Well, we didn’t see this coming.
Wednesday morning, during the third of three days of oral arguments before the U.S. Supreme Court concerning the federal health reform law’s “individual mandate,” the Court’s conservative justices made clear their doubts about the ability of the remainder of the law to survive, if the Court strikes down the individual mandate as unconstitutional.
We have thought for some time that the individual mandate would probably—but narrowly—survive its consideration by the Supreme Court (a prediction perhaps a bit more in doubt after Tuesday’s arguments). But we would have bet a considerable sum that, were the Court to strike the mandate, the justices would simply carve it and perhaps a related provision or two out of the law, and allow the balance of the legislation to survive.
Not so fast, said the Court’s conservative justices yesterday morning.
By way of background, the individual mandate is a provision in the health reform law that requires virtually all Americans to obtain health insurance. As a practical matter, the mandate is necessary to compel the nation’s healthy but uninsured population into the insurance pool, along with the uninsured and unhealthy population. That’s because the health reform law requires insurers to issue policies to all applicants, without individual underwriting and without exclusions for the applicants’ pre-existing conditions. In short, insurers must insure every unhealthy person who knocks on their doors, but for that to work in a cost-efficient manner the insurance pool needs all the healthy people too.
Pieces of legislation typically come with a “severability clause,” that is, a provision that says if any portion of the law is deemed invalid, it may be severed from the rest of the law, and the rest of the law may survive. Interestingly, however, the health reform law does not contain such a provision.
There’s no clearly defined standard or test for determining how a court, once it rules that part of a statute is invalid, decides what other parts should also be tossed out, what parts might be able to stand alone, or whether the entire law must go. In fact, the Supreme Court spent considerable time Wednesday morning noting the lack of consensus about just how to go conduct a severability analysis.
The Obama Administration’s lawyer conceded that if the individual mandate goes, the law’s “guarantee issue” requirement and community rating rules (the rules that prohibit individual underwriting) would also have to go, to prevent a death spiral of the individual insurance market. But he urged the Court to let the remainder of the law survive. The Court’s liberal justices tended to agree. Justice Ginsburg thought the Court should work to salvage as much of the law as possible, rather than go at it like a wrecking ball.
Paul Clement, representing the 26 states challenging the individual mandate, said the individual mandate is connected to the insurance exchanges, and they in turn are connected to the law’s subsidy provisions, which are related to the employer mandate, and so on. He said the best, most expedient path forward would be to toss the entire law and let Congress decide what portions of the law it should reconstruct.
The Court’s conservative justices tended to agree, particularly Justice Scalia, who said the Court wanted no part in inching step-by-step through the 2,000-page statute, trying to figure out which provisions are related to the individual mandate and which are not, or to guess which provisions Congress might have been willing to let stand on their own and which provisions Congress might have intended to pass only as part of a complete package. He quipped that requiring the Court to do that would be cruel and unusual punishment.
So now we wait and see. The Court is expected to issue an opinion in June.