In NFIB v. Sibelius, the Supreme Court upheld the constitutionality of the individual mandate of the Affordable Care Act (ACA) by branding the penalty for not buying health insurance as a tax. In 2017 however, the Republican-controlled Congress under the newly elected President Trump enacted an amendment to the ACA that set the penalty for not buying health insurance to zero, leaving the rest of the ACA in place. Several states, including Texas, subsequently filed suit in federal court challenging the individual mandate again, positing that because the penalty was now zero, it can no longer be considered a tax and is thus unconstitutional. California and several other states joined the lawsuit in defense of the individual mandate. The oral arguments for the case took place on November 10th, and Professor Ilya Somin joins us to discuss the oral argument and the implications for the case.
Prof. Ilya Somin, Professor of Law, Antonin Scalia Law School, George Mason University
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Nick Marr: Welcome to The Federalist Society's Teleforum conference call as this afternoon, November 16, 2020, we're having a special Courthouse Steps Oral Argument Teleforum on California v. Texas. Oral arguments were heard last week during our National Lawyer's Convention, so we couldn't do a Teleforum right then, but we scheduled it for soon after. I'm Nick Marr, Assistant Director of Practice Groups at The Federalist Society.
As always, please note that expressions of opinion on our call today are those of our expert.
And we're fortunate to have with us this afternoon Professor Ilya Somin, the Professor of Law at the Antonin Scalia Law School, George Mason University. After Professor Somin gives his opening remarks, which should go about 15 minutes, we'll go to audience questions. So be thinking of those for him and have those in mind for when we get to that portion of the call. Thanks very much for being with us here today Professor. I'll give the floor off to you.
Prof. Ilya Somin: Thank you so much. I'd like to thank The Federalist Society for organizing this event and all of you for listening in. And I should also note right off the bat that I do have at least a small involvement in this case, in that I joined an amicus brief, along with sever other legal scholars arguing that this provision of the Affordable Care Act is, in fact, severable from the remainder of the Act.
The brief didn't take a position on the other issues in the case, so I should note that what I say, particularly on those other issues, just reflects my viewpoints. Not necessarily those of the other people who are on the brief. I should also note, I don't have any financial stake in this case, except to the extent that like almost everybody, my health insurance is, to some degree, effected by the future of the ACA.
So before going into the details, I'd like to end the suspense where such suspense remains and say that, while there's a lot of things about the outcome of this case which remain uncertain, one thing that is very clear after oral argument is that this case almost certainly will not lead to the collapse of the entire ACA.
Maybe what's left of the individual mandate will be struck down and that will set an important legal precedent. Maybe the Court will say that the entire case has to be thrown out based standing. But the one thing we almost certainly are not going to see is that the entire ACA has to go as a result of this. I think that kind of outcome was never very likely. But it is certainly clear from the oral argument that that's not going to happen, even though, obviously in the political arena and in the media, this possibility has been much discussed over the last few months.
So I'm going to start off by talking briefly about this history of this case and how we got there. Then I'll talk about the severability issue, which I think is the most important issue, at least from the standpoint of healthcare policy. I'll also talk about the question of the constitutionality of what's left of the individual mandate, and also the issue of standing, which is perhaps the most uncertain aspect about what the Court might actually do.
So how did we get here? As I hope most of you know, 10 years ago, Congress enacted the Affordable Care Act, also known as Obamacare. One provision of the Affordable Care Act that was considered very important at the time, was the individual mandate, which required nearly all Americans to purchase federal government approved health insurance or pay a fine, if they failed to do so by a certain date.
This individual mandate was famously challenged by a wide range of different plaintiffs, including many state governments in a variety of cases in 2010, '11, and '12. And this culminated in NFIB v. Sebelius decided by the Supreme Court in 2012, where the Court ruled on the one hand, that the individual mandate could not be justified under Congress's powers under the Commerce Clause or the Necessary and Proper Clause.
