The Affordable Care Act (popularly known as Obamacare) may be the Supreme Court equivalent of the cat with nine lives. Or at least four.
Starting with its decision in NFIB v. Sebelius, 567 U.S. 519 (2012), the Supreme Court has now turned aside three distinct lines of attack on the Act’s controversial “individual mandate” (which imposed a “tax penalty” on most taxpaying Americans who failed to buy federally defined minimally adequate health insurance). And in 2015 the Court preserved the viability of another key provision relating to federally created insurance exchanges in King v. Burwell, 576 U.S. 473.
The Court’s latest Obamacare reprieve came on June 17, 2021. In California v. Texas, a 7-2 majority upheld the individual mandate’s constitutionality against attack by two insurance purchasers and 18 states. Beyond the obvious social, economic, and political significance of the most important federal healthcare law in decades staying on the books, the latest save is especially interesting for three reasons.
First, California v. Texas illustrates the legal and practical importance of the complex doctrines surrounding standing to sue. (As a Constitutional Law professor, I find it gratifying to have such a prominent example of the outcome-determinative importance of a procedural/jurisdictional issue some students roll their eyes at!) Second, California v. Texas is a high-profile case study in how the discretionary standing doctrines allow the justices to avoid the merits of difficult and complicated issues. Third, the decision showcases two dynamics of the current Court’s decision-making.
But to begin with a bit of background about the challenger’s theory: Although Sebelius rejected Congress’s preferred theory for why the individual mandate (IM) was constitutional (the interstate commerce power), Chief Justice Roberts (in)famously led a bare majority to uphold the IM on alternative grounds under Congress’s power to tax. Roberts reasoned that the IM resembled a tax for several reasons, including that it “produces at least some revenue for the Government.”
Fast forward to 2017, when, as part of the tax-reform act passed that year, Congress set the IM at zero. “Eureka!,” said the intractable opponents of Obamacare. They argued that because the IM no longer raises revenue or otherwise resembles a tax, the only basis for its constitutionality disappeared. And because the Act’s hundreds of pages of other statutory provisions are “inseverable” from the now-unconstitutional IM – i.e., because all provisions must stand or fall together – the whole Act is void.
Overturning lower-court decisions, seven California v. Texas justices led by Justice Breyer held that they could not reach the merits of the challenger’s arguments because challengers failed to establish a crucial constitutional prerequisite – “standing” to sue.
The Legal and Practical Significance of the Standing Doctrines
The first major facet of California v. Texas is the light it shines on the complicated rules governing standing and how they can make the legally practical difference in high-stakes public litigation. One key requirement for bringing claims within the Article III jurisdiction of federal courts is for challengers to show “a past or future injury fairly traceable” to governmental enforcement of an unconstitutional statutory provision.
The Breyer-led majority systematically examined the injuries claimed by the private plaintiffs (money spent on health insurance they did not want) and the states (direct costs when residents join state-funded healthcare programs and indirect costs flowing from administering ACA participation). The majority found that these alleged injuries failed to trace back to the IM: Because the IRS “can [no] longer seek a penalty from those who fail to comply,” “there is no possible Governmental action that is causally connected” to the injuries. (Translation: the unenforceable IM isn’t forcing individuals to buy insurance.) Derivatively, the state-claimed direct costs from individuals joining insurance pools similarly lack a causal chain. And the indirect administrative costs are attributable to “other provisions of the Act, not the [IM].”
Looking from the standpoint of another standing requirement – that injury be meaningfully “redressable” – the majority found that the unenforceable statutory mandate left courts “no one, and nothing, to enjoin.” Ultimately, then, the majority invoked the judicial-restraint impulse behind many standing decisions – that, without a compelling need to intervene on behalf of specifically injured parties, “unelected judges [should not] conduct oversight of decisions of the elected branches of Government.”
The bottom line: Without standing to sue, the challengers could not get a Court majority to decide the merits of their claims that the IM was unconstitutional and that the rest of the ACA should fall along with it.
