Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Life Health > Health Insurance > Health Insurance

Maybe the Affordable Care Act Can Live Without the Individual Mandate

Your article was successfully shared with the contacts you provided.

One of the debates over Texas v. California — the big  Affordable Care Act (ACA) constitutionality case — concerns what should happen if the U.S. Supreme Court declares the individual mandate provision to be unconstitutional.

Many individuals and groups have sent in their own thoughts, in “friend of the court briefs,” to explain why they think the Supreme Court can cut out the mandate without killing the whole law.


Some of the parties submitting the briefs, including officials in California and other states that support the ACA, and America’s Health Insurance Plans, would prefer to see the individual mandate stay in effect.

But at least one of the briefs comes from the states of Montana and Ohio, who say the individual mandate is unconstitutional.

Congress has no authority to command people to buy products, and allowing it to have that authority would give it what amounts to a general police power, according to Montana and Ohio.

“The Constitution does not vest such immense power in Congress,” the states contend.

But, at the same time, none of the court’s precedents “permits striking down an entire act based on the unconstitutionality of a single insignificant provision,” the states say.

The History

The ACA includes hundreds of pages of text that deal with matters such as funding for graduate medical education, Medicaid expansion fund, Medicare Part D prescription drug benefits, and other topics that have little to do with ordinary major medical insurance.

The ACA also includes Section 5000A, a provision that requires many people to have a minimum level of health coverage or else pay a penalty.

When Congress passed the Tax Cuts and Jobs Act of 2017, it set the individual mandate penalty at zero.

Back in 2012, Supreme Court let the mandate survive a lawsuit. The plaintiffs argued that the mandate was just as unconstitutional a requirement for people to buy and eat broccoli. The Supreme Court avoided ruling on that aspect by classifying the mandate as a text. The court majority held that a federal law prohibits people from suing to block new federal taxes.

Now, officials from Texas and other states that generally oppose the ACA say that, by setting the mandate penalty at zero, Congress has converted the ACA individual mandate provision from a tax on people who fail to have enough to coverage to a bare, unconstitutional requirement for people to pay for a commercial product.

Some laws have “severability” provisions. These provisions keep the rest of the law intact if a court tosses out one part.

The ACA contains no severability provision.

A district court judge in Texas ruled that the mandate is now an unconstitutional requirement for people to buy insurance, rather than a tax, and that, because the ACA lacks a severability clause, all of the ACA must be thrown out.

The 5th Circuit upheld the lower court ruling declaring the individual mandate to be unconstitutional, but it asked the district court judge to take another look at whether throwing out the mandate would really call all of the ACA.

The Supreme Court yanked the case away from the district court judge, and into its own stream of cases, in March.

The Arguments for Severability

Here are four of the arguments groups made for letting the ACA survive the death of the individual mandate.

1. Letting the death of the mandate kill the whole ACA would give the court too much ability to interpret and shape law.

Montana and Ohio say the court has the ability to strike down an unconstitutional provision but should not then try to interpret what the drafters intended, or put much effort into seeing how the rest of the law will work.

“Courts engage in quintessentially legislative work when they effectively repeal an entire law by deciding to ‘strike it down’ based on its partial unconstitutionality,” Montana and Ohio say.

2. Congress zeroed out the mandate penalty amount without actually repealing the mandate.

In practice, members of Congress now make many changes in federal law by increasing or eliminating funding associated with existing statutes. That’s because Democrats and Republicans have trouble working together to pass bills, and because Senate rules let supporters of spending legislation pass spending legislation with just 51 votes.

To get an ordinary bill to the Senate floor, supporters normally need 60 votes, to ward off a filibuster, or endless round of stalling by opponents.

Public Citizen contends, however, that, on paper, Congress has shown its intent to sever the individual mandate from the rest of the ACA by zeroing out the penalty in the Tax Cuts and Jobs Act, and leaving the rest of the law intact.

“The TCJA added no other legal consequences for failing to obtain overage, and it otherwise left the ACA intact,” Public Citizen says. “The TCJA effectively decoupled the rest of the ACAs provisions from an individual coverage mandate.”

3. The mandate is still actually a revenue provision.

Jeremy Doerre, a North Carolina lawyer, notes that the Internal Revenue Service is still collecting ”individual shared responsibility” payments owed for the period before the penalty was zeroed out.

“Section 5000A as amended is also currently still applicable to produce revenue from delinquent taxpayers,” Doerre writes.

“The negligible nature of this revenue does not undermine classification as a valid exercise of the taxing power,” Doerre writes.

4. Many parts of the ACA have nothing to do with the individual mandate.

The Patient-Centered Outcomes Research Institute notes in a brief that it was created to evaluate the effectiveness of medical treatment, and that, in 2019, Republicans worked with Democrat to reauthorize its funding.

“If this court reaches the question of severability, it should find that the provisions of the ACA authorizing PCORI can be severed from any unconstitutional provisions of the act,” PCORI writes. ” If the individual mandateand all related provisions of the ACA were invalidated, the provisions authorizing PCORI would remain ‘fully operative’ as law….They are entirely unrelated to any other provisions of the ACA; they operate independently. Indeed, they include a sunset provision that required Congress to reauthorize PCORI after ten years, and Congress did so in 2019 in the omnibus budget law for 2020, in provisions wholly independent of any provision of the ACA.”

A coalition of groups representing people with disabilities have written to say that the ACA has many provisions that help people with disabilities and have nothing to do with the individual mandae.

— Read 3 Possible Effects of the New Supreme Court ACA Ruling, for Agentson ThinkAdvisor.

— Connect with ThinkAdvisor Life/Health on FacebookLinkedIn and Twitter.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.