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Individual Mandate Is Unconstitutional, Federal Court Rules In Texas-Led Affordable Care Act Lawsuit

Jill Ramirez, the Director of Outreach for the Latino Healthcare Forum, passes out flyers and explains components of the American Care Act (ACA) to Jesse Zavala at a carshow and picnic at the Promiseland Church in Austin, Texas on Oct. 5, 2013.
Spencer Selvidge
The Texas Tribune
Jill Ramirez, the Director of Outreach for the Latino Healthcare Forum, passes out flyers and explains components of the American Care Act (ACA) to Jesse Zavala at a carshow and picnic at the Promiseland Church in Austin, Texas on Oct. 5, 2013.

The individual mandate, a critical provision of President Barack Obama’s landmark Affordable Care Act, is unconstitutional, a three-judge panel on the U.S. 5th Circuit Court of Appeals ruled Wednesday.

In a long-awaited ruling in a case that has pitted a conservative coalition of states led by Texas against a counter-team of blue states led by California, a three-judge panel on the New Orleans-based appeals court sent the case back to a federal district judge in Texas to determine whether the rest of the law must fall with the individual mandate.

That federal judge, Reed O’Connor of Wichita Falls, had already declared that the individual mandate was unconstitutional — and that the rest of the sprawling law must fall with it. But the higher court ordered him to re-approach that analysis.

The case has long turned on the question of “severability” — if the individual mandate must fall, must the rest of the law fall with it?

“This issue involves a challenging legal doctrine applied to an extensive, complex, and oft-amended statutory scheme. All together, these observations highlight the need for a careful, granular approach to carrying out the inherently difficult task of severability analysis in the specific context of this case,” wrote U.S. Circuit Judge Jennifer Walker Elrod for the panel. “We are not persuaded that the approach to the severability question set out in the district court opinion satisfies that need.”

In February 2018, the Texas-led coalition asked a federal judge in Fort Worth to strike down the law as unconstitutional, arguing that the landmark health care law must fall in its entirety after Congress in 2017 gutted one of its major provisions, the individual mandate. The conservative-led states won an early victory in December 2018, when O’Connor — who has a reputation for issuing rulings friendly to the conservative Texas Attorney General’s Office — ruled the entire law unconstitutional.The case was originally filed against the federal government, but after the Trump administration, in an unusual move, declined to defend the law, the task has largely fallen to a California-led coalition of states.

In July, attorneys for Californiatold the appellate court that unrelated portions of the law should stand even if the court chose to strike down the individual mandate. They also argued that overturning the law that has touched nearly every prong of the American health care system would cause immeasurable chaos.

And the decision comes at a perilous political time. Health care has proven the top issue of the Democratic race for president in 2020; and the thumping Republicans suffered in 2018 was largely attributed to the issue as well. Depending on the speed of the litigation, the bellwether lawsuit could land in front of the U.S. Supreme Court as the country wages a bitter presidential election.

Critical to the 2009 Affordable Care Act, which aimed to insure more Americans, was the “individual mandate” — a penalty individuals had to pay if they chose to remain uninsured. In an earlier challenge to the law, the U.S. Supreme Court ruled that that provision was constitutional only if it was interpreted as a tax levied by the federal government. But in 2017, in passing a package of tax cuts, Congress set the individual mandate’s charge at $0.

Texas argued that the mandate could no longer be interpreted as a tax, and thus must fall as unconstitutional — and if the mandate had to fall, the rest of the law had to, too. That question of “severability” — can the bulk of the sweeping health care law stand without that core provision — has animated the lawsuit so far, with legal scholars on both sides of the political aisle ridiculing Texas’ position.

The Texas Tribune provided this story.

Emma Platoff is a breaking news reporter at The Texas Tribune. She previously worked at the Tribune as a reporting fellow and is a recent graduate of Yale University, where she studied English literature and nonfiction writing. She has also worked as the managing editor of the Yale Daily News and as an intern at The Philadelphia Inquirer and the Hartford Courant.