The Department of Justice’s Refusal to Defend the Affordable Care Act

By Isaac Cui (PO ‘20) Managing Editor

In March, I wrote an article for the CJLPP about a lawsuit filed by Texas and joined by nineteen other states to enjoin enforcement of the Affordable Care Act (ACA, often called Obamacare). On Thursday, June 7, 2018, the United States Department of Justice filed its brief in the case, asserting that parts of the ACA are unconstitutional and requesting a declaratory judgment to that effect.[1] The DOJ’s brief is hardly more persuasive than the initial complaint, which I argued against previously, but it is worth noting how DOJ’s arguments differ from Texas’s and why this position matters.

DOJ’s Position on the ACA

One of the key differences between the DOJ’s position and Texas’s is that Texas asked the court to enjoin the entirety of the ACA’s enforcement,[2] whereas DOJ has argued that only two other provisions of the ACA are unconstitutional. The ACA includes a lot of mandates, but some of its major provisions[3] are:

the individual mandate, requiring people to get a minimum level of insurance and imposing a penalty if they did not do so
a tax liability on large employers that fail to offer coverage to full-time employees, and tax incentives for certain small businesses to purchase insurance for employees;
the creation of health insurance exchanges for individuals and small businesses to purchase insurance
the Medicaid expansion
tax credits for people who earn between 100% and 400% of the federal poverty level in order to purchase health insurance
insurance market regulations, such as the requirement that family coverage plans continue to cover adult children under the age of 26, the requirement that plans provide certain “essential health benefits,”[4] the “guaranteed-issue” provision which prevents insurers from denying coverage to individuals due to a pre-existing condition, and the “community-rating” provision which prevents insurers from charging higher premiums to people because of their medical history.

DOJ’s brief argues that the last two provisions—the guaranteed-issue and community-rating provisions, which protect those with pre-existing conditions—should be struck down.[5]

DOJ’s argument begins similarly to Texas’s. Because the individual mandate’s penalty was reduced to $0 under the 2017 Tax Cuts and Jobs Act, it can no longer be construed as a tax per the Supreme Court’s decision in NFIB v. Sebelius.[6] Since that decision only upheld the mandate only insofar as it was a tax, the mandate is now unconstitutional.[7] As noted in my previous post, the argument is somewhat absurd because it hinges on the technicality that people are still required to own health insurance even once the penalty for not owning insurance is $0.[8] The technicality is ultimately meaningless for people, however: there is no difference for anyone financially between a world in which the individual mandate were struck down as unconstitutional and the status quo after January 1, 2019, when the individual mandate’s penalty becomes reduced to $0.[9] The reason why the individual mandate argument matters is because Texas, and DOJ, argue that ruling the individual mandate as unconstitutional would thereby compel the court to strike down other aspects of the ACA.

The core of DOJ’s brief is the issue of “severability”—basically, the question of what courts should do when they find aspects of a law unconstitutional. DOJ argues that because “Congress believed the individual mandate requirement is ‘essential’ to the operation of the guaranteed-issue and community-rating provisions,” those provisions are not severable[10]; thus, if the court rules the individual mandate unconstitutional, it must also strike down the guaranteed-issue and community-rating provisions.

The policy logic behind this is rather straightforward. The theory behind the individual mandate was that healthy individuals must enter into the insurance market to offset costs for people who are chronically ill or have pre-existing conditions.[11] If there are not enough healthy people in the pool buying insurance, the theory goes, then premiums will rise because the remaining people who own insurance will be less healthy individuals who need to use their healthcare more. The individual mandate provides an influx of healthier individuals who tend to pay the insurance company more than the company pays for their healthcare, which generates a surplus that can better support those who are sicker and thus need more from the insurance company.[12] Under this economic theory, the guaranteed-issue and community-rating provisions hinge on the individual mandate, because both of those provisions eliminate ways in which insurance companies can offset the costs of covering sicker patients—either by refusing to cover them or by charging them more than more healthy individuals.

