American Enterprise Institute

Sense and severability: If one part of the Affordable Care Act is ruled unconstitutional, what is the proper remedy or resolution?

Introduction: Thomas P. Miller, AEI

Panel I: In theory: Making sense of severability

Panelists: John Harrison, University of Virginia School of Law David Gans, Constitutional Accountability Center

Moderator: Thomas P. Miller, AEI

Panel II: As applied: Texas v. United States

Panelists: Josh Blackman, South Texas College of Law Houston Jim Blumstein, Vanderbilt Law School Ted Frank, Hamilton Lincoln Law Institute Ilya Somin, George Mason University

Moderator: Thomas P. Miller, AEI

1:00–4:00 p.m. Friday, February 15, 2019

Event Page: http://www.aei.org/events/sense-and-severability-if-one-part-of- the-affordable-care-act-is-ruled-unconstitutional-what-is-the-proper-remedy-or- resolution/

Thomas P. Miller: Good afternoon. Welcome to the American Enterprise Institute. I’m Tom Miller, chief entertainment critic for health policy, which rarely fails either to amuse or appall us. Today’s conference is cosponsored by our silent partners at the Federalist Society, whose secretary may disavow all knowledge if this tape is captured. Our Mission Impossible today is to make a little more sense out of the law of severability, which tends to pop up from time to time when Congress makes a mistake in the laws it writes and gets flagged by the courts for a violation. Our first panel will take a deeper dive into where we’ve been, where we are, and where we could or should go in the future in dealing with federal laws with constitutional or other legal problems. Severability essentially comes down to how much of a law, if any parts of it, can survive and function if that happens. More on that in a moment. Some of our regular attendees and viewers may recall some earlier installments in this series of health law forums at AEI involving the ever-mutating Affordable Care Act, a renewable source of employment and commentary for lawyers and legal policy analysts. Last July, for example, we reviewed how the ACA bill that escaped Congress in March of 2010 launched a wave of litigation, regulatory revisions, and administrative workarounds. It was a little bit different from the simplified civics class process. And this cyclical process appears to be self-perpetuating, as the results of cases like NFIB v. Sebelius can produce a revised, if not completely rewritten, law that can launch a new round of lawsuits. So as I’ve said before and mentioned in congressional testimony last week and most likely will repeat again, welcome back to “Groundhog Day: ACA Litigation Version.” Or perhaps it’s just an updated spin-off of the long line of Dick Wolf TV shows, “ACA: SVU.” Making its debut in early 2018 was a case from Texas brought by 20 states, mostly Republican attorneys general, that claimed that after Congress had reduced the individual mandate tax to zero as of January 2019, the remaining individual mandate as a regulatory command had become unconstitutional. And here’s your severability answer: The rest of the ACA in its entirety should be ruled unenforceable as well. That’s sort of full-strength non-severability, Texas style. There are other positions in that case, ranging from the Trump administration’s lawyers settling for partial severability of several related regulatory provisions, to excising just the individual mandate, and, of course, to finding no constitutional legal problems at all. More on that case during our second panel on severability as applied in Texas v. United States. Because I still need some continuing legal education credits and this area of law remains far from well understood or applied consistently, we’ll start off with a longer-range look at severability. Maybe not as far back as the old-school biblical approach of splitting the difference or throwing out the baby with the bathwater. Oops, there was an objection on that artwork from the Department of Justice, but we’ve got it taken care of now. That fig leaf makes it a little bit better, if not so for Obamacare. One of the goals of our first panel is to provide a better understanding of how our three branches of government might interact better in this area within the separation of powers framework that can get blurred when it comes to severability. All this will be on the exam later, but here are some helpful course materials as part of your study guide. We begin on Panel I with a pair of thoughtful scholarly critiques of severability law, its permutations, and its evasions, but also its better accomplishments on occasion. Our

panelists won’t exhaust every possible point of view, but they should get you to think more carefully about what courts should do in this area and what might happen in the future. I’ll introduce them separately. Our first speaker is John Harrison, who joined the University of Virginia School of Law faculty in 1993 as an associate professor of law after working in the Department of Justice for 10 years, including serving as the deputy assistant attorney general in the Office of Legal Counsel from 1990 to 1993. John clerked for Judge Robert Bork on the US Court of Appeals for the DC Circuit after graduating from UVA. He earned his law degree in 1980 at Yale, where he served as editor of the Yale Law Journal. Professor John Harrison. There or up here? Okay. John Harrison: Thank you, Tom. It’s good to be here. The great baseball theorist Bill James said, “Like Ronald Reagan, I believe in simplicity. I love complexity, but I believe in simplicity.” What I’m going to try to do is talk about a somewhat complex topic, severability and inseverability, by building it up from what I hope are the relatively simpler building blocks that give rise to the phenomena and raise the questions that we’ll be talking about. First thing I want to say is: What is the phenomenon that’s under discussion here? And the genuinely interesting phenomenon, the one that came up in NFIB against Sebelius, that has now come up in the latest iteration of this problem, is inseverability. It is inseverability that is the issue. Inseverability arises when there is some statutory rule, body of statutory rules, that by itself or by themselves are constitutional but nevertheless are found to be inoperative because something else, some application or some other statutory rule or set of statutory rules, is unconstitutional. How can that happen? The answer is that it can happen. Whether it happens is fundamentally determined by how Congress has legislated implicitly or explicitly about certain contingencies. But it can happen, and that’s why there is the topic that we’re talking about. Okay, the first thing I want to say by way of simple building block is how the Constitution operates. The constitution operates by creating a legal hierarchy in which it is at the top. And because it’s at the top and because of a few other basic assumptions of the American constitutional system, the Constitution provides criteria for the validity of nonconstitutional laws. It determines whether they are actually legally operative or not. That was the premise of the Constitution itself. Lots of famous Supreme Court cases are about it. The point I want to make is the Constitution operates on the content of the law. The next point is the Constitution operates on the content of the law by saying what the law can’t be. It says quite little about what the law is or has to be. Overwhelmingly — and here I’m going to be talking about Congress. Similar questions of course can come up with respect to state law, but what we’re mainly concerned with here is Congress. Overwhelmingly what the law is is up to Congress. What it’s not is to a certain extent determined by the Constitution, but, again, the Constitution — the constraints imposed by the Constitution are relatively generous. Notice that suggests — and I’m going to elaborate on this in a couple of moments — that suggests that because Congress says what the law is and the Constitution says what it’s not, what Congress has said is going to be the decisive question when it comes to the kind of thing that comes up under the rubric of severability or inseverability. Okay? So that’s the first building block, the way the Constitution operates, constraining the sub-constitutional law, but by and large not dictating the sub-constitutional law.

Next point: the levels at which the Constitution operates. The Constitution sometimes means that particular applications of a nonconstitutional rule, say a statutory rule, are impermissible. The law can’t be that in that particular circumstance. But that’s just about those circumstances. For example, the Fourth Amendment says, “No unreasonable searches and seizures.” If Congress authorizes a category of searches or seizures, say by federal law enforcement officers, and says, “All of these are authorized, and some of them are unreasonable,” well, the rule that says they’re authorized is overridden by the Constitution. They become unauthorized because they are unreasonable. People who engage in those searches can’t rely on the defense of federal privilege, for example. But all the other authorizations left intact as far as the Constitution is concerned because the Constitution operates at the level of particular applications. Sometimes, the Constitution operates at the level of the rule. And by saying that it operates at the level of the rule, I mean sometimes the Constitution means that a particular generalization that the legislators, say, Congress has used, is impermissible. And as a consequence, that rule is invalid, inoperative, not to be followed even though — and this is, as I say, the content of operating on the rule — even though some of the applications of that rule could have been constitutionally achieved pursuant to another rule. Classic example: the flag-burning statute that Congress enacted in response to the first of the flag-burning cases. Flag-burning statute said, “This whole range of flag burning is illegal.” Supreme Court said, “That is unconstitutional, as they say, on its face.” The whole rule is unconstitutional. Nobody can be prosecuted under it even though some instances of flag burning could permissibly be prosecuted under other laws. If somebody steals a flag and burns it, that’s vandalism and can be prosecuted as vandalism. It can’t be prosecuted under a rule specifically about flag burning. The fact that that’s the Supreme Court’s approach — and they interpret the First Amendment that way and I think correctly — is a phenomenon about the First Amendment. There are circumstances in which the First Amendment operates on whole rules in that way. Interestingly, sometimes the Constitution operates on collections of rules, and this sort of thing comes up from time to time. And since this is an inside-the-Beltway crowd, you will know about some of these issues. Sometimes the combination of rule that’s involved is a rule about the power of a federal officer and the means by which the federal officer can be removed or not removed. There are number of important cases that have been about that. The case about the comptroller general and the Gramm-Rudman-Hollings mechanism for deficit reduction was like that. And the interesting thing there is there are powers that can be given to officers, provided they can be removed or not removed in certain ways. There are rules about removal that are permissible that are fine for officers with certain powers, but there are some combinations of removal rule and power rule, even though either one of them in isolation might be fine in different circumstances that are unconstitutional. That’s what happened in Bowsher against Synar, the Gramm-Rudman-Hollings case, where the Supreme Court said the combination of this particular power in the comptroller general and Congress’ power to remove the comptroller general by statute was unconstitutional, even though there’s nothing wrong with the comptroller general having other powers and being subject to that form of removal. It was the combination of the two that was unconstitutional. I will say, that that sometimes ties the courts in knots because that can produce difficulties

