreme Court.

The Supreme Court might choose to hear the case right away, setting up a constitutional showdown that could become the centerpiece of the 2020 presidential election. Or the justices could wait until the lower court rules, leaving the fate of Obamacare in limbo for years.

♦ The Supreme Court heard arguments on November 10, 2020.

♦ June 17, 2021, the Supreme Court, on a 7-to-2 vote, turned aside the latest effort by Republicans to kill the healthcare law.

Case history

The case centers on the Individual Mandate. This is the requirement that all Americans have health insurance or pay a penalty.

♦ In 2012, the Supreme Court decided that the Individual Mandate was a form of tax. A tax on the decision to go without insurance. The court reasoned that people had a “lawful choice” about whether to buy insurance or pay a penalty. The Affordable Care Act was therefore constitutional.

Republicans never really accepted this outcome. In 2017, they tried to repeal the Affordable Care Act but they failed miserably. As a consolation prize, they passed a tax bill and attached an amendment to zero out the penalty. Now if you go without insurance, nothing happens to you.

A bunch of attorney generals in red states saw an opportunity. They reasoned that the penalty’s elimination meant that the mandate didn’t look like a tax anymore. Legal scholars disagree with this line of thinking. Most say, a tax is still a tax even if it is zero.

• A suit was filed in Texas, so that a well-known conservative judge with a history of opposing the Affordable Care Act would get the case.

The suit argued that with a zero-tax penalty the Individual Mandate was no longer a tax and therefore unconstitutional. The suit went further to argue if the Individual Mandate were unconstitutional then the entire Affordable Care Act must be unconstitutional.

Judge Reed O’Connor, the conservative Fort Worth judge who heard the case, bought the argument hook, line, and sinker.

Initially, the Trump administration did not buy into the storyline that the entire law must be unconstitutional. The fear of angering voters appeared to weigh heavily on the administration. The administration only took the stance that they would not provide an argument in defense of the Affordable Care Act.

However, several months later the administration suddenly jumped into the fray and came out in favor of invalidating the entire law. This shocked Republicans up for re-election in 2018. To avoid making this a campaign issue, Judge O’Connor was encouraged to delay his ruling until after the fall elections, which he did.

• Judge O’Connor dutifully ruled the Individual Mandate was unconstitutional and because it was unconstitutional the entire Affordable Care Act must be considered unconstitutional. To his credit, he immediately stayed his decision pending an appeal.

♦ For now, the Fifth Circuit’s decision changes nothing on the ground. But it stands as evidence that traditional legal restraints have become fragile in a time of partisan warfare.