Severability May Hold the Key to Obamacare’s Future: How Much of the Law Will Survive the Supreme Court’s Review?

Updated:
Posted in: Constitutional Law

As the Supreme Court “goes dark” for the next couple of months, the pundits and commentators who paid rapt attention to the Obamacare oral arguments two weeks ago have been left to speculate about what the Court will do.  Understandably, most of that speculation concerns the central question in the case: Whether the minimum coverage provision of the Patient Protection and Affordable Care Act (“the PPACA”) can be sustained as an exercise of one or more of the powers given to Congress in the Constitution.

But as Court watchers know, the extraordinary three days of oral arguments on Obamacare raised a number of other important issues as well.  Perhaps no question will prove as decisive as the following: If a majority finds that the minimum coverage provision is unconstitutional, how much of the rest of the PPACA will go down with it?  All?  None?  Something in between?

On the third day of the Obamacare oral arguments, the Supreme Court heard from three lawyers on this question of severability.  They presented a number of stark alternatives, none starker than the plaintiffs’ position that if the minimum coverage provision is struck down, the whole Act must go down with it.  In this column, I explain why the plaintiffs’ proposal should be rejected, and most of Obamacare should be left to stand, even if a majority of the Court votes to invalidate the minimum coverage provision.

Why Invalid Statutory Provisions Are Usually Presumed to Be Severable

The plaintiffs’ proposed severability holding is nearly the exact opposite of the Supreme Court’s usual approach to severability.  As a general rule, a finding that a law is unconstitutional in one respect does not result in the invalidation of other parts of the law, which may be perfectly valid and can function even without the invalid parts.

This principle was made clear in the landmark 1803 case of Marbury v. Madison, which established the power of the courts to set aside unconstitutional laws.  The decision invalidated the last clause of Section 13 of the Judiciary Act of 1789—which authorized the issuance of writs of mandamus in cases filed originally in the Supreme Court.  But the Court did not say that the whole of Section 13, much less the whole of the Judiciary Act, was therefore invalid.  Instead, everybody at that time in history, and everyone since, simply assumed that the provision held invalid in Marbury could be (and was) severed from the remainder of the Act.

More modern cases establish a presumption of severability.  Sometimes the Court says that an express statutory severability clause establishes the presumption, but even absent such a clause, the courts presume severability.  Why?  Because judicial invalidation of a law as unconstitutional frustrates the will of the People, as expressed through their elected representatives.  Where the courts are confident that a given law is unconstitutional, that frustration is a price worth accepting, but the presumption of severability rests on the premise that, insofar as the legislature has not acted unconstitutionally, its handiwork should be preserved.

The Plaintiffs’ Position on the PPACA: Strike It All Down

In their briefs and during the oral argument, the plaintiffs in the Obamacare case argued that despite the presumption of severability, the invalidation of the minimum coverage provision should result in the invalidation of the entire PPACA.  The plaintiffs conceded that there may be some provisions of the PPACA that have nothing to do with the minimum coverage provision, but, they said, sorting those provisions out from the provisions that are inextricably linked to the minimum coverage provision is an impossible task for the Court to accomplish.  Accordingly, the plaintiffs argued, it would be cleaner for the Court to simply invalidate all of the PPACA and let Congress go back to the drawing board.

That was an opportunistic argument, to say the least.  Republicans in Congress—who opposed the PPACA in 2010 and who have closely allied themselves with the plaintiffs’ challenge to the Act—now have enough votes to block the re-enactment of all of its provisions, including the uncontroversially valid ones.  But apart from its politically opportunistic character, is there anything to be said for the plaintiffs’ throw-out-the-baby-with-the-bathwater position?

Perhaps.  Recall the government’s chief argument for the validity of the minimum coverage provision: That provision, the Solicitor General contended, is needed to prevent young healthy people from “free riding” once health insurance companies are required to issue policies to all comers, notwithstanding pre-existing conditions.  The risk—which became a reality in some states that attempted to require guaranteed-issue without also imposing a minimum coverage mandate—is that young, healthy people will refuse to purchase health insurance until they become sick, at which point they can obtain coverage without having previously paid premiums.

To be sure, the plaintiffs argue that, in fact, this risk of free riders is insufficient to bring the minimum coverage provision within the powers of Congress.  But, they note, Congress plainly thought that the minimum coverage requirement for individuals was necessary to the operation of the guaranteed-issue requirement for insurers.  Indeed, the plaintiffs point to language in the PPACA that describes the minimum coverage provision as “essential” to the guaranteed-issue requirement.

The plaintiffs seize on this language to say that invalidating the minimum coverage provision would therefore fatally undermine the guaranteed-issue requirement.  Because that requirement is, in turn, connected to a wide variety of other aspects of the PPACA, the plaintiffs urge that were that requirement to be deemed unconstitutional, then the whole Act would have to go.  As the state plaintiffs’ attorney, Paul Clement, repeatedly put the point during the oral argument, the minimum coverage provision is the “heart” of the PPACA, and if the heart is cut out, there is no point in trying to save the rest of the patient.

Yet Clement’s claim was wrong in three key respects.

Is the Minimum Coverage Provision Really the “Heart” of the PPACA?

