Column: Appeals court saves and hurts Obamacare with one ruling

By Michael HiltzikBusiness Columnist

Dec. 19, 2019 6 AM PT

Legal experts and health reform advocates were both breathing sighs of relief and groans of frustration Wednesday when a federal appeals court issued its long-awaited ruling on the constitutionality of the Affordable Care Act.

Relief because the three-judge panel of the U.S. 5th Circuit Court of Appeals stopped short of declaring the entire law unconstitutional, as had a lower-court judge ruling in a case brought by Texas and 17 other red states.

Frustration because the judges, voting 2 to 1, sent the case back to the same judge who had invalidated the entire law in the first place, in a ruling almost exactly a year ago condemned by many legal authorities as a judicial absurdity.

Careless judicial interference has the potential to be especially pernicious when it involves a complex statute like the ACA, which carries significant implications for the welfare of the economy and the American populace at large.

— Appellate Judge Carolyn Dineen King

U.S. District Judge Reed O’Connor of Fort Worth had ruled that because Congress had reduced the ACA’s individual mandate penalty to zero as part of the tax cut enacted in December 2017, and because the Supreme Court had earlier upheld the penalty as constitutional, the entire law was therefore unconstitutional.

The appeals court didn’t go that far. The panel agreed that the individual mandate is now unconstitutional, but it instructed O’Connor to decide whether that provision or any others are “severable” from the rest of the ACA, and therefore which parts of the law can survive.

In practical political terms, the appellate judges have all but ensured that the fate of Obamacare will remain uncertain through the presidential election. That means that safeguards guaranteeing access to health coverage for millions of Americans with preexisting medical conditions will continue to hang in the balance, as will myriad other provisions of one of the most far-reaching statutes ever enacted by Congress.

It also means that the Republican Party’s threat to overturn the law, which has reformed almost every corner of the American healthcare system since its enactment in 2010, will remain a political issue in the coming campaign. Recent history indicates that’s good for Democrats, who used GOP hostility to healthcare reform to potent effect in the 2016 midterm elections.

“Careless judicial interference has the potential to be especially pernicious when it involves a complex statute like the ACA, which carries significant implications for the welfare of the economy and the American populace at large,” wrote Judge Carolyn Dineen King, the only Democrat on the three-judge panel and the sole dissenter.

King said she would have tossed O’Connor’s ruling lock, stock and barrel.

The Texas lawsuit had been seen in strictly legal terms as the longest of long shots. But it had a strong Republican pedigree. Not only were the plaintiff states all Republican-controlled, but the Trump administration had decided not to defend the law in federal court, effectively throwing its weight behind the notion that the entire law is unconstitutional.

Advocates of healthcare reform had awaited the 5th Circuit ruling anxiously after oral arguments in the case in July, when two of the three judges evinced doubts about the law. In addition to King, the judges were Trump appointee Kurt Engelhardt and Jennifer Walker Elrod, an appointee of George W. Bush.

“Oral argument in front of the circuit went about as badly for the defenders of the Affordable Care Act as it could have gone,” University of Michigan law professor Nicholas Bagley said at the time. “We should be prepared for the worst — the invalidation of all or a significant part of the Affordable Care Act.”

After the ruling was handed down Wednesday, Bagley judged it “a remarkable mix of hubris and cowardice. It’s hubris to say that the ‘unenforceable’ individual mandate is an unconstitutional ‘command.’ And it’s cowardice to remand without grappling with what that means for the rest of the law.”

The appeals judges, Bagley observed, gave O’Connor no guidance in choosing what parts of the law might stand and what should be discarded. That presages a year or more of judicial wheel-spinning, presumably followed by an appeal to the Supreme Court.

There were a few small positive nuggets for ACA supporters in the ruling. The majority agreed that California, 16 other blue states and the District of Columbia had standing to defend the law in court. That should settle the stomachs of ACA supporters who feared the appeals judges might rule that those states had no right to participate in the case, which would have left the law with no defenders.

The majority also acknowledged that the ACA is “a monumental piece of healthcare legislation that regulates a huge swath of the nation’s economy and affects the healthcare decisions of millions of Americans.” But they said that the policy implications of the ACA were not before them, “and for good reason — the courts are not institutionally equipped to address them.” Rather, they said, they would focus on the narrow issue of whether the law is unconstitutional.

King, in her dissent, noted that the majority invalidated the one part of the law that was already reduced to inoperability. The individual mandate required all Americans to carry health insurance, on pain of paying a penalty to the IRS. Because the tax cut law reduced the penalty to zero, “questions about the legality of the individual ‘mandate’ are purely academic.... No more need to be said; it has long been settled that the federal courts deal in cases and controversies, not academic curiosities.”

The discussion should have ended there, King wrote. The majority, however, “feels bound to ask whether Congress would want the rest of the Affordable Care Act to remain in force.” Answering that question is “easy,” she wrote, “since Congress removed the coverage requirement’s only enforcement mechanism but left the rest of the Affordable Care Act in place.”

The majority, King concluded, engaged in “textbook judicial overreach,” ensuring that “no end for this litigation is in sight.”