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Timothy Jost: The Arguments Over Severability Of The Minimum Coverage Requirement



March 29th, 2012
by Timothy Jost

The central issue in the Supreme Court Affordable Care Act (ACA) litigation is the constitutionality of the minimum coverage requirement (individual mandate).  If the Court decides that the requirement is unconstitutional, it must next decide how much of the rest of the ACA must be stricken with it. It could strike the requirement and leave the entire remainder of the ACA in place, as did the Eleventh Circuit, whose decision the court is reviewing, or strike down the entire law, as did the district court in the Florida case, or do something in between, as a Pennsylvania district court case did.

The ACA consists of ten titles and the vast majority of it is unrelated to the minimum coverage requirement, or indeed to insurance reform.  Nevertheless, the states and private plaintiffs in the ACA argue that the minimum coverage requirement is essential to the remainder of the ACA, and that the statute cannot stand without it.  The federal government argues on the merits that the minimum coverage requirement is necessary to make the guaranteed issue and modified community rating requirements of the ACA work, and thus concedes that if the minimum coverage requirement falls, these must go as well, but that the rest of the statute is unrelated to the requirement and should remain in place.

Because none of the parties defended the Eleventh Circuit position that the minimum coverage requirement was entirely severable from the remainder of the statute, the Court appointed an amicus, H Bartow Farr III, who ably argued that position. The oral argument was divided into three equal half hour segments, with Paul Clement arguing first for the states and private plaintiffs, Edwin S. Kneedler, Deputy Solicitor General arguing for the United States, and Mr. Farr, arguing third, with a brief rebuttal by Mr. Clement.

Paul Clement’s Argument For The Plaintiffs

Mr. Clement’s began his argument with the proposition, to which he returned often, that the minimum coverage requirement is the “heart” of the statute, which could not function without it.  The community rating and guaranteed issue provisions depend on it, but so do all of the other insurance reforms, and indeed the entire rest of the statute.

Justice Sotomayor challenged this assertion immediately, noting that states have found a variety of approaches to reforming insurance markets.  Isn’t it up to Congress, she asked, to fix the statute if insurance prices increase if the coverage requirement is stricken?  Mr. Clement responded that Congress itself had stated in the findings accompanying  the minimum coverage requirement that it was “essential” to the operation of the community rating and guaranteed issue requirements.  But, Justice Sotomayor, responded, Congress did not say that the requirement was essential for the exchanges or other reforms, and, again, why not let Congress fix the problem if the coverage requirement must go?

Mr. Clement replied that Congress would have to respond in any event if the “heart” of the statute was removed. It would be better to let Congress start all over again with a clean slate.  But, said Justice Sotomayor, Congress could start all over again in any event, so why force that choice?  Mr. Clement replied that whatever the Court did, Congress had options, but Justice Scalia then weighed in, noting “there is such a thing as legislative inertia, isn’t there?”  Mr. Clement agreed, stating the real question was what was the best step to take in light of legislative inertia.

Justice Sotomayor asked if making this choice was not taking too much power on the Court, to which Mr. Clement responded that he was simply asking the Court to inquire into the intent of Congress.  Justice Scalia asked in response whether the real question wasn’t whether the remainder of the statute would function without the coverage requirement.  Justice Scalia observed that there is a real problem with focusing on the intent of Congress, on whether Congress would have adopted the law without the provision.  The law was passed by a narrow majority, and presumably many provisions of the law were included the secure the vote of one member or another and might not have been passed without it — does that mean that the entire statute must fall if any provision is removed?  “That can’t be right.”

Mr. Clement responded that Congressional intent is the test, and the best evidence of that intent is the text.  Justice Kagan joined in at this point, noting that there was textual evidence that guaranteed-issue and community rating are tied to the mandate, but not anything else.  Mr. Clement responded that finding J of the ACA said that the minimum coverage requirement was essential to the operation of the exchanges.  (This is not in fact what finding J says).  Justice Kagan noted, however, that exchanges function in Utah without a coverage requirement, and that “half a loaf is better than no loaf.”  But, Mr. Clement responded, they would not function the way Congress intended.  To which Justice Kagan replied that whenever the Court severs a provision from a statute, the statute does not function as Congress intended it would.

At this point Justice Ginsburg weighed in, noting that many provisions of the ACA, such as reauthorizing the Indian Health Service, would work fine without the coverage requirement:

So why should we say it’s a choice between a wrecking operation, which is what you are requesting, or a salvage job. And the more conservative approach would be salvage rather than throwing out everything.

Here Mr. Clement returned to his persistent theme—the coverage requirement is “the very heart of this Act,” textually connected to all of its key provisions.  The ACA is a “hollow shell” without it.