when they think, “But only one of those rules is actually before us. What are we supposed to do?” My point is the Constitution can operate at these varying levels. Next thing — and as you’re about to see, we’re going to have situation in which the Constitution and Congress are, to some extent, going to bump into one another. Congress operates at different levels, but probably the most fundamental level at which Congress operates is enactments. It passes laws. That’s what Article I, Section 7 provides for: the mechanism. Bill passes the Senate, passes the House, presented to the president, president vetoes or signs it, etc. That’s the fundamental unit in which Congress operates, but it’s not the only unit in which Congress operates. For legal purposes, probably the main unit — and these arise within those enactments I was talking about — are rules. Generalizations. Congress says, “This is the rule. In the following category of cases, the following thing is the answer.” Very unusual for Congress to legislate in enormous detail and say, “In this particular situation, here is the answer.” Much more commonly, Congress operates at the level of rules. The Congress, of course, creates packages of rules. Some of them are those enactments that I was talking about. Not all of them, interestingly, are those enactments. For example, Congress legislates by enacting something called — I’ll give an example, the Atomic Energy Act of 1954. Congress enacted the Atomic Energy Act of 1954 in 1954 and then subsequently has passed enactments that say, “The Atomic Energy Act of 1954 is hereby amended as follows.” The result is a collection of particular enactments produce this construct that has nowhere once been enacted by Congress; it’s the result of a series of enactments. Why does Congress do that? Congress does that in the pursuit — the extent to which Congress achieves this, of course, is one of the questions — in the pursuit of coherent policy. That is to say Congress, for instance, wants to make sure that people never drop their pencils at AEI events and might require a wide range of rules that interact together in order to produce that desirable result. Notice the thing about the act to produce coherent policy is to produce a combination of rules that will work together. Sometimes Congress does that, legislates in ways that interact with one another without even using the construct of an act like the Atomic Energy Act. Rather, some provisions of different acts, of different enactments, will interact with one another, sometimes referring to one another or sometimes not referring to one another, in a way that reflects Congress’ policy design. And that’s what produces the problem of inseverability. Congress operates from the standpoint of policy through packages of rules, through combinations of rules that work together. That means that statutes are designed and statutory rules are designed to operate together, okay? Another building block: Congress works in these combinations. Now, one of the things that statutes have to do is deal with contingencies, what happens under the following circumstance. And in particular, statutes have to or ought to deal with contingencies that Congress did not focus on or focus on primarily in enacting its policies of rules, all sorts of things that can happen. And the courts need to know what to do in those contingencies.

And one of the contingencies that can arise — or actually, the broader category of contingency that can arise that I’m thinking about — is the law might be something other than the law that was the primary predicate that Congress assumed when it put together the policy package of various rules, doing that in various ways. The law might be different from the one that Congress primarily assumed when it put the package together. The sub-part of that that we’re specifically concerned about is, because of the Constitution, the law that Congress — and here I’m going to personify Congress and I don’t want to put too much force on this way of thinking — that Congress thought was going to be is not the law. That is to say, the Constitution means that some of what Congress created is, in fact, going to be inoperative. It’s going to be invalid because the legal hierarchy renders it invalid, and that means that the primary contingency for which Congress legislated is not going to be the one that actually arises. Something else has happened, and something else has happened to Congress’ own laws, which is unusual. Because normally, why have rules? Rules deal with contingencies. Normally, one contingency Congress doesn’t have to worry about is what’s the federal law going to be because Congress can control the federal law most of the time. And so it can just put in place the assumption, “The law is this,” because it’s what Congress says it is. Well, Congress doesn’t have complete control over the federal law because the Constitution to some extent constrains what Congress can do. That’s the situation in which Congress has put together, from the standpoint of policy, a package of rules, generalizations that are designed to work together through one of these various mechanisms that Congress uses to get them to work together. Congress has put together a package, and the package confronts a contingency having to do with the content of federal law. And the contingency is not all of that federal law was constitutional. That’s the issue that came up in NFIB against Sebelius — or was raised in NFIB against Sebelius. What if it turns out that part of this large package that Congress put together is inoperative because it’s unconstitutional? And here’s the crucial question that gives rise to the possibility of inseverability: Is it possible that some other components of that statutory package were implicitly predicated for policy reasons because they interact with one another or implicitly predicated on this particular rule being operative? The rule that was challenged, the individual mandate. As a policy matter, clearly other components of the Affordable Care Act were designed to interact with the individual mandate. Those interactions, by themselves, don’t mean that any particular provision was predicated on the operative character of the other provision in the sense that it is implicit that it’s inoperative. It’s another step to say that, but that’s the possibility that arises. Maybe because their policy interaction is so strong, one of them was implicitly predicated — its operation is predicated on the assumption that the other rule is in place. As I said, that was the question in Sebelius. Here is how the Supreme Court deals with that. Sometimes, on rare occasions, they can deal with it fairly easily because sometimes Congress has explicitly dealt with the contingency of unconstitutionality and has said, “If this package is in part unconstitutional, substitute this other package.” An explicit fallback, as Professor Michael Dorf calls it. That’s what happened in the Gramm-Rudman-Hollings case. Congress had said, “If what we have

primarily designed here with the comptroller general is unconstitutional, here’s another way to proceed that is much less constitutionally problematic.” And indeed, people at the time thought it was constitutional and still regard it as such. So sometimes Congress actually gives that fallback. Sometimes it doesn’t. And the question is: Okay, what are the courts supposed to do? These days, the Supreme Court’s leading case on this is the case called Alaska Airlines against Brock. And Alaska Airlines against Brock is worth thinking about because it involved a plausible claim. The Supreme Court ultimately rejected it, but a plausible claim that one statutory rule was, in fact, implicitly predicated on another one being operative. The two statutory rules were regulatory authority granted to the secretary of transportation and a so-called legislative veto that Congress had imposed by statute, meaning one house of Congress could undo the regulation that the secretary had adopted. Congress a few years before Alaska Airlines and the Chadha case had said, “Legislative vetoes are unconstitutional.” Well, it’s entirely possible that supporters of regulation were prepared to give that authority to the agency only if they retained the string of the legislative veto. So there was a reasonable argument that the legislative authority was predicated — it was indeed part of a policy package, that much is clear — was predicated on the availability of the legislative veto. The Supreme Court had decided that the legislative veto was unconstitutional and inoperative and — and here’s an important thing about inseverability being the problem. And the regulated party, Alaska Airlines, said, “The secretary does not have this authority not because the authority was said to be unconstitutional but because it was part of a policy package, another part of which, the legislative veto, was unconstitutional.” And, said Alaska Airlines, “Congress had, in fact, made one dependent on the other.” Again, not directly a constitutional argument, a party not affected — there no legislative veto had been used. A party not affected by the legislative veto affected by the grant of regulatory authority of the secretary, posing a classic problem of inseverability. The Supreme Court said they are severable. Congress would have enacted the regulatory authority even without putting it in counterfactual terms as it’s often done, even without the legislative veto, and the court announced or repeated the standard formulation. And I’ll just quote this, “Unless it is” — because this is one of those in Alaska Airlines — this is Alaska Airlines quoting another case quoting another case. The court has said this any number of times by now. “Unless it is evident that the legislature would not have enacted those provisions which are within its powers” — in Alaska Airlines, that’s the regulation — “independently of that which is not” — in Alaska Airlines, that’s the legislative veto — “the invalid part may be dropped if what is left is fully operative as a law.” And in previous cases and subsequent cases, the court has put that in terms of — has said, “This is an inquiry into —” and here fill in the blank about how you describe what the courts are looking for when they’re trying to identify the content of statutory law. Is it legislative intent? Is it is a text meaning? That depends on other debates. The important thing is that question — is inseverability triggered even though the legislative provision that the court is concerned with in Alaska Airlines, the perfectly constitutional regulation — is that triggered even though it is constitutional. And the answer is that it may be if there is a policy package and — and I stress, these are two different questions. And Congress has implicitly — because these cases aren’t Bowsher against Synar–type cases

