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Fifth Circuit Affirms Finding That the ACA's Individual Mandate Is Unconstitutional

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By Laura Temme, Esq. on January 03, 2020 1:48 PM

In 2018, a district court judge in the Northern District of Texas declared the Affordable Care Act's "individual mandate" unconstitutional. And not only that, they held that as a result, the entire ACA was invalid. Unsurprisingly, the decision was almost immediately appealed. Almost exactly a year later, the Fifth Circuit Court of Appeals delivered yet another surprise: It affirmed the decision, at least in part.

This might sound like deja vu all over again for those who remember the Supreme Court's 2012 decision in National Federation of Independent Businesses v. Sebelius. There, SCOTUS held that although requiring individuals to obtain health insurance or face a penalty exceeded the Commerce Clause, it was permitted under Congressional tax authority. However, when the Tax Cuts and Jobs Act of 2017 changed the ACA's tax component to $0, two individuals and 18 states filed constitutional challenges against the ACA once again.

Panel Finds Individual Mandate Unconstitutional

In its opinion, the Fifth Circuit panel examined the history of litigation against the ACA. Notably, the panel found that the individual mandate was "most naturally read as a command to purchase insurance." This command, the court held, was only saved from unconstitutionality by being read together with the shared responsibility payment. With both in effect, people had the option to either buy insurance or pay a tax. Without the tax, the individual mandate is simply a command.

Can One Exist Without the Other?

The plaintiffs argue that because the individual mandate was essential to the ACA as a whole, its invalidation would strike down the entire statute. The federal defendants, along with the 16 states that intervened to defend the ACA, contend that the individual mandate (along with two closely related provisions) could be severed from the rest of the Act. The Fifth Circuit remanded the issue back to the district courts, asking them to consider whether the Legislature would have enacted these measures independently. If so, the invalid part can be dropped as long as what is left is a fully operative law.

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