Justices grapple with what parts of PPACA should be retained, if the insurance mandate is found unconstitutional

On March 28, in the third and final day of oral arguments on the Patient Protection and Affordable Care Act (PPACA) health reform law, the U.S. Supreme Court heard varying views on the issue of what parts of the law to retain, if they decide to rule the health insurance mandate is unconstitutional.

In some ways, this could be the most critical debate of the whole three days as the justices were left with three options, should they choose to invalidate the insurance mandate. Paul Clement, arguing on behalf of the 26 states challenging the law, urged the Court to invalidate the entire law. Deputy Solicitor General Edwin Kneedler, speaking on behalf of the government, urged the Court to remove only two other provisions—guaranteed issue and community rating—and keep the rest of the law, including the Health Insurance Exchanges, intact. H. Bartow Farr, assigned by the Court to advocate on behalf of the view that, if the mandate is unconstitutional, the rest of the law, including the guaranteed issue and community rating provisions, should remain intact.

The view of the challengers. Clement argued on behalf of the 26 states challenging the law that, if the individual mandate is unconstitutional, then the rest of the Act cannot stand. Without the individual mandate, the community rating and guaranteed issue provisions would cause health insurance premiums to skyrocket. These provisions are essential, he suggested, to the Health Insurance Exchanges and other parts of the law.

In response, Justice Elena Kagan pointed out that in Utah, for example, the exchanges operate perfectly well without an insurance mandate. She suggested that Congress would have preferred half a loaf to no loaf at all, in terms of the Exchanges. Justice Ruth Bader Ginsburg suggested that the conservative approach, if the mandate is tossed, would be to do a “salvage job” and keep parts of the law, rather than a “wrecking operation” that would throw out the entire law.

Justice Anthony Kennedy, often thought of as the swing vote, wondered what standard should be applied to decide which parts could stand. “Is it whether as a rational matter separate parts could still function, or does it focus on the intent of the Congress?” he asked. However, he noted it would be intrusive to go into legislative history but wondered whether the Court should use an objective, rational test.

Other justices, including Justice Stephen Breyer, wondered whether the Court would be required to go through all 2,700 pages of law text and choose what should stay and what should go. Later, in fact, Justice Antonin Scalia jokingly suggested that it would be a violation of the 8^th Amendment’s cruel and unusual punishment provision for the Court to have to go provision by provision through the 2,700 pages of law text.

According to attorney Clement, the individual mandate is tied, as the government suggests, to guaranteed-issue and community rating, but the individual mandate, guaranteed-issue, and community rating, together, are the heart of the PPACA. Further, they are what make the Exchanges work, which, in turn, are critical to the tax credits. The Exchanges are also key to the employer mandate because that mandate is imposed on an employer if one of the employees gets insurance on the Exchanges.

Government’s position. According to Deputy Solicitor General Kneedler, only a few provisions should be thought of as inseverable from the minimum coverage (insurance mandate) provision of the PPACA. However, in response, Justice Scalia, pointing out that, one way or another, Congress is going to have to reconsider this, suggested that it would be better to have them reconsider it in total. Justice Kennedy questioned whether, by keeping some provision but retaining others, the Court would be imposing a risk on insurance companies that Congress never intended, creating a new regime that Congress did not provide for or even consider.

Further, Kneedler suggested that the minimum coverage (mandate) provision along with the guaranteed-issue and community rating is the one package that Congress deemed essential. However, he argued that the PPACA is a huge law with many provisions that are completely unrelated to market reforms and operate in different ways, believing that it would be “extraordinary in this extraordinary Act to strike all of that down because there are many provisions and it would be too hard to do it.”

According to Kneedler, “the notion that Congress would have intended the whole Act to fall if there couldn't be a minimum coverage provision is refuted by the fact that there are many, many provisions of this Act already in effect without a minimum coverage provision.” He cited, as an example, the large number of young adults under age 26 who are already receiving insurance under the law. However, Justice Scalia noted that members of Congress would not have voted for the law without some of those other provisions.

Kneedler also suggested that it is the Court’s function to look at the text, structure, and legislative history of the law that Congress enacted, and not the financial balance sheet, which doesn't appear anywhere in the law.

A third alternative: Keep the rest of the law intact. As mentioned, attorney Farr was appointed by the Court to present the position that the law should remain intact, even if the mandate is struck down. Farr argued that, even if the Court rejects the mandate, contrary to the government’s view, the community rating and the guaranteed issue provisions should be kept intact. The minimum coverage mandate is a tool to make the nondiscrimination provisions, guaranteed issue and community rating work, Farr suggested. He further noted, for instance, that Congress included at least a half dozen other solutions to help with adverse selection, such as an annual enrollment period requirement and the subsidies to help pay for coverage.

Without guaranteed-issue and community rating, we’d be going back to the old, pre-PPACA system. Is that what Congress would’ve wanted, Farr wondered. When asked what remedy insurance companies would have if the Court were to throw out the mandate and nothing else, Farr said the insurers would not have a remedy in court but, instead, could go to Congress and seek adjustments. 

According to Justice Scalia: “if you take the heart out of the statute, the statute's gone.” The Court should not interject itself into the process of saying whether each provision is good or bad, he opined. According to Farr, taking out the mandate isn’t taking out the heart of the statute but taking out guaranteed issue and community rating, is getting closer to taking out the heart of the law.

Now what? Will the justices (or their law clerks) have to go line by line through 2,700 pages of law text to decide what stays and what goes? Will the law get tossed out, in its entirety, requiring Congress to start over? What's next?

Now, we wait and see, until June or so, to find out what the Court will do with this “extraordinary” law. Despite what many may say, what the Court ultimately rules is anyone’s guess.