where Congress has said something — and Congress has implicitly made the operation of the constitutional piece predicated on the piece that turns out to be unconstitutional. That’s how the problem arises. The building blocks of how the American constitutional system and the way Congress operates generate these problems, and what I just said, the basics about how the Supreme Court approaches it. There are a couple of issues in the courts’ doctrine. I will just flag one that I think is interesting and then talk for the last couple of minutes of my part here about the other one. The first one is — and it goes back to what I was saying a moment ago: What is the object that courts are looking for when they, as we say, interpret statutes? And as you know, for a few decades, now there’s been a renewed debate about that among judges, among scholars, among justices, between basically the camps of intent, meaning some subjective mental state of actual legislatures, and text, meaning something more objective, meaning in the statute. And one — one question that arises here arises because in the cases specifically about severability and inseverability, the Supreme Court routinely describes the question — it’s an inquiry into what Congress has implicitly provided for. And they routinely describe it in terms of the intent of Congress. And that then raises a question: Is the court actually committing itself in the area of severability to a subjectivist kind of inquiry, or is it just, “Well, that’s how the justice who wrote that opinion happens to talk about inquiries into statutory content?” I think that’s an open question. I think it poses a tricky one before the lower courts because sometimes the Supreme Court’s doctrine does include some methodological principle like that. Normally, interestingly, it doesn’t, and the lower court judges follow their own views about what — how to understand statutory content. Is its subjective? Is it objective? But if the court says, “It’s subjective here,” well, it’s subjective there. Whether the court has done that, I think is not clear, but one might say that it has. The other issue — and this has come up a couple of times in the last few decades. It came up in Sebelius, and I think is presented in the Texas case — is the question of severability properly understood — the way I described it, presenting what I think is the classical approach — properly understood as a question of the content of the law, or is it properly understood as a matter of judicial remedies? The other way of understanding it is to say, “When a court confronts an unconstitutional statutory provision, what it does is make it invalid.” As the courts often say, “We invalidate this component.” Well, if that’s what’s going on, if a court is applying the remedy of invalidity of as it were severing the statute, not finding what the law is but making it invalid because the Constitution says to make it invalid — notice that’s what the law of remedies routinely operates. The law of remedies says — the primary law would say, “Here is what a nuisance is.” The law of remedies says, “And the court can enjoin a nuisance and injunction changes the obligations of the parties.” An injunction creates a new obligation that hadn’t existed before. A party subject to an injunction now can’t do something that previously was either lawful or would give rise only to damages with the injunction in effect, that the party faces contempt of court if the party violates the injunction. That’s a change in the content of the obligations of parties brought about by a court in carrying out the law of remedies. Notice the two steps. First the primary law — is this a nuisance — then the possible change in the law through the law of remedies.

If you think that the questions of severability and unconstitutionality generally raised the law of remedies in the sense of courts changing the content of the law, then a natural question is: Well, what remedy should the court apply? How much of the law should it make invalid? That’s another way to understand severability. One consequence, one important consequence of that — and this came up in Sebelius, NFIB against Sebelius litigation — has to do with another one of these fairly technical doctrines: the idea of standing. Standing says that a party can get relief, like an injunction against the enforcement of a statute, only with respect to rules that apply to the party. And in NFIB against Sebelius, the parties who challenge the individual mandate hadn’t shown that any other part of the ACA applied to them. But they said, “Courts say the whole thing is invalid if you, like, invalidate it. As the remedy, you will remedy the problem we actually have,” which is with the individual mandate, “and we want you to apply the broader remedy of invalidating the entire act.” Well, if invalidation is a remedy and the court must decide how much of a remedy to give, maybe that’s okay. If invalidity is a phenomenon of the primary law and parties can complain about only those parts of the primary law that apply to them, then a party not subject to all these other parts of the ACA that may have been inseverable did not have any grounds to ask the court to say anything about any of those other parts of the law. The joint dissenters in Sebelius actually addressed this question and took — and this is the last thing I’ll say — and took what I think — or the next last thing — took what I think is the wrong approach. They said, “This is a question of severability, and hence we can decide whether to invalidate the entire statute.” I think the fundamental predicates of the American constitutional system is that invalidity is produced by the Constitution. It is not produced by the courts. They do not, in fact, dispose of this remedy to make laws unconstitutional. Two little pieces of evidence for that: Congress enacted the Legal Tender Act in the 1860s. Supreme Court said it was unconstitutional. Couple years later, Supreme Court overruled the legal tender cases, said it was constitutional. Legal Tender Act went back into effect, practically speaking, without having been reenacted by Congress. How did that happen? Because the content of the law had not changed. The Supreme Court had simply said something about the content of the law. Second, we always focus on the Supreme Court of the United States in talking about this sort of thing, and the Supreme Court of the United States can do something that is functionally similar to changing the content of the law nationwide. Courts of appeals can’t. Can a court of appeals actually make a law invalid? Well, only within its own appellate jurisdiction. If the Ninth Circuit says the statute is invalid, it’s not invalid here in the DC Circuit. Seems to me that fact shows that what’s really going on here is courts are interpreting the substantive primary law, not changing the law. The last thing I’ll say to connect this to the Texas case is, if I’m reading the Texas case correctly, this question — whether severance, as it said, is a remedy — comes up in the Texas case, I think, as it came up in NFIB against Sebelius. Because from what I can tell, the parties, they are too have shown only that they are subject to the individual mandate, not that they are actually subject to all those other parts that they want the court to say is inseverable. If that’s right, if I’m reading the case correctly, that means that the courts, I think, should not address that issue because the combination of standing and the way I think severability

operates. Whether severability operates like that, though, is a matter of some current controversy. Thanks. Thomas P. Miller: Thank you very much. Your description of legislative packages when I was thinking about the ACA made me picture a gift package that wasn’t fully assembled but was shipped nevertheless in a bit of a hurry, apparently either Amazon Prime or UPS, and then we had to figure out what was inside of it on Christmas morning or shortly thereafter. Our next speaker — I’ll just introduce him from here, and David will speak at the podium, I guess. David Gans is director of the Human Rights, Civil Rights, and Citizenship Program at the Constitutional Accountability Center. He’s a coauthor in 2014 of “Religious Liberties for Corporations,” another case involving Hobby Lobby, the Affordable Care Act, and the Constitution. He joined the center after serving as program director of Cardozo School of Law’s Floersheimer Center for Constitutional Democracy, and he was an attorney with the Brennan Center for Justice at NYU’s School of Law. Previously he was an acting assistant professor at NYU and also served as a law clerk for the Honorable Rosemary Marquette on the US Court of Appeals for the Eleventh Circuit. David is also a graduate of Yale Law School. We’re just overloaded with Yalies today. Sorry Harvard, you didn’t make the cut today. We’ve got some more on the next panel. And he also served as an editor on the Yale Law Review. David Gans. David Gans: Thanks so much. So I want to just say thanks so much for having me and convening this to talk about severability, which is an incredibly important topic that is I think often misunderstood. And, you know, what this case sort of highlights, this is a doctrine that is crucial that comes up time and again in loads and loads of really important constitutional spaces. And usually we’re really interested in sort of the big constitutional question to which severability is appended, so I applaud kind of this focus. And I think partially because of severability being sort of an adjunct to a dispute about sort of the extent to which the Constitution limits federal or state power, it’s misunderstood, ignored. You know, sometimes major Supreme Court precedents that are taken as precedents on severability are cases where the Supreme Court never said a thing about severability, but we now sort of consider them as part of the severability canon. The Supreme Court cites them as severability precedents. And this, you know, among many features, kind of produces a state in which we have a severability law that is somewhat problematic. I sort of want to sort of pick up where Professor Harrison left us, which is sort of this question of what exactly is severability. Is it remedial? Is there something else? So the sort of block letter law of severability sort of reduces to maybe three kind of fundamental points. So one, what is it it’s talked about as statutory construction, which I find sort of problematic. And we’ll sort of talk about that. So we have kind of one question: statutory construction or remedy? Two, we have kind of the governing test, which is legislative intent. You know, would Congress or would a state legislature prefer what’s left when the unconstitutional part or unconstitutional application has been excised, or would it prefer nothing at all? And then the final point is how should a court deal with a severability clause, which are quite common, and I suppose you could also consider an inseverability clause. And the