I think, by the way, that ruling was correct and I argued in great detail at the time in various publications and amicus briefs that that's what it should be. But, in his controlling opinion for the Court, Chief Justice John Roberts ruled that the individual mandate nonetheless could be preserved through what he called a saving construction, that it could be interpreted as a tax. And there are a number of different reasons why he thought it could be interpreted as a tax and therefore needed to be interpreted as a tax to avoid striking down the law.
But one key reason was that it raised revenue. That is that people who violated the individual mandate, they had to pay a sum of money and that money went into the treasury. And so that makes it much more like a tax than it might be otherwise, the fact that it can raise money.
So then it seemed like Obamacare had survived. At least most of it survived. The Court did strike down part of the Medicaid expansion. It also survived another lawsuit in King v. Burwell, which was a statutory interpretation case, where the Court ruled 6-3 against the plaintiffs. And of course, then in 2017, the Trump administration came to power, and the Republicans had control both House of Congress and they promised to repeal Obamacare. The getting rid of Obamacare, that idea was going to be made great again. But sadly, or happily, depending on your point of view, that didn't occur. And the Republicans largely failed in their efforts to repeal the statute.
What they did manage to do, however, in December of 2017 was to reduce the penalty in the individual mandate to zero. They didn't remove the actual tax of the mandate as such, but they did remove the penalty. So the penalty is now zero.
In 2018, the next year, a few months later, 20 state governments, led by the State of Texas, all these were conservative red states, filed a lawsuit in which they argued two things. First, the individual mandate is now unconstitutional because it can't be considered a tax anymore due to the fact that it doesn't raise any money. If the penalty is zero, it can't possibly raise any money. Therefore, it can't be a tax.
Secondly, and more controversially, they said that because the individual mandate is now unconstitutional, the whole rest of the Affordable Care Act also has to go, not because they were arguing that part is unconstitutional. But because it could not be severed from the individual mandate. Or from what's left of it.
The doctrine of severability, which until this case was sort of a backwater issue that only experts were interested in, it holds that as a general rule, if one part of a law is unconstitutional, then it can just be severed and struck down. But the rest of the law will remain. But in some cases, the part that is severed is so important or so essential in the lingo of the Supreme Court that the whole rest of the law has to go with it because the remainder of the law just can't work or can't exist without the part that has been struck down.
So they said this residual individual mandate was so central to the rest of the ACA that the rest of the ACA simply couldn't exist without it. And they cited findings, legislative findings, from the original 2010 Affordable Care Act, which indeed said that the individual mandate was very important to the overall structure of the ACA.
Moreover, the Trump administration, at least to a large extent, actually agreed with the plaintiff states in this case and refused to defend most of the law. And so as a result, you ended up having a coalition of blue states, led by California, intervening to undertake the defense. So that's how the case became California v. Texas, even though originally it started off as Texas suing the federal government to get rid of the ACA.
A trial judge, Judge Reed O'Connor, actually very surprisingly to most experts, ruled in favor of the plaintiffs on both of these issues. Both on the unconstitutionality of what's left of the individual mandate and on the issue of severability. Obviously, the case was appealed to the Fifth Circuit and in a decision of December of last year, the Fifth Circuit in a 2-1 ruling, they upheld the judge on the point that what's left of the individual mandate is now unconstitutional.
But they essentially told him to do a do-over on the issue of severability. They said his severability analysis was flawed in a variety of ways, including that he was relying on the 2010 findings as opposed to the intent of the 2017 Congress. But they said you, Judge O'Connor, you have to go back and do your homework all over again. Go over the issue of severability from the beginning to see which parts really are severable and which parts are not.
But before Judge O'Connor could actually undertake his new homework assignment, so to speak, the Supreme Court intervened, and they decided to hear the case. And so that's what we had oral argument on last Tuesday. Obviously the case cannot be remanded back to District Court, if at all, until the Supreme Court finishes its work.