First, the plaintiffs read the crucial language in the PPACA out of context.  It is true that the Act states that the minimum coverage “requirement is essential to creating effective health insurance markets in which improved health insurance products that are guaranteed issue and do not exclude coverage of preexisting conditions can be sold.” Yet that language appears in a portion of the Act labeled “Findings,” which marshals evidence for the conclusion that the minimum coverage provision is a constitutionally permissible regulation of interstate commerce.  And, as used in the Supreme Court’s commerce cases—which the Findings section clearly references—“essential” is a term of art meaning “useful” or “reasonably related to,” rather than “indispensable.”  Given that context, it is simply incorrect to read the statutory language as reflecting a Congressional determination that the minimum coverage provision should be deemed inextricably connected to any other provisions for severability purposes.

Second, it is quite misleading to refer to the minimum coverage provision as the “heart” of the PPACA.  Mr. Clement’s argument itself made clear that the guaranteed-issue requirement for insurers (and associated limits on price disparities among policies) are the heart of the PPACA, with the minimum coverage provision serving only to protect the guaranteed-issue requirement against the free rider problem—the problem of young healthy people failing to pay for insurance until they become sick, or old enough that they fear becoming sick.

Third, as a factual matter, the guaranteed-issue requirement could work even if the minimum coverage provision were to be struck down.  The Court appointed an amicus, H. Bartow Farr, III, to argue that the minimum coverage provision should be held completely severable, and Mr. Farr made a pretty persuasive case.  In particular, Mr. Farr noted that the PPACA contains a number of mechanisms to address the free rider problem, not just the minimum coverage provision.

One such mechanism is annual enrollment.  Under the PPACA, an insurance provider need not take all comers the moment they become sick.  Instead, the provider can limit enrollment to a designated period each year.  Thus, a healthy person who decides to gamble by forgoing insurance until he becomes sick could roll snake eyes. Suppose such a person is hit by a bus or detects a suspicious lump in February but cannot sign up for health insurance until the following January.  His effort to game the system will leave him uninsured for eleven months when he desperately needs medical coverage.  Anticipating the possibility of such ill fortune, many people will sign up for insurance in advance, even if the minimum coverage provision is cut out of the Act.

Does that mean that the minimum coverage provision is wholly unnecessary?  No.  Even Mr. Farr conceded that Congress had determined that the other provisions of the PPACA would work better with the minimum coverage provision than they would without it.  But that does not mean that the PPACA would not work at all without the minimum coverage provision.  Given the presumption of severability, that should be enough for the Court to hold the rest of the Act valid, even if the minimum coverage provision is struck down.

Whether the presumption of severability actually proves to be sufficient, in the Court’s eyes, to preserve most of the PPACA is another question.  A Court that is willing to strike down the minimum coverage provision in the first place would, by that very fact, show that it has little concern for its precedents granting Congress broad discretion in economic affairs.  And there is scant reason to think that such an adventurously conservative Court would nonetheless show great respect for its severability precedents.

  • Anonymous

    Severability is kind of weird in this case since the government was also trying to use Necessary and Proper to justify the individual mandate’s constitutionality. That kind of undermined the case for it being severable.

    Considering N&P gets used reasonably often in these commerce clause cases, I hope the Supreme Court makes it really clear how to handle severability in the future. I think the easiest and most practical approach would be to either strike an entire bill if Congress believes it is integral enough to be justified under N&P, or to only strike the actual provisions directly ruled unconstitutional and leave Congress to clean up the mess. Any slicing and dicing (even cutting the GI and CR provisions) just feels like it’s something we shouldn’t expect courts to properly handle, and would be likely viewed as judicial overreach by anyone that didn’t like the exact results.

  • Anonymous

    Severability is kind of weird in this case since the government was also trying to use Necessary and Proper to justify the individual mandate’s constitutionality. That kind of undermined the case for it being severable.

    Considering N&P gets used reasonably often in these commerce clause cases, I hope the Supreme Court makes it really clear how to handle severability in the future. I think the easiest and most practical approach would be to either strike an entire bill if Congress believes it is integral enough to be justified under N&P, or to only strike the actual provisions directly ruled unconstitutional and leave Congress to clean up the mess. Any slicing and dicing (even cutting the GI and CR provisions) just feels like it’s something we shouldn’t expect courts to properly handle, and would be likely viewed as judicial overreach by anyone that didn’t like the exact results.

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  • jlr1827

    I think that U S citizens are being forced to automatically accept the idea of “Big Governmen.”
    The Social Security situation is a perfect example. The elected officials can and should regulate what is in place. They have no authority to make requirements on personal quality of life issues.
    They are requiring every citizen to “HAVE” life, “PERSUE” liberty, and “BE” happy. Oh yes, during this economic situation, we are increasing taxes to make sure we do

  • jlr1827

    I think that U S citizens are being forced to automatically accept the idea of “Big Governmen.”
    The Social Security situation is a perfect example. The elected officials can and should regulate what is in place. They have no authority to make requirements on personal quality of life issues.
    They are requiring every citizen to “HAVE” life, “PERSUE” liberty, and “BE” happy. Oh yes, during this economic situation, we are increasing taxes to make sure we do