California v. Texas
|California v. Texas|
|Argued November 10, 2020|
|Full case name||California, et al. v. Texas, et al.|
California v. Texas (Docket 19-840) is a case pending before the United States Supreme Court that deals with the constitutionality of the 2010 Affordable Care Act following the passage of the Tax Cuts and Jobs Act of 2017. With this law, the "individual mandate" (26 U.S.C. § 5000A), which created a tax penalty for Americans without insurance, was eliminated. Lower courts found that this individual mandate was a critical provision of the ACA and, without it, some or all of the ACA was potentially unconstitutional as an improper use of Congress's taxation powers.
The ACA (Obamacare) was passed in 2010 under Democratic leadership in both houses of Congress and signed by President Barack Obama. Among much of its provisions, it provided programs for states to provide free or low-cost health insurance to low-income residents through programs like Medicare and Medicaid. ACA encouraged all Americans to have health insurance and as part of this, created an income tax penalty for those that did not have health insurance, otherwise known as the "individual mandate". Passage of the ACA was controversial, and remained an issue that was divided along political lines, with Democrats favoring the law promoting public good and Republicans seeing it as a tax burden. The law had been challenged in courts multiple times, with the Supreme Court having seen two cases previously. Notably, in 2012, the Court ruled 5–4 in National Federation of Independent Business v. Sebelius that the individual mandate was constitutional as a granted power of Congress under the Taxing and Spending Clause.
In 2016, the Republican Party held control of both the House and Senate and gained control of the Executive branch with the election of President Donald Trump. Trump had campaigned on the promise of replacing the ACA once in office, and repealing the law was one of the early targets of the Republicans, but early efforts failed by mid 2017 due to in-party disputes, specifically the deciding vote which was to come from Senator John McCain was denied the Republican Party due to the fact that a promised replacement plan was not forthcoming.
Tax Cuts and Jobs Act of 2017
By December 2017, President Trump signed into law a large tax relief bill, the Tax Cuts and Jobs Act of 2017. Among many other tax cuts, the Act eliminated the individual mandate requirement from the ACA by reducing the required amount of health coverage to US$0 starting in 2019. The elimination of the individual mandate was estimated by the Congressional Budget Office to save more than US$300 billion in federal spending though would cause premium rates to go up for some individual tax payers. Political commentators recognized the removal of the individual mandate was a partial victory for the Republicans that were trying to repeal the ACA before.
In February 2018, Texas led 19 other states in a federal lawsuit in the United States District Court for the Northern District of Texas challenging the constitutionality of the ACA following the removal of the individual mandate from the Tax Cuts and Jobs Act. The suit, Texas v. Azar, established that since the individual mandate was seen as core provision of the ACA as determined by the Supreme Court in Sebelius, then with its removal, the entire law became an unconstitutional exercise of Congressional taxing power. The United States Department of Justice told the district court in June 2018 that it mostly agreed with the general basis of the lawsuit, in that without the individual mandate, certain provisions of the ACA were invalidated such as the protections it had provided for those with pre-existing conditions, and would not defend those factors in court. However, the Justice Department still believed certain provisions of the ACA were valid.
On December 14, 2018, District Judge Reed O'Connor released his opinion on the case, affirming that without the individual mandate, the whole of the ACA was unconstitutional, going farther than the Justice Department had even indicated. O'Connor wrote that the "Individual Mandate can no longer be fairly read as an exercise of Congress's Tax Power and is still impermissible under the Interstate Commerce Clause—meaning the Individual Mandate is unconstitutional." He then further reasoned that the individual mandate is an essential part of the entire law, and thus was not severable, making the entire law unconstitutional. O'Connor's decision rendered the ACA unconstitutional but did not immediately overturn the law, granting a stay pending the resolution of the case on appeal. Among reaction to this decision was California and several other states, vowing to lead a challenge to the ruling.