The legal argument in DOJ’s brief is more complicated. The Supreme Court, earlier in this term, dealt with the issue of severability in NCAA v. Murphy.[13] In that case, the Court explained that severability analyses proceed by asking “whether the law remains fully operative without the invalid provisions,” but the Court emphasized that “we cannot rewrite a statute and give it an effect altogether different from that sought by the measure viewed as a whole . . . .”[14] The Court continued: “It must be evident that Congress would not have enacted those provisions which are within its power, independently of those which are not.”[15] And, as Justice Ginsburg’s dissent noted, “When a statute reveals a constitutional flaw, the Court ordinarily engages in a salvage rather than a demolition operation: it limits the solution to severing any problematic portions while leaving the remainder intact.”[16] When the Court heard the first major challenge to the ACA, which forms the basis for this lawsuit, the Chief Justice said that severability is a question of whether Congress “would have wanted the rest of the Act to stand, had it known” that the given provision was unconstitutional.[17]

As such, the severability question is simply whether Congress would have wanted the rest of the ACA to exist if it got rid of the individual mandate. If the issue “is ‘essentially an inquiry into legislative intent,’”[18] as DOJ’s brief puts it, then the natural question is to ask whether Congress ever thought about a world in which the pre-existing conditions regulations would exist without the individual mandate. Unfortunately for DOJ and Texas, Congress did. And it did so at length, because when the 2017 Congress sought to replace the ACA, one of the most controversial issues was about the regulations protecting those with pre-existing conditions.[19] Congress acted when it passed the Tax Cuts and Jobs Act to effectively remove the individual mandate, but it left the ACA intact. It is hardly difficult to ask the counterfactual of what Congress would have intended in if the individual mandate were gone because it isn’t even a counterfactual—it’s the status quo!

DOJ’s brief makes two arguments in rebuttal to this obvious objection. Neither is persuasive.

First, DOJ notes that the congressional findings about how important the individual mandate is to the guaranteed-issue and community-rating requirements are not “undermined by the fact that the TCJA [Tax Cuts and Jobs Act] did not itself eliminate the . . . requirements at the same time it eliminated the mandate’s penalties . . . .”[20] The Brief argues that the “best evidence of Congress’s intent” is the legislative findings.[21] But while the legislative findings may be the best evidence of the 2010 Congress that initially passed the ACA, they are not probative of the 2017 Congress’s intent, which modified the ACA deliberately by excising the individual mandate’s penalty. Moreover, it is undeniable that the 2017 Congress knew about the 2010 Congress’s findings on how important the individual mandate was. In getting rid of the mandate’s penalty despite those findings, Congress clearly showed its intent that it wanted the rest of the ACA to continue.

DOJ’s brief relegates its second, and only other argument, to a footnote. There, it intimates that it was Congress’s intent to repeal the guaranteed-issue and community-rating provisions, but because the TCJA was passed through the reconciliation process, Congress “could not have revoked the guaranteed-issue or community-rating provisions . . . .”[22] This argument fails on its own because if Congress’s intent was to get rid of the provisions, it could have done so separately from the TCJA.

Indeed, other aspects of DOJ’s brief demonstrate how absurd this argument is. The brief concedes that “Congress has provided further proof of its intent that the bulk of the ACA would remain in place by amending the ACA on numerous occasions after the TCJA invalidated the individual mandate.”[23] DOJ’s brief contends that the failure to get rid of certain aspects of the ACA after the TCJA was passed demonstrated that Congress wanted to keep those parts of the ACA. The logic applies no differently to the guaranteed-issue and community-rating provisions as it does to the other aspects of the ACA, which DOJ contends should not struck down as a result of this lawsuit.

In short, DOJ’s position ultimately boils down to an attempt to get the courts to do what Congress could not—to eliminate parts of the ACA. It asks the court to do so out of loyalty to congressional intent by saying that the original Congress which enacted an omnibus and fairly-comprehensive statute would have wanted the entire statute to stay in its entirety. The original Congress obviously would have wanted that, but subsequent Congresses which changed the Act decided that the ACA made more sense with certain modifications, e.g., in getting rid of the individual mandate. There is a robust debate over whether the ACA can work without the individual mandate, but that debate is not one for the courts. DOJ suggests that the ACA makes no sense without the individual mandate. Congress knew that and altered the ACA regardless. That was a political and policy decision, one which legislatures, not courts, should make. And even if it was a wrong-headed decision, the Court has no role in fixing it; as the Chief Justice put it in his opinion in NFIB, “[i]t is not our job to protect the people from the consequences of their political choices.”[24]

