Balkinization  

Saturday, December 15, 2018

There is no "mandate." And oh, by the way, Judge O'Connor didn't enjoin enforcement of any provision of the ACA, let alone "strike down" Obamacare in its entirety.

Marty Lederman

All the many critics are absolutely correct that Judge O’Connor’s severability analysis in his Affordable Care Act opinion yesterday is indefensible.  By focusing so intently on the severability argument, however, many of those critics concede (or assume) far too much at the front end, which is, if anything, even less defensible.

The linchpin of O’Connor’s judgment—the part that triggers his severability analysis in the first place—is his conclusion that once the Affordable Care Act’s “shared responsibility payment” is reduced to zero on January 1 (the result of an amendment Congress enacted in December 2017), what will remain of 26 U.S.C. § 5000A is a “mandate” for individuals to “maintain minimum essential [health insurance] coverage.”  Because Congress lacks any power to mandate, or require, individuals to purchase or maintain insurance, reasons Judge O’Connor, the “mandate” will become unconstitutional in a couple of weeks.  And having decided that, O’Connor then further "reasons" that the “mandate” isn’t severable from any of the other myriad of provisions of the ACA, and thus that the entire kit and kaboodle will be inoperative on January 1.

The word “mandate” or the phrase “individual mandate” appears no fewer than 245 times in Judge O’Connor’s decision.  On top of that, he uses “requirement” and “obligation” as synonyms for “mandate” another 45 or so times.  That’s close to 300 references in a single 55-page opinion.

But the ACA doesn’t contain any mandate, or legal requirement, for anyone to maintain health insurance.  What § 5000A contains, instead, is a choice.  As originally enacted—that is to say, under the ACA in effect today (i.e., before January 2019)—that choice for most individuals is either to maintain health insurance (subsection 5000A(a)) or to make the prescribed “shared responsibility payment,” which has been the greater of 2.5% of household income or $695 (subsection 5000A(b)).  As Chief Justice Roberts put the point in NFIB v. Sebelius, "[t]hose subject to the individual mandate may lawfully forgo health insurance and pay higher taxes, or buy health insurance and pay lower taxes.  The only thing they may not lawfully do is not buy health insurance and not pay the resulting tax."

As of January 1, the second of those two lawful choices will become even less onerous—paying "zero" will be an option that satisfies the law, just as paying the greater of 2.5% of household income or $695 to the IRS did until now.

Judge O’Connor repeatedly insists that the directives in subsections 5000A(a) and (b) are “distinct”—that “Congress never intended the two things to be one,” and “could not possibly have intended the mandate and penalty to be treated as one when it treated them as two.”  He’s right about that—but what he appears not to realize is that it undermines, rather than supports, his argument that § 5000A imposes a “mandate” to maintain health insurance.  They are distinct provisions—and Congress plainly meant to give individuals the choice between complying with one or the other, either of which is a lawful option.  (At one point O’Connor writes that “because Congress had the power to enact the shared-responsibility exaction, § 5000A(b), under the Tax Power, it was fairly possible to read the Individual Mandate, § 5000A(a), as a functional part of that tax also enacted under Congress’s Tax Power.”  This is simply nonsense.  Obviously, § 5000A(a) isn’t a “part of a tax”—it’s an option that individuals may choose to comply with in lieu of paying the tax in subsection 5000A(b).)
  
What about the word “shall”?  See § 5000A(a) ( “An applicable individual shall . . . ensure that the individual . . . is covered under minimum essential coverage.”)  Doesn’t that create a mandate—a legal obligation—to maintain health insurance?  No, it doesn’t.  Read in conjunction with subsection (b), and in light of the government’s unequivocal (and correct) representations in NFIB v. Sebelius, upon which Chief Justice Roberts relied, that “if someone chooses to pay rather than obtain health insurance, they have fully complied with the law,” it’s evident that Congress’s use of the word “shall” in § 5000A(a) merely describes one of two available choices—it doesn’t create a “mandate,” or legal obligation, to “ensure that the individual . . . is covered under minimum essential coverage.”  This follows directly from New York v. United States, 505 U.S. at 169-170, in which the Court, using a virtually identical analysis, explained that a provision of federal law reading that “[e]ach State shall be responsible for providing ... for the disposal of ... low-level radioactive waste” did not impose a legal requirement  the states (which would have been unconstitutional) when read in conjunction with other provisions of the same act providing that the failure to provide for such disposal subjected a state to losing the right to federal dollars and to lose access to disposal sites in other States.

