On Obamacare, Is Common Sense Really Judicial Activism?

As one of its first acts, the new Democrat-controlled House of Representatives has intervened in the constitutional lawsuit in which Texas federal district-court judge Reed O’Connor, widely denounced as a “conservative judge” appointed by President George W. Bush, found the entire Affordable Care Act (ACA or Obamacare) to be unconstitutional. However, Judge O’Connor, unlike the several federal judges who have ruled against the Trump administration in immigration cases, did not issue an injunction against the continuing operation and enforcement of the Act. The case is now under appeal to the Fifth Circuit Court of Appeals.

Since Judge O’Connor’s ruling, there have been few if any efforts to point out O’Connor’s reasoning or to place the case in its necessary background and context. His decision is based not only on the relevant acts of Congress but also on the tortured ruling of the Supreme Court in NFIB v. Sebelius (2012), the landmark Obamacare decision aggrandizing the power of the federal government and Chief Justice Roberts’ endorsement of the completion of the Great Society. And in light of the Democrats’ apparently successful emphasis on health care in the 2018 elections and with not just the socialist wing of their party promoting “Medicaid for all,” healthcare as a national policy is as prominent a contemporary political issue as there is. And it is all the more topical in light of the regular expostulations about how Justice Kavanaugh will vote in major cases, together with the daily reports concerning the health of Justice Ginsburg.

The ACA was and is unique in the history of the creation of major federal programs as something that was not enacted by legislative and political consensus. Unlike Social Security, Medicare, and Medicaid, which were passed into law with overwhelming votes, the Affordable Care Act was squeaked into law by a strictly partisan margin, with the entire Republican party in both the House and the Senate voting against. The bill passed the House by a vote of only 219-212.

Before the ACA went into effect, twenty states sued contending that while Article I, Section Eight of the Constitution gives the Congress the power to “regulate commerce . . . among the several states,” that regulatory power does not include the additional power to order individual Americans to affirmatively engage in commerce. The reference was to the provision of the ACA, the “Individual Mandate,” that required all Americans not enrolled in health insurance plans to contract for health insurance on their own or pay a “penalty” for not doing so. Those suing argued the same principle of coercion in opposing the “Medicaid Expansion,” whereby states that refused to participate in the ACA’s broadening of Medicaid coverage could have their entire Medicaid funding eliminated, Medicaid being a program jointly administered and funded by both the states and the federal government. In NFIB v. Sebelius (2012), the Supreme Court overturned the Medicaid expansion but upheld the Individual Mandate.

A “Mandate” Is a “Tax”

Among landmark Supreme Court cases about landmark federal government programs, NFIB is unique. Chief Justice Roberts, writing for the Court, salvaged the Individual Mandate against the dissent of Justices Scalia, Thomas, Alito, and Kennedy but with the concurrence of Justices Ginsburg, Sotomayor, Kagan, and Breyer. Although agreeing with the dissenters that Congress could not give such an order to individual American as a constitutional “regulation” of commerce, Roberts changed the subject by holding that the enacted “penalty” for individual citizen’s failing to contract for health insurance was effectively the Mandate itself and was a constitutional “tax” under the Congress’ power “to lay and collect taxes.”

None of the other eight justices agreed with Roberts. That is, there is a landmark Supreme Court decision regarding the fundamental scope of the constitutional power of the federal government that is based on the opinion of only one justice. Roberts said that even though the Congress called it a “penalty,” it was “fairly possible” to treat it as a tax, that it “functioned like a tax,” that it will bring in “considerable revenue,” and thus it “may for constitutional purposes be considered a tax.” Overall, then, he essentially ruled that Article I, Section 8, of the Constitution has no unity and that the power to tax is in opposition to the power to regulate commerce.

Only in the first three lines of her long concurrence/dissent did Justice Ginsburg bother to mention Roberts’ tax conclusion, and that mention was for the pragmatic purpose of cobbling together the needed majority for upholding the Individual Mandate. Otherwise, her long opinion justified the ACA, its Individual Mandate, and the Medicaid Expansion under the Commerce Clause, the Spending Clause, the Necessary And Proper Clause, and was, in general, a treatise on how the Constitution does not stand in the way of unlimited centralized government. Despite “concurring” with Roberts on the tax issue, she criticized his opinion again and again, calling it in various places, “spurious,” “newly minted,” a “novel constraint,” with “multiple flaws.”

Justice Scalia, for the four dissenters, spoke in terms of a unified Constitution, and specifically about “the constitutional power to tax and spend for the general welfare” and the division in the Constitution between federal and state power. He pointed out that a tax is different from a penalty, that the law enacted by Congress uses the word “penalty,” and that there was no precedent for characterizing a penalty “for violation of the law” as a tax. “To say that the Individual Mandate merely imposes a tax is not to interpret the statute but to rewrite it,” he concluded.

