The final question in Obamacare: severability

Does the entire Patient Protection And Affordable Care Act have to stand and fall as a whole? Or can it be separated into various parts, so that one part can be struck down and another still remain in place? That’s one of the questions the justices will consider on the last day of oral arguments.

Very often, legislatures will insert a “severability” clause into a law, that says “if a section of this law is ruled unconstitutional, we want the rest of it to still be enforced.” But courts aren’t required to follow such instructions. They have to decide for themselves whether the statute makes sense with the invalid portion removed—whether the legislature would have wanted the rest of the statute to remain in place or not. And that can sometimes be a complicated analysis.

In this case, the severability question is made more complex because of questions about standing. As we’ve seen, the principle of standing holds that you can only challenge a law that actually harms you. Just because you’re harmed by one part of a law—and have standing to challenge it—that doesn’t mean you’re harmed by other parts of the law, or have standing to challenge them. The Obama Administration contends that some of the plaintiffs in the case have standing to challenge some of the PPACA’s provisions but not others. So in their eyes, the states have standing to challenge the Medicaid provisions, but lack standing to challenge the Individual Mandate. And some of the provisions in PPACA aren’t involved in these cases at all (for example, the IPAB provision that we’ve discussed before) because they just aren’t related to the Individual Mandate. On the other hand, other provisions—most obviously the “guaranteed issue” provision that forces insurance companies to insure people who are already sick—are clearly connected to the Mandate.

So the Administration contends that:

1. If the Court strikes down the Individual Mandate, it can only consider whether or  not Medicaid expansion is severable, because the states only have standing to challenge that section of the law. The rest of the severability issues—that is, the question of whether things like IPAB are or are not severable from the Individual Mandate—can’t be decided because the plaintiffs don’t have standing to challenge those provisions.

2. Some of the other sections in PPACA are taxes, and thus the Court lacks jurisdiction to decide those matters, due to the Anti-Injunction Act that we’ve discussed before. Again, the Administration’s not saying that the Individual Mandate itself is a “tax” under the Anti-Injunction Act—it’s saying that some of the many other provisions in Obamacare are taxes, which the Act forbids courts from addressing.

3. But if the Court does consider the severability of the other provisions in PPACA, the only thing it should strike down is the “guaranteed issue” provision, because “many provisions of [PPACA]….have no connection to insurance coverage at all.” Congress would want these other provisions to remain in place. Finally, it is “well established that an equitable remedy should extend no further than what is necessary to afford relief for…the plaintiff’s claim.” But the plaintiffs really only challenged the Individual Mandate and Medicaid provisions, so the Court shouldn’t go out of its way to invalidate the whole shebang, especially since the lawsuit hasn’t really developed any evidence on these other matters.

The problem with this argument, according to the individual plaintiffs, is that striking down only part of the PPACA would “fundamentally change the statute.” Congress glued together a wide variety of compromises, burdens, benefits, exceptions, subsidies, exemptions, and wealth-transfers when it made PPACA, and to cut out part of it is like cutting the string that holds the whole thing together. As we all know, the bill got through Congress only through the narrowest of votes, and only after the Obama Administration bought the votes of Louisiana, Florida, Nebraska, and other Congressional delegations by giving those states special exemptions and subsidies. Had the bill been any different than it was, “the delicate compromises in the [PPACA] would have blown up, and there is little chance that Congress would…have proceeded, unfazed, to enact the remainder of the law.”

Of course, just about every law includes some log-rolling. But, the plaintiffs argue, that’s just why the Court should not start tinkering with a law, but should strike down the entire thing and let Congress put together another bundle of compromises that might be constitutional. “For this Court to slice up the legislation in unforeseen, uncontemplated ways—invalidating quids and retaining quos, likely without even realizing it—would raise profound separation-of-powers concerns” and essentially create a law “substantially different” from the one Congress passed.

In fact, they argue, the PPACA could not have been passed without the Mandate, because Senator Brown was elected from Massachusetts, Congress would have had to vote again on the entire package if it had changed the statute. Rather than do so, the Democratic majority decided to stick with the version that the Senate had already passed. And when you add to that the fact that Congress purposely chose to remove a severability clause from the statute, it seems clear that not only might Congress have not passed PPACA without the Mandate, but it would not have.

Even aside from Congress’ political dynamics, the states argue, the PPACA would not operate without the Individual Mandate. Congress, after all, based its Medicaid expansion requirements on the Mandate, knowing that many people would seek to obey the Mandate by signing up for Medicaid. Meanwhile, it expected to use the Mandate to offset the increased costs of medical insurance: “On the demand side, Congress enacted the individual mandate to force individuals who do not want insurance to obtain it, even if (indeed, especially if) they are unlikely to need it. That, in turn, would make it more affordable for insurers to provide insurance to higher risk and lower income individuals. On the supply side, Congress enacted a series of measures—insurance market regulations, exchanges and subsidies, employer regulations, and expanded Medicaid—designed to force an increase in the supply of private, employer-based, and public insurance.” So even aside from Congressional intent, the PPACA just wouldn’t work without the Individual Mandate.

The justices appointed a prominent member of the Supreme Court bar—H. Bartow Farr—to argue in favor of complete severability. He points out that the absence of a severability clause in the PPACA doesn’t really matter, because the law also doesn’t have a non-severability clause. And while some portions of the law may not work as well without the Mandate, they can operate in theory—for instance, the “guaranteed issue” requirement would still “fully operate as a law’ in the relevant sense that there is no textual dependency on the [Individual Mandate].” In other words, the PPACA is really a collection of provisions which can operate, though not very well, without being connected. And as long as the statutory text doesn’t make provisions explicitly dependent on one another, the Court shouldn’t strike the whole thing when it finds one provision invalid. And while it might be sensible to say that the law won’t work without the Mandate, that “requires a heavy dose of conjecture,” in which the courts should not indulge. In fact, Mr. Farr points out that while some states have adopted similar “guaranteed issue” requirements, the only state that also imposed a mandate to compensate for it was Massachusetts. And other portions of the PPACA can also operate without the Individual Mandate.

The severability issue is a complicated one. On one hand, to invalidate the entire statute due to one flawed provision seems like an extreme measure that intrudes on the legislature’s lawmaking powers, not to mention exceeding traditional judicial limits like standing. On the other hand, to uphold this law without the Mandate does seem to transform the PPACA into something Congress didn’t write and would never have been able to pass. And although there’s no explicit interdependence between many of its provisions, common sense dictates that at least many of PPACA’s most prominent provisions would never work without the Mandate.

Ironically, this highly technical issue may be end up being the most important one in most people’s lives. Since PPACA is so huge and contains so many provisions that people don’t even know about, and that are not directly raised in the arguments here, we all may be more affected in the long run by how the Court decides the severability question than by anything else.

More here from Ilya Shapiro, Richard Epstein, and Mario Loyola.

Bottom line: Does the federal expansion of Medicaid eligibility, combined with a Mandate that will push a lot of people onto the states’ Medicaid rolls, go so far that the Medicaid “deal” between states and the federal government can no longer be called “voluntary”?

Arguments set for: Wednesday, March 28

What to listen for: Complex discussions of what provisions would or would not work without the Mandate, and why.

Does it matter whether Congress could have or would have voted for the package without the Mandate? Or should the Court only look at the statute itself to see how it would function without the Mandate?