severability clause essentially says, “If any part, application, you know, is held unconstitutional, we want the rest. We want everything else.” And the current doctrine is that’s treated as a presumption in favor of severability, but it’s not that much different from the presumption that would otherwise obtain. So if we’re thinking in a textualist frame, it’s sort of odd. And one thing that — so when I had written my piece, I argued in favor of a more remedial view of severability. And when I was reading Professor Harrison’s later piece preparing for today, he sort of emphasizes there’s actually been somewhat of a remedial turn in the law of severability, which is the Supreme Court still uses the same test. And I think they still often refer to it as a matter of statutory construction, but increasingly, there’s an idea of this is really a remedial matter. And so what is the remedial view of severability? That’s sort of something that I want to talk about, which is making its way into the law. It certainly hasn’t displaced the sort of traditional view, which is incredibly long-standing. So the remedial view is sort of three different things. One, the plaintiff gets the narrowest remedy available. That’s the remedy that cures the constitutional violation. When you’re a plaintiff and you’ve sort of showed the court that the government has violated your constitutional rights, you get the remedy, and it has to fit the violation. So you get the narrow remedy, and that kind of produces the guiding principle that the court is supposed to save and not destroy a partially invalid statute, which is something the court has said for decades and decades, though they haven’t viewed it so much in terms of remedial. But it fits the basic remedial rules as well. So second, in devising a remedy, the court has to strive to respect the legislature’s handiwork, which is kind of a basic remedial rule. It also kind of tacks on and is the root of kind of this idea of “we care about legislative intent,” and so if you’re worried about looking at legislative intent in a statutory construction mode, it fits better in a remedial mode. And then the third is the court has to be mindful of separation of powers and avoid substantially rewriting a partially invalid law. The court said this recently, I think, through Chief Justice Roberts, “Editorial freedom belongs to the legislature, not the judiciary.” In other words, the court should avoid using severability to engage in radical surgery. And in some sense, these are competing. You know, saving and not destroying it, might require some kind of rewriting. The question is, you know, is it the kind of radical surgery that the court is really sort of overstepping its boundaries? And I think much more so than the legislative intent test, this reflects sort of some of the questions the courts should be asking when it comes to severability. And I think it is ultimately tied more to remedy than statutory construction. One, if you could sort of think temporally, it’s usually considered at the tail end of the court’s analysis of a case. You know, you start with jurisdiction. You start with standing. The court construes the law. It makes an effort to avoid a constitutional problem. When it’s done that, it then reaches the merits, and then severability, at least most of the time, comes sort of at the tail end when the court is thinking about “What should the decree be? Should it be this law is invalid as to this particular plaintiff? Should it be something broader?” So I think in many respects, it does fit into thinking of it as a remedial matter.

Second, so we have this long idea that severability is a matter of statutory construction, but it’s not really construction in any usual sense. Statutory construction is about heeding the text, and severability is not. There’s no text to heed other than severability clauses. But in a case where you have no severability clause, there’s no text that you can, you know, sort of look at to get the answer to severability. It’s not really understanding about what the words mean but whether the statute should be held unconstitutional in part or in toto, which really fits more I think into the remedial camp. And as such, remedial concerns deserve more weight in the analysis. If you could think about this as under the rubric of saving constructions, you both have avoidance and severability. They’re both ways of saving a statute. The court could say — in NFIB, you sort of have both examples. You have Chief Justice Roberts using avoidance to say, “The mandate should be considered as text.” You also have him using severability, saying, “Even though I find a problem with the Medicaid expansion, the answer is severing.” So you have these two ways, but they differ in that avoidance comes before the constitutional analysis. And it’s actually statutory construction, though. When the court is construing the statute in avoidance, it’s also thinking about constitutional concerns as well. Severability, it’s really not statutory construction in any sense of the term. So I think — one, I think calling it statutory construction fits poorly, and I think looking at it as a remedy is a more grounded analysis. I think the main problem that courts struggle with in severability as it’s understood is that it asked this counterfactual question, you know. If the legislature realized this part was unconstitutional, would it have wanted what remained, or would it have wanted no law at all? Now, you have the instance where the legislature thinks about it, and we talked about the Bowsher case, where they devised the fallback law. But the fallback law is, I think, sometimes you see those, but they are a rarity where the legislature says, “I see this constitutional problem. I’m worried about it. I’m going to devise a solution so the court will know exactly what I want.” Most of the time they don’t do that. Either they’re silent, or they have this incredibly broad severability clause. And I think courts tend not to give them weight because it’s saying, “I don’t know what the constitutional problem is but whatever it is, whether it’s small or enormous, I still want you to save the rest.” And I think, although the courts have been saying such severability is a matter of legislative intent for decades and decades, there’s I think pretty pervasive distrust of severability clauses to the point that — right now the law is they establish a presumption. But that presumption is one that obtains really in the absence of severability clause. And I think the way severability clauses are treated, again, is sort of a test of whether it’s statutory construction. If it was purely statutory construction, they would be your textualist answer. They said sever, so sever, whatever the result it produces. And courts have not gone there. They don’t seem interested in going there. And I think part of the problem is it’s understandable that a legislature wants as much of its statute saved, but it’s much harder to explain why it would prefer the court get rid of the entire thing. And I think a good illustration of this problem is a recent severability case out of the Supreme Court called Murphy v. NCAA. This was a Tenth Amendment case involving a federal sports betting law. The court struck it down in an opinion by Justice Alito that I believe was joined by six justices. They found it a violation of the anti-commandeering

doctrine under New York and Printz, and then they proceeded to strike down the rest of the law. And Alito’s main argument was what remained once the challenged provision was struck down really didn’t make sense as a coherent whole. And to me, when you read his analysis, it feels wooden. He’s trying to explain why the legislature wouldn’t have wanted it, but it’s not really tied to any legislative materials. It sort of feels very speculative, and I think insofar his main point was, you know, we’ve kind of cut out the heart of what Congress enacted when it passed the sports gambling law. We’re not going to sort of rewrite it and produce a wildly different law. It would have been a much stronger opinion that simply went and said that rather than, I think, sort of a more tortured effort to try and phrase it in terms of legislative intent. And the last point I sort of want to emphasize is if you look at severability as a remedial view with sort of three principles that I started with at the top, I think it sort of largely accords with what the court has done, even though they’ve been much more focused on legislative intent. One, the main rule that’s focused in most of the cases is the idea that the court should save and not destroy. You know, you see that with NFIB. You see that in the Free Enterprise Fund case involving the Sarbanes-Oxley Act. You see that in abortion cases like Ayotte v. Planned Parenthood, which insists that sometimes the narrow relief is the best — the court should find the narrowest way to cure the constitutional violation and — you know. Then I think Roberts kind of — Roberts hits on this. He says, you know, “The narrow remedy with respect to Medicaid expansion is fully remedies the constitution violation in respect to Congress’ basic objective and imposing that remedy kind of fits with basic remedial principles. The plaintiff gets the narrowest remedy.” You know, and I think as sort of these cases, which, you know, sometimes I think liberal litigants are disappointed. Sometimes the conservative litigants are disappointed. But it’s a reflection that normally the court orders the relief that fully remedies the constitutional violation and doesn’t go any further. There are certainly exceptions. So Murphy is one example. There are a number of sort of a counter-tradition in some free speech severability cases where the court says, “No, we’re not going to — we’re going to leave more line-drawing to Congress. We’re not going to step in.” But then there are also counter examples like Booker where the court saved a statute, in that case, a sentencing guideline with — you know, with really quite a lot of rewriting, sort of changing mandatory sentencing guidelines to discretionary ones. And the court said, “Look, this is consistent with what Congress wanted to do when it passed the sentencing guidelines, and that’s all that severability requires.” Even though, you know, the dissent had a pretty good case. Wow, you’ve, you know, really rewritten the statute in major ways. And, you know, Booker, it’s almost even worse because not only did they rewrite in Booker, but what they left in place was so vague that they’ve had to keep rewriting it and rewriting it. And the court has had a lot of cases kind of fleshing out what was the meaning of the remedy that Booker rewrote. So that’s part of the canon. I guess sort of turning toward the ACA, I think against this backdrop, sort of the joint dissent, which, you know, urged invalidation of the entire ACA, including sort of everything in all 900 pages, including many provisions that were sort of far, far, far from the constitutional problems. The joint dissent identified stands as an outlier, and it sort of didn’t give much weight at all to the normal remedial role that the plaintiff gets the narrowest remedy and the court’s obligation is to save and not destroy. You know, it relied