So I'd like to first look at the severability issue because for obvious reasons, that issue is the one that has attracted the most attention because that issue could potentially determine the future of Obamacare. And if you look at what happened in the oral argument, there is at least six out of nine justices who clearly think that what's left of the individual mandate should, in fact, be severable from the rest of the ACA. And based on that, I conclude, therefore, that the ACA will survive largely as is. The only thing that might fall is what's left of the individual mandate, which just isn't that significant anymore anyway precisely because the fine was zeroed out. That is, there's no fine anymore. There's a payment of zero that you have to do if you're in violation.
So for example, Chief Justice Roberts said "It's not our job to get rid of the entire ACA just because this individual mandate, or what's left of it, might now be unconstitutional." Justice Kavanaugh said that the severability analysis here is easy and he repeatedly noted in statements in question to some of the lawyers for the two sides that he thought that the obvious right solution to severability is at question, which is to say that what's left of the mandate is severable from the rest.
Justice Samuel Alito made an interesting airplane analogy. He said that originally, when the ACA was first designed, it was thought that the individual mandate was like an essential part for an airplane without which the airplane would crash. But then he said that part got taken out in the 2017 tax law and the plane is still flying. And therefore, it's clear that it's not actually essential to the overall ACA. And therefore, these 2010 findings just aren't relevant anymore.
So those three conservative justices, plus I think pretty obviously, the three liberal justices, they're all inclined to say that this is completely severable. The other three justices, Gorsuch, Thomas, and Barrett, we don't really know where they stand. At least not based on the oral argument. But it's notable that none of those three even spent more than very minimal time on severability and the argument at all. And it seems to me if any of them were inclined to say that it's not severable, they would have at least talked about the issue.
Moreover, as I wrote about in some detail during the confirmation hearings for Justice Barrett, in those hearings, she strongly hinted that she has a view of this case pretty similar to that of Kavanaugh. So while I think the 6-3 is sort of the minimum majority, probably, for the ruling that this is severable, it could easily be 7-2, or 8-1, or even potentially 9-0.
But I think this is actually entirely understandable because the severability argument for the plaintiffs in this case is actually extremely weak. First of all, the idea that the 2010 findings are the ones that are relevant, that just doesn't make much sense given that those findings relate to the mandate as it was enacted in 2010, i.e. with a penalty, as opposed to the mandate that exists after 2017, which has no meaningful penalty at all. And it seemed to me, to the extent that what matters is the intent of Congress, it's the intent of the Congress that made the law as it is today. Not the intent of the Congress that made a previous version of it. And the intent of Congress is, in fact, the standard that current Supreme Court precedent on severability says should apply. It seems to me it's very unlikely that Congress would intend that a provision that is almost completely toothless is actually central or essential to the rest of the law. That just doesn’t make much sense.
You can also view it a different way and say, okay, forget about intent. Maybe there's no such thing as intent. We can't really tell what 535 people are collectively thinking. Just look objectively at whether or not the ACA can function without the individual mandate. I think it's pretty obvious that the ACA can function as well, or in my view, as badly without an individual mandate that is now toothless as it can function with a toothless mandate. In fact, there's very little difference between the two situations.
Justice Thomas has a somewhat revisionist view on severability that he has advanced in a number of recent Supreme Court opinions. The full implications of his view for a case like this are not entirely clear. But it seems to me that it, too, probably lies in favor of concluding that this is severable. Because Thomas argues that the part that should be struck down is whatever part is essential to remedying the injury suffered by the plaintiff. The injury being limited to whatever part is unconstitutional or illegal. And here, such unconstitutional or illegal injury as there is surely comes from the mandate itself. Therefore, getting rid of what's left of the mandate arguable can cure the injury. Though the question of what exactly counts as a relevant injury under Thomas's view, I think that is a little bit disputable.
