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11th Circuit Rules Individual Mandate Unconstitutional

We now have one court of appeals ruling that the Affordable Care Act, along with the individual mandate, is a constitutional statute, and one court of appeals disagreeing. The 11th Circuit Court of Appeals, generally seen as a conservative-leaning group, ruled that the individual mandate is unconstitutional, by a 2-1 margin on the 3-judge panel.

The decision, penned by Chief Judge Joel Dubina and Circuit Judge Frank Hull, found that “the individual mandate contained in the Act exceeds Congress’s enumerated commerce power.”

“What Congress cannot do under the Commerce Clause is mandate that individuals enter into contracts with private insurance companies for the purchase of an expensive product from the time they are born until the time they die,” the opinion said.

Circuit Judge Stanley Marcus disagreed in a dissent.

Hull was actually a Clinton appointee voting against the mandate’s constitutionality, while Marcus was a Reagan appointee (to a district court seat, before Clinton appointed him to the circuit court) voting for it. The other judge, Joel Dubina, has a daughter who is a conservative freshman US Congresswoman (Martha Roby of Alabama).

As you can read for yourself, the court did not agree that the mandate was a tax, and therefore part of Congress’ power under taxation. They saw it as a penalty, as per the text of the Act and the legislative history. And they ruled that it went beyond the federal government’s power under the commerce clause. “We have not found any generally applicable, judicially enforceable limiting principle that would permit us to uphold the mandate without obliterating the boundaries inherent in the system of enumerated congressional powers,” says the opinion.

However, the 11th Circuit did not leave District Court judge Roger Vinson’s ruling intact. Vinson had ruled that the individual mandate was not severable from the rest of the law, essentially striking down the entire Affordable Care Act. The 11th Circuit, in their ruling, allowed for severability, despite the baffling lack of a severability clause:

The individual mandate, however, can be severed from the remainder of the Act’s myriad reforms. The presumption of severability is rooted in notions of judicial restraint and respect for the separation of powers in our constitutional system. The Act’s other provisions remain legally operative after the mandate’s excision, and the high burden needed under Supreme Court precedent to rebut the presumption of severability has not been met.

There’s a difference between severable and feasible. Some experts contend that an exchange system without the mandate would cause insurance companies to massively raise the cost of their product, because they have to take all comers, including the sick. So they would raise prices to compensate for that. This would mean that the cost of subsidies for the exchanges would skyrocket. However, because of the lack of a mandate, it would mean that more people would opt out of buying insurance altogether, which could bring down the ultimate cost of the subsidies. It’s unclear at this point, and there are certainly studies showing systems without mandates that get to near-universality while also being more affordable than expected.

It was well-known that this would ultimately end up in the Supreme Court, but the competing rulings from two separate Circuit Courts almost ensures that. The Supreme Court could not deny cert on the case, and leave constitutionality up in the air. What this most likely means is a hearing in the Supreme Court this next session, with a ruling in June 2012, smack dab in the middle of the Presidential race.

The full opinion can be found here.

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David Dayen

David Dayen