Balkinization: Dear Judges Elrod, Engelhardt and King: Please Don't Confirm the Preposterous Reading of Section 5000A of the ACA

Dear Judges Elrod, Engelhardt and King: Please Don't Confirm the Preposterous Reading of Section 5000A of the ACA

Marty Lederman

If yesterday’s oral argument is any indication, some of you are concerned that Section 5000A of the Affordable Care Act, as amended by Congress in 2017, must be read as imposing a legal obligation, or “mandate,” that many Americans must maintain a certain form of health insurance. The apparent basis for this reading—again, if the oral argument is any indication—is that (i) the word “shall” appears in the first subsection of that provision, § 5000A(a) (“[a]n applicable individual shall . . . [maintain insurance]”); and (ii) the 2017 Congress “zeroed”-out the shared responsibility payment option beginning in 2019.

If I may respectfully suggest: That reading of the 2017 Congress’s handiwork, which District Court Judge O’Connor essentially adopted and which Texas and the Department of Justice are urging you to affirm, is an embarrassment, and you shouldn’t rely upon it in your ruling.

Why is it embarrassing? There are at least four reasons. [Note: The House of Representatives discusses these reasons in further detail in its briefs, especially its reply brief, and I elaborated upon them in two earlier posts.]

First, in its 2012 opinion in NFIB v. Sebelius, the Supreme Court construed the first two subsections of § 5000A, read together, to afford covered individuals a choice between two lawful options, notwithstanding the inclusion of the word “shall” in § 5000A(a): they could (i) maintain health insurance (§ 5000A(a)) or make a “shared responsibility payment (§ 5000A(b)) . . . and, importantly, the 2017 Congress, fully aware of the Supreme Court’s “two legal options” construction, did not amend those two subsections.

The words of subsections (a) and (b) today are exactly what they were when the Court construed them in NFIB v. Sebelius. The only relevant amendment Congress made in 2017 was to a subsequent subsection, § 5000A(c), a provision that played no role in the Supreme Court’s construction. The 2017 Congress merely amended § 5000A(c) to change the amount of the second option (the shared responsibility payment) from approximately $695/year to zero, beginning in 2019.

In other words, as the House wrote in its reply brief, the 2017 Congress “left the choice-creating text and structure of Section 5000A intact,” and merely made it less costly to forgo maintaining insurance by reducing the alternative payment to zero.

In light of that, it would make no sense to conclude that Congress in 2017 amended § 5000A to change a choice of two legal options into a mandate to perform only the first of those options.

Second, there’s no evidence at all in the legislative history—none—that any member of the 2017 Congress, let alone majorities of both Houses and the President, intended such a radical change or understood the amendment of subsection 5000A(c) to have such an effect. To the contrary, and as the House brief elaborates, every member of Congress to speak on the issue in 2017—from then-Speaker Ryan and Leader McConnell on down—confirmed that the point of the amendment was to eliminate any legal or financial pressure to purchase insurance, not to establish a legal obligation to buy it. And President Trump agreed. The month after he signed the bill, he boasted in his State of the Union address:

We eliminated an especially cruel tax that fell mostly on Americans making less than $50,000 a year — forcing them to pay tremendous penalties simply because they could not afford government-ordered health plans. We repealed the core of disastrous Obamacare — the individual mandate is now gone.

On Judge O’Connor’s view, however, Congress and President Trump did precisely the opposite of what President Trump announced—namely, they had (on O’Connor’s view) restored a legal mandate where before there had merely been a choice of two legal options. That reading is, not surprisingly, inconsistent with how everyone in the legislative process, in both political branches, understood what they had done.

Third, and as I’ve explained twice before, Judge O’Connor’s reading would render tens or hundreds of thousands (perhaps now millions) of people to be lawbreakers, even though that was manifestly not Congress's intent or design, in either 2010 or 2017.