So there is a number of different schools of thought on what qualifies as the right approach to severability. But I think under any plausible theory of severability, this particular type of provision is severable. And I should add, by the way, that there's nothing in the text of the law which says that it's not severable. So if there had been a provision which said, you know, if any one part of this law is struck down, then the whole rest must fall, then that would be good evidence that Congress said everything is essential. But Congress did not say that. Even in the legislative findings from 2010, it didn't say that. And those findings, I think, just simply don't apply to the form of the individual mandate that exists today.
The last point that I would make on severability is that this result, or this likely result I should say, should not be a surprise. It was very much pre-figured by what many of the Supreme Court justices, including several of the conservatives, had said in the robocall case just last June, or this June, where they made clear, including Kavanaugh, Roberts, and others made clear that they thought there should be a very strong presumption in favor of severability. And one of the opinions even indicated that the tail should not be allowed to wag the dog. That a small, insignificant provision shouldn’t be allowed to take down an entire law with it. And if isn't an example of a tail wagging a dog, it's hard to imagine what would be.
Now, there are obviously two other important issues in this case. The constitutionality of what's left of the mandate and also standing. I'll take the issue of the constitutionality of the mandate nest.
In my view, what's left of the mandate is clearly unconstitutional. Roberts in NFIB gave various criteria for why the individual mandate could be considered a tax as a way of saving the statute from unconstitutionality. There are several different criteria there. But one of them clearly is that it must be able to raise at least some revenue. A law that can't, even in principle, raise any money just can't be considered a tax. And I think that's pretty obviously the case here. That when they zeroed out the penalty in 2017, they made it so it couldn't possibly be a tax anymore.
In my view, actually, Roberts got it wrong back in 2012 and it was never a tax in the first place. And never justifiably defined as such. But even if he was right, then under his own criteria, this just doesn't work anymore. However, both in the briefs and also in the oral argument, a couple other possibilities were considered.
One is that in the aftermath of zeroing out the penalty, this provision is just a nullity. That is, it just doesn't do anything because, in effect, it issues a command, but it's a command not backed by any kind of penalty, and therefore, it's a nullity. And so it could be saved from being unconstitutional because it doesn't do anything at all.
To my mind, that's not entirely right because you can perfectly well imagine a command, which is a meaningful order, where you're trying to get somebody to do something but also not backed by any kind of threat or punishment. I give orders like that to my five-year-old daughter all the time. There are times when I say, you must go to bed right now, and she knows and I know that if she procrastinates, she's not actually going to be punished. I'm not going to lock her up or send her to prison, or anything like that. But she also knows that I genuinely do want her to go to bed at that time and that what I'm saying is not just some kind of a nullity.
And there are even a few provisions of law which are like that, such as the flag code, for example. The flag code has all sorts of guidelines for how you're supposed to treat the flag, but there's no penalty for violating them. So you're not allowed to drag the flag on the ground under the flag code. But if you do so, you won't actually be punished because there's no penalty provision.
Another way of looking at this which might save it from unconstitutionality is to say, well it's not really an order or a command. It may not be a nullity. But ultimately, it's just a suggestion. This should be interpreted as just the federal government's or Congress's opinion. But it might be nice if people bought ACA-approved insurance. But it's not at all mandatory. I think this just doesn't fit the text of the language. And if the text of the language says that affected people "shall" purchase this insurance. Shall strikes me as a command, not just as a suggestion. And in interpretation of other statutes, words like shall usually are thought to imply commands, not just statements or suggestions or random comments in a conversation or something like that. So I don't think this argument really works either.
As I interpret the oral argument, I think there probably is a majority for the proposition that what's left of the individual mandate is unconstitutional. But I admit, I don't know that for sure and there are at least a couple justices where it's just not entirely clear to me so it's not for certain where they stand on this. So that's an issue to watch, not because it matters much for the future of the ACA, but because it does have some significance for the future, in that it's important to establish the idea that under Roberts' reasoning in NFIB, you can't have a tax unless there's some raising of revenue. And I think this, among other things, would reaffirm the principle that you can't disguise an otherwise unconstitutional federal mandate as a tax if the penalty for it is something other than paying a fine or paying a monetary penalty. I think perhaps this is already clear and implicit NFIB. But it would be good to reaffirm that.