At this point Justice Kennedy returned to Justice Scalia’s question — the test can’t be whether the law would have passed without a particular provision if the provision was passed simply to secure votes for passage of the act, but other provisions function perfectly without it.   We don’t want to inquire into legislative history, so is there an objective test?  Mr. Clement responded that the test is whether a statute can function in the manner Congress intended without a provision.

Justice Sotomayor said that by definition, if you strike a provision, the statute is not the statute Congress passed.  Why not sever an unconstitutional provision and leave it to Congress to fix the problem?  Why should the Court make legislative judgments?  This is why we presume that Congress would want to sever any unconstitutional provision and otherwise leave the statute as is.  Mr. Clement responded that the Court’s precedents focus on congressional intent.  Justice Sotomayor noted that it has been decades since the Court had struck down an entire statute because it found one provision unconstitutional, but Mr. Clement came up with one case where it had, and another where he suggested the Court had caused itself endless problems by failing to do so.

Justice Breyer entered the discussion at this point, raising an issue that he raised again later in the argument:  There are many provisions in the ACA that have nothing to do with the coverage requirement; must we go through the entire statute and decide what goes and what stays?  Mr. Clement responded again that the ACA is a hollowed out shell without its heart, the minimum coverage requirement.  So why not just strike down the whole thing—give Congress a clean slate to work with?

Edwin Kneedler’s Argument For The United States

Mr. Kneedler next took the dias.  He began by restating the government’s position that the minimum coverage requirement is constitutional and therefore there is no need to reach severability.  He proceeded to argue that most of the provisions of the law do not pertain to the plaintiffs and thus they have no standing to challenge them, and the Court lacks jurisdiction to strike them down.

This position was challenged by the Chief Justice and several of the Justices, who noted that no one would have standing to challenge a number of the provisions.  The Court seemed increasingly frustrated as Mr. Kneedler stuck with the standing argument in the face of uniform resistance from the Court until Justice Sotomayor ordered him to move on, and when he tried to return to the argument one more time said “I’ve asked you three times to move around that.”

As Mr. Kneedler was pressing the standing argument, however, Justice Scalia asked a telling question.  If we just send it back to Congress, having cut the heart out of the act, Congress will still have to reconsider the law.  Isn’t it better that Congress reconsiders the law in toto, instead of the Court sending it back to them having eliminated its heart?  Justice Kennedy followed by asserting that it was a greater assertion of judicial power to strike one provision and leave the rest in place—a result Congress never intended—than  to strike the entire statute.

Mr. Kneedler next joined Mr. Clement in arguing that the role of the Court was to determine Congressional intent, looking into the text and structure of the Act and its legislative history, a task that Justice Scalia suggested would violate the Eighth Amendment (which prohibits cruel and unusual punishment).  Mr. Kneedler responded that all the Court need do is look at the text, not try to evaluate the legislative process itself.  The text ( in the section 1501 findings) ties together the minimum coverage requirement, the guaranteed issue, and the community rating provision.

Here Justice Alito, referring to a brief filed by a group of economists which claimed that eliminating just the minimum coverage requirement would leave insurers with a $350 million burden, asked what would happen to the insurance industry if just the requirement and not the entire act was eliminated.   (Actually, the brief acknowledges that much of this money would come from the ACA’s premium tax credits and cost reduction payments, which could remain if the requirement was eliminated, a point Mr. Farr made later).  Mr. Kneedler responded that the Court should not become a budget committee, deciding who should get what under the ACA (and that the economists had added up the figures wrong).

Justice Kennedy pressed the case—isn’t it an “awesome exercise of judicial power” to impose this level of risk on the insurance industry without knowing the extent of the risk.  Justice Scalia then returned to the “heart of the Act” argument—has the Court ever struck down the main purpose of a statute and left the rest in place?  Mr. Kneedler responded that this is a huge law, with many provisions unrelated to market reform, and it would be an extraordinary act to strike down the entire law.

Mr. Kneedler pointed out that many provisions of the law were already in place, and thus clearly did not depend on the requirement, but Justice Scalia countered that they were put in place in anticipation of the mandate.  Justice Scalia suggested that the young adult coverage requirement already in place would bankrupt the insurers without the minimum coverage requirement, prompting Justice Sotomayor to remind him that he had argued the day before that young people did not need insurance.  Mr. Kneedler continued that all of the other provisions of the ACA would advance the goals of Congress without the coverage requirement, but Justice Scalia in turn continued to channel Mr. Clement, stating that it would not effectuate the intent of Congress to implement the law “once you’ve cut the guts out of it.”