The Consequences of DOJ’s Decision

DOJ’s choice not to defend the ACA raises some difficult questions, though the reaction may be overblown. The general danger is that the executive should to execute the law—or, as the Constitution puts it, the president “shall take Care that the Laws be faithfully executed . . . .”[25] If the executive can refuse to defend certain laws in court, there is the danger that duly-enacted laws can be effectively nullified through litigation strategy. As one law professor put it: “The Justice Department has a durable, longstanding, bipartisan commitment to defending the law when non-frivolous arguments can be made in its defense. This brief torches that commitment.”[26]

Many have noted that there is some precedent for DOJ refusing to defend a law—most prominently, when the Obama Administration chose not to defend the federal Defense of Marriage Act (DOMA) in 2011.[27]

The question of whether that precedent justifies DOJ’s current action is basically a question about the level of generality that one views the issue. In broad generality, in both cases, the executive chose not to defend a law. Arguably, therefore, the DOJ’s commitment to defending the law has already been broken.

But there are ways of distinguishing the cases. For one, DOMA denied equal treatment of the laws between same-sex couples and opposite-sex couples; when President Obama chose not to defend it, the Administration stated that it concluded that classifications based on sexual orientation should be subject to scrutiny under the Fourteenth Amendment and that, therefore, the Act was unconstitutional.[28] Moreover, the legal theories underpinning the Obama Administration’s choice not to defend DOMA were, frankly, much more persuasive than the arguments in the ACA lawsuit.

Also, the Obama Administration still declared that it would enforce the law until either Congress repealed it or a court struck the law down (which the Supreme Court eventually did in 2013), which is different than how the current Administration has, for example, hurt the enforcement of the ACA by reducing advertising and promotion for enrollment in the marketplace.[29] Of course, neither of these two arguments may be persuasive; the problem is that there is simply no self-evident way to determine what level of generality provides the correct analysis of whether DOJ’s actions are acceptable.

That being said, the impact of dangerous precedent usually is based on slippery-slope logic. That makes some sense with the judiciary. After all, the American court system is built on precedent and, as Justice Jackson put it, “All who observe the work of courts are familiar with . . . ‘the tendency of a principle to expand itself to the limit of its logic.’”[30] Courts often take a single principle and extend its logic to the extreme. Executive action does not have to be so legalistic; the discretion accorded to the president is meant to be wielded with pragmatic wisdom, not to be used to test the boundaries of the law. The Obama Administration’s choice not to defend DOMA is therefore not a justification for the Trump Administration’s choice not to defend aspects of the ACA.

In analyzing both decisions, we need to ask ourselves whether the choice was a justified by a legitimate, constitutional determination. After all, the Take Care Clause does not necessarily imply that the president must enforce all congressional laws—if Congress passes a law that is unconstitutional, the president is constitutionally obligated to refuse to execute that law, so long as that choice is “faithful[ ]” to the demands of higher law, i.e., the Constitution. For DOMA, President Obama was vindicated by the Supreme Court, which also found the Act to be unconstitutional.[31] It is extremely unlikely that that will be the case for the Trump Administration’s position on the ACA. Indeed, the brief is so audacious that three career DOJ lawyers withdrew from the case right before this brief was filed, in a signal that even they—civil servants who routinely make arguments they disagree with—strongly disagreed with the position that the brief took.[32]

In short, the position that DOJ is taking in the ACA litigation is incredibly tenuous, at best. And that should sufficiently distinguish the choice from President Obama’s refusal to defend DOMA.

[1] Federal Defendants’ Memorandum in Response to Plaintiffs’ Application for Preliminary Injunction, Texas v. United States, No. 4:18-cv-00167-O (N.D. Tex. June 7, 2018) [hereinafter DOJ Brief], available at https://www.justsecurity.org/wp-content/uploads/2018/06/ACA.Azar_.filing.pdf.

[2] Complaint at 4, Texas et al. v. United States et al., No. 4:18-cv-00167-O (N.D. Tex.) [Hereinafter, Complaint.], available at https://www.texasattorneygeneral.gov/files/epress/Texas_Wisconsin_et_al_v._U.S._et_al_-_ACA_Complaint_(02-26-18).pdf.

[3] DOJ Brief, supra note 1, at 3-4.

[4] Id. at 3 (quoting 42 U.S.C.A. § 18022 (2014)).

[5] Id. at 13.

[6] Nat’l Fed’n of Indep. Bus. v. Sebelius, 132 S. Ct. 2566, 2584 (Roberts, C.J.).

