Oral arguments and legal drama in the Texas v. United States ACA case

On Tuesday, July 9, the Fifth Circuit Court of Appeals will hear oral arguments in the appeal of Texas v. United States.

The conventional wisdom, even among conservative legal scholars, is that the case was based on such a contorted legal theory that it should not be taken all that seriously.

Then, in December, U.S. District Court Judge Reed O’Connor agreed with Texas and 17 other conservative states and declared the whole Affordable Care Act unconstitutional. He did not order the law thrown out immediately, however; pending appeal, the law is still in place and the federal government is enforcing it.

But it got even more bonkers – and more threatening to the 21-state coalition (including D.C.) led by California that’s in court defending the health law. The Trump administration, which had earlier supported only a portion of the case related to the individual mandate, changed its mind in March. Over the objections of the Department of Health and Human Services and the Department of Justice, (according to these reports in Politico and the New York Times) the administration changed its position in the case early in 2019. Encouraged by acting White House chief of staff Mick Mulvaney, the Trump administration decided to back the lower court ruling wiping out virtually the entire ACA.

That led a three-judge panel on the Fifth Circuit in late June – just a few weeks before the oral arguments – to raise the question of whether there even is a case at all and whether anyone has the right to pursue it. The appeals court asked if either side has standing given that the defendant (the federal government) and the Texas-led plaintiffs are now basically on the same side.

The pro-ACA states argued in their brief that they had standing – that they and their citizens will be hurt if the law goes away to the tune of billions of dollars going to health coverage. The Democratic majority House of Representatives, which has become part of the case, said in its brief this it is “defending the [health] law in its capacity as a representative of the federal government.”

The Texas bloc of states argued that they have the right to continue their suit (although they argued that the Democratic House does not have a role). The Department of Justice in its brief also agreed that the case should go ahead. The ACA is the law of the land and DOJ is enforcing it and the red states have a right to fight it.

Now what?

The oral arguments on Tuesday in New Orleans are just that – arguments, 45 minutes on each side. (They will not be broadcast but will be posted on the Fifth Circuit website later in the day. Update: Here is the audio of the oral arguments.) It is highly unlikely that a ruling would be imminent. The Fifth Circuit is known for its conservatism; this case will be heard by one judge appointed by President Jimmy Carter, one by President George W. Bush and one by President Donald Trump.

Then the Fifth Circuit has several options.

It could agree that standing is not a problem, and go ahead with the case, which revolves around whether the individual mandate is constitutional after Congress knocked out the financial penalty in the 2017 tax law. No matter how it rules, there’s a strong likelihood that the losing side will take it to the Supreme Court (which is not obligated to hear it but we won’t know that for a while).

If it concludes that no one has standing, it gets tricky. The Fifth Circuit could let the lower court ruling by Judge O’Connor stand – which would be highly controversial given that a lone judge would have the ability to singlehandedly strike down a major piece of legislation that has already withstood years of repeal attempts and two Supreme Court challenges. And there would be no possibility of appeal.

Or it could vacate the lower court’s ruling because the system isn’t set up to allow one judge to make such a sweeping ruling with no further judicial review.

If it does vacate the case, conservative states may well regroup and launch some other legal challenge – perhaps more along the lines of what the Justice Department originally outlined. DOJ had originally argued that Congress’s elimination of the individual mandate penalty doesn’t mean the whole ACA is moot but it does mean that many of the patient protections in Title I (including pre-existing condition protections, guaranteed issue and community rating) should be tossed. That position itself would have a dramatic effect on health coverage in the United States and undermine the ACA, but it’s been overlooked in the larger drama of the sweeping Texas argument.

If the court does strike down the entire ACA, the advocates on the other side also will likely regroup and try another approach to preserve the legislation that’s covering about 20 million people – and adding protections to people who get insured outside of the ACA.

Remember – whatever happens next could come smack in the middle of the 2020 presidential campaign.

For further insights:

  • As usual, Nick Bagley of the University of Michigan Law School has excellent analysis. He posts on both the health section of the TakeCare blog and Incidental Economist. Here’s one of his most recent pieces.
  • Conservative lawyer Jonathan Adler, who has fought the ACA to the Supreme Court in prior cases but thinks the legal arguments in this case don’t add up, writes frequently for the Volokh Conspiracy. Here’s one post from earlier this year asking whether anyone, including the nation’s smartest conservative legal thinkers, agrees with the Texas case.
  • Michael Cannon, a conservative/libertarian at the Cato Institute, has written about recent developments in the lawsuit here.
  • Katie Keith tracks ACA litigation on the Health Affairs blog.
  • The Kaiser Family Foundation has an explainer brief on Texas v. U.S.
  • Modern Healthcare: There’s little chance appeals court will strike down ACA, legal experts say

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