The Supreme Court and Obamacare: Eight Possible Outcomes


ACRU Staff


June 15, 2012

This column by ACRU Senior Legal Analyst Ken Klukowski was published June 13, 2012 on

Everyone is now waiting for the U.S. Supreme Court to hand down its decision in NFIB v. Sebelius, the name of the case frequently referred to simply as “Obamacare.”

Lawyers argued four issues before the justices who will decide the fate of the Patient Protection and Affordable Care Act, and there are eight possible outcomes. Some are more likely than others, and some are more consequential than others.

In fact, one would change this country forever.

But aside from that one apocalyptic scenario, there are several outcomes that will carry the legal force of a tsunami and could change parts of the constitutional landscape for decades to come.

The four issues before the Court in NFIB v. Sebelius are:

1. Whether the Anti-Injunction Act (AIA) regards the individual mandate as a tax, and as such federal courts lack jurisdiction to decide this case until the individual mandate goes into effect in 2014.

2. Whether Obamacare’s requirement that individual Americans must purchase and maintain federally-approved forms of health insurance starting in 2014–the infamous individual mandate in Section 1501–exceeds Congress’ powers under the Commerce Clause, Taxing Clause, and/or Necessary and Proper Clause of the Constitution.

3. Whether Obamacare’s massive Medicaid expansion that requires states to pay part of the cost and could penalize any state that refuses to go along with these requirements by stripping all Medicaid funds from that state, found in Section 2001, exceeds Congress’ power under the Spending Clause of the Constitution, thereby violating state sovereignty under the Tenth Amendment.

4. If either the individual mandate (or the Medicaid expansion) is struck down, whether it can be “severed” from the rest of the 2,700-page Obamacare statute, and if not, whether the invalid section can be partially severed to save most of Obamacare, or whether it is “nonseverable,” meaning the entire statute must be struck down completely.

Those are the issues. Here are the possibilities, and my best guess of the rough odds for each as a lawyer who has filed briefs in this case since it was filed in 2010 (which could still be completely wrong nonetheless):

Scenario 1: No Jurisdiction

The Supreme Court could hold that the individual mandate is a tax for purposes of the AIA, and that it strips federal courts of jurisdiction for the next two years. If that happens, every Obamacare lawsuit challenging the individual mandate would be dismissed and must be re-filed in federal district court in 2014. This option would probably get Obamacare back before the Supreme Court in 2016.

The odds of this scenario are essentially zero. In fact, this part of the Court’s opinion might be unanimous. The correct position on this issue is: (1) the AIA is a filing-process law, not a jurisdictional law, so it doesn’t strip federal courts of the power to decide anything. (2) Even if the AIA was a jurisdiction-stripping law, it would not apply in this case, since the AIA only refers to lawsuits brought by persons, and such laws do not apply to sovereign entities unless Congress explicitly mentioned it. States are sovereign, and 26 of the plaintiffs in this case are states. (3) Even if the AIA did apply to states, it would at most only apply to the tax penalty for violating the individual mandate–which is a separate part of Obamacare–not to the individual mandate itself. So for all those reasons, the Supreme Court is almost certain to move on to decide the merits of this case.

Scenario 2: Obamacare Upheld with a Majority Opinion

The second scenario is that both challenged provisions (individual mandate or Medicaid) of Obamacare are upheld, and five justices agree on a majority opinion explaining why Obamacare is authorized by a combination of the Commerce Clause and the Necessary and Proper Clause.

This is the nightmare scenario. The Obama administration acknowledged during oral arguments both at the Supreme Court and in the lower courts–both in this case and in at least two other Obamacare cases across the country–that they cannot articulate any limiting principle on the power of the federal government if it has the power to order private citizens to enter into contracts with private organizations and give those organizations your money. It would fundamentally and forever transform the federal government from one of limited and specified powers in the Constitution to an all-powerful central government with plenary power over every area and aspect of your life from cradle to grave. Unless something is protected by a specific provision in the Bill of Rights (such as free speech or the right to own a gun), the national government could control it. It would fulfill President Obama’s ominous vow to “fundamentally transform the United States of America.”

