A three-judge panel at the 5th U.S. Circuit Court of Appeals Wednesday that the Affordable Care Act’s individual mandate is unconstitutional, but the panel left open the possibility that much, or even most, of the Obama-era law could survive the death of the mandate provision.
The court sent the case, Texas v. Azar, back down to the district court, so that the district court look again at whether the individual mandate provision can be removed from the rest of the ACA.
The panel also found that:
- The individual mandate provision is now an ordinary law, not a tax, because the mandate violation penalty has been zeroed out.
- A group of states that opposes the individual mandate has standing to challenge the provision.
- A group of states that supports the provision has standing to defend it.
The ACA individual mandate provision, or “individual shared responsibility” provision, initially required many people to own what the government classifies as solid major medical coverage or else pay a penalty. Congress passed a tax bill in 2017 that included a provision setting the penalty at zero.
ACA critics challenged the mandate through a case that reached the Supreme Court in 2012.
In a ruling on that case, the Supreme Court held that a federal law that blocks challenges to new taxes protected the individual mandate provision, because the penalty was a tax.
Critics of the provision say that, now the new tax law has set the individual mandate penalty at zero, the individual mandate is no longer a tax and can no longer benefit from the legal protection accorded to federal taxes.
In 2012, ACA supporters argued that keeping the individual mandate penalty in place was vital to helping the rest of the ACA expand access to health coverage and lower the cost, by pushing many relatively young, healthy people to pay for coverage.
(Related: Supreme Court Upholds Health Care Law)
Most ACA health coverage programs came to life in 2014. Now that the programs have been in place for more than five years, some insurers and others have suggested that the ACA system seems to be strong enough to continue to operate, at least temporarily, without the use of an official individual mandate.
Texas Attorney General Ken Paxton is leading a coalition of states that has challenged the ACA individual mandate.
California Attorney General Xavier Becerra is leading a coalition of states that’s defending the law.
Democrats now control the U.S. House of Representatives, and the House has been arguing in support of the individual mandate and the rest of the ACA.
The Justice Department originally asked the courts to declare the ACA individual mandate unconstitutional but to leave most of the rest of the law intact. The department later moved to drop efforts to defend the ACA.
The 5th Circuit Ruling
The 5th Circuit panel has sided with the individual mandate provision’s critics on the current nature of the mandate.
“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,” according to an opinion by Judge Jennifer Walker Elrod.
Elrod writes that the 5th Circuit decision “breaks no new ground,” as the mandate was “originally cognizable as either a command or a tax. Today, it is only cognizable as a command.”