For starters, consider (i) members of Indian tribes and (ii) many indigent individuals--those who can’t afford coverage; taxpayers below the poverty line; individuals experiencing “short coverage gaps” in health insurance; and persons who’ve received a “hardship” exemption from the Secretary of Health and Human Services. Under the ACA as it’s existed since its enactment (subsection 5000A(e), in particular), such persons are expressly exempt from the Shared Responsibility Payment (the “penalty”). Accordingly, many of those persons have neither maintained the prescribed insurance nor made any shared responsibility payments to the IRS for the past five years. Have they therefore been violating the ACA all these years, by virtue of being exempt from the tax provision, i.e., from one of the two choices available to others? Of course not. And yet, according to Judge O'Connor (and DOJ, and Texas), those indigent persons and tribal members have been subject to a legal obligation to purchase and maintain minimum-essential coverage, and therefore have been recklessly and audaciously violating federal law every month for five years now.

This is, of course, ridiculous. Congress originally exempted those categories of persons from the payment obligation precisely because they couldn't afford to maintain federally prescribed levels of 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 had because it’d be unfair or impossible for them to satisfy it.

Well, the effect of the December 2017 amendment to subsection 5000A(c), properly construed, is simply to put everyone else in exactly the same legal position as lower-income individuals and tribal members have been for the past five years: They all now have a lawful choice to do nothing—to make a “payment” of zero—and therefore don't have a legal duty to purchase or maintain health insurance.

The O'Connor reading would lead to other absurd results, too. Imagine, for example, a good samaritan who paid $695 a year, rather than maintaining health insurance, from 2014 through 2018, and who has voluntarily chosen to continue paying the IRS $695 this year, even after Congress reduced the required payment to zero. That person, in other words, hasn’t changed her behavior in the slightest. Is she now violating the law because of the 2017 amendment? Of course not. According to Judge O’Connor and DOJ, however, she’s a lawbreaker.

Fourth, and perhaps most revealingly, construing Congress’s modest amendment in 2017 as having converted Section 5000A from offering a choice to imposing a command would effectively be to accuse Congress and the President of directly defying the Supreme Court—the precise opposite of what the constitutional avoidance canon demands.

As everyone agrees, the Supreme Court held in NFIB that Congress lacks an Article I power to actually require individuals to purchase and maintain health insurance. Judge O’Connor’s view—and Texas’s, and, shockingly, DOJ’s—is that the 2017 Congress, knowing of this holding (a holding applauded by most of the members who supported the 2017 amendment), did precisely what the Court had just held it could not do. In other words, instead of construing the amended law to avoid a serious constitutional question, as courts are obliged to do where possible, Texas and DOJ are urging you to construe it to be the most direct and audacious congressional rebuke of the Supreme Court’s interpretive authority in the history of the Nation.

As the House puts it, “[g]iven the respect due co-equal branches of government, it is remarkable that DOJ in particular would insist that Section 5000A be forced to bear a meaning that renders it unconstitutional rather than presuming that Congress intended to preserve the Supreme Court’s constitutional interpretation of the provision.”

Just so.

* * * *

The Supreme Court explained, in the second of its ACA cases (King v. Burwell), that "in every case [the court] must respect the role of the Legislature, and take care not to undo what it has done. A fair reading of legislation demands a fair understanding of the legislative plan."

Judge O'Connor's reading of the ACA would, in all of the ways I've explained above, turn the legislature's plan inside out, and thus accomplish the opposite of what Congress and President Trump so obviously intended. There's no justification for such a counterintuitive and destructive act of judicial distortion.[1]

P.S. If you rule, as you should, that Section 5000A does not require individuals to maintain insurance, that would have the added virtue of precluding the need to resolve all those questions you raised about severability and remedy.

[1] Does the word “shall” in § 5000A(a) require a different result? No. The Court in NFIB understood that directive term to describe only one of the two alternative legal options—i.e., you “shall” do A or otherwise must do B. As Chief Justice Roberts explained, 567 U.S. at 568-69, this unexceptional reading of § 5000A(a)--to describe one prong of a choice--followed 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.

Posted 10:08 AM by Marty Lederman [link]