In sum, because Congress has the power to impose one of the two “lesser included” options described in § 5000A, standing alone, it therefore has the authority to offer individuals the choice between complying with that option and another, even if it couldn’t impose the latter as a stand-alone requirement. 

The intervenor defendant States in the new case go to great lengths in their briefs to insist that the amended version of § 5000A(b)—setting the payment option at “zero” as of January—continues to be an exercise of Congress’s taxing power.  Contra Judge O’Connor, they’re probably right about that—but it doesn’t matter whether or not they are.  Congress doesn’t need to point to any particular fount of Article I, section 8 authority in order to afford individuals the option of doing nothing—which is what the recent amendment does.  And if that’s a lawful option behind Door No. 2, there’s simply no “mandate” to maintain insurance (Door No. 1), no matter how many times Judge O’Connor says otherwise.  [UPDATE:  As Neil Siegel puts the point in a follow-up post:  "To put it bluntly, Congress does not require an enumerated power to declare that Americans must either do X or else not do X and suffer no consequences.  After the 2017 statutory amendment to the ACA, that is what the individual mandate and shared responsibility payment provisions provide."]

This understanding is the only way to make practical sense of § 5000A, in at least two important respects.  

First, Judge O’Connor’s reading blinks reality in terms of what everyone knows Congress’s “plan” was when it amended the ACA in 2017 (see Burwell v. King).  As I wrote earlier, the 2017 Republican Congress obviously didn’t intend to diminish individuals’ choices and to require them to maintain health insurance beginning in 2019 whereas they previously didn’t have to do so.  Indeed, I think it’s a safe bet that no members of Congress who voted for the bill would favor such a result—and that they’d all laugh at the idea that that’s what they accomplished in 2017.  Instead, the new Congress’s design was manifestly to lessen the burden on individuals by giving them an option they previously didn’t have—namely, to decline to either maintain insurance or pay a tax:  Come January, payment of “zero” while not maintaining health insurance will be a lawful option.  Because that's precisely what the Congress intended.  [Later in his opinion, in the severability analysis, Judge O'Connor actually has the audacity to write that the 2017 Congress “intended to preserve the Individual Mandate because the 2017 Congress, like the 2010 Congress, knew that provision is essential to the ACA.”  As Nick Bagley writes today regarding that statement:  "Your jaw should be on the floor.  On no account did Congress in 2017 'intend to preserve' the individual mandate.  It meant to get rid of the loathed mandate — and it did, by eliminating the penalty that gave it force and effect."]

Second, take a look at the key tell, very early in Judge O’Connor’s opinion:  the run-over sentence on pages 3-4 and the accompanying footnote 2.  When it enacted the ACA in 2010, Judge O’Connor (correctly) explains, “Congress exempted five categories of individuals from the shared-responsibility payment but not the Individual Mandate” (citing § 5000A(e)).  What were those exempted categories of individuals?  (i) Those who can’t afford coverage; (ii) taxpayers below the poverty line; (iii) members of Indian tribes; (iv) individuals experiencing “short coverage gaps” in health insurance; and (v) persons who’ve received a “hardship” exemption from the Secretary of Health and Human Services.  

From 2014 (when § 5000A went into effect) to this day, individuals in each of those categories have, in effect, been subject to a “responsibility payment” of zero, just as everyone else will be come January.  According to Judge O’Connor, all of those persons have, since 2014, been subject to a legal “obligat[ion] to obtain minimum-essential coverage.”  Yet presumably many hundreds of thousands or millions of such persons have not maintained health insurance for all or most of that time.  Thus they have, in O’Connor’s view, been lawbreakers each and every day of the past eight-plus years.

Allow me to repeat that, because it so vividly illustrates what's wrong with Judge O'Connor's--and the Trump DOJ's--theory of the case:  According to O'Connor and DOJ, someone who has been making monthly payments to the IRS for the past eight years has been in compliance with the law, but many indigent persons and members have been recklessly and audaciously violating federal law every month for years on end by neither making such a payment nor maintaining health insurance.  [UPDATE: I tweaked this to make it less categorical in light of the fact that many such persons of course satisfy § 5000A(a) by receiving, e.g, Medicaid or employer-provided care.]

