On Tuesday, the Supreme Court will hear California v. Texas, the latest challenge to the Affordable Care Act. Both liberal and conservative legal commentators agree that there is virtually no chance the Supreme Court will strike down the entire ACA because the individual mandate is severable from the rest of the statute.
But this doesn’t mean the case is inconsequential. On the contrary, a ruling that the individual mandate is unconstitutional will establish all-too-necessary constraints on Congress’s taxing power and give force to the Framer’s design of the federal government of limited and enumerated powers.
One of the most controversial provisions in the Affordable Care Act is the individual mandate, which requires individuals to purchase health insurance, regardless of their health or risk tolerance.
In its 2012 decision in NFIB v. Sebelius, the Supreme Court held that, while Congress has broad authority under the Commerce Clause to regulate items once they are in the stream of commerce, it may not force individuals to buy a product like health insurance. Chief Justice Roberts explained that the “most natural interpretation” of the individual mandate was as a “command [to] individuals to purchase insurance” — and under such a reading, the mandate was unconstitutional.
Nevertheless, a bare majority of the Supreme Court strained to uphold the individual mandate under the doctrine of constitutional avoidance, the idea that federal courts have a “duty to construe a statute to save it, if fairly possible.” Because of this obligation, the Supreme Court found that it was “fairly possible” (though not “the most natural interpretation”) to interpret the “shared responsibility payment” to be a “tax.” The Court then upheld the mandate as a valid exercise of Congress’s power to tax.
The latest Affordable Care Act case is important, not because it is likely the Supreme Court will invalidate the entire statute, but because it may reimpose some crucial federal power limits.
There were a couple of reasons that the “shared responsibility payment” was not naturally viewed as a tax. Foremost, in enacting the ACA, Congress had declared that the payment was not a tax. Thus, the Court went against the expressed intent of Congress. Further, in a forgotten portion of the opinion, the Supreme Court held that the very same payment was a run-of-the-mill penalty and not a tax for statutory purposes. (If the Court had found the payment to be a penalty for statutory purposes, the Anti-Injunction Act likely would have barred the lawsuit.)
In NFIB, the Supreme Court, nevertheless, blessed Congress’s use of its taxing power to require individuals to do something — like purchase health insurance or maybe even eat broccoli — when Congress had told the American people it was not enacting a tax. This discards the internal safeguard inherent in the taxing power — the requirement that Congress actually passes a tax — something that has been unpopular since the days of Alexander Hamilton.
California v. Texas allows the Supreme Court to reimpose some limits on the taxing power. There is a good argument that the individual mandate can no longer be supported even by the Supreme Court’s exorbitant view of the taxing power.
In the Tax Cuts and Jobs Act of 2017, Congress zeroed out the payment attaches to a failure to purchase health insurance. The individual mandate now lacks what NFIB called the “essential feature” of a tax—that the tax “raise at least some revenue for the Government.” This feature is essential because it requires Congress to own up to enacting a tax on the American people.
The arguments in favor of upholding the individual mandate as a zeroed-out tax are weak. First, California argues that the Constitution permits a legislative bait and switch — commanding individuals to buy something through the taxing power and then zeroing out the tax all the while avoiding constitutional scrutiny. The Constitution is not so malleable.
Second, California claims that the individual mandate is meaningless because there is no penalty imposed for failing to purchase insurance. Congress often passes such precatory legislation without needing to rely on any of its enumerated powers. But the sorts of statutes California looks to are precatory on their face: providing, for example, that “[n]o disrespect should be shown to the flag of the United States.” In contrast, the individual mandate uses mandatory shall language, requiring that most Americans “shall . . . ensure that [they are] covered under minimum essential coverage.”
Finally, California maintains that, since the tax structure is still in place, the individual mandate can be upheld as a suspended tax because Congress can reimpose a revenue-generating tax at a later point in time. But Congress can later enact a constitutional tax that does not save a tax that currently generates no revenue.
The decision to strike down the individual mandate would be a win for Americans everywhere.