So I think this has some significance for future cases, even though it will matter very little for the future of the ACA. Because the residual individual mandate already plays little, if any, role in how the ACA functions.
Finally, there's the issue of standing. And this is actually the issue on which the justices spent the most time in questions. And I think they're really struggling with this. And it's far from clear to me whether the Court will rule that there is standing for the plaintiffs here. And if so, on what basis. And if they rule against standing, it's not entirely clear to me on what basis they would rule that.
So I'll just mention a few different theories of standing which are at stake. One is the idea, the simple fact that there is a mandate creates a legal obligation. And that therefore you can have standing that harms you even if there's no penalty for violation because it's still an imposition of a legal duty. This would at least give standing to some of the individual plaintiffs. Individuals who want to avoid getting Obamacare compliant health insurance. It might not give standing to the 20, now actually 18 states governments. But if some plaintiffs have standing, that's sufficient.
Another possibility is that you can have standing that's specific to the states based on what the Supreme Court said with the special solicitude for state governments on standing created in the 2007 case in Massachusetts v. EPA. This issue surprisingly actually didn't get discussed very much in the Supreme Court oral argument. But it's a possibility. And I think the issue of whether states should get special treatment on standing is, I think, at least potentially raised in this case. Actually, it is raised in this case, although the Court could potentially avoid having to deal with it if they grant standing on another basis.
Another possibility is that the supposed lack of severability, itself, can grant standing in that some of the plaintiff states argue that even if the individual mandate doesn't harm them, the fact that as a result of it, some additional people might either go on Medicaid or buy Obamacare compliant health insurance, even if it's just a few of them, that that might indirectly negatively affect the states. It might increase their public expenditures or affect them in other ways. So that can be an indirect effect of standing.
And related to that is the idea that even if the individual mandate, as such, or even in it's an indirect effect, if that is not enough to give them standing, maybe the fact that it's tied into these other provisions of the ACA, that's enough to create standing on the basis of inseverability. And on this theory, the Court would have to decide the severability issue before it could decide standing. Because whether there is standing turns on whether there is severability or not. That is on whether getting rid of the remaining individual mandate would also get rid of all the rest of the ACA, which on this theory is the part that really harms the states. Or at least has some negative impact on them.
So there are these several different theories of standing. Each of them have their potential strengths and weaknesses. To my mind, I think the states and the individual plaintiff should have standing. I'm a long-time advocate of even just getting rid of the doctrine of constitutional standing, which I think is not actually required by the text in the original meaning of the Constitution.
But I admit, under current Supreme Court standing precedent, there certainly is a very solid argument for the idea that nobody has standing in this case. And that perhaps it should be dismissed. And each of these theories I just mentioned, it has potential weaknesses under current standing doctrine. And just more generally, standing doctrine is far from a model of clarity. So there's a lot of mushiness there. And the Supreme Court may or may not clear up some of that mushiness in this case.
The last point that I'd like to make before we go to the questions is that when you see what has happened on severability in this case, it's to some degree a triumph of elite expert consensus. That while this case got some credibility from the fact that 20 state governments, now 18, backed it up, and also the Trump administration backed it up, right from the beginning, the plaintiff's severability argument got a very cold shoulder from legal experts on both right and left. I won't say there's a 100 percent consensus among experts that the plaintiffs' severability argument is wrong. But I would say there's at least like a 90 or 95 percent expert consensus.
And this is in sharp contrast to what happened in the previous two major Obamacare cases, which split experts along, roughly speaking, ideological lines. In both of those cases, conservative and libertarian experts, myself included for the most part, thought that the individual mandate was unconstitutional in the 2012 case. And in the 2015 case, most of them bought the plaintiff's argument about statutory interpretation. And of course, experts on the left, again with a few exceptions, they tended to think that the Obama administration's position was correct in both 2012 and 2015.
