DANIEL VAUGHAN: Obamacare is inching toward death

December 17, 2018

DANIEL VAUGHAN: Obamacare is inching toward death

On Friday evening, a federal judge in Texas ruled that Obamacare, as currently constructed after the GOP’s 2017 tax overhaul, is unconstitutional. In response, mainstream cable news anchors have lamented how unjust and incredible it is that a judge could make such a ruling, especially since “Obamacare was ruled constitutional last time.”

But the federal judge in Texas wasn’t arbitrary in ruling against Obamacare. The new ruling was made because the central taxing provision that saved the Affordable Care Act last time its constitutionality was questioned is no longer present — Republicans removed the individual mandate as part of their tax overhaul last year.

Chief Justice John Roberts and the Supreme Court majority relied extensively on that now-canceled provision to uphold the law, but since the Tax Cut and Jobs Act passed in 2017, it has been unclear if the ACA would stand. It was only a matter of time before a federal judge had to make a ruling.

Still, I understand why this case was so shocking to CNN’s crowd; they’re myopically focused on Donald Trump, and they’ve forgotten that lawsuits unrelated to the president are happening all across the country. In fact, the case questioning Obamacare in Texas was heavily litigated by nearly every state attorney general in the nation.

The plaintiffs consisted of 20 states and their attorney generals, led by Texas, along with two individuals. On the other side sat the U.S. government, tasked with defending the law, and a coalition of 17 mostly blue states and their attorney generals. In total, 37 of the 50 states, along with a host of industry groups and experts, joined the lawsuit.

It was, to put it bluntly, a massive legal clash.

There are three broad issues at play in this case, and U.S. District Judge Reed O’Connor addressed each one in turn: First, did the plaintiffs have the standing to bring a lawsuit? Second, is the individual mandate still part of Congress’ taxing power with this new tax cut legislation, or does it fall under the Constitution’s Commerce Clause? And third, if you rule that the new individual mandate is unconstitutional, does the rest of the law have to be struck down with it, or can you remove the offending parts while keeping the rest?

Other issues and arguments intertwine, but they all generally fall under these three broad questions.

To have standing, a person generally has to prove they’ve suffered some harm or will suffer injury from a given statute. Under the initial version of Obamacare, this was easy to show, since the individual mandate fined anyone and everyone who did not comply with the law.

But this issue is murkier now because the GOP tax law neutered the individual mandate. In this case, the plaintiffs have asserted that they still have the capacity for injury, because the 17 blue states are arguing that the remaining penalties and taxes under Obamacare are still part of Congress’ taxing power.

With this, the judge ruled the plaintiffs had met the standing requirements, but I suspect this issue will come up again on appeal before the Fifth Circuit Court of Appeals, and, if it gets there, the U.S. Supreme Court.

The second issue is the main meat of the case, and it’s the million dollar question: Is Obamacare still constitutional under Congress’ taxing power if the taxing power was nullified by Congress?

This is important because if Obamacare is no longer ruled to fall under Congress’ taxing power, then it must be analyzed under the Commerce Clause. And in the NFIB case where the Supreme Court upheld Obamacare under the taxing law, a majority of the justices — 5 of 9 — held that Congress only had the power to regulate commerce; they cannot compel people into commerce.

Instead, Obamacare was upheld because Congress does have the power to tax people without health insurance. But on Friday, Judge O’Connor ruled that “[u]nder the law as it now stands, the Individual Mandate no longer ‘triggers a tax’ beginning in 2019. So long as the shared-responsibility payment is zero, the saving construction articulated in NFIB is inapplicable and the Individual Mandate cannot be upheld under Congress’s Tax Power.”

If that central ruling holds, then Obamacare is in grave legal jeopardy — which brings us to the third issue: severability.

In general, if a broad piece of legislation has an unconstitutional provision in it, the courts can use severability clauses to strike down only the offending parts of the law while keeping the rest.

But in Obamacare, the taxing powers were deemed essential throughout its initial debate and in subsequent lawsuits. If the taxing sections — which are critical to Obamacare’s survival — are gone, then is it possible to sever the taxing parts of the Affordable Care Act and keep all the other provisions?

In this case, the federal judge ruled that the plaintiffs had standing, that the mandate no longer fell under Congress’ taxing power, and that it was impossible to sever the tax provisions from the rest of Obamacare.

If that’s the case, then Congress had better start working on health care legislation right now — because it’s entirely possible that the Affordable Care Act is limping toward its demise.


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Daniel Vaughan

Daniel Vaughan is a columnist for the Conservative Institute and lawyer in Nashville, Tennessee. He has degrees from Middle Tennessee State University and Regent University School of Law. His work can be found on the Conservative Institute's website, or you can receive his columns and free weekly newsletter at The Beltway Outsiders. Connect with him on Twitter at @dvaughanCI.