very heavily on the argument that the ACA couldn’t function in a manner Congress intended. But that’s always true in severability cases. Since you’ve taken something out, it’s not going to function the way. The question, again, that the court sort of always poses is: Would Congress have preferred what’s left or no statute? And I think, in that case, the joint dissent really sort of dodged that question, and in my mind, it sort of brings back a point that history tells us — is that sometimes severability can be abused by court striking down more than their constitutional analysis gets them. And some examples to think about in this respect are the very end of the 1930s, conservative Supreme Court in cases like Carter v. Carter Coal, they used severability to strike down New Deal legislation they disliked. And you can go even back further to the post-Reconstruction era and look at cases like United States v. Reis, where the court used severability to invalidate Reconstruction-era civil rights law knowing that Congress with reconstruction over wouldn’t be passing any more federal civil rights laws. I mean, I guess so that sort of tees up the next panel. I’ll just sort of end by pointing out, in many respects, the Texas v. US case is kind of a severability case that breaks the mold because we have this sort of second snapshot. Of course, Congress zeroed out the penalty tied to the individual mandate, which I think pretty clearly makes the point that, you know, the rest of the ACA could survive without a mandate backed by sanctions. So the judicial guess that you often have in severability cases, you know, isn’t really here. We have kind of the second in time view where Congress recognized, “We’re fine keeping the rest of the ACA even if the mandate has no sanctions.” And I think, you know, that’s going to make it a very uphill battle. But I think briefing is happening pretty soon, and we’ll see and watch very closely. Thanks so much. Thomas P. Miller: That particular piece of fur will fly on our second panel, I think. And, we can stay within the bounds of terminology and categories, but, without stifling any cross- panel rebuttals and counter-rebuttals, which you may have as well, we do get caught in this set of — at least we start out with bright lines and rules, and then we’re suddenly sliding and well on the one hand, on the other hand, you know what I’m saying? So, David has argued on occasion that, whatever legislative intent is — the courts dial it up, dial it down — it’s not a particularly rigorous test. I guess, John, what I’m asking is — you have your preferences, but looking at the array of how this has been applied in practice, do we have enough of a binding framework where you have some predictability — I guess the ACA always wins, but beyond that — as to how severability is going to be conducted and whether the judiciary is straying into other lanes? John Harrison: Two things about that. First, just as a description of general severability approach, I think that there’s certain amount of unpredictability. I think that the language I quoted from Alaska Airlines, that sort of deeply embedded series of quotations, that that basically describes it. That is to say, there is an operative presumption in favor of severability, and that’s not an absolute bright-line rule. But it is meaningful. It actually provides guidance. The other thing I want to say about that is this is — and this can connect to some of the things David was saying. Questions of inseverability overwhelmingly are questions in which the courts are going to be in a situation of severe uncertainty precisely because they are dealing with the contingency that was not the basis on which the statute was primarily drafted. And that creates difficulties, and that creates difficulties in particular for textualists,

although textualists know there are unforeseen contingencies that the statutes have to be interpreted in light of. And therefore, what the courts are doing when they have things like presumptions of constitutionality — and therefore, the courts are coming up with ways to decide how they’re going to decide in light of uncertainty. And when they do that, they are perhaps inevitably making some policy judgments because what they’re doing is deciding which kind of error is worse than another kind of error. Because in cases of uncertainty, that’s the crucial thing. And so inevitably to some extent, the courts’ policy judgments are going to be involved here. And then, of course, I don’t want to be unduly realistic about the judiciary, but anytime there is a hard question, well, guess what may influence their decision? But to some extent, they’re doing their own sort of policy thinking is legitimate and unavoidable because they’re dealing with uncertainty. Thomas P. Miller: So Congress made a mess, and it’s cleanup on Aisle 5? John Harrison: And cleanup on Aisle 5 without being told which part of the problem do we address first. Not a lot of guidance. Thomas P. Miller: Okay. I want to get to some of David’s policy incentive aspects of analysis. David Gans: I mean, so I think there’s both some amount of predictability and some amount of — so, one, there is kind of a strong inclination to giving the narrowest remedy, and you see that. But I think often, you know, in bigger cases, sometimes that gives way, and you have — the sort of doctrinal framework of legislative intent is very malleable. And, you know, because you’re asking a counterfactual on which there is usually no evidence, you know, I think you can often make arguments on both sides. And the court — I mean, the court doesn’t really have tools to litigate them, so it’s very easy for their own views to slide in. Thomas P. Miller: But they can produce a faster remedy, whether or not it’s the right one, than going back to Congress. David Gans: They can produce — I mean, right. So the chief advantage of severability is, you know, sort of speed. There’s no sort of lag time of sending something back. Thomas P. Miller: Well, it’s close enough for government work as far as I can tell. You talked about in your other earlier article, the incentive structure. You point out quite well that every legislature believes as much of its work should be saved as possible regardless of whether they premeditated which parts were more important than others. So there’s a built-in bias. What kind of incentives does that provide, though, in legislating if you know you might have a safety valve in the judiciary? David Gans: I mean, so there’s — and this is something that I think the court kind of hits on a lot, which is that there’s a worry that the courts will do the job of tailoring a law to constitutional concerns as opposed the legislature. That’s something that I think Breyer mentioned in the Whole Woman’s Health case that also came up in the ADI case. It’s something that goes back to, you know, to some of the court’s own older severability precedents.

I mean, you know, it’s counterbalanced by the fact that we don’t always have this sort of pure — we don’t have a pure system of legislative intent. You know, we have — and I think Murphy is sort of an example of this — concerns about rewriting and being incorporated into the analysis in a lot of recent cases, which is sort of assigned to a legislature. You know, if there’s a major problem, the court might fix the minor one, but I don’t think — you know, if you look at the counter examples where the court gave a broader remedy, they tend to be ones where there wasn’t a small fix. There was a bigger one. And you can debate kind of among those cases where they should have come across the line. Thomas P. Miller: Okay, one of the places we started out structurally was the idea of separation of powers. John, I was discussing this issue with a mutual friend of ours and past colleague of yours, Tom Christina, and he raised this question for you: If a line-item veto is unconstitutional, does treating a statute as consisting of discrete portions for purposes of severability analysis create asymmetry in the powers among the three branches? John Harrison: Well, my answer to that is going to be in principle, no, precisely because I don’t think that severability is something courts do. Precisely because I think it is something the Constitution does. And hence, there’s a difference in a line-item veto and courts engaging in excision. Because if courts are doing what they ought to be doing, they’re not doing the excising. They are finding it and not making it. Now — Thomas P. Miller: If they’re doing what they’re doing. John Harrison: Well, right, and then the next point is going to be that to the extent that they are indeed influenced by their own policy judgments, the way that the president is legitimately so in exercising the veto and a governor is legitimately so in exercising a line- item veto, they should stop. Thomas P. Miller: Okay, we’ll wait on that one. On lower court rulings, you gave the traditional view that they’re only giving a ruling within their jurisdiction, and it doesn’t have a larger impact. I know you’ve spoken on this elsewhere. We’ve seen some federal district courts issuing nationwide injunctions, so sometimes those rules don’t seem to hold. What’s going on? John Harrison: Yeah, that is another important question that’s gotten a lot of attention recently, and it is related to a couple of things I was talking about. This is the situation where, say, the federal government is — has a program. There is one party who’s affected by the program and seeks an injunction against carrying out the program one way or another, and the injunction that the court gives is “Don’t carry out the program at all.” And it’s normally put in terms of being nationwide. The actually interesting phenomenon is when the court is in effect providing relief to non-parties, somebody who did not sue. And it is certainly true that that makes it possible when a lower court does that to do something that is like what the Supreme Court of the United States does when the Supreme Court sets a nationwide precedent. Because when we say the Supreme Court has invalidated a statute, I think what we really mean is they have set a precedent that every other court will follow that the statute is invalid. So, the problem of the so-called nationwide injunction relief to non-parties is a way in which a single trial court can go beyond what trial courts normally do by exercising a remedy. Notice this then becomes a part of both the law of remedies under what circumstances can a