On this case, at least on severability, there has been a near consensus of experts, both right and left, which is why even though this case had some pretty strong political backing from numerous state governments, and from the Trump administration, judges, other than Judge O'Connor, have been extremely reluctant to embrace the severability argument offered by the plaintiffs.
So I think there is still dissents in which judges are, to some extent, separate from politics and they listen to expert views on these kinds of issues. At least when there's a universal or near universal consensus of the experts. So experts of have taken a lot of -- quite a beating over the last few years from both right and left. But this is one area where I think expert opinion still does matter, at least when the experts are in agreement with each other. Which, of course, on many constitutional law issues and many issues in legal theory, generally, they are not.
So one reason why this case never really got off the ground in a way that previous Obamacare cases did, is because it just got a very negative reception from the expert community of legal commentators, academics, judges, and others.
So on that note, I'll conclude, but I very much look forward to the questions. Thank you.
Nick Marr: Thanks Professor. We'll go to our first questioner now.
Christopher Melling: Hi. This is Christopher Melling from BYU Law School. I just would like you to expand on your last point. You talked about the Court kind of being influenced or subject to politics. Is the -- and it may be a new issue of President -- if Biden is elected president, but is the threat of packing the Court, like is that -- do you think the Court, especially if Chief Justice Roberts is going to take that seriously as a sort of Damocles hanging over them, and that any major decision from the Court could potentially trigger Court packing. So would that -- like is that going to, do you think, significantly affect the decision-making process? Thank you.
Prof. Ilya Somin: So that's a good question to which I don't fully know the answer, obviously. I would note, however, that for the moment at least, the threat of court packing has receded, in that I believe despite Trump's last-ditch attempts to deny this, that Biden has been elected President and will be President January 20th. But it's also very clear that best from the Democrats point of view, they will have a 50/50 balance in the Senate, which just simply won't be enough to enact any kind of court packing plan.
Senator Joe Manchin, from West Virginia, who's a key moderate Democratic Senator, he just said a couple days ago that he will not vote for any court packing bill. And therefore, there will not even be 50 votes for that bill and there will probably be other moderate Democrats who are unwilling to vote for it as well.
So that said, obviously the idea of court packing is in the air and it may not go away completely, if ever for some time to come. So I suspect it is, to some degree, on the minds of the justices. But I'm skeptical that that is what caused the result here. Both, because by the time you had the oral argument in this case, it was already clear. I think that the Democrats would not be able to enact court packing anytime soon.
And because on the severability issue, I think it's just not a close call on the legal arguments. I think that for most of the conservative justices, this is not really something that they wanted to do anyway, so I don't think the image of these people were chomping at the bit to rule that all of Obamacare would fall because of this, but they were only prevented by the threat of court packing, I just don't think that's accurate because it doesn't seem to me that they were chomping at the bit to begin with.
Indeed, as I mentioned earlier, several of them had signaled their views on this in the robocall case back in June. So there might be some other areas where Roberts or others might feel this is a close case. Maybe we want to draw back from a certain line for fear that it will anger people sufficiently that court packing will happen, and it's not easy to gauge when and if that might happen. Indeed, to this day, we don't even really know for sure what role FDR's Court packing threat played in the 1937 switch in time or supposed switch in time. There's a lot of scholars think it would have happened anyway, regardless of what FDR did.
So there might be other cases where that has an impact. I think it's very unlikely it had much of an impact in this case.
Christopher Melling: Awesome. Thank you very much.
Prof. Ilya Somin: Thank you.
Nick Marr: So Professor, we don't have any questions lined up in the queue right now. So what I'll do is offer you a chance for any closing remarks you might want to offer. If we get a question, maybe we can go to it if that's okay. Well, actually, we do have a question now.