What if the “Tax” Is Eliminated?

In 2017, the Congress, by means of a budget reconciliation bill, zeroed out the “penalty”/“tax,” while retaining the statutory language providing for it. That change is scheduled to go into effect this year. Nineteen states have sued bringing up again the constitutionality of the ACA

Texas Judge O’Connor has now concluded that the Individual Mandate, “unmoored from a tax,” is unconstitutional and “is inseverable from the ACA.” In NFIB by a 5-4 vote, Justice Roberts, had saved the Individual Mandate by calling it a tax. So, O’Connor, reasoning that the Mandate was upheld only as a tax, concluded that without a tax it could no longer be upheld as constitutional. And since Roberts was joined by the four dissenters in holding that the Mandate was unconstitutional under the Commerce Clause, the Mandate could not be upheld there either. The entire ACA was unconstitutional, O’Connor concluded.

Echoing Justice Roberts in NFIB who called the Individual Mandate one of “two key provisions” of the ACA, O’Connor described the Individual Mandate as “essential” to the ACA. Arguing in NFIB, the Obama Justice Department had labeled the Individual Mandate “an integral part of a comprehensive scheme of economic regulation.” In her NFIB dissent/concurrence, Justice Ginsburg pointed out that the Individual Mandate was “vital to Congress plan.” Justice Scalia, for the four dissenting NFIB justices, wrote that Individual Mandate and the Medicaid expansion together were “central to the design and operation” of the ACA, which “would not have been enacted without them.”

So, O’Connor, agreeing with all nine NFIB justices that the Individual Mandate is an essential component of the ACA and with a majority of those justices having characterized the Mandate as a tax, and with the tax now reduced to zero—Chief Justice Roberts had said that it produces “revenue”—therefore the Individual Mandate cannot be severed from the ACA and the ACA as a whole is unconstitutional

Judicial Activism?

Judge O’Connor’s ruling has been subject to harsh criticism on the Right and on the Left. Who said bipartisanship is dead?

Law professors Jonathan Adler and Abbe Gluck, “experts in the field of statutory law” who were previously opponents in the two Supreme Court cases on Obamacare, have called the decision a “sad day for the rule of law.” Among their criticisms is that Judge O’Connor, in declaring that the Individual Mandate unconstitutional, should not have proceeded, as he did, to then declare the whole ACA unconstitutional. They emphatically cite the “established legal principle called severability,” by which a court need not overturn a whole statute if it finds one provision of the statute unconstitutional.

However, the “established” legal doctrine of severability is not in the Constitution itself, nor is the doctrine self-enforcing. And as it happens, it has a history in judicial consideration of the constitutionality of Obamacare. In NFIB, Chief Justice Roberts concluded that the Medicaid Expansion provision could be severed without affecting the rest of the ACA. In purporting to follow the principles of severability, Roberts spoke of what Congress “would have intended . . . would have wanted . . . it is evident . . . we are confident . . . it is fair to say . . . we do not believe.” Such judgment calls and subjective language are example of an “established” legal doctrine?

Looking at the same issue, Justice Scalia made the opposite judgment call and reposted that Roberts was “rewriting” the Medicaid Expansion. He said that the Medicaid Expansion, as well as the Individual Mandate were both “central to the design and operation” of the ACA, and that the Court’s overall ruling on the ACA was altering the “dynamics” of the ACA and taking it “and the Nation” in a new direction. In NFIB, Ginsburg opposed the invalidating of the Medicaid Expansion, but she endorsed Roberts’ saving of the whole ACA.

The same professors also criticize Judge O’Connor for not giving sufficient importance to the act of the Congress in 2017, which by zeroing out the Individual Mandate’s “penalty” (“tax”) made it clear, they argue, that the whole ACA itself could stand without the penalty. But that begs the issue of whether the whole ACA is still unconstitutional, even with Congress having had two cracks at it. Are the professors calling into question the principle of judicial review itself?

In addition, it has been argued that the decision is unnecessary because the ACA is going on quite nicely without the individual mandate. But what if the Congress were to re-fund the still-existing mandate? Would there be a constitutional case then? And that is not a legal argument.

Overall, Judge O’Connor’s reasoning and conclusions were simple and commonsensical, meaning that any citizen, not just constitutional lawyers, could understand them. But that may not be permissible in constitutional law today.

Reader Discussion

Law & Liberty welcomes civil and lively discussion of its articles. Abusive comments will not be tolerated. We reserve the right to delete comments - or ban users - without notification or explanation.

on January 17, 2019 at 08:48:33 am

Obamacare was inflicted on American Taxpayers without addressing the fact of the tens of billions of dollars in Medicare and Medicaid fraud - already out-of-pockets of American Taxpayers. Due to confusion and mismanagement, HMO's, PPO's supported by the Obamacare MISTAKE, ALL are collapsing with the same fraud-and-billing- MISTAKES. I must also mention shameful conduct of Providers related to opioid diversion and abuse.

