Appellate court has ACA's individual mandate in crosshairs after hearing

Affordable Care Act
The ACA was back in court Tuesday before a federal appeals court. (Getty/Ellenmck)

A federal appeals court may be poised to deem the ACA’s individual mandate unconstitutional, but appeared to be on the fence about whether they believe that strikes down the entire law.

States on both sides of the constitutional debate faced off before a three-judge panel in the Fifth Circuit court Tuesday afternoon, with the future of the Affordable Care Act hanging in the balance. The judges seemed to wrestle with the question at the crux of the ongoing case—can the individual mandate be excised from the law?

Judge Jennifer Walker Elrod, a George W. Bush appointee, asked how the plaintiff states how they would argue the mandate could not be considered separately from other provisions in the far-reaching healthcare law, such as restaurant calorie guidelines. She also questioned if the plaintiffs would feel similarly if the mandate didn't impose a tax, but instead offered a reward for compliance.

"Does the 'shall' matter even if you're given positive incentives?" she asked.

RELATED: 3 things to know as federal appeals court prepares to weigh in on ACA's perilous future

The Republican-appointed judges also pushed back hard on states seeking to defend the ACA. Attorneys for the blue states argued that if Congress had wanted to get rid of the rest of the law then it would have done so when passing tax reform in 2017. They also contended that by setting the penalty to $0, Congress had rendered the mandate a choice instead of a command.

“Congress expressed its views that the individual market and the entire ACA can operate without an enforceable individual mandate,” said Samuel Siegel, an attorney for California in his arguments during the hearing.

Judge Carolyn King, who was appointed by former President Jimmy Carter, a Democrat, did not ask any questions during the hour-and-a-half hearing. The Republican-appointed judges on the panel were skeptical of the argument, though.

“How do we know that Congress didn’t say that this was the silver bullet that would undo the ACA because we understand the tax issue and it is no longer a tax?” Elrod asked.

On Twitter, legal scholars noted that the back and forth likely spells doom for the individual mandate specifically.

RELATED: DOJ injects further uncertainty into ACA markets—but for some it’s just more legal ‘noise’

The arguments

Texas is leading a group of 18 red states that argue Congress' 2017 decision to set the mandate penalty to $0 prevents it from functioning as a tax. The Supreme Court narrowly ruled in 2012 that the individual mandate for everyone to get insurance could be enforced as a tax under the Interstate Commerce Clause.

The states argue that since that tax has been effectively struck down, then the rest of the law must go as Congress lost its tax authority. Texas District Court Judge Reed O’Connor agreed with the red states in December that the zeroing out of the mandate penalty led the law to be unconstitutional. A collection of 17 blue states quickly appealed O’Connor’s ruling.

If the law is struck down, it could result in 19.9 million people losing coverage, according to an analysis from the left-leaning Urban Institute, a think tank.

The Trump administration has taken several different positions on the lawsuit. When the lawsuit was first filed, the Justice Department said that only the law’s pre-existing condition protections should be invalidated and not the entire law. After O’Connor’s ruling in December, the DOJ shifted to say that it believed the entire law should be struck down—it has also argued that O'Connor's ruling only applies in the plaintiff states.

The administration has promised to continue to enforce the law while the lawsuit makes its way through the federal court system.

RELATED: Kentucky, West Virginia among states that would be hit hardest by an ACA rollback

Victory laps

Both sides claimed victory after the hearing. Rob Henneke, general counsel for the Texas Public Policy Foundation, which represents two individual plaintiffs that joined the red states in arguing the ACA is unconstitutional, took a victory lap on a call with reporters after the hearing.

“I think the takeaway from today is that for the side I represent…today’s arguments seem to have gone very, very well,” he said.

California Attorney General Xavier Becerra, on the other hand, highlighted the DOJ’s struggles to explain its position on the law, including why the law should be invalidated in some states but upheld in others.

“Today we saw an Administration pressed to explain why affordable care, and American lives, should be put at risk,” Becerra said in a statement.