Analysis: If the health insurance mandate falls…
on Dec 8, 2011 at 12:19 am
This is one of a continuing series of articles the blog has been publishing in recent weeks, explaining more fully the new federal health care law, and the Supreme Court’s review of the constitutionality of key parts of the law. Previously, the blog analyzed the core of the Affordable Care Act — that is, the mandate that all Americans obtain health insurance by the year 2014. (The parts of this series dealing with that are here, here, and here.) This article deals with an issue the Court will confront if it strikes down the mandate: what, if anything, would then be left of the remainder of the Act? (The opening three articles of this overall series can be read, in sequence, here and here and here.)
When a federal court uses its most awesome power — to strike down a law passed by Congress because it violates the Constitution — it is difficult to think of any part of that process that could be called an act of judicial restraint. But there is such a thing, and it occurs when a court finds something about a law that is invalid, but it cannot say that the entire law is necessarily flawed. Then, in an act of restraint (and, to a degree, an act of speculation), the court tries to figure out what Congress would have wanted to keep in the remainder of the law, if it had known that it could not have the part that fell. This is called the doctrine of “severability” and, using it, a court asks itself: can some part or parts of the law remain on the books, after the flawed part is severed?
The Supreme Court will ask itself that very question if, when it rules on the key part of the new Affordable Care Act, it finds that Congress had no constitutional authority to enact that provision: the requirement that every American must obtain health insurance by the year 2014, or pay a penalty for every month without such insurance.
Last January, a federal judge in Pensacola, Fla., Senior Judge Roger Vinson, struck down the mandate, and then went on to conclude that everything else in the 2,700-page Act was so closely tied to that provision that Congress would not have wanted any of the remainder without it. The Eleventh Circuit Court based in Atlanta, however, partly disagreed. While it shared Judge Vinson’s view that the mandate was unconstitutional, it said that all of the rest of the Act could remain in effect, because it could still work without the mandate, and Congress would have wanted that outcome. The Supreme Court will have to say who was right, if it, too, nullifies the mandate.
There is no doubt that the Obama Administration (and, very likely, Congress) believes that the mandate is an essential part of the new health care law. But the Administration has said that the only parts of the Act that surely will fall if the mandate does are: (1) the requirement that insurance companies must sell insurance to anybody who seeks it even if that individual has a preexisting medical condition that normally would disqualify them for a policy; and (2) the ban on insurance companies charging higher premiums based on a policy holder’s medical history. Of course, those are truly central parts of the new law, and if they do not survive, the law — according to the Administration — will not be able to reach its overall goal of paying for nearly universal health care.
The Supreme Court summed up how the severability doctrine is to work in a 1992 decision, New York v. United States: “Common sense suggests that where Congress has enacted a statutory scheme for an obvious purpose, and where Congress has included a series of provisions operating as incentives to achieve that purpose, the invalidation of one of the incentives should not ordinarily cause Congress’ overall intent to be frustrated.”
For the Affordable Care Act then, the Court will be asking itself: if Congress knew last year that it could not have the mandate as an incentive — producing enough premium income for insurance companies so that they can afford covering high-risk patients, too — would it have been frustrated in the pursuit of the goal of nearly universal health care, or would some remaining parts of the Act be worth keeping, going part of the way toward achieving that goal? Judge Vinson didn’t think so; the Eleventh Circuit thought so.
Of course, one might suggest, the Supreme Court and lower courts that strike down part of a law could just send a letter to Congress to ask what its preferences are. But lawsuits don’t work that way: a court has a case in front of it, it has to do the best it can with what it has in the case record before it, and it may well have to sort out, all on its own, the consequences of what it decides. Thus, the severability doctrine in the field of constitutional decision-making.
As Judge Vinson in Florida noted, the inquiry into severability is a two-step process for a court: first, to decide whether other parts can actually function if a key part is nullified, but this part focuses actually on whether they could function as Congress intended, and, second, to decide whether Congress would have preferred to keep any of the remaining parts. On the first point, the judge said it was clear that, read in isolation, some parts of the law could work without the insurance mandate; among the examples he gave was a requirement that employers give pregnant workers more “break” time in a separate room if they wanted to breast-feed their babies. But it was the second point that Vinson found more compelling.