Mark Scarberry: This is Mark Scarberry from Pepperdine Law School. I know it's not exactly relevant, but I believe California has enacted a rather large penalty for not having insurance. So it's interesting to see states, perhaps, stepping in, perhaps appropriately.
Prof Ilya Somin: So it's a good question. California's penalty is not an unprecedented thing for the states to do. Indeed, as probably a lot of people remember, the Obamacare -- the federal Obamacare law was modeled on a Massachusetts law that also included a similar individual mandate, ironically, enacted under and with the support of then Governor Mitt Romney, who later opposed Obama in the 2012 election. So as one of my colleagues at George Mason once put it, the 2012 election pitted the Jesus Christ of Obamacare, President Obama, against the John the Baptist, Mitt Romney because he had pushed through a similar law at the state level.
So I think that the enactment of a state level mandate doesn't raise the same kinds of constitutional issues as a federal mandate did because states are not limited to the lists of enumerated powers. They're included in the federal constitution for Congress. So maybe a state mandate could be challenged under a state constitution, or maybe it raises some other kinds of issues. But states stepping in, in that way, just doesn't raise the same kinds of problems.
The fact that states can do that, and that they can undertake a number of other ways to try to deal with problems, it does undercut part of the policy rationale for the federal individual mandate, which was the fear that otherwise, if states expanded health insurance protections for people with preexisting conditions, then people with preexisting conditions would flock to the state which had that protection. And so that state's insurance system would be overburdened or even potentially collapse. The fact that states have various possibilities of addressing that problem on their own, I think, weakens that argument.
But from a constitutional point of view, however, what California did, just like what Massachusetts did in the Mitt Romney days, it just doesn't raise the same kinds of issues.
Mark Scarberry: Yes. I thought it was just interesting as an example of federalism, where a state could step in where, perhaps, the federal government did not have authority. And I don't see a good argument against a state requiring a party to "engage in commerce." That's the way I think you, correctly, described the constitutional problem with the commerce power. Thank you.
Prof Ilya Somin: No problem. As I said before, the scope of the federal commerce power doesn't limit the scope of state power.
Nick Marr: We'll go to our next question now.
Caller 3: Yes. Good afternoon. Thank you for the very informative presentation. I just want to throw something out, it might be more of a policy issue, just if you have any comments on it. One of the big discussions about getting rid of the Affordable Care Act is that it will harm people with preexisting conditions. And this is a delicate subject, but obviously, the problem is we don't want people with preexisting conditions to have no coverage. That's certainly an important issue. The other issue is, we don't want people to wait until the last minute to buy insurance with a preexisting condition. Live with the preexisting condition for years, and then when they really, really need it an expensive procedure, buy the insurance.
So one solution to this would be to have a waiting period. To have that, let's say a 12-month waiting period that, you know, that you're eligible for coverage with preexisting conditions, but it has to be -- unless you bought the insurance at the earliest possible time, like a newborn baby or something. But other than that, or you know, other than that, there has to be a waiting period. Otherwise, financially it doesn't make sense to cover someone who just bought the insurance yesterday.
I understand this is more of a policy matter than a constitutional matter, but have you heard any discussion about this and do you have any comments on it? I think the State of Maryland used to have such a policy about a waiting period.
Prof. Ilya Somin: Yeah. So obviously, this is sort of one of the central policy issues involved in the debate over the Affordable Care Act. And to fully do justice to it, we'd probably have to have a whole separate Teleforum. And there's vast literature on it by economists, healthcare experts, and others. Here, I'll just mention a couple of brief points.
One is, there is a wide range of other possible ways to protect people with preexisting conditions, other than the approach adopted in the ACA, which I think essentially uses this tail to wag the entire dog of the healthcare system by essentially requiring a kind of national standard for healthcare policies, which is very restrictive and which limits competition and also drives up costs and causes a lot of other kinds of problems. So it might be better to view this as a discrete problem to be solved in its own right, rather than as this thing around which the entire healthcare system needs to be restructured and limited so as to deal with this issue.