[7] DOJ Brief, supra note 1, at 9.

[8] See, e.g., id. at 11 (citing testimony of people who feel obligated to buy health insurance under the individual mandate even though there is no associated penalty).

[9] Id. (“[T]he TCJA’s elimination of the penalty takes effect in 2019 . . . .”).

[10] Id. at 13.

[11] Id. at 5.

[12] Anna Maria Barry-Jester, If the GOP Kills The Health Insurance Mandate, We May Finally Find Out If It Works, FiveThirtyEight (Nov. 16, 2017, 3:08 PM), https://fivethirtyeight.com/features/if-the-gop-kills-the-health-insurance-mandate-we-may-finally-find-out-if-it-works/.

[13] Murphy v. Nat’l Collegiate Athletic Ass’n, No. 16-476 (U.S. May 14, 2018)

[14] Murphy, slip op. at 26 (internal citations and quotation marks omitted).

[15] Id. at 25-26 (internal quotation marks and alterations omitted).

[16] Id. at 3 (Ginsburg, J., dissenting) (internal quotation marks and alterations omitted).

[17] Nat’l Fed’n of Indep. Bus. v. Sebelius, 132 S. Ct. 2566, 2607 (Roberts, C.J.).

[18] DOJ Brief, supra note 1, at 12 (quoting Minnesota v. Mille Lacs Band of Chippewa Indians, 526 U.S. 172, 191 (1999)).

[19] See, e.g., Anna Marie Barry-Jester & Perry Bacon, Jr., Some With Pre-Existing Conditions Could Lose Coverage Under the GOP Health Bill, FiveThirtyEight (May 24, 2017, 6:56 PM), https://fivethirtyeight.com/features/cbo-report-some-with-pre-existing-conditions-could-lose-coverage-under-the-gop-health-bill/ (discussing generally a Senate-side bill which potentially included waivers to the community-rating requirement and related controversies); Patrick Marley & Jason Stein, After Outcry Gov. Scott Walker Vows to Keep Protections for Wisconsin Patients with Pre-Existing Conditions, Milwaukee J. Sentinel (May 5, 2017, 11:13 AM), https://www.jsonline.com/story/news/politics/2017/05/05/gov-scott-walker-would-consider-dropping-pre-existing-condition-coverage-rules-wisconsin/101327456/ (discussing uproar in Wisconsin about dropping pre-existing coverage regulations); Rebecca Savransky, Poll: Voters Want Protections for Pre-Existing Conditions, The Hill (May 3, 2017, 7:16 AM), http://thehill.com/policy/healthcare/331696-poll-voters-want-protections-for-pre-existing-conditions (describing pre-existing conditions modifications as “perhaps the biggest obstacle to passing the healthcare bill” promoted by the Republican leadership in Congress).

[20] DOJ Brief, supra note 1, at 15.

[21] Id.

[22] Id. at 16 n.4.

[23] Id. at 18.

[24] Nat’l Fed’n of Indep. Bus. v. Sebelius, 132 S. Ct. 2566, 2579 (Roberts, C.J.).

[25] U.S. Const., art. II, § 3.

[26] Renuka Rayasam, Trump Administration Backs Court Case to Overturn Key Obamacare Provisions, Politico (June 7, 2018, 8:51 PM), https://www.politico.com/story/2018/06/07/obamacare-trump-administration-court-case-texas-606930 (quoting Nicholas Bagley of the University of Michigan).

[27] Id.

[28] Charlie Savage and Sheryl Gay Stolberg, In Shift, U.S. Says Marriage Act Blocks Gay Rights, N.Y. Times (Feb. 23, 2011), https://www.nytimes.com/2011/02/24/us/24marriage.html.

[29] See, e.g., Editorial Board, Americans Are Starting to Suffer From Trump’s Health-Care Sabotage, Wash. Post (May 6, 2018), https://www.washingtonpost.com/opinions/americans-are-starting-to-suffer-from-trumps-health-care-sabotage/2018/05/06/c60fb6fa-4fb2-11e8-b725-92c89fe3ca4c_story.html?utm_term=.712bf0d930dc; Abby Goodnough & Robert Pear, Trump Administration Sharply Cuts Spending on Health Law Enrollment, N.Y. Times (Aug. 31, 2017), https://www.nytimes.com/2017/08/31/health/affordable-care-act-trump-spending.html.