The Trump Administration Won’t Defend Obamacare’s Individual Mandate In Court

The Trump administration won’t defend Obamacare’s individual mandate to purchase health insurance in court. Instead it will argue that the mandate is unconstitutional—and so are the health law’s preexisting conditions rules.

It’s an unusual, though not unprecedented, move. (The Obama administration, for example, declined to defend the Defense of Marriage Act.) And the mandate won’t go without a defense; a coalition of blue states will represent Obamacare in court. It’s also clear that the decision comes straight from the top: A Department of Justice letter announcing the decision begins by saying that it was made “with the approval of the President.”

The real problem is that the Trump administration’s argument is unlikely to hold up to legal scrutiny.

The White House’s decision, unveiled in a brief tonight, follows a legal challenge to Obamacare brought by a group of conservative states, led by Texas. Those states argue that Obamacare’s purchase requirement is now unconstitutional based on the logic outlined by the Supreme Court when it upheld the mandate in 2012—and that, as a result, the entire law should be struck down.

When the Supreme Court upheld the mandate, it ruled that the mandate was unconstitutional as an economic command to purchase insurance; the Commerce Clause of the Constitution does not extend that far. Instead, Chief Justice John Roberts wrote in the majority ruling, the mandate was constitutionally permissible under a saving construction—by viewing it as a tax penalty that raised revenue for the federal government.

But the tax reform law passed by Republicans in Congress eliminated that tax penalty, setting it to zero as of 2019. Technically, the mandate remains on the books, but functionally the tax law repealed it. Since the mandate no longer raises any revenue, the states’ argument goes, the saving construction—that is, the notion that it is legal if understood as a tax—no longer applies. And since the mandate is the lynchpin of the entire law, the glue that holds the entire scheme together, all of Obamacare must be struck down with it.

Typically, the executive branch defends federal laws in court. But in this case, the Trump administration decided to side partially with the states in court. Although the federal government does not argue that the entire law should be struck down, the administration’s brief does make the case that the mandate is unconstitutional, and that the law’s preexisting conditions rules should be struck down as well. The government cites Obama administration arguments to the effect that the mandate and the preexisting conditions rules are inseparable, according to congressional findings associated with the law. (Notably, the Trump administration’s argument, if it succeeded, would allow Obamacare’s Medicaid expansion, health insurance exchanges, and the private insurance subsidies to stay in place.)

There may be some appeal in the turnabout of using the awkward logic of John Roberts’ Supreme Court against the law that it was designed to save. But I do not think it has much of a chance, for several reasons.

The first is that it will be hard for the states challenging Obamacare to demonstrate standing, given that standing to sue requires a demonstration of harm. The mandate penalty is zero, so who, exactly, is it harming?

The second, as Jonathan Adler, a law professor at Case Western Reserve University, recently argued in a Federalist Society debate, is that it’s very difficult to make the case that the mandate cannot be severed from the rest of Obamacare when Congress has, in effect, already done exactly that.

Yes, the mandate remains part of the law. However, by zeroing out the penalty as part of the tax law, the current Congress effectively declared that the mandate is severable from the rest of the law; courts are unlikely to decide that Congress was wrong that the rest of the law cannot stand apart from the mandate. So while it may once have been possible to reasonably argue that Congress intended the mandate and the preexisting conditions rules to be a tightly wrapped package, it is much harder to do so following the passage of the tax law. The arguments that the Obama administration made were about the law as it existed then; it is more difficult to apply those arguments to the altered law that exists now.

Indeed, if a court were to find that in passing the tax law, Congress acted unconstitutionally by repealing the mandate but leaving the rest of the health law in place, that could raise the question of whether the tax law itself was constitutional, and put the tax law’s standing in legal limbo. That’s probably not a road the White House really wants to go down.

The problem with the Trump Administration’s response to the latest ACA suit is not its refusal to defend the mandate so much as its adoption of problematic (and quite cynical) approach to severability.

— Jonathan H. Adler (@jadler1969) June 8, 2018

Adler, to be clear, is far from a supporter of Obamacare. He helped devise one of the major challenges against it, King v. Burwell, in which challengers argued that the plain text of the law prohibited insurance subsidies in state-run exchanges. In the Federalist Society debate, he says he has problems with the law, and believes that “the individual mandate exceeds the scope of federal power.”

Although it is still early, and previous health law cases have proven difficult to predict, it seems plausible, and perhaps even likely that this case turns out to have very little practical impact.

The end result may simply be that courts rule that the mandate as it now stands is unconstitutional and unenforceable—and that’s it. Preexisting conditions rules stay on the books, as does the rest of the law. Given that the penalty, and the power of the mandate, has already been reduced to nothing, that would be a symbolic victory and nothing more.