The second point I would make is that there are a number of different ways to address it. A waiting period might be one of them. Another might be that one reason why we run into this problem is that currently, we have a system in the U.S. where, for most people, their health insurance is tied to where you work. So whenever you switch jobs, you end up having to get new health insurance. And it doesn't have to be that way.
It's because of the sort of tax treatment that we created for health insurance benefits, beginning in the 1940's, I think, where they're tax deductible if they're linked to an employer, but not otherwise. We can potentially equalize the tax treatment. We can also make health insurance more portable across state lines in various ways. And do other things to make the market more competitive, so as to enable people to buy long-term plans that are not dependent on being employed with a particular employer. And you can imagine a variety of incentives to give people. Incentives to purchase insurance without waiting until they have a preexisting condition. So I think this is an important issue, but I'm not convinced that the way the ACA goes about solving it is the right way.
The very last point I'll make on this, is that there's some irony in that protecting people with preexisting conditions is probably the most popular aspect of the ACA. The individual mandate was the most unpopular. But the thinking was that the two were tied in. In that if you didn't have the mandate, but did prevent insurance companies from dropping people with preexisting conditions, then there would be a moral hazard. That is, that people would be incentivized to wait until they got the preexisting condition before getting insurance. And yet, eliminating the mandate, or effectively eliminating it has, so far, only had a modest impact on the operations of the ACA. So it may be that the link between these two is not as strong as people in 2010 thought that it was. So that might lead us to rethink, you know, what is the proper way to address the preexisting conditions issue.
Caller 3: Thank you.
Prof. Ilya Somin: Thank you.
Nick Marr: Well, it looks like we're all out of questions for now. So Professor, I'll give you a chance for some closing remarks if you want to offer those.
Prof Ilya Somin: Sure. So for those of you who might be interested, I wrote a blog post on the day of the oral argument, which I go through the issues that were raised, what the different justices said. You can find it on the Volokh Conspiracy Blog, V-O-L-O-K-H, which is currently hosted at The Reason website.
There, also, I have links to the amicus brief that I joined with several different legal scholars. And it's perhaps worth noting that that brief reflects the broad scholarly or academic consensus against the severability argument. And I was on the brief, even though obviously I sympathize and supported the plaintiffs in the original Obamacare case. So was Jonathan Adler, who's my co-blogger at the VC, but also is a Professor at Case Western. Jonathan was one of the architects of the King v. Burwell, the second big lawsuit against Obamacare. And of course, we also had people who are Obamacare supporters, like Abby Gluck from Yale and Nicholas Bagley from the University of Michigan.
So this is an area where I won't say there's universal agreement among experts. There are a few who supported the plaintiffs in this case. But it was broad enough that it was never very likely that the Supreme Court would accept this sort of argument, even though there is a lot of room for disagreement, I think, on the other two issues in the case. The standing issue and the issue of whether what's left of the individual mandate is now unconstitutional or not.
It'll be interesting from a legal theory point of view and from a setting a precedent for future cases to see what the justices do with those two other issues. But the issue, which dominated public discussion of this case over the last year or so, that issue will likely turn out to be something of a nothing burger. That is that it will turn out to have no or almost no effect on healthcare policy.
Nick Marr: Great. Thanks very much for being here with us today, Professor Somin. And thanks to the audience for calling in. As always, we welcome your feedback by email at email@example.com. And keep an eye on your emails and our website for announcements about upcoming Teleforum calls. You can also access videos of all of our convention panels from the last week. So thank you all for calling in today. And we are adjourned.
Dean Reuter: Thank you for listening to this episode of Teleforum, a podcast of The Federalist Society’s practice groups. For more information about The Federalist Society, the practice groups, and to become a Federalist Society member, please visit our website at fedsoc.org.