court that has one plaintiff before it give a remedy that in effect extends to a whole lot of other plaintiffs that is to some extent governed by the law of remedies. I think in some of these cases, the lower courts have made an error with respect to how broad the remedy should be under principles about — but as David was saying, the remedy is supposed to remedy this plaintiff’s wrong and not somebody else’s. There are also questions having to do with, beyond the law of remedies, in Article 3 standing problem. That is to say, the courts have often said it’s a principle of the scope of the judicial power and the nature of a case or controversy that a party is entitled to a remedy. That remedy is only that party’s problem and not somebody else’s. So a lot of the same issues come up in those cases. David Gans: But, I mean, the issue about nationwide injunctions is in many respects far afield from severability. Thomas P. Miller: It’s all part of — it’s doing the right thing. We’re impatient people, and we just want to get to the bottom line. And however you get there, it tends to be the case. David Gans: Well, right, lots of people like nationwide injunctions when they’re getting them. John Harrison: And one great thing about this topic is both axes have been gored in the last several years so it’s to some extent possible to have some real perspective on it. Thomas P. Miller: Yeah, there’s oxen all over the field. You know, we’ve got these different categories and tools, but let’s take constitutional avoidance — does that end up migrating back and forth into severability, into how you decide these cases? Do these items fall into these slots and categories? Or does a court get stuck with a problem and says, “How are we going to get out of it?” David Gans: I mean, I tend to — I mean, I’m not sure how much migration there is back and forth, though. Thomas P. Miller: But they are alternative ways to deal with it. David Gans: I mean, they’re both ways to save a statute that’s attacked on constitutional grounds. They do it in very different ways. When the court is avoiding, then it’s construing the statute, and, you know, as Scalia pointed out, then the statute has that construction kind of going forward, even as to other cases in which there’s no constitutional problem to avoid. That was the Martinez case. And avoidance is both constitutional interpretation and statutory construction, and I think the Martinez case sort of illustrates that. And the court at least sometimes says, you know, “We can’t take avoidance this far.” I mean, there are loads of cases where people say — they point to a case — you know, I certainly recall NAMUDNO, the precursor to Shelby County, being a case where people said, “Boy, Chief Justice Roberts kind of pushed the limits of what, you know, what could be called avoidance because he didn’t want to reach the merit.” So, I mean, I think they have their own dynamics. So I’m not sure courts sort of say, you know, “We’re going to do avoidance to avoid severability.” Thomas P. Miller: They wouldn’t say it out loud, no.

David Gans: I’m not even sure they think about it. You know, I think mostly if they’re thinking about avoidance and are, you know, perhaps going further than the typical case, it’s because they don’t want to reach the merits, not because of something connected to severability. John Harrison: First, on constitutional avoidance is where a court construes a statute in a particular way — not to avoid saying the statute is unconstitutional but to avoid having to decide whether it’s unconstitutional. And that practice has been criticized, I think to some extent legitimately, for encouraging courts to bend statutes, like the case David was just talking about. I do want to say — and this illustrates something I think that’s important about severability. There is an important configuration in which a court quite legitimately and properly avoids the constitutional question in a case that poses a severability issue. That’s where the party before the court is saying, “I’m subject to something that’s constitutional” — that’s like Alaska Airlines — “but there’s this other thing that’s unconstitutional, and it’s inseverable.” It is perfectly legitimate and I think better for the court to address the severability question first — maybe the point of severability doesn’t always come at the end because courts sometimes do what I’m about to describe — to say, “That may be unconstitutional, but if it is, it’s severable.” So you, the person subject to the thing that’s okay, you have no grounds to complain either way. Either it’s constitutional or it’s severable, and you’re subject to the other provision. I think that’s absolutely right. I don’t think that is illicitly docking anything. I think that’s addressing a genuine statutory construction question, the question of severability. Courts should do that. David Gans: I mean, I agree with that, and if you look at sort of the older severability cases, there were many more of those. I think maybe now we have litigants who — they make sure they have the plaintiff who is challenging the thing they’re complaining about. And so I think if you look in recent cases, there are fewer cases like that, though perhaps NFIB was one where that was an issue. And maybe that’s an issue going forward, but more of the time, you see cases where severability comes at the end. Thomas P. Miller: We have both a general audience and a media and legal audience, so let me bastardize this. This is always the case — beyond more precise conclusions — which is — okay, thumbs up, thumbs down? What kind of job are the courts doing on severability? A few slips here and there, but we know basically what’s going on. There are some hard cases on the margins. Or is there some slack and some softness in what the courts say as opposed to what they do? David Gans: So, I mean, as I said, I actually think it’s moving in the right direction. That doesn’t mean, you know, there aren’t cases — I think I find Booker sort of quite problematic insofar as, you know, they substantially rewrote the very part — it wasn’t that there was another part that was related to what was held unconstitutional. It was the very part that was held unconstitutional, and, you know, the court has had to kind of continue sort of rewriting the law because of the lack of clarity. Thomas P. Miller: They’ll get it right eventually?

David Gans: But, you know, I think in some of the ways I mentioned, they’re at least distancing themselves from this idea that it’s simply a question of statutory construction, which I just think doesn’t make sense. And they are incorporating it more into remedies, though, again, perhaps they’re not doing that fully. But you certainly see evidence of this in a number of recent cases. And I think the court has ended up largely in the same place because instead of talking about legislative intent, they’re talking about, you know, “You get the remedy that fully remedies your constitutional violation and not more.” Thomas P. Miller: All right, wrap up. John Harrison: I think just in general, I would give them a pass but not an honors grade. They are doing — Thomas P. Miller: They’re probably just auditing it. John Harrison: They’re doing okay, but they could do better. Exactly. And the Supreme Court could give the lower courts some more useful guidance. I will say about the remedy question, as I said, I think most of the time it doesn’t matter. Most of the time, one opinion could be written in terms of severability and the remedy; another opinion that reads exactly the same conclusions and uses basically the same considerations about legislative purpose could be written in the terms that I would find more correct. Wouldn’t make a difference. Now and then, it does make a difference as, for example, the court came within one vote of what I think would have been a very serious error of treating it genuinely as a remedy and saying that plaintiffs who do not have standing with respect to the ACA should nevertheless be entitled to get the Supreme Court to say the whole thing is inseverable. So I think that the remedial understanding of it is an error. It’s a figure of speech run amok, and they should get that under control and not do that. David Gans: I mean, the standing issue in some ways is presented in sort of a subset of cases, and that I take it is still sort of open. The court could continue treating it as a remedy in cases where you had standing to do so but say, you know, “There are limits, and we won’t even consider severability in cases where there’s a standing issue.” Thomas P. Miller: All right, I’ve awarded everybody three credits of continuing legal education, even if you’re not members of the Bar. We’re going to thank our panelists, take a very short break just to change hockey lines, and we’ll be back in about five minutes. [Break] Thomas P. Miller: Welcome back everybody from our brief break, a little longer than I wanted between panels. We’re now going to take up the severability issues in Texas v. United States — as applied, as it were — although it also could be considered a “full facial” challenge in light of the December federal district court ruling. The very quick recap: That court ruled on partial summary judgment that the individual mandate in the Affordable Care Act as amended by the last Congress has become unconstitutional as of January 1, 2019, and the rest of the law cannot be severed and saved,

