The Fifth Circuit has ruled in the closely-watched constitutional challenge to the Affordable Care Act, Texas v. United States, No. 19-10011 (Dec. 18, 2019). Notable more what it does not say than what it does, the 2-1 decision could lead to several different paths going forward.
The Fifth Circuit’s Opinion
The panel majority opinion was written by Judge Jennifer Elrod of Texas, joined by Judge Kurt Englehardt of New Orleans, a recent appointment by President Trump. The opinion’s introduction succinctly summarized its four holdings:
The first two addressed whether the case was appropriately in federal court: “First, there is a live case or controversy because the intervenor-defendant states have standing to appeal … [and] [s]econd, the plaintiffs have Article III standing to bring this challenge to the ACA; the individual mandate injures both the individual plaintiffs, by requiring them to buy insurance that they do not want, and the state plaintiffs, by increasing their costs of complying with the reporting requirements that accompany the individual mandate.”
The other two holdings addressed the merits: “Third, the individual mandate is unconstitutional because it can no longer be read as a tax, and there is no other constitutional provision that justifies this exercise of congressional power. Fourth, on the severability question, we remand to the district court to provide additional analysis of the provisions of the ACA as they currently exist.”
In other words, the panel majority agreed with the district court’s holding that the ACA’s individual mandate was no longer constitutionally defensible as a tax, after Congress reduced the amount of that tax to zero in 2017. It did not accept the district court’s conclusion that the entire ACA needed to be invalidated as a result, and ordered that the district court conduct further analysis of the “severability” of the unconstitutional provision.
Judge Carolyn King dissented. She reasoned: “I would vacate the district court’s order because none of the plaintiffs have standing to challenge the coverage requirement. And although I would not reach the merits or remedial issues, if I did, I would conclude that the coverage requirement is constitutional, albeit unenforceable, and entirely severable from the remainder of the Affordable Care Act.”
Next Steps
While the panel’s opinion remands the case back to the district court, the matter will undergo scrutiny two more times before it actually arrives there. The panel opinion may survive intact, undergo significant revision, or be reversed outright.
A key area of review will be the panel’s conclusion about the severability of the now-unconstitutional mandate from the rest of the ACA.
The panel identified three specific areas: “The first category includes the three core ACA provisions the Supreme Court has called “closely intertwined”: the individual mandate, the guaranteed-issue [preexisting-condition] requirement, and the community-rating requirement.
“The second category includes the remaining ‘[m]ajor provisions of the Affordable Care Act,’ namely other provisions dealing with ‘insurance regulations and taxes,’ ‘reductions in federal reimbursements to hospitals and other Medicare spending reductions,’ the insurance ‘exchanges and their federal subsidies,” and “the employer responsibility assessment.’
“The third category includes a variety of minor provisions, for example taxes on certain medical devices or provisions requiring the display of nutritional content at restaurants.” (citations omitted).
The next potential stop for the case will be is review by the full, en banc Fifth Circuit. After several appointments by President Trump, the Fifth Circuit has sixteen active judges, eleven of whom were appointed by Republican presidents. With the Trump appointees now fully integrated into the Court’s operations, the en banc Court has been active and many of the new judges have asserted conservative viewpoints in opinions. A significant number of judges may want to revisit the panel majority’s conclusion about whether further analysis of “severability” is needed.
And of course, the final stop for the case would be review by the United States Supreme Court. That Court has already addressed the individual mandate once before; much of the Fifth Circuit’s work in this most recent opinion was devoted to the correct application of that precedent. Some Justices of the Supreme Court-in particular, the previous dissenters—may want to revisit the full ACA. Others may be content to let the case continue with further review by the trial court.
David Coale is an appellate law partner at Lynn Pinker Cox Hurst in Dallas.