By early January 2019, 17 states led by California filed an appeal of O'Connor's decision to the Fifth Circuit, as the Justice Department had indicated it would not challenge the ruling. At point, it was recognized that the case was likely bound for the Supreme Court, and would land in the midst of the 2020 elections, making it a critical issue for either party. Four additional states joined California's challenge by February 2019, bringing the number to 21. The Democrat-controlled House of Representatives following the 2018 election also joined in the defense. The Department of Justice filed a brief in support of the defendants (Texas et al.) in March 2019, now in full agreement with O'Connor's decision that the ACA as a whole was unconstitutional without the individual mandate, and would support Texas in defending the challenge.
Prior to the July 2019 oral hearings, the judges in the Fifth Circuit raised the question of whether California and the other states had standing to bring the challenge to the original suit. The oral hearings before Judges Carolyn Dineen King, Jennifer Walker Elrod, and Kurt Engelhardt focused on the constitutional challenge, the intent of Congress when they wrote and passed the Tax Cuts and Jobs Act, and on the matter of standing. Observers believed the case would be decided upholding O'Connor's ruling due to how the questioning fell, with Judges Elrod and Engelhardt, both appointed under Republican presidents, asking the bulk of the questions, while Senior Judge King, appointed under Democrat Jimmy Carter, was relatively silent.
The Fifth Circuit issued its ruling on December 18, 2019. The 2–1 decision, joined by Judges Elrod and Engelhardt, upheld in principle District Judge O'Connor's decision that with the elimination of the individual mandate, parts of the ACA were potentially unconstitutional. However, the decision remanded the case back to the district court, arguing that O'Connor's conclusion that the whole of the ACA was unconstitutional may be flawed. The Fifth Circuit decision asked the District Court to consider the concept of severability, since the individual mandate aspect was not apparently tied to other parts of the ACA like the health insurance marketplace. The Fifth Circuit also asked the District Court to consider a suggestion that the Justice Department had included in one of its briefs where the ACA may be invalid only in those states that had challenged it. As questions remained to the degree to which the ACA was unconstitutional, the ACA remained in enforcement following the decision.
The California-led group filed a petition for writ of certiorari to the Supreme Court by January 3, 2020 in response to the Fifth Circuit's decision. The filing asked for the case to be heard on an expedited schedule, "because of the practical importance of the questions presented for review and the pressing need for their swift resolution by this Court". Texas and the other states also filed a petition in February 2020 for the Supreme Court, asking them to deny the expedited review of the case as it was not ripe and allow it to proceed through the normal judicial process, but that should it accept the case, to review and affirm the ruling that the ACA is now unconstitutional.
On June 25, the Trump administration's Solicitor General of the United States, Noel J. Francisco, filed a brief arguing that the individual mandate is unconstitutional and that, because of this, the rest of the law must be struck down, too.
The Supreme Court refused to hear the case on an expedited schedule for the 2019–2020 term, but did agree, on March 2, 2020, to hear the case during the 2020–2021 term, reviewing not only the severability factors but the standing issue raised by the Fifth Circuit. The Court consolidated both California's and Texas's petitions (Dockets 19-840 and 19-1019, respectively) under California v. Texas.
Oral arguments were heard on November 10, 2020. Observers to the arguments believed that Chief Justice John Roberts and Justice Brett Kavanaugh, along with the three more liberal Justices, appeared to accept the severability arguments of the individual mandate that would leave the rest of the ACA in place.
After Democrats won the two Senate seats in the Georgia Runoffs in 2021 giving them control of Congress, speculation has been rumored that President Joe Biden, along with a Democratic controlled Congress, will reinstate the individual mandate. This would in effect make any ruling against Obamacare null as the case is centered around a $0 individual mandate penalty. However, much is still unknown and more will be explained as the year goes on. The Department of Justice under Biden did submit a new amicus brief in February 2021 following the oral hearings asserting that they now believe the ACA is constitutional and the mandate is severable from the rest of the ACA.
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