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A New Hope: The new federal lawsuit that could get rid of Obamacare completely


Remember how the “skinny repeal” of Obamacare failed to pass in the Senate by one vote last July? And how McCaskill’s “no” vote determined the outcome of that bill every bit as much as McCain’s did?

If you found those events to be frustrating, here’s some good news: We may not need to wait until after the November elections to see whether we’re stuck with Obamacare indefinitely. Last week, Attorney General Josh Hawley joined 19 other states in filing a federal lawsuit that may get rid of Obamacare entirely.

The lawsuit stems from a provision in the Tax Cuts and Jobs Act of 2017 that President Trump signed into law on December 22, 2017 that reduced the penalty for noncompliance with the individual mandate to zero. Reducing the penalty to zero left the individual mandate under the Affordable Care Act (“ACA” or “Obamacare”) without a constitutional leg to stand on, according to the new lawsuit filed in federal court in Fort Worth, Texas.

The suit alleges that the ACA’s individual mandate is an unconstitutional command from the federal government to individuals to purchase a product. It further alleges that, because the individual mandate is a core provision and the ACA cannot function without it, the ACA must be invalidated in its entirety, and the government must be enjoined from implementing, regulating or otherwise enforcing any part of it.

When the individual mandate requiring people to buy a product was challenged as unconstitutional in N.F.I.B. v. Sebelius, it was upheld – as a tax. 567 U.S. 519 (2012). “Nobody saw that coming,” Josh Hawley aptly observed in an op-ed shortly after the lead opinion by Chief Justice Roberts was handed down. No one seemed to have predicted that the Chief Justice would join with the Court’s four most liberal justices in making the ultimate judgment to interpret the individual mandate as a tax and to thereby uphold it as constitutional.

To understand why this new federal lawsuit may succeed when a similar prior challenge to the law’s constitutionality failed, one must understand the reasoning that lead Roberts to interpret the individual mandate as a tax and thereby find it to be a constitutional exercise of Congress’s taxing power.

First, Roberts and his four most conservative colleagues held that the individual mandate exceeded Congress’s power under the Commerce Clause and the Necessary and Proper Clause. In rejecting the Obama Administration’s arguments, the Court held that “[t]he Commerce Clause is not a general license to regulate an individual from cradle to grave, simply because he will predictably engage in particular transactions.” And as Hawley astutely noted, this blocked “the federal government’s attempted power grab” and it was a “major development” because, before this holding, the Supreme Court’s modern Commerce Clause jurisprudence had not set “a clear and decisive limit to what the federal government may do with its commerce authority.”

Second, even though Roberts conceded that the “most natural interpretation of the mandate” is that it is a command backed up by a penalty, not a tax, he subscribes to the philosophy of judicial restraint, meaning that if there is a way for the Court to interpret the law in a way that avoids striking it down as unconstitutional, the law should be upheld.

Finally, in reaching for a way to uphold the law as constitutional (even after finding the most natural interpretation of the exercise of power that Congress intended was unconstitutional), Roberts examined the way the law operated, and found that the individual mandate and its penalty for noncompliance functioned like a tax: it was administered by the IRS, processed similarly to other taxes, and the penalty for failing to comply with the individual mandate raises revenue for the government, which is “an essential feature of any tax.” Since Congress has the power to enact taxes, he upheld the individual mandate as a constitutional exercise of Congress’s taxing power.

The operation of the individual mandate and penalty as a tax changed significantly when President Trump signed the Tax Cuts and Jobs Act of 2017 into law on December 22, 2017. Under the newly amended ACA, starting in 2019, the penalty for noncompliance with the individual mandate is zero. This means zero revenue to the government from the individual mandate, which is “the essential feature of any tax.” It also makes the administration by the IRS of the individual mandate pretty pointless.  Basically, without a penalty, the individual mandate can no longer be construed to operate as a tax, which is the only basis under which the Supreme Court found it could be upheld as constitutional in 2012. Accordingly, the new lawsuit alleges, the individual mandate no longer has a constitutional leg to stand on and must be struck down.

It will be interesting to see what one of President Trump’s appointees – Judge Don Willett – does when this case reaches the Fifth Circuit Court of Appeals. Willett is a jurist to watch not only because of his Twitter fame, but because he is one of the most libertarian-minded federal judges on the bench.  He does not subscribe to Roberts’ philosophy of judicial restraint. In an opinion he wrote while on the Texas Supreme Court, he rebuffed the government’s argument about the Court’s role: “The State would have us wield a rubber stamp rather than a gavel, but a written constitution is mere meringue if courts rotely exalt majoritarianism over constitutionalism.” To put it another way: Willett will not be bending over backwards to save Obamacare like Roberts did. Willett is one of a growing number of conservative jurists in the country who believe in judicial engagement. And that’s a very good thing.

When he ran for Attorney General, Josh Hawley promised to fight federal overreach. And that’s exactly what he is doing by joining this lawsuit. It is worth keeping an eye on.