A Federal Court Hangs the Sword of Damocles Over Obamacare

And in other legal news, the Supreme Court will hear an important religious liberty case.

Donald Trump was impeached yesterday. I dedicated most of yesterday’s newsletter to my endorsement of impeachment, and I won’t repeat those arguments today (and the readers sigh in relief). The next phases are predictable. Democrats will cry foul on process just as Republicans did in the House—to the point where side questions about process will sometimes overwhelm any real debate on substance—but Republicans control the chamber, so they’ll conduct the trial according to the rules they set and acquit the president. And if Wednesday’s House debate is any indication, most of the GOP senators will do so without raising a single peep of objection about the president’s underlying conduct, even if they know it was wrong.

The only real questions regard the political and historical impact of impeachment, and that depends a great deal on the outcome of the 2020 election. There is a huge difference between a narrative that reads, “corrupt, impeached, defeated” and one that reads, “persecuted, impeached, triumphed.” One is a cautionary tale, the other is a heroic journey. 

But more happened yesterday than impeachment. The judiciary never sleeps (well, it does sleep—and it golfs—but it was alert Wednesday), and two things happened that have significant implications for American constitutional law and American electoral politics. They’re the subject of today’s French Press:

  1. The 5th Circuit hangs the Sword of Damocles over Obamacare.

  1. SCOTUS takes a critical religious liberty case.

The 5th Circuit has spoken, and the fate of Obamacare still hangs in the balance.

As some readers may know, one of the most significant cases in the country is winding its way up the federal judicial system from the great state of Texas (also known as Tennessee’s first colony). The background is important. After twice surviving brushes with judicial death—and once surviving a brush with legislative death, thanks to John McCain’s famous thumbs-down—in 2017 Republicans gutted one of the core provisions of Obamacare when they zeroed out the tax penalty for failure to obtain insurance, leaving the law’s famous individual mandate virtually toothless. 

This triggered a third significant challenge to Obamacare. Texas and a coalition of allied states filed suit, arguing that since Congress removed the tax penalty for the individual mandate, it lost its constitutional foundation. Moreover (and far more controversially), it argued that the individual mandate was so central to Obamacare that if the mandate is struck down, the entire law must fall. 

It seemed like a stretch, right up until the trial judge ruled that the individual mandate was unconstitutional and ruled that all of Obamacare was thus invalid. In legalese, the court ruled that the mandate could not be “severed” from the rest of the statute. The court stayed the effect of its ruling pending appeal, and the case jumped up to the 5th Circuit Court of Appeals.

Yesterday, the appeals court rendered its ruling. While it made important preliminary standing determinations (holding, among other things, that Texas had standing to challenge Obamacare), the court’s ruling on the substance of the case is what made headlines, so let’s focus on the core holding. 

First, the court of appeals affirmed the district court’s ruling that the individual mandate is unconstitutional. This holding seems plainly correct. After all, as the court explained, in the original Obamacare case, “A majority of the court ... concluded that the individual mandate is not constitutional under either the Interstate Commerce Clause or the Necessary and Proper Clause.” The individual mandate was famously saved, however, because Justice Roberts joined with four other justices to find that the tax penalty applied to the mandate rendered it a “legitimate exercise of Congress’ taxing power.”

So, what happens if Congress removes the tax? The court was clear: “Now that the shared responsibility payment amount is set at zero, the provision’s saving construction is no longer available.  The ... attributes that once saved the statute because it could be read as a tax no longer exist.” If it’s not a tax, then there is no other constitutional doctrine that permits Congress to compel the purchase of a commercial product. Goodbye mandate.

But that’s not a terribly consequential decision. After all, with the penalty set at zero by Trump’s 2017 reforms, the “mandate” wasn’t much of a mandate. The truly consequential question is what striking down the mandate means for the rest of the law, and that’s where we get to the severability question.

Here, the court punted. Rather than striking down all or part of the rest of Obamacare—or holding definitively that the individual mandate could be severed from the rest of the statute—it sent the case back down the trial judge to take a fresh look. In essence, the appeals court held that the trial court’s first ruling didn’t contain a comprehensive enough analysis of the 2017 version of Obamacare when it found that the individual mandate was fundamental to the structure of the entire statute. 

Think of the first major version of Obamacare in software lingo as Obamacare 1.0. This is Obamacare as enacted, and the 2010 Congress labeled the mandate as “’essential’ to its goal of ‘creating effective health insurance markets.’” So case closed, right? If the mandate is “essential,” then it’s necessary to take an ax to the statute, striking down all or most of it. Can a person live without a heart? Can Obamacare live without the mandate?

But as noted above, Congress gutted the mandate in 2017 yet kept the remaining material provisions of Obamacare in place. This is Obamacare 2.0. In essence, Congress created “zombie Obamacare.” It took out the statute’s heart, but left the rest of the body intact, and now the zombie roams the health care landscape, moaning and feasting on taxpayer money. But if Congress wants a zombie, then doesn’t Congress get to keep its zombie?

That’s exactly the question the district court must now address. Here’s the conclusion of the appeals courts severability section, and this is what a judicial punt looks like:

It may still be that none of the ACA is severable from the individual mandate, even after [the trial court’s] inquiry is concluded.  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. But it is no small thing for unelected, life-tenured judges to declare duly enacted legislation passed by the elected representatives of the American people unconstitutional.  The rule of law demands a careful, precise explanation of whether the provisions of the ACA are affected by the unconstitutionality of the individual mandate as it exists today.

