In Supreme Court Litigation, Biden Administration Asserts That ACA's Individual Mandate Is Constitutional and Severable | Practical Law

In Supreme Court Litigation, Biden Administration Asserts That ACA's Individual Mandate Is Constitutional and Severable | Practical Law

The Office of the Solicitor General in the US Department of Justice (DOJ) filed a letter informing the US Supreme Court that it is now the Biden administration's position that the Affordable Care Act's (ACA's) individual mandate is constitutional (despite the tax penalty associated with the mandate being reduced to zero by 2017's Tax Cuts and Jobs Act (TCJA)). DOJ also asserted in its letter that even if the individual mandate is held to be unconstitutional, the provision is severable from the rest of the ACA.

In Supreme Court Litigation, Biden Administration Asserts That ACA's Individual Mandate Is Constitutional and Severable

by Practical Law Employee Benefits & Executive Compensation
Published on 16 Feb 2021 • USA (National/Federal)
The Office of the Solicitor General in the US Department of Justice (DOJ) filed a letter informing the US Supreme Court that it is now the Biden administration's position that the Affordable Care Act's (ACA's) individual mandate is constitutional (despite the tax penalty associated with the mandate being reduced to zero by 2017's Tax Cuts and Jobs Act (TCJA)). DOJ also asserted in its letter that even if the individual mandate is held to be unconstitutional, the provision is severable from the rest of the ACA.
On February 10, 2021, the US Department of Justice (DOJ) filed a letter announcing new positions—under the Biden administration—in litigation regarding the constitutionality of the ACA's individual mandate (26 U.S.C. § 5000A; Texas v. Calif., 140 S. Ct. 1262 (2020)). This litigation, which involves the individual mandate's constitutionality in light of the zeroing out of mandate penalties under 2017's Tax Cuts and Jobs Act (TCJA), was the topic of oral arguments before the Supreme Court in November 2020 (see generally Legal Update, Fifth Circuit Affirms Ruling That ACA's Individual Mandate Is Unconstitutional, But Orders Do-Over of District Court's Severability Analysis).

Individual Mandate Is Constitutional

In its letter, the Biden administration's DOJ asserted that it had reconsidered its positions in the litigation (as previously argued under the Trump administration) and concluded that the individual mandate is constitutional. In the Supreme Court's 2012 ruling upholding the individual mandate, the Court concluded that mandate payments were a valid exercise of Congress's power because the mandate provided individuals a choice between maintaining health insurance and making a tax payment (Nat'l Fed'n of Indep. Businesses v. Sebelius, 567 U.S. 519 (2012); see Legal Update, Supreme Court Upholds ACA's Individual Mandate). The Court reasoned that:
  • No negative legal consequences resulted from not buying health insurance (other than a payment to the IRS).
  • If someone chose to pay instead of obtaining health insurance, that person had fully complied with the mandate.
According to the Biden administration's DOJ, the TCJA's amendment (rather than adding a new burden on covered individuals):
  • Preserved the choice between lawful options.
  • Merely eliminated any financial or negative legal consequence from an individual's decision not to enroll in health coverage.

Individual Mandate Is Severable from Rest of ACA

In addition, the Biden administration's letter asserted that even if the Court holds that the individual mandate is unconstitutional due to the TCJA amendment, the mandate can be severed from the rest of the ACA. This position reverses the litigation position—under the Trump administration's DOJ—that the individual mandate is inseverable from the ACA, rendering the ACA unconstitutional. According to the Biden administration's DOJ, the presumption of severability cannot be overcome here, because the TCJA amendment left in place the remainder of the ACA.
Despite its changed positions, the DOJ in its letter did not request supplemental briefing in the litigation because:
  • Oral argument in the consolidated cases occurred in November 2020.
  • Other parties had fully briefed both sides of the issues.
(See Practice Note, Affordable Care Act (ACA) Overview: Elimination of Individual Mandate Penalty; Validity of the ACA.)

Practical Impact

It's unclear what impact, if any, the Biden administration's revised positions will have on the Supreme Court's decision in this litigation, particularly given that—as the administration acknowledges—oral arguments were heard shortly after the November election. During those arguments, some justices appeared disinclined to invalidating the entire law. A ruling in the case is expected in the upcoming months.