QED. Now, we’re on the way to the Fifth Circuit Court of Appeals, and the House of Representatives under new management just joined this litigation party. A few stipulations upfront: There are other significant legal issues in this case that could short-circuit another run at severability on appeal — standing, whether there’s something unconstitutional that happened, and a few other lesser cats and dogs. But as much as possible, with four litigators on an afternoon panel in Washington, we are not going to get bogged down in those items and instead move ahead to our separate hour of arguments over “what if” severability, sort of like the Supreme Court did back in March of 2012 in NFIB v. Sebelius. So we’ll have four opening rounds apiece with no hitting on the break, and up first is Josh Blackman. And I will introduce each speaker separately because they all insist upon being introduced, even though they need no introductions. Josh is an associate professor of law at the South Texas College of Law in Houston. He specializes in constitutional law, the United States Supreme Court, and the intersection of law and technologies. He is the author of a few books: “Unraveled: Obamacare, Religious Liberty, and Executive Power” in 2016. Before that, “Unprecedented: The Constitutional Challenge to Obamacare” in 2013. And among other things, he’s the founder of FantasySCOTUS, the internet’s premier Supreme Court fantasy league. Many of the real rulings are enough of a fantasy, but aside from that, he’s the author of over four dozen law review articles, including the upcoming “Undone: The New Constitutional Challenge to Obamacare,” which was to say the least very influential in Judge O’Connor’s December 14 ruling in Texas v. United States. A full disclosure: I had to invite Josh here in order to ensure that I get mentioned in the index of his next book, pending a Fifth Circuit ruling and Supreme Court grant of cert. Josh Blackman. Josh Blackman: Thank you very much. For me, talking about Obamacare feels like the movie “Groundhog Day.” It’s the same script that repeats itself over and over again. We all know what happened, and we all know what will happen. We just don’t know how quite we’ll get there. My analysis today doesn’t focus on the mandate. Jim gave me fierce instructions. I will assume that the Supreme Court finds that the mandate is unconstitutional following the Tax Cut and Jobs Act of 2017. I’ll just assume that. Okay. The resulting question then is what is the remedy for this constitutional violation. I think there are four possible ways that the Supreme Court can go. First, the mandate and only the mandate will be enjoined. Second, the entire ACA, all of it, will be halted. Third, the mandate plus guaranteed issue and community rating are blocked. GI and CR, these are the provisions that ensure that insurance companies can’t discriminate against sick people. And the fourth provision is a bit unorthodox: that the correct remedy is to kill the tax cut — that is, to restore the penalty at 100 — sorry, about $700 a year, give or take. So let’s go through the options one at a time. First, if the Court finds that the mandate is unconstitutional, then duh, they have to declare the mandate unconstitutional and say they will not give effect. This remedy will not have much of an impact beyond the people on this stage. I would take it as a salutary victory for the rule of law. I’ve actually come to grips with Chief Justice Roberts in NFBI. I’ve accepted it begrudgingly that this was his best way of reading

the law, and if his idea that the law can be saved because the mandate raises revenue and the mandate no longer raises revenue, that now it’s constitutional, I’m happy. Again, no one else will care about that, but I’ll be very happy with that ruling. I will be happy if the Court simply declare the mandate unconstitutional and went home and said, “The rest of the law survives.” Okay. That’s option one. That’s easy. Option two is the remedy that Judge O’Connor adopted in Texas. And for full disclosure, Judge O’Connor cited my writings in four or five different places, so he found my things influential. That’s probably a sign that he’s wrong. But the challenge to propose the remedy, you have to kill the entire ACA. And they base this remedy on the arguments advanced by the joint dissenters in the NFIB decision, right? We have Justices Scalia, Kennedy, Thomas, and Alito, and they argue that if the mandate is unconstitutional, then the rest of the ACA must fall. Even back in 2012, right, before all this went on, I was skeptical of the all-or-nothing proposition. I thought that aspects of the ACA could possibly be salvaged. The Medicaid expansion, perhaps a few other provisions, probably would exist independent of the ACA, so I didn’t fully agree with the joint dissenters back in 2012. I could be persuaded, but I was still a little bit on the fence about this. But Judge O’Connor found that the remedy that should be adopted is to kill the entire ACA pursuant to basically what the dissenters did in 2012. Okay. I want to focus now primarily on options three and four, which I see is where a lot of the attention should be focused. In 2012, Solicitor General Verrilli argued to the Supreme Court that there was a remedy to be had. If the Court found that the mandate was unconstitutional, the correct remedy was to declare the mandate unconstitutional and also chop off the guaranteed issue and community rating provisions, the GI and CR. Now, why did Verrilli make this argument? Why did he say that the Court should strike down other parts of the law? The Obama administration took the position that the mandate was essential to the preexisting condition protections, okay? And it didn’t make this argument about it whole cloth. It looked to findings in the statute, right? The ACA didn’t have a severability provision like we know it. It did have express statutory findings in which it said in different places — I think at least twice — that the mandate was essential. That’s the word it used — “essential” to the operation of the GI and CR marketplaces — and really argued that without the mandate, these provisions couldn’t function. Okay. Maybe you agreed with that in 2012; maybe you didn’t. I found it actually pretty persuasive in 2012, but that doesn’t matter. Fast-forward to 2017. After the Tax Cut and Jobs Act was enacted, Attorney General Sessions, who’s in the news recently, made a finding, and he argued that the Obama — I’m sorry, the Trump DOJ would not defend the mandate and would also argue that the GI and CR provisions would have to go if the mandate was unconstitutional. He defended the rest of the ACA, so he didn’t quite go as far as Texas. He said, “I am keeping the same argument that Verrilli adopted five years earlier.” Now, I know the common response is, “Wait a minute, Josh. We know exactly what Congress thought in 2017, right? They didn’t want to kill Obamacare. They made the decision that the ACA can exist without the mandate.” I agree, right? As a matter of politics, the mandate never actually worked. I think the penalty was always too small, and it was not effective at nudging people into the insurance

marketplace. There are lots of exemptions and waivers, and it wasn’t enforced well. I’m with you. But that’s not the only question we have. There are different lays — sorry, there are different ways of measuring legislative intent, right? Now, Congress can express its findings in a statute. Congress can express its findings in a committee report. They can express their findings in a floor statement, right? They can express their thoughts in a press conference. Hell, now politicians can express their thoughts in a tweet, right. That’s now admissible evidence in any federal court. So if you were to poll the members of Congress in 2017 who voted for this bill and say, “Can the mandate exist?” — I’m sorry, “Can the ACA exist without the mandate?” They’ll say, “Yeah, sure, the mandate is not necessary.” That doesn’t win the day, right? That’s not enough, and the reason why are these statutory findings I mentioned. These are findings that Congress adopted by bicameralism presentment. They’re in the law. They’ve not been repealed. The mere fact that Congress did something consistent with these findings does not affect an implied repeal of those findings. Now, you may say, “Josh, wait a minute, these findings are not enough to save the law.” Maybe that’s right or wrong, but the mere fact that Congress took an action that consists with a statute doesn’t render a duly enacted statute invalid, so I think Sessions was actually correct to look to these findings. Now, I think Sessions screwed up. He could have defended the severability with ease, so I don’t agree with his decision not to defend the GI and CR. But I think there’s a credible argument, right? I think there’s a credible argument that because Congress hasn’t repealed those findings, as a matter of law the mandate was still essential, and that’s why I think there’s a good position to take. I haven’t actually come to a firm conclusion. I think there’s a good position that the GI and CR provisions have to go. Now, would this be the end of the world? No. Almost every state in the Union has some form of guaranteed issue in the book, right? If we repeal guaranteed issue tomorrow and California and these other states suing, nothing would change. Their GIs are even more strict than the federal standard. This is not like our other favorite case, King v. Burwell, where if the challengers won, states would lose lots of money. States are fully competent to enact GI and CR. It’s popular as hell. In fact, I wish Congress would enact a single-page statute imposing GI and CR as an independent basis. I don’t care about health care policy. It’s irrelevant to me. I mean that sincerely. It’s not my thing. I do care about faithful application of the law, so I think it’s a plausible solution for the court to kill the GI and CR in the same ruling that Verrilli argued in 2012. Now, option four is the funkiest, and I mean this. I didn’t buy it at first, but I’ve come around a little bit, right? Let’s think of it this way. In 2017, Congress did something bad. They took a statute that was constitutional, and they made it unconstitutional, right? They knew — or they should have known — that by dropping the penalty to zero, they were rendering the ACA unconstitutional. I knew it. I was watching, and I was like, “Wow, man, they just made Obamacare unconstitutional.” I was watching the debate, right? I’m sure their staffers who realize this.