Justices Kennedy and Alito continued to press Mr. Kneedler with the argument that the minimum coverage requirement was necessary for all of the insurance reforms because it provided funds to the insurers to cover the cost of the other reforms and lowered the cost of insurance.  Despite his best efforts (and some help from Justice Ginsburg), Mr. Kneedler just could not seem to get through to a number of the judges his position that the question was not one of the financial relationship of reforms in the ACA, but the textual relationship.

The Argument Of H. Bartow Farr III, Amicus

Mr. Farr was up next.  His argument proceeded very differently from any other argument in the prior four and a half, hours of argument.  Perhaps because the justices actually agree with him, perhaps because they had already made up their minds otherwise, perhaps because they were just tired, he was allowed to speak for whole minutes at a time without interruption.

Farr’s argument was essentially that the minimum coverage requirement was not actually the heart of the statute; that Congress had provided multiple tools in the ACA to address the problems of adverse selection and to expand coverage; and that the requirement was only one of them.  These tools include the premium tax credits, the annual open enrollment periods, the cost-reduction payments, and other provisions.  Moreover, striking it and leaving guaranteed issue and community rating in place would not raise costs for everyone—indeed it would reduce costs for the unhealthy.

Mr. Farr continued to argue (to a skeptical Justice Scalia) that the Congressional finding that the minimum coverage requirement was “essential” to the community rating and guaranteed issue requirements was not to be taken literally, but merely meant that it advanced the objectives of those provisions.  It was there to make the necessary link to interstate commerce.

Mr. Farr further argued that the real heart of the ACA is the guaranteed issue and community rating requirements; that is what really changed with the ACA. To strike these down would really defeat the intent of Congress.  If enforcing those provisions without the minimum coverage requirement caused problems for Congress, the insurers should go back to Congress; it is not the Court’s job to bail them out.

Here Justice Scalia revealed his cards.  In fact, he acknowledged, Congress is at this point gridlocked–it cannot at this point either fix or repeal he law.  It is a “great distortion” to simply pretend that the Court is showing deference to Congress by saying Congress will fix the law.  Once we take the “heart out of the statute” we should strike the whole thing, and let Congress do what it wants, “in the usual fashion.”  Mr. Farr continued that the minimum coverage requirement was not the heart of the statute, the community rating and guaranteed issue requirements were.

Justice Breyer at this point returned for the third time to the question of whether the “peripheral” parts of the Act could not be preserved, but Mr. Farr argued that was not necessary—there is no precedent for the “heart of the statute” approach.  If the Court finds the minimum coverage requirement unconstitutional, it should strike it and leave the rest of the statute in place.

Paul Clement’s Rebuttal

Mr. Clement completed the argument with his rebuttal, emphasizing the financial burden on insurers that seemed to be troubling Justice Kennedy and the “heart of the act” argument that had won the heart of Justice Scalia.  Much of the argument demonstrated how incredibly successful Mr. Clement and the movement he speaks for has been in persuading the media, the public, and now the Court, of its narrative.  One of the many provisions of the ACA intended to increase access to health care, and certainly not the most important, has become the “heart of the act,” and an evil heart at that, not only to much of the American pubic, but also to Justice Scalia and who knows how many other members of the Court.

What Comes Next?

Nevertheless, I find it hard to predict where the Court will end up.  The Court seems to have little appetite for going through the ACA section by section deciding which provisions stay and which go.  The justices did not seem to be convinced by the federal government’s textual argument that only the community rating and guaranteed issue provisions had to go with the minimum coverage requirements.  Justice Scalia seemed ready to jettison the whole statute, but, although Justice Kennedy seemed troubled by the cost to insurers of dumping only the coverage requirement, the justices did listen respectfully to Mr. Farr’s argument that all of the statute should be preserved if the coverage requirement is stricken.

One thing seemed to be clear, and Justice Scalia (and possibly Kennedy) acknowledged it.  The Congress we have today is not the Congress that we had in 2010, and if the Court throws out the entire statute, the ACA is not coming back.  The Court thus faces an intensely political decision.  If it votes 5 to 4 to strike down the minimum coverage requirement (and there are only 5 possible votes for this result), and then strikes down the entire ACA, a Republican Court will have rejected the entire signature piece of legislation of a Democratic administration and Congress — it is Bush v. Gore all over again.  One has to wonder if the Court would retain any legitimacy after this, or whether it .will simply, and rightfully, be seen as a super legislature.

One can only hope that the Court steps back from this precipice—for the good of the Court and of the nation.  The easiest way to do this would be to uphold the minimum coverage requirement and avoid the severability question altogether.

Editor’s note: For more on the severability oral arguments, see additional Health Affairs Blog posts by Wendy Mariner, Alice Noble and Mary Ann Chirba, and William Sage.

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