This is, of course, absurd.  Congress originally exempted those persons from the payment obligation precisely because they could not afford to purchase health insurance (or some other equitable reason, such as the inefficiency/inconvenience of purchasing insurance during “short coverage gaps,” or the fact that tribes provide health care to their members).  Congress didn’t intend to obligate them to purchase and maintain health insurance—to give them even fewer lawful choices than everyone else has had.  Precisely the contrary:  Congress exempted them from a statutory burden everyone else has had because it’d be unfair or impossible for them to fulfill it.

Come January 1, we’ll all be similarly situated to those five categories, e.g., to those who can’t afford coverage, including the very poorest among us, when it comes to § 5000A:  Like them, we’ll have a lawful option of doing nothing—paying “zero.”  Section 5000A will not require (just as it has not previously required) anyone to maintain health insurance.[1]  (Accord, Jonathan Adler:  [T]here is nothing left in the ACA that mandates that people obtain health insurance.”)

Therefore § 5000 won’t be unconstitutional in January—instead it’ll merely be toothless.  And if § 5000 isn’t unconstitutional, that’s the end of Texas’s case.  There’s no need even to proceed to severability analysis.


* * * *

And now, a word on the nature and scope of the judgment:  Having written one of the more aggressive and implausible opinions in many a year, Judge O'Connor blinks at the end.  He only grants the plaintiffs  "partial summary judgment," ostensibly on Count One of their Amended Complaint:
For the reasons stated above, the Court grants Plaintiffs partial summary judgment and declares the Individual Mandate, 26 U.S.C. § 5000A(a), UNCONSTITUTIONAL. Further, the Court declares the remaining provisions of the ACA, Pub. L. 111-148, are INSEVERABLE and therefore INVALID.  The Court GRANTS Plaintiffs’ claim for declaratory relief in Count I of the Amended Complaint.
There are at least two problems with Judge O'Connor's judgment on Count One of the Amended Complaint, which reads as follows:
Plaintiffs are entitled to a declaration that the individual mandate of the ACA exceeds Congress’s Article I constitutionally enumerated powers.  Plaintiffs also are entitled to a permanent injunction against Defendants from implementing, regulating, or otherwise enforcing any part of the ACA because its requirements are unlawful and not severable from the unconstitutional individual mandate.  
As you can see, the "declaratory" relief the plaintiffs seek in Count One extends only to the "individual mandate of the ACA"--they do not seek a declaration that the rest of the ACA is "invalid."  Therefore Judge O'Connor extended his declaratory relief beyond what the plaintiffs asked for (which isn't beyond his authority, but should come with some explanation, especially where, as here, that declaration is toothless).

On the other hand, what that paragraph of Count One of the Complaint does seek with respect to the remainder of the ACA is "a permanent injunction against Defendants from implementing, regulating, or otherwise enforcing any part of the ACA because its requirements are unlawful and not severable from the unconstitutional individual mandate."  (They ask for similar injunctive relief in Count Five, too.)

Strangely enough, however, Judge O'Connor did not grant that requested injunctive relief, and failed to offer any explanation for why he didn't do so in his adjudication of the motion for summary judgment on Count One of the Amended Complaint.

Therefore, contrary to almost every media account you've read in the past few hours (come on, New York Times!) Judge O'Connor did not "strike down" the "entire Affordable Care Act" (something he lacks the power to do, in any event), nor did he even issue any injunction prohibiting federal officials from implementing any part of it, let alone all of its provisions.  Indeed, his judgment doesn't require the parties to change their conduct at all.  “[A] declaratory judgment...is a much milder form of relief than an injunction.  Though it may be persuasive, it is not ultimately coercive; noncompliance with it may be inappropriate, but is not contempt.”  Steffel v. Thompson, 415 U.S. 452, 471 (1974).

There is, therefore, at least a theoretical possibility that the federal defendants might simply disregard Judge O'Connor's indefensible declaratory judgment, particularly in light of the fact that appears to be reluctant to back it up with the force of an injunction.



[1] For another illustration of why that’ll be so, imagine that an individual who’s been making the responsibility payment rather than maintaining insurance for the past few years voluntarily chooses to continue paying the IRS $695 a year, even after January 1, 2019, when the tax requirement will be reduced to zero.  That person, in other words, does not change her behavior in the slightest.  Will she then be violating the law because of the 2017 amendment?  Of course not.  But according to Judge O’Connor, she will be.



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