The Patient Protection and Affordable Care Act, often referred to as Obamacare (the “ACA”) has survived two trips to the U.S. Supreme Court. It remains to be seen whether there will be a third.
By way of brief background, the ACA became law on March 23, 2010. The ACA on its face contains a requirement (referred to as the “individual mandate”) that most individuals maintain health insurance that provides minimum essential coverage. The ACA requires those who are subject to the individual mandate to pay a “shared-responsibility payment” if they do not maintain the applicable insurance. In National Federation of Independent Business v. Sebelius,1 the U.S. Supreme Court held that the ACA’s individual mandate went beyond Congress’s power under the Constitution’s commerce clause, but that the combination of the individual mandate and the shared-responsibility payment operated as a valid exercise of Congress’s taxing power under the Constitution. On December 22, 2017, the Tax Cuts and Jobs Act (the “TCJA”) was signed into law. In the TCJA, Congress reduced the ACA’s shared-responsibility payment to zero, effective January 1, 2019.
In December 2018, the U.S. District Court for the Northern District of Texas held in two opinions in Texas v. United States2 that, following the passage of the TCJA, the ACA had been rendered unconstitutional. The bases of the court’s ruling were that (i) the ACA’s individual mandate is not valid as an exercise of congressional power under the Constitution’s commerce clause and was valid only as an exercise of Congress’s taxing power as manifested by the ACA’s shared-responsibility payment, (ii) the TCJA, by eliminating the shared-responsibility payment, eliminated the constitutional basis for the individual mandate and (iii) the remainder of the ACA is inseverable from the individual mandate, thereby rendering the entirety of the ACA unconstitutional. However, the District Court denied a request for an injunction to stop the enforcement of the ACA, thus allowing the ACA to remain in effect during the appeals process. We issued an OnPoint reporting on the Texas opinions.
The U.S. Court of Appeals for the Fifth Circuit last week, on December 18, 2019, affirmed the District Court’s holding that the individual mandate is now indeed unconstitutional.3 The Fifth Circuit remanded the case back to the District Court on the severability question directing it to “employ a finer-toothed comb . . . and conduct a more searching inquiry into which provisions of the ACA Congress intended to be inseverable from the individual mandate.”4
While it is unclear how this story will ultimately play out, it appears that the District Court now has the daunting task of surgically going through the complex and comprehensive ACA to determine which, if any, other portions of the ACA should fall by virtue of the Fifth Circuit’s affirmation of the District Court’s holding that the individual mandate is unconstitutional. One thing does seem somewhat clear, though—it does not look like the story is likely to end soon.