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Appellate Court Rules Obamacare’s Individual Mandate Is Unconstitutional


The United States Court of Appeals for the Fifth Circuit on Wednesday ruled 2-1 that the Affordable Care Act’s (ACA) 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.”

This ruling was long-anticipated.

Circuit Judge Jennifer W. Elrod began by separating issues of policy from issues of law.

“Some say that the Act is a much-needed solution to the problem of increasing healthcare costs and lack of healthcare availability. Many of the amici in this case, for example, argue that the law has extensively benefitted everyone from children to senior citizens to local governments to small businesses,” Elrod wrote. “Others say that the Act is a costly exercise in burdensome governmental regulation that deprives people of economic liberty. Amici of this perspective argue, for example, that the Act ‘has deprived patients nationwide of a competitive market for affordable high-deductible health insurance,” leaving “patients with no alternative to . . . skyrocketing premiums.’”

Elrod said that these weren’t the issues before the court, “And for good reason,” because the courts “are not institutionally equipped to address them.” She said that these issues are better left to the Executive and Legislative branches. The judge then asked the “narrower” questions of law and answered them [emphases ours]:

First, is there a live case or controversy before us even though the federal defendants have conceded many aspects of the dispute; and, relatedly, do the intervenor-defendant states and the U.S. House of Representatives have standing to appeal? Second, do the plaintiffs have standing? Third, if they do, is the individual mandate unconstitutional? Fourth, if it is, how much of the rest of the Act is inseverable from the individual mandate?

We answer those questions as follows: First, there is a live case or controversy because the intervenor-defendant states have standing to appeal and, even if they did not, there remains a live case or controversy between the plaintiffs and the federal defendants. Second, 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. 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.

Legal scholars provided rapid reaction about the implications of the ruling.

U.S. District Judge Reed O’Connor ruled last December that Obamacare should be struck down as unconstitutional, in light of the elimination of the penalty once tied to the individual mandate. To be clear, O’Connor struck down the entire ACA.

President Donald Trump‘s Tax Cuts and Jobs Act of 2017 got rid of the penalty, which the U.S. Supreme Court previously declared a “tax,” and therefore legal. The Justice Department then did an about-face from the Obama administration’s position, and agreed with the plaintiffs’ position that by removing the “tax,” the mandate was no longer connected to any congressional authority and was therefore unconstitutional.

At the time, Speaker of the House Nancy Pelosi (D-Calif.) called the O’Connor ruling “absurd.” The Appellate Court has kicked this back down to the lower court to analyze whether the ACA can survive without the individual mandate.

You can read the opinion below.

Fifth Circuit Obamacare Ruling by Law&Crime on Scribd

[Image via Mark Wilson/Getty Images]

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Matt Naham is the Senior A.M. Editor of Law&Crime.