Obamacare to face another Supreme Court test, this time with a 6-3 conservative majority

Key Points
  • Obamacare will face its third test at the Supreme Court before the most conservative panel of justices on the bench in decades.
  • The case was the primary focus of Democrats during the confirmation hearings for Justice Amy Coney Barrett last month.
  • More than 20 million people could lose their coverage if the Affordable Care Act is eliminated. A decision is expected by the end of June.
A protestor holds a sign outside the U.S. Supreme Court building, as the court justices engage in arguments over the fate of Obamacare laws, in Washington, U.S. November 10, 2020.
Hannah McKay | Reuters

The landmark health-care legislation known as Obamacare will face its third test at the Supreme Court this week before the most conservative panel of justices on the bench in decades.

The top court will hear arguments on Tuesday in a challenge to the constitutionality of the Affordable Care Act, signed into law by President Barack Obama in 2010.

The case was the primary focus of Democrats during the confirmation hearings for Justice Amy Coney Barrett last month. Democrats warned that confirming Barrett, by providing the court a 6-3 majority of Republican-appointed justices, would effectively doom the legislation.

If the court strikes down the law, more than 20 million Americans could lose the health-care coverage they have received under its provisions. The health-insurance industry, which has built itself around the law for 10 years, could be upended.

Amy Coney Barrett takes her constitutional oath as a Supreme Court justice
Amy Coney Barrett takes her constitutional oath as a Supreme Court justice

The spreading coronavirus pandemic, which has killed more than 230,000 in the U.S. since it emerged late last year and sparked a recession that has kicked millions off their health insurance, has amplified the stakes of the battle.

A decision is expected by the end of June.

Obamacare's history in court

The case was brought by a consortium of red states led by Texas and is backed by President Donald Trump's Department of Justice. California and other blue states are defending the law.

The dispute will be argued just one week after the presidential election between Trump and President-elect Joe Biden. It illustrates the wide differences in policy proposed by the two men.

While Trump has gone to court to scrap the law, Biden, who played a role in its passage, centered his health-care policy on preserving and strengthening Obamacare. If the court strikes it down, Biden will likely have few options to resuscitate a new version of it and little time.

Read more: What President-elect Biden's victory means for the future of Obamacare

Democrats are projected to retain control of the House of Representatives, but their path to a Senate majority is narrow, with control of Congress' upper body appearing likely to come down to two special elections in Georgia that will be held in January.

The top court has twice reviewed the Affordable Care Act, in 2012 and 2015, and both times considered it to be lawful. The upcoming case raises a new question about the constitutionality of the law's individual mandate provision, which requires most Americans to obtain health insurance or pay a penalty.

The Supreme Court upheld the individual mandate in the 2012 case known as National Federation of Independent Business v. Sebelius. In that case, Chief Justice John Roberts disagreed with the Obama administration, which argued the mandate was a penalty — but Roberts upheld the provision as effectively being a tax.

In 2017, Republicans in Congress, who have been gunning to eliminate Obamacare since it was first signed, set the individual mandate penalty to $0.

Because the penalty is $0, Texas and the other red states have argued that it is no longer permissible as a tax. Further, they say, because the individual mandate is now unconstitutional, the entire law must be eliminated.

A federal district court in Texas and the 5th U.S. Circuit Court of Appeals sided with the red states and said the individual mandate is unconstitutional. The district court said that as a result, the entire law must fall, while the appeals court did not address the latter point conclusively.

"The individual mandate is unconstitutional because it can no longer be read as a tax, and there is no other constitutional provision that justifies this exercise of congressional power," the appeals court said.

The severability question

The panel added that whether the mandate was "severable," or could be separated from the rest of the law, was an open question.

"It may still be that none of the ACA is severable from the individual mandate, even after this inquiry is concluded," the majority said. "It may be that all of the ACA is severable from the individual mandate. It may also be that some of the ACA is severable from the individual mandate, and some is not."

Health-care activists are worried that the court, with a 6-3 majority, will finally scrap the law.

"I'm really quite nervous," said Wendell Potter, a former executive at the health insurance company Cigna who has spent a decade advocating for liberal health-care reforms.

"There have been so many close calls, certainly when John McCain saved the day a few years ago," Potter said, referring to the late Arizona GOP senator's 2017 "thumbs down" vote on repeal of the individual mandate and other provisions of the law. "This threat now, with the change in the makeup of the court, is really unnerving."

Barrett, an academic for most of her career, has been critical of the Supreme Court's reasoning in upholding Obamacare in the previous cases that have come before it, though she has not addressed the legal question in the present case. She said during her hearings that she would approach the case with an open mind.

Views on severability, unlike the questions raised in the earlier cases, do not obviously split along partisan lines. Last term, three of the court's conservatives suggested in a case unrelated to Obamacare that their views on severability could be favorable to Democrats in the health-care case.

Justice Brett Kavanaugh, in an opinion joined by Roberts and Justice Samuel Alito, wrote that courts should generally sever an offending provision from a broader law if the rest of the law can function independently. Kavanaugh wrote that it was "fairly unusual for the remainder of a law" not to be able to do so.

"Constitutional litigation is not a game of gotcha against Congress, where litigants can ride a discrete constitutional flaw in a statute to take down the whole, otherwise constitutional statute," Kavanaugh wrote.

Andrew Bab, a partner at the law firm Debevoise & Plimpton and a co-head of its health care and life sciences group, said that another key factor for the justices to weigh will be the intent of Congress when it enacted the Affordable Care Act.

Bab noted that the individual mandate was one part of Obamacare's so-called "three-legged stool."

At the time that Congress passed the Affordable Care Act, Democrats argued the individual mandate was essential in order for two other aspects of the law to function: Its requirement that insurers provide coverage to those with preexisting conditions and subsidies to make insurance affordable.

"How can Congress ever have intended, goes the argument, for the two legs of the stool to stand without the third leg?" Bab said.

On the other hand, he explained, Congress' decision in 2017 to lower the individual mandate penalty to $0 without scrapping the entire law cuts in the other direction.

"Not only did the legislators seem to intend for the law to continue to operate, but it has continued to operate, and at least arguably, we haven't seen the death spiral that was the reason behind the mandate," Bab said.

"These are not easy or sexy questions, and are not the kind of questions many scholars would spend a lot of time writing about," he added.

Because of Covid-19, Tuesday's arguments will be conducted via telephone and streamed live to the public. They will begin at 10 a.m.

The case is known as California v. Texas, No. 19-840.