On December 18, 2019, the Court of Appeals for the Fifth Circuit ruled that the Patient Protection and Affordable Care Act (ACA) individual mandate is unconstitutional but remanded to the district court to assess whether the rest of the ACA can stand without the individual mandate.
As previously reported, the Northern District of Texas issued a ruling in December 2018, holding the entire ACA unconstitutional. The district court declared that Congress’s decision to set the individual mandate to zero dollars made the mandate an unconstitutional penalty and that the entire ACA was invalid because the individual mandate could not be severed. In a split decision on appeal, the Fifth Circuit affirmed the district court’s decision that the zeroed-out mandate was unconstitutional but ordered the district court to reconsider the severability question on remand. Texas v. United States, No. 19-10011, slip op. (5th Cir. Dec. 18, 2019).
The case began when a coalition of private individuals and states challenged the constitutionality of the individual mandate. The individual mandate requires individuals to maintain health insurance coverage or make a payment to the IRS. The individual mandate survived an earlier challenge, when the Supreme Court held that it was a tax and valid exercise of Congress’s taxing authority. Nat’l Fed’n of Indep. Bus. v. Sebelius, 567 U.S. 519 (2012). In 2017, however, Congress set the individual mandate at zero dollars, effective January 2019.
On appeal, the Fifth Circuit affirmed the district court in part and remanded in part, in a 2-1 decision written by Judge Jennifer Elrod and joined by Kurt Engelhardt. The majority agreed with the district court that the Supreme Court’s framework for upholding the individual mandate was no longer valid because the zeroing-out of the mandate meant that it could no longer be interpreted as a tax. Therefore, the majority found, the individual mandate was unsupported by any Congressional authority and was unconstitutional. But the majority reversed and remanded on the question of severability. The majority found that the district court failed to perform a detailed severability analysis and was better positioned to address new severability arguments the federal defendants first introduced on appeal. In dissent, Judge Carolyn King argued that none of the plaintiffs had standing, so she would vacate the district court’s order.
Although the decision is only binding in states within the Fifth Circuit (Louisiana, Mississippi, and Texas), it sets the stage for another potential challenge to the ACA before the Supreme Court. A copy of the Fifth Circuit’s opinion is available here.
