In late 2009, as Congress debated the Affordable Care Act (ACA), Todd Gaziano, Nathaniel Stewart, and I contended that the bill's individual insurance "requirement" or mandate was unconstitutional because it exceeded the combined Commerce and Necessary and Proper Clause powers of Congress. Our argument was dismissed as frivolous by most constitutional law professors. It was not until District Court Judge Judge Henry Hudson held that the insurance mandate was indeed unconstitutional that a few constitutional law professors began taking the argument seriously. But in truth, most continued to disparage it. Why?
In a lengthy Florida Law Review article, I tried to explain why most law professors missed the boat. But one reason stands above all others: Our argument rested entirely on existing Supreme Court doctrine; and somewhat surprisingly, some professors did not fully understand the Court's post-New Deal Commerce Clause doctrine. Like those who read the Constitution for what they want it to say, these professors read these post-New Deal cases for what they wanted them to say.
Therefore, there was a degree of vindication when, in NFIB v. Sebelius (2012), five justices entirely endorsed the Commerce and Necessary and Property Clause analysis we had formulated in 2009. Of course, in NFIB, the Court ultimately upheld the Affordable Care Act when Chief Justice Roberts–alone–invoked a "saving construction" of the "penalty" enforcing the "requirement" to buy private health insurance.
The Chief Justice held that, because the "penalty" could be construed as a tax (in important part because it raised revenue for the Treasury), the ACA could be upheld. Crucially, he denied that reading the "penalty" this way was the best or natural reading of the statute. ("[T]he statute reads more naturally as a command to buy insurance than as a tax….") Instead, construing the "penalty" as a tax was merely a "fairly possible" reading, which turned out to be good enough given the doctrine of "constitutional avoidance." ("Granting the Act the full measure of deference owed to federal statutes, it can be so read….")
We are now witnessing a similar social phenomenon. In Texas v. United States, a single district court judge, Judge Reed O'Connor, has accepted the argument made by state attorneys general: because the Tax Cuts and Jobs Act of 2017 (TCJA) zeroed out the "penalty," it is no longer "fairly possible" to construe the "penalty" as a tax. This is because the "penalty" no longer fits the definition of a tax articulated by Chief Justice Roberts in NFIB v. Sebelius. Judge O'Connor then further held that, since the insurance requirement was unconstitutional, and was inseverable from the rest of the ACA, the ACA in its entirety was now unconstitutional.
The response among law professors to the argument of the state AG's, and the ruling by this lone district court judge, is remarkably similar to their reaction to the rulings of Judge Hudson and, later, District Court Judge Roger Vincent. Once again, they are incredulous; dismissing the argument as silly or ludicrous.
Could they be right this time?
To answer this question, we have to distinguish between three issues:
the constitutionality of the individual insurance "requirement" or mandate in § 5000A(a) of the ACA after the "penalty" cum tax in § 5000A(b) was set at $0;
the standing of the plaintiffs to sue; and
whether the insurance requirement in § 5000A(a), if now unconstitutional, is severable from the rest of the ACA.
In a series of coauthored blog posts, Professor Josh Blackman and I will maintain that, with respect to the first of these issues, the conventional wisdom of law professors is wrong once again, and wrong for the same reason as last time: these professors have read existing Commerce and Necessary and Proper Clause doctrines as they wish them to be, not as they actually are. In this case, however, it is the Chief Justice's reasoning and the Court's holding in NFIB v. Sebelius that they are misreading.
As Josh and I will explain in our next co-authored blog post, the first of these three issues has already been decided by a majority of the Court: the individual insurance "requirement" in § 5000A(a) is unconstitutional. Only once this holding is understood can we then move on to profitably discuss the standing and severability issues as they relate to the ACA.
In a subsequent post, we will offer some insights about the standing issue–in particular, the injury-in-fact requirement–that draw upon a comparison of oral argument in NFIB with Chief Justice Roberts' analysis in his written opinion. A close comparison of the two supports the reasonableness of Judge O'Connor's analysis of standing. In a final, solo-authored piece, I will offer my thoughts on Judge O'Connor's severability analysis.
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