Fortunately–and no one is really talking about this fact–the odds of this scenario are extremely slim. You can’t get to five votes without Justice Anthony Kennedy. And during oral arguments Kennedy asserted repeatedly that the Constitution imposes limits on federal power, and he expressly acknowledged that adopting the Justice Department’s argument would change our entire form of government in a fundamental way. So even if the liberals prevail, it should not be with a majority opinion that would be a new rule of constitutional law protected as precedent.

Scenario 3: Obamacare Upheld with a Plurality Opinion

The third scenario is that there are five votes to uphold the individual mandate but not with a unified opinion. In this scenario one of the liberal justices, probably either Ruth Bader Ginsburg, Stephen Breyer or Elena Kagan, writes an opinion for four justices about how the Constitution empowers the federal government to impose the individual mandate, and with it claims unfettered federal power.

But Justice Kennedy would refuse to sign that opinion, and instead write a separate opinion concurring in the judgment only. Such an opinion would say that somehow the individual mandate is unique to healthcare and to the specifics of this law, and therefore that upholding it does not open the door for the government to impose any other mandates on any of your other private decisions.

Only an opinion with five or more votes becomes an opinion of the Supreme Court itself and thus binding constitutional law. Otherwise Kennedy’s concurring opinion would be the controlling opinion, and would only apply to Obamacare.

The odds of this are slim, but realistic. Based on how oral argument went, maybe there’s roughly a 20 percent of this outcome. Kennedy was skeptical of the Obama administration’s claim right to the end of oral argument, but then he cracked the door in an exchange with challengers’ lawyer Mike Carvin that the individual mandate might be unique. Hopefully he was just playing devil’s advocate. We’ll find out soon.

Scenario 4: Individual Mandate Struck Down and Totally Severed

The fourth scenario is that the individual mandate is struck down, but then is totally severed from the other 450 sections of the Obamacare statute, and the remaining law stays on the books. This would deny the federal government its claim of unlimited power but would destroy the healthcare industry. The guaranteed-issue and community-rating provisions of Obamacare–found in Section 1201–would allow everyone to refuse to get insurance until they get sick and not be charged extra for their health condition, and then after treatments or medications are finished they could immediately dump their insurance until the next time they get seriously ill.

Between this and all the other mandates in Obamacare, some experts say that within five or 10 years the healthcare finance sy
stem would become completely insolvent and every insurance provider would go bankrupt. At that point America would have a single-payer system of socialized medicine and government-run healthcare, just like Britain and Canada.

Although the odds of the individual mandate going down are maybe 80 percent, this scenario is unlikely. Kagan admitted this result would cause the healthcare industry to “crash and burn”–her words, and Justice Sonia Sotomayor added that it would cause a “death spiral” in healthcare costs. So if the mandate goes down, some other part of Obamacare will almost surely go down with it.

Scenario 5: Medicaid Expansion Struck Down and Totally Severed

The fifth scenario–another one no one is discussing–is that the individual mandate could be upheld but the Medicaid expansion struck down. These two sections are rooted in different clauses of the Constitution, and they can stand or fall separately from each other. This would be like Scenario 3 where the mandate survives but without a majority opinion (Kennedy writing separately), but five votes to say that this is an unprecedented coercion of the states.

Obamacare sticks the states with a $50 billion additional copay on a vastly-expanded version of Medicaid–and threatens to withdraw every Medicaid dollar from a state if they refuse–while at the same time continuing to tax all the citizens of that state through their bi-weekly payroll taxes is an unconstitutional assault on the status of the states as sovereigns that are coequal with the federal government. But the Court completely severs this section of the statute and keeps the remaining 450 sections on the books.

