The U.S. Supreme Court today held the third of three days of hearings to consider the constitutionality of two key provisions of the Patient Protection and Affordable Care Act ("ACA"). In its morning session, it considered the question of the severability of the minimum-coverage requirement from the rest of the ACA and whether the conditions Congress attached to the ACA Medicaid-eligibility extension violate the limitations on Congress' powers under the spending clause of Article I of the Constitution.[1]

Overview -- the severability issue

If the Court were to conclude the ACA's minimum-coverage requirement is constitutionally invalid, it would need to decide what remedy to order. In the parlance of the courts, it would have to decide whether the unconstitutional part of the statute could be "severed" neatly from the remainder of the law or whether some more-extensive judicial surgery would be more appropriate.

The Court has always exercised considerable discretion to impose equitable remedies in such situations. In doing so, it generally adverts to two fundamental principles rooted in its role in the constitutional system. Courts, including the Supreme Court, hear and decide actual cases and controversies arising under existing law, do not render "advisory opinions" to interested bystanders, and should defer to the democratically accountable branches for the enactment and enforcement of the law. From this it is thought to follow, first, that generally only those provisions of a law with a direct impact on the actual parties to the case should be considered -- the principle of "standing." Second, the court should excise only the unconstitutional provisions of a statute, leaving in place remaining parts that are "consistent with Congress' basic objectives in enacting the statute" unless it is evident that Congress would not have wanted the remaining provisions to stand.[2] On reflection, it is clear that these principles may sometimes conflict with one another.

The district court that first decided this case held that because the minimum-coverage provision was unconstitutional, the entire ACA should be invalidated. The Court of Appeals reversed, deciding that only the minimum-coverage provision itself should be excised from the statute. In their briefs, the parties have urged several different approaches to this question.

Strike down only the minimum-coverage rule

The federal government argues that because the states, individuals and the business organization that are parties in this case are not regulated by the other provisions (save one) of the ACA, the Court should not even consider invalidating those other provisions. The only exception, according to the government, is the Medicaid-eligibility expansion, which directly affects the state litigants, so that the Court might properly consider its severability from the minimum-coverage rule[3] -- otherwise, hands off! Even though the government concedes that Congress regarded the guaranteed-issue and community-rating provisions as inextricably intertwined with the minimum-coverage requirement, it insists that invalidating those provisions as inseverable must await a lawsuit brought by persons directly affected by them.

Strike down other related health insurance sections of the ACA

All the parties agree that the minimum-coverage requirement is necessary to make effective the ACA's guaranteed-issue and community-rating insurance market reforms.

Congress expressly found that this minimum coverage provision is crucial to the viability of the guaranteed-issue requirements that will take effect, along with the minimum coverage provision, in 2014. Congress determined that, without a minimum coverage provision, many individuals would take advantage of the guaranteed-issue and community-ratings requirements by "wait[ing] to purchase health insurance until they needed care." .... That practice would drive up premiums and threaten the viability of the individual insurance market.[4]

At a maximum (the federal government) or a minimum (the states and private litigants), the guaranteed-issue and community-rating provisions should be invalidated, in keeping with the aim of crafting a remedy that honors congressional intent.

Declare the entire ACA unconstitutional

In a classic "for want of a nail"[5] argument, the states and private litigants urge the view that if the minimum-coverage requirement is unconstitutional, the entire ACA must be declared unconstitutional. Very simply, Congress would not have enacted the other ACA insurance-related provisions without the minimum-coverage requirement, and it would not have enacted the ACA without the insurance-related provisions. Therefore, the Court should honor congressional intent by invalidating the rest of the ACA once the minimum-coverage provision is declared unconstitutional.

Today's oral argument

In the argument today, the Court explored with counsel the difficult task that it will face in crafting an appropriate remedy if it holds that the minimum-coverage provision of the ACA is unconstitutional.

One possibility would be to invalidate the entire ACA. Paul D. Clement, appearing for the states, urged that this would be the sensible approach because the minimum-coverage provision is the base on which the core provisions of the ACA are built. Guaranteed issue, community rating, insurance exchanges, employer-directed insurance revisions, and other insurance reforms will not work as Congress intended without the minimum-coverage provision. And once those provisions are invalidated, he urged, there remains nothing but "a hollowed-out shell" that cannot function as Congress intended and therefore should be entirely struck down.