The Issue-Avoidance Benefits of Standing
Which brings up a second, and related lesson from California v. Texas: the strategic value of standing doctrines to a Court often confronted with especially complicated and controversy-fraught merits issues.
The standing doctrines are highly discretionary and their proper application is often in the eye of the beholder. This is shown by the dissenting opinion of Justices Alito and Gorsuch, which in three more pages than the majority’s own standing analysis developed a very different version of causation and redressability. Along the way, the dissenters claimed that past Courts had been inconsistently “selective” in letting states sue and that the California v. Texas majority had “fundamental[ly] distort[ed]” standing jurisprudence.
It often does not seem accidental that finding a lack of standing removes the need for justices to wade into controversial and complicated waters. (The Court used no-standing holdings to delay ruling for several crucial years on the constitutionality of state bans on same-sex marriage. Hollingsworth v. Perry, 570 U.S. 693 (2013). And the justices avoided ever having to decide whether the phrase “Under God” in the Pledge of Allegiance violated constitutional rules about church/state interaction. Elk Grove Unified Sch. Dist. v. Newdow, 542 U.S. 1 (2004).)
Had the Court not resolved the Obamacare challenge based on standing, the justices would have had to sort through two very different views about whether a zeroed-out tax still deserved that label. Specifically, the justices faced very plausible arguments that Congress regularly “suspends” taxing and appropriations provisions but leaves them on the books for potential revival.
Even more challenging would have been sorting through which of the ACA’s numerous and varied threads were integrally tied to the IM. Severability always raises complex questions of legislative intent. But the calculus with Obamacare was further complicated by the fact that, although Congress originally viewed the IM as a crucial leg in a three-legged stool, later realities robbed it of much importance. Which posed a yet-unresolved question: Which time frame matters for severability analysis – the original legislative intent when Obamacare was passed or the view of Congress arguably expressed in the non-controversial 2017 neutering of the IM?
Insights into Supreme Court Dynamics
Ultimately, California v. Texas parts the curtain on two dynamics often attending public litigation at the Supreme Court.
One is how the popular account of justice polarization, in which the Court splits 5-4 along ideological lines, can lack nuance – even in high-profile cases. The seven-justice no-standing majority in the latest Obamacare dustup consisted of three “liberals” and four “conservatives,” including the two most recent Trump appointees, Justices Kavanaugh and Barrett. This non-polarized trend not only tracks many past standing decisions but – refreshingly – also characterizes several other prominent cases the Court decided in its recently ended Term.
A second reality is about how oral argument contributes to the evolution of the justices’ thinking, even as the pattern of justice questioning may not necessarily predict how the Court will ultimately rule. The November 2020 oral argument in California v. Texas began with a significant focus on standing issues. But then the justices pivoted to detailed exploration of the constitutionality of the IM and the myriad severability questions. Court-watchers predicted in media stories that the justices would invalidate the IM but save the remainder of the ACA.
That the majority did not reach these issues may implicitly underscore to the value of oral argument in bringing home that key issues are more complicated than originally anticipated and that avoiding sticky wickets in the name of judicial restraint has greater appeal.
Discretion as Valor
That the majority ultimately avoided the merits in California v. Texas speaks volumes about the importance and strategic advantage of the standing doctrines.
Ultimately, the decision not to decide also shows that the Court is well acquainted with the old adage that “discretion is the better part of valor.”
Professor Glenn C. Smith teaches constitutional law and Supreme Court decision-making at California Western School of Law in San Diego. He is the principal co-author of Constitutional Law for Dummies [John Wiley & Sons, Inc. 2012].
Suggested citation: Glenn C. Smith, Obamacare’s Still Standing – Thanks to Standing!, JURIST – Academic Commentary, July 14, 2021 https://www.jurist.org/commentary/2021/07/Glenn-Smith-Obamacare-still-standing/.
This article was prepared for publication by Katherine Gemmingen, Commentary Co-Managing Editor. Please direct any questions or comments to her at email@example.com