Politically, this puts the Republicans in a bit of a pickle. The Democrats can argue that zombie Obamacare is in danger of getting the Walking Dead treatment—with a judicial .357 bullet delivered straight to its rotting brain—and then circle the wagons around protecting President Obama’s signature legislative achievement. By doing so, they can highlight the fact that Republicans want to destroy Obamacare (including its popular sections) without a viable alternative plan. 

This is a problem for the GOP. My former National Review colleague Ramesh Ponnuru explained the stakes well:

If the suit is successful, however, it will create an acute problem for a lot of people. Insurers will again be able to discriminate against people with chronic conditions. Many states’ budgets will be thrown into turmoil as Washington stops covering most of the tab for the expansion of Medicaid coverage to households just above the poverty line. People who get their insurance through Obamacare’s exchanges will stop receiving the tax credits that make it affordable.

The Republicans had better formulate a response to these challenges, or their long-sought final judicial victory over Obamacare could prove to be pyrrhic indeed. 

While I think it highly likely that SCOTUS (should it decide to ultimately hear the case) will find the mandate unconstitutional in the absence of a tax, I believe it’s highly unlikely that it will strike down all or most of the rest of the statute. Zombie Obamacare will lurch on to be undead another day. However, in the next edition of my new podcast with my Dispatch colleague Sarah Isgur we’ll host a very special guest—one of the key architects of the lawsuit—and we’ll see if he can change my mind. Please tune in (and subscribe)!

SCOTUS agrees to review a terrible 9th Circuit opinion.

I just finished recording a “constitutional year in review” podcast with my good friends at the National Constitutional Center, and in prepping for the pod, I thought a great deal about the Supreme Court’s challenge in its “culture war cases”—specifically cases dealing with abortion and religious liberty.

Regarding abortion, it’s going to be vital to learn whether the addition of justices Gorsuch and Kavanaugh will result in any substantial or meaningful change in the Roe/Casey framework. Regarding religious liberty, the key flashpoint is the repeated conflict between assertions of religious liberty and state attempts to impose anti-discrimination laws.  Fewer legal conflicts are more troublesome to many millions of people of faith than the effort by states to inject state nondiscrimination law into hiring and firing decisions made by religious employers regarding their religious employees. 

In 2012, a unanimous Supreme Court rejected the Obama administration’s effort to apply federal employment discrimination law to so-called “ministerial employees.” It ruled that both the Free Exercise Clause and the Establishment Clause constrained the government from injecting oversight into ministerial employment. It was one of the most significant religious liberty cases of the new century, and (because it was unanimous) one of the least-appreciated. The absence of judicial fireworks led many people to overlook its importance.

Since that time a number of circuit courts have decided cases that further define exactly which employees are entitled to the ministerial exception. In fact that was exactly the issue in one of my last cases before I left private practice. My colleagues and I defended InterVarsity Christian Fellowship from a sex discrimination claim brought by a former “spiritual director” who was terminated after she divorced her husband.

This is classic religious discipline, and the court found that while she didn’t hold the title of a “minister,” she performed that function. The court’s words were clear: 

The parties point to no historical example in which the founding generation permitted any arm of the federal government—including the judiciary—to order a religious organization to accept or retain in a ministerial position a person whom the organization deemed unfit for ministry. To the contrary, the historical practice has always been that the government cannot dictate to a religious organization who its spiritual leaders would be.”

This is the correct rule. An employee can perform a ministerial function in the absence of a ministerial title or even ordination. For a brief time in the 1990s, I served as an interim youth pastor at my church, and while I have theology training, I neither hold a theology degree nor am I ordained by any denomination. Was I not performing a “ministerial” function when I delivered Sunday morning and Wednesday night sermons and taught Sunday school?

The 9th Circuit, however, has held that the ministerial exception to nondiscrimination law is extraordinarily narrow, and that is the issue that the Supreme Court will take up later this term. In two cases, one called Morrissey-Berru v. Our Lady of Guadalupe School and the other called St. James School v. Biel, the 9th Circuit held that teachers at a Christian school were not covered by the ministerial exception even though they carried out undeniably important religious functions. For example, in Our Lady of Guadalupe, the teacher “committed to incorporate Catholic values and teachings into her curriculum, as evidenced by several of the employment agreements she signed, led her students in daily prayer, was in charge of liturgy planning for a monthly Mass, and directed and produced a performance by her students during the School's Easter celebration every year.”

If religious employees who engage in religious activities that vital and explicit are not treated as “ministers” within the ministerial exception, then the potential scope of state control over religious employment will expand dramatically. Religious believers will feel even more vulnerable to state persecution, and the culture wars will escalate.

I’m doubtful, however, that the Supreme Court accepted review for the purpose of essentially gutting a recent, unanimous precedent. I suspect the court will reverse the 9th Circuit, affirm a pragmatic, functional definition of ministerial employees, and erect a bit higher (dare I say it?) “wall of separation” between church governance and state interference. 

One last thing ...  
Many readers take issue with my (accurate) assessment that LeBron James is the GOAT. So, let’s appeal to an unimpeachable, independent authority. Watch below. They say “ball don’t lie” ... well, goat don’t lie:

Photograph of anti-Obamacare protesters demonstrating in front of the U.S. Supreme Court on June 28, 2012, by Alex Wong/Getty Images.