Justice Breyer questioned whether striking down the entire ACA would really be appropriate, because many sections of the 2,700-page ACA clearly have nothing to do with the insurance market revisions at issue in this case. Justice Scalia questioned whether such an approach would not be an extravagant exercise of judicial authority in the context of "legislative inertia," asking whether it would not be more deferential to Congress to make the narrowest-possible excision from the statute.

When Justice Sotomayor pursued the same suggestion that the narrowest-possible invalidation would be the Court's best path, Mr. Clement replied that the Court should take the "sweet with the sour" and wipe the legislative slate clean. Congress, he suggested, would not have enacted the ACA without the minimum-care provision. Justice Scalia, observing that Congress also would not have enacted the ACA without the "Cornhusker kickback, which surely violates the constitutional proscription on venality," questioned whether the "but for" analysis suggested by Mr. Clement was really the right one to guide the Court's decision on severability. This led to questioning by Justices Kennedy and Kagan and others in which several alternative possible standards were examined with counsel:

  • Look to the text and history of the statute to define the scope of invalidity to be ordered.
  • Ask whether the remaining provisions would be reasonably functional without the invalid provision(s).
  • Invalidate only the offending minimum-coverage provision, leaving any other changes to Congress.

Questions by various Justices highlighted the difficulty of applying each of these standards. How could the line be drawn between ACA provisions fatally infected with dependence on the minimum-coverage provision and those not? (Breyer and Scalia) How intent should the Court be on "salvaging" as much of the law as possible? (Ginsburg) Is not half a loaf better than none when it comes to an extensive and complex statute such as this one? (Kagan) Can any law really function as Congress intended if a significant piece of it is stricken as unconstitutional? (Sotomayor) Pressed by this discussion and Justice Alito's direct question, Mr. Clement conceded that it would be a reasonable outcome for the Court to strike down -- along with the minimum-coverage provision -- only the parts of the statute dealing with guaranteed issuance, community rating, tax credits, insurance exchanges, insurance-related employer mandates, and other insurance-related provisions.

The Court pursued the same set of issues and questions with Deputy Solicitor General Edwin S. Kneedler, who represented the federal government's position before the Court. Giving only brief consideration to Mr. Kneedler's suggestion that the Court has no authority to do anything broader than invalidate the minimum-coverage provision, the Court continued to focus on what standards should guide the Court's remedial discretion and how those standards should be applied in this case. Mr. Kneedler urged the general proposition that traditional doctrines of judicial restraint, coupled with the Court's respect for its limited role in the constitutional system of divided powers, should counsel a narrow remedy consistent with the legislative history, text, and structure of the ACA. In Mr. Kneedler's view, application of this standard would lead to invalidation of the minimum-coverage provision, the guaranteed-issue provision, and the community-rating requirement.

The Justices asked a series of questions that indicated that they found the connection between Mr. Kneedler's principle and the outcome much less clear. Justice Breyer: Do we need to appoint a special master to consider the link between the minimum-coverage provision and every other provision in this massive piece of legislation? Is that what it means to examine the text? Justice Scalia: Is it more deferential to Congress to just invalidate the entire ACA? Justices Alito and Kennedy: Without going that far, are there not much more extensive economic balances and compromises struck in the ACA than simply in the three sections suggested by Mr. Kneedler -- and is the Court really equipped to plumb those depths? Is the Court instead necessarily driven to one extreme or the other?

H. Bartow Farr, III, appearing as amicus curiae, argued that the Court should invalidate only the minimum-coverage provision, refusing to let "the best drive out the good." All the other provisions of the ACA would still work reasonably well, he urged, even without the minimum-coverage provision. His argument was met with skepticism at two levels.

Justice Kagan, referring to the legislative history of the ACA, questioned whether Congress had not concluded in its legislative findings that the minimum-coverage requirement is "essential" to the operation of the other insurance provisions. Justice Kennedy asked whether such an outcome would be "calamitous," leaving in place only part of the grand balance struck by Congress in the ACA. Justice Scalia, continuing to exercise his prerogative of arguing all sides of the issue in oral argument, asked whether Mr. Kneedler's announced principle did not dictate invalidation of the entire ACA. This, he suggested, would keep the Court out of the business of weighing and balancing various sections of the ACA and their interaction with one another, speculating about congressional intent, and predicting the operation of a partial ACA.

Mr. Farr's response to all these questions provided a fair summary of the entire morning session. The doctrine of severability, he observed, is a very blunt tool. But the need to craft a remedy forces on the Court the decision as to whether leaving more or less of a law in place is better than striking down the entire law.