The odds of this are about as slim as Scenario 4. It’s an uphill climb to get to five votes on striking down the Medicaid expansion. (Maybe 30 percent tops, and I can only say that because I couldn’t believe how well oral arguments went on this issue. Before argument I wouldn’t think you had a 10 percent chance of this section being struck down.) The Court has never adopted this coercion theory before, though it has acknowledged it might be out there somewhere. And the Court has never looked at a law that threatens the states with even a fraction of this amount of money. So it’s difficult to imagine how you could keep all five possible votes (Chief Justice John Roberts, Antonin Scalia, Clarence Thomas, and Samuel Alito–plus Kennedy) on board on this issue, but not also keep them together to take down the individual mandate. But it’s possible, at least theoretically.

Scenario 6: Narrow Partial Severability

The sixth scenario is that the individual mandate is struck down (again, maybe an 80 percent chance of that), but Medicaid is upheld. Then the Court holds that the preexisting conditions provisions in Obamacare (guaranteed-issue and community-rating provisions in Section 1201, explained above) cannot be severed from the Section 1501 mandate, an argument that is so strong that the Obama administration conceded it in court.

This takes out the three most important provisions in Obamacare but leaves everything else in place. It would ruin the healthcare industry, but it might take decades instead of years and would be a gradual decline as opposed to the immediate downturn under Scenario 4.

This scenario is very possible. That’s why Kagan and Sotomayor mentioned “crash and burn” and a “death spiral,” but if the preexisting-conditions provisions are thrown out then that outcome becomes debatable to talking heads. If, for example, Roberts goes against the mandate but doesn’t think it’s the proper role of the courts to take down all of Obamacare, then this may be the result.

Scenario 7: Broad Partial Severability

The seventh scenario is like Scenario 6, except that additional major parts of Obamacare are held nonseverable from the Section 1501 mandate and are struck down. The Medicaid provision might be independently struck down under this scenario, or it might be held okay in itself but doomed anyway because it is inextricably linked to the individual mandate. Other provisions that could go down under this scenario are the employer mandate that companies with 50+ employees must provide healthcare coverage (Section 1513), the provisions for the massive state-based insurance exchanges, and other mandates on healthcare providers and insurance companies.

This scenario is distinctly possible, but less likely than Scenario 6. It requires five justices willing to essentially go page-by-page through 2,700 pages, picking which provisions to keep and which to eradicate. There’s really only about twenty sections that would seriously be on the chopping block in such an inquiry, so it might not be an impossible task. But it’s hard to imagine five justices willing to say that they are in a position to make each of those section-by-section decisions, and then being able to agree between themselves as to which sections those should be. Remember–each section would take five “no” votes.

Scenario 8: Unconstitutional and Nonseverable–Obamacare Struck Down Entirely

The final scenario is that the individual mandate is struck down, and possibly the Medicaid expansion is separately struck down, and the Court holds the mandate so central to the “original legislative bargain” in the Affordable Care Act statute that the remaining provisions no longer function “in a manner consistent with the intent of Congress,” so Congress would not be satisfied with the remaining law.

Under Supreme Court precedent, this means the individual mandate (and possibly the Medicaid expansion as well) is totally nonseverable from the other 450 sections in the statute, and the entire law must be struck down. This is the brass ring–the grand-slam outcome. This is quite possible.

Again, there’s perhaps an 80 percent chance the individual mandate goes down. Scalia signaled that he probably believes that means the whole law perishes, and–this surprised a lot of lawyers in the courtroom, including me–Kennedy suggested this statute might be an all-or-nothing proposition for him, too. If you can keep Roberts, Thomas, and Alito with them, then Obamacare goes down. If the individual mandate is invalidated, then you might want to flip a coin between Scenario 6 (narrow partial severability) and this one.

The good news is we don’t have long to wait. Don’t expect a decision in less than two weeks (although the Court could always surprise us–wouldn’t be the first time), but sometime between Monday, June 25, and Thursday, June 28, we should expect the nine justices of the Supreme Court–entrusted with the power to act as the final arbiters of the constitutionality of Acts of Congress–to hand down their decision.

The Constitution created the Supreme Court for cases such as this. And when the Court decides this case–one way or the other–America may never be the same.



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