Congress, of course, could have made this task easier for the courts, by writing into the new law a severability clause, giving its specific preference on what it wanted to happen if a part of that law is found invalid. Congress, however, did not do that with the ACA as finally passed, although earlier versions of it as a bill did have such a clause.
The Pensacola judge said that Congress knew, throughout the time that the new legislation was being discussed, that it was controversial, and that at least some of it might be challenged as invalid. That, he said, made the absence of a severability clause more telling. It was “strong evidence,” Vinson said, that “Congress recognized that the Act could not operate as intended without the individual mandate” (his emphasis).
He added that the government had conceded that the insurance industry changes that the law would make could not survive without the mandate, and those, he said, “are the very heart of the Act itself.”
Overall, he said, while a court is obliged not to strike down more of a law than is absolutely necessary, there is another obligation: not to judicially rewrite a law to save it or parts of it. The judge commented: “Going through the 2,700-page Act line-by-line, invalidating dozens (or hundreds) of some sections while retaining dozens (or hundreds) of others, would not only take considerable time and extensive briefing, but it would, in the end, be tantamount to rewriting a statute in an attempt to salvage it,” which is an endeavor barred by Supreme Court precedent. “Courts should not even attempt to do that….For me to try and ‘second guess’ what Congress would want to keep is almost impossible,” he said.
Judge Vinson summed up: “In the final analysis, this Act has been analogized to a finely crafted watch, and that seems to fit. It has approximately 450 separate pieces, but one essential piece (the individual mandate) is defective and must be removed. It cannot function as originally designed.” And he closed with a suggestion to Congress: “The Act, like a defectively designed watch, needs to be redesigned and reconstructed by the watchmaker….Congress should do a comprehensive examination of the Act and make a legislative determination as to which of its hundreds of provisions and sections will work as intended without the individual mandate, and which will not.”
The Eleventh Circuit, however, saw the severability issue differently. “The lion’s share of the Act has nothing to do with private insurance, much less the mandate that individuals buy insurance,” it said. Judge Vinson, it said, put too much emphasis on the absence of a clause in the ACA to settle the issue. Members of Congress and their staffs, it noted, work with drafting manuals that say that severability clauses are generally unnecessary in legislation, unless Congress explicitly intends that it does not want the remainder of a law nullified if one part is struck down.
But, after having said that the entire Act need not fall, as the Florida judge had decreed, the Circuit Court said it had to pause before concluding that it could leave on the books two key insurance provisions that the government had said would be casualties of a decision against the mandate itself: the insurance companies’ duty not to turn anyone away, and the ban on companies’ exclusion of insurance applicants who had preexisting medical problems. In the end, it said, the way Congress wrote the law was evidence that it wanted to keep those reforms if it could, even without the mandate. The Act, it said, “retains many other provisions that help to accomplish some of the same objectives as the individual mandate.”
And, in deciding the severability point, the Circuit Court drew a very significant conclusion about limits on the mandate that Congress wrote into the ACA. “Although the individual mandate requires individuals to obtain insurance coverage,” it said, “the mandate itself does not require them to obtain” a specific array of health benefits in the policies they purchase on their own or obtain through their employers or from the government. “Although the chosen term ‘minimum essential coverage’ appears to suggest otherwise, when the lofty veneer of the term is stripped away, one finds that the actual ‘coverage’ the individual mandate deems ‘essential’ is nothing more than coverage ‘essential’ to satisfying the individual mandate.”
All of those limitations, it reasoned, “serve to weaken the mandate’s practical influence on the two insurance product reforms. They also weaken our ability to say that Congress considered the individual mandate’s existence to be a sine qua non for passage of these two reforms.” If Congress wants to change the ACA after learning that the mandate is invalid, that is its “legislative and political prerogative,” the Circuit Court commented.
When the Supreme Court agreed on November 14 to hear the constitutional cases on the Act, it expressly promised a decision on the severability issue in two of the cases, in which 26 states and other challengers to the mandate want the entire law struck down, as Judge Vinson had ruled.
Next in this series: A discussion of the new law’s requirement that employers provide health insurance for their workers.