States Battle Over Affordable Care Act in Fifth Circuit

The Fifth U.S. Circuit Court of Appeals. (Associated Press)

(CN) – Weighing the fate of millions of Americans’ health insurance, the Fifth Circuit heard oral arguments Tuesday in a federal lawsuit aimed at killing the Affordable Care Act based on a technicality related to Congress’ removal of the individual mandate tax penalty two years ago.

A three-judge panel in New Orleans heard two hours of oral arguments Tuesday in the case of Texas v. Azar. Attorneys for a group of Republican-led states and the Trump administration split the time with attorneys from Democrat-led states and the Democrat-controlled U.S. House of Representatives, arguing about whether the trial judge in the case properly ruled in December 2018 that the removal of the penalty invalidated the entire health care measure known as Obamacare. 

The panel consisted of Judge Carolyn Dineen King, a Jimmy Carter appointee, Judge Kurt Engelhardt, a Donald Trump appointee, and Judge Jennifer Elrod, a George W. Bush appointee. 

Elrod seemed dissatisfied with Justice Department attorney August Flentje’s answer when she asked what plans are in place if the court does invalidate the ACA.

“It is complicated,” Flentje said. “A lot of this stuff will need to get sorted out.”

Engelhardt seemed annoyed at Congress’ repeated failure to solve the dispute politically. 

“There is a political solution here and you are asking the court to roll up its sleeves and get involved,” he said. 

The judge asked why Congress seems to want the judiciary to act as a “taxidermist for every big game legislative accomplishment it achieves,” and he wondered why the Republican-controlled Senate had not intervened in the case, calling it the “800-pound gorilla who is not in the room.”

The dispute began in 2017 after Trump and Congress repeatedly failed to repeal the ACA through legislation. They then removed the individual mandate tax penalty in the law when the Tax Cuts and Jobs Act was passed later that year. 

Texas and 19 other Republican-led states then sued the federal government in February 2018 in Fort Worth federal court, citing the U.S. Supreme Court’s ruling in 2015 that held the ACA is not an unconstitutional exercise of federal power as long as the tax penalty exists. 

Judge Elrod opined that congressional Republicans thought “this is the silver bullet” that will undo the entire ACA.

The plaintiffs’ case is built on the lack of severability – if Congress renders one portion of the law unconstitutional, it renders the whole law invalid.

Texas Solicitor General Kyle Hawkins told the panel the individual mandate is “unconstitutional and it is inseparable” from the rest of the ACA.

In response, Judge Elrod pointed out that the ACA also includes provisions controlling calorie labeling on menus.

“What do you say to those who say it is absurd to say it is not separable from restaurant calorie guides,” she asked.

Hawkins argued the ACA “has what amounts to an inseverability clause because the penalty is essential to drive people to buy insurance.”                             

California and 15 other Democrat-led states intervened in the case in April 2018, arguing that Congress merely reduced the tax penalty from 2.5% to zero and that no statutory provision of the law was repealed. 

The Democrats took over the defense of the ACA after the Trump administration decided it would not defend Obamacare in the case, breaking a longstanding tradition of the Justice Department to defend the constitutionality of laws if reasonable arguments can be made in their defense. Four months ago, the Trump administration decided to fully support the Republican-led states.

Engelhardt and Elrod aggressively questioned attorneys on the secondary issue of whether either side has standing in the case given the Trump administration’s recent support of the plaintiffs.

House general counsel Douglas N. Letter urged the court to sever the mandate if it is unconstitutional, as many of the remaining provisions can still stand legally, including provisions covering pre-existing conditions. He said it is the court’s job to “save everything you can unless it is evident Congress did not mean that.”

Hawkins disagreed, saying it is “a difficult and dangerous game” to guess what Congress intended.

“I am not in the position to psychoanalyze Congress,” he said. “This court is not in a position to engage in psychoanalytical tasks.”

Letter asked the panel to not remand the case back to the trial court, and said they have the authority to invalidate the individual mandate but sever it from the remaining provisions.

The panel is expected to issue its ruling within months, and an appeal to the Supreme Court or to the Fifth Circuit en banc is expected whatever the panel decides. 

Obamacare remains in place until then, because the trial judge granted the Democrat-led states’ request for a stay shortly after his ruling in December, saying that “many everyday Americans would otherwise face great uncertainty during the pendency of appeal” in securing healthcare. 

Texas Attorney General Ken Paxton said after oral arguments that “Obamacare resulted in higher costs, fewer choices and power imbalance” between citizens and the government.

“When Obamacare is struck down once and for all, legislators across the country can get back to crafting policies that address the needs, and conform with the values, of their own residents,” he said. “This includes protecting preexisting conditions, which Texas and a majority of the other states protected before Obamacare was signed into law.”

California Attorney General Xavier Becerra said the intervenors will continue to “fight the Trump administration tooth and nail” to save Obamacare. He blamed Trump and the plaintiffs for risking the health “of nearly every American, from children to the elderly, the sick to the gainfully employed.”

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