Thank you for your discussion of Obamacare Mandate vs It's Constitutionality - that I can understand although I am not encouraged by it. I pray that the Chief Justices, now with Kavanaugh (and the spirit of Justice Scalia - my personal champion) will move quickly to start all over again with the American who raises a family, works to make best living possible and deserves to be able to afford reliable health care in mind, first and foremost.

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Debbie Asbury
on January 17, 2019 at 10:39:53 am

Thank you for this clear and concise analysis of Judge O'Connor's decision and the constitutional issues surrounding it. I have to point out one minor factual error, however. The congressional Republican opposition to the ACA was not unanimous. Joseph Cao, then the Republican Representative from Louisiana's 2nd congressional district, voted in favor of the bill.

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Rob Zrabkowski
on January 17, 2019 at 11:01:23 am

Cao voted for the House bill - The Affordable Health Care for America Act - in November, 2009, which was very similar but not identical to the ACA. He did not vote for the ACA, however, on the grounds it was less strict than the AHCA in preventing public funds from being spent on abortion services.

Interestingly, the individual mandate in the AHCA was explicitly called a tax, not a penalty, and so would have been unequivocally constitutional. For that matter, the mandate in the ACA was also called a tax (excise tax) in every version of the Senate bill up until Reid changed it to a penalty just before final debate began in December.

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Ken Kelly
on January 17, 2019 at 11:51:44 am

Yes, ACA was a fraud.
BUT the bigger fraud was that engineered by the Solicitor Genral and the Chief Justice. Previously, the SG had argued that the "mandate" was not a tax (https://caselaw.findlaw.com/us-dc-circuit/1585226.html) Seven sky v Holder in order to get around the Anti-Injunction Act. The 4th circuit agreed and then took up the case.
Funny, isn;t it that when re-examined (what a quaint euphemism that is) by Roberts, it suddenly became the considered determination of the Supreme Black Robes that "Yes, indeed, kiddies, what we have here is a tax"
This being done without so much as "by your leave" or even a pronounced "Oops!" - maybe as a tax we OUGHT not to have even taken this under consideration.

What does any of that have to say about "common sense"?

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Image of gabe
on January 17, 2019 at 13:52:37 pm

You are right, Ken. My memory was faulty.

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Rob Zrabkowski
on January 17, 2019 at 14:12:27 pm

Whatever the merits of the argument that Roberts ultimately endorsed, it did not spring out of nowhere. At the appellate level at least, the SG consistently and clearly made the same argument: that a) the mandate was a legitimate exercise of Congress's authority under the Tax Clause and b) the AIA did not apply because it was restricted, by the language of the statute, to provisions actually labelled taxes in the Internal Revenue Code, as well as those provisions labelled as penalties found in chapter 68 of the Code (the mandate is in chapter 48).

You may disagree with this argument, but it is not true that only emerged when "re-examined" by Roberts.

That said, the SG did do an about-face w.r.t to the AIA of the course of litigation: in Liberty U v Geithner, he first argued that the AIA did bar the suit, on the grounds that the mandate was a tax for its purposes too. He changed his position in front of the 4th Circuit Court of Appeals to the argument above.

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Ken Kelly
on January 17, 2019 at 15:12:33 pm

This piece does not really articulate (let alone respond to) the numerous criticisms of Justice O'Connor's ruling. It does not even respond to the critiques in pieces to which it cites (such as my co-authored NYT piece with Abbe Gluck).

For those interested in critiques of Judge O'Connor's ruling, I recommend the following.

First, here is an explanation of the issues in the case:

Second, here are some critiques of Judge O'Connor's first ruling:

And finally, here's a critique of Judge O'Connor's later opinion, focusing on the issue of standing:

P.S. I'm tickled that I'm identified as having attacked Judge O'Connor from the "left," as my work is rarely described in such terms.

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Jonathan H. Adler
on January 17, 2019 at 18:23:17 pm

Social Security was found to be Constitutional in the 1930s because it was ruled a tax and the revenue doled out ruled as a benefit. The same with Medicare/Medicaid and The Affordable Care Act. The Congress,at any time,can rescind Social Security Medicare/Medicaid and the ACA and stop the benefit stream in its tracks. But this will never happen because the political repercussions would tear the nation apart.

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libertarian jerry

Law & Liberty welcomes civil and lively discussion of its articles. Abusive comments will not be tolerated. We reserve the right to delete comments - or ban users - without notification or explanation.