How then do you resolve a constitutional violation where later in time, Congress does something to render an earlier-in-time statute unconstitutional? Well, there’s an old case. It’s old, from the 1920s, called Frost v. Corporation Commission of Oklahoma. An old case, but still cited every now and then. And Frost teaches a lesson that when you have the sort of later-in-time action that renders an earlier statute unconstitutional, the remedy is to kill the amendment. You heard me right. The remedy would be to actually reimpose the penalty. Then everything’s copacetic, right? We’re back in John Roberts’ world. Everything’s happy. I know this sounds nuts, but I think there’s actually some weight here, right? If we take the position seriously that what Congress did in 2017 was unlawful, then the remedy is to kill what Congress did in 2017 and raise the penalty back to $700 a year. Now, I don’t go full hog on this remedy because I don’t think it’s available in Texas v. United States or Texas v. Azar, whatever they’re calling it nowadays, right? Why? No one in the Texas case challenged the tax cut. Courts don’t have this sort of red pencil they can just strike out any provision of the US code they want, right? There a limited menu of options available in the Fifth Circuit, and I don’t think one of those options is killing the tax cut. Now, in Maryland, the attorney general of Maryland’s name is Tom Goldstein — actually it’s not, but Tom is their de facto AG — filed a lawsuit challenging the tax cut. Now, there’s a funny question about standing. Do you have standing to challenge a tax cut? Right? They’re removing a penalty from you. It goes back to the mandate debate. I only talk about standing. I think it’s a problem. I don’t think you can challenge the tax cut because it’s actually removing a burden, which you could say the same thing about the mandate, and we could go in circles all day. But I think there’s a — you have to give some weight to the argument that the possible remedy is reimposing a tax, which then creates an even more bizarre circumstance. If the Supreme Court rules that all these people who didn’t pay a tax have to pay tax, you know, we’re all tax delinquents, right, now have to pay back taxes and there’s penalties, I don’t know what that is. In other words, this case is messy. It’s messy; it’s unpopular. No one liked it except for maybe me and three other people, right? This is not good for Republicans. It’s not good for anyone. But I start from the principle that I believe John Roberts. He made his ruling. I believe he thought that was the best ruling he can have, and let’s see if he stands up for it. Thank you all so much, I look forward to your questions and answers about Obamacare or the wall or anything else. Thank you. Thomas P. Miller: Thank you, Josh. You’re able to come out in favor of four different positions somewhat, which is a good goal and it’s good for business. Josh Blackman: I try. Thomas P. Miller: Our next speaker is Ilya Somin. He’s professor of law at George Mason University, author of a number of books including “Democracy and Political Ignorance” — he’s more the latter than the former but, well — “Why Smaller Government Is Smarter,” that’s right. And “The Grasping Hand: Kelo v. City of New London and the Limits of Eminent Domain” and also coauthor of “A Conspiracy Against Obamacare” The Volokh Conspiracy and the Health Care Case.” He spent a number of years as coeditor of the Supreme Court Economic Review, and previously clerked for Judge Jerry Smith, the US

Court of Appeals for the Fifth Circuit. So he’s been in the Fifth Circuit before, interestingly enough. And Ilya also earned a J.D. from Yale Law School. And he’s on the brief, one of the briefs, that is quite critical of the plaintiffs’ argument in Texas v. US. And I suspect he’ll be filing more often again in the future on that front as well as others. Josh Blackman: And he was my property professor at George Mason so I’m always fond with Ilya. Ilya Somin: Josh’s most important credential, which wasn’t mentioned, is that he’s one of my former students. I can’t imagine that was omitted in his bio. Thomas P. Miller: You can go up. That’s fine. Ilya Somin: So I’d like to start by thanking AEI for organizing this very timely event and all of you for coming. I’m very happy to be here, though, I’m not entirely happy to be in the position of having to defend Obamacare because like Josh and others here, I was involved in the earlier Obamacare litigation. I argued that the mandate in its original form was unconstitutional, and I’m still unhappy that the Supreme Court decided things that way. I’m also unhappy that in 2017, the Republican Party for the most part failed miserably in its attempts to repeal Obamacare. My main objection to most those attempts was that they didn’t go far enough. Nonetheless, I do not agree with the severability argument that was put forward by the 20 states in this case or the slightly more narrow version of it that was endorsed by the attorney general. And I think if it does persuade the courts, then it would make a hash of severability law, and it will also set a potentially dangerous precedent, which is why I joined in the brief that was mentioned a moment ago. So as you saw earlier in the previous panel, there is a lot of disagreement about how severability doctrine should work and how the court should handle this. I don’t propose to resolve that disagreement here, but I think on any reasonable theory of severability, this particular argument that the newly neutered mandate is inseverable, that argument should fail. And I’ll go through several different versions of severability theory and explain why that’s so. And then at the end, I’ll talk a little about the dangers of the precedent that would be set if the severability argument advanced by Texas and the other states were to be accepted by the courts. So as you heard previously, the standard view on severability is: What did Congress intend? This is the rhetoric the Supreme Court uses. Would the Congress have wanted the statute to be kept in place, the remainder of the statute to be kept in place, if this one part is struck down? And in this instance, if in any case, you can figure out what Congress’ intent is. Here it’s pretty clear. They themselves in 2017 essentially neutered the individual mandate. They removed all possible penalty. If they thought this was really essential to the rest, they would have kept the penalty, or at least they would have kept some sort of penalty. So their actions very strongly indicate their intent that they don’t believe that this is all that important to the rest of the statute. If they did believe it, they would have let it have at least some teeth. And the court, by the way, has said that Congress can express its intent not just in findings and statements and the like but in the actual text of their law.

Making the mandate completely toothless is a pretty powerful statement of congressional intent. At the very least, it suggests that Congress prefers a situation where the rest of Obamacare or most of the rest of it stays in place, whereas the mandate gets neutered or eliminated entirely to a situation where either Obamacare gets repealed entirely or one where the mandate is kept in place like it was before 2017. Now, Josh and the plaintiffs in this case, they say, “Well, what about those 2010 findings that say the mandate was essential, right?” There were statements by the Obama administration and others. I think it’s pretty obvious what those statements refer to is not the mandate as it exists since December 2017 — it’s the mandate that existed before with the associated penalty. I think you can look far and wide and not find any member of Congress or the administration or any other critical political actor who thought that — who thought then or thinks now that what’s really essential to Obamacare and its operations is a mandate that has no teeth whatsoever. This just isn’t true, and no relevant political actor, to my knowledge at least, believes it. And so, therefore, those 2010 statements, even if they are in some sense still binding, they’re binding only with respect to a version of the mandate that doesn’t actually exist anymore. They’re not binding with respect to the one that’s before the court, which is the one that’s essentially neutered. And I agree that the neutered mandate is now unconstitutional under John Roberts’ reasoning. The court can and should strike it down, but that doesn’t mean that the rest of Obamacare is inseverable from it. Now, some people say, we shouldn’t look to the intent of Congress. Maybe even some argue that intent is just a meaningless concept when you’re talking about a multimember body with hundreds of different people. What you should look is sort of how does the statute actually work, what would be the practical effect on the rest of the statute of removing this thing. And such calculations can get murky. John Harrison mentioned in the earlier panel, they might dissent into policy judgments that are contestable, but in this case, I think it’s pretty obvious that removing a mandate that has been completely neutered would have virtually no effect on the operations of the rest of the statute. I think, you know, that’s pretty clear, and therefore from this sort of more practical approach, you end up with a similar result. Finally, there’s some people, including the recently appointed and confirmed Justice Kavanaugh, who argued that what we should really be doing or what courts should be doing in the area of severability is to, as he puts it, cut the statute to the narrowest extent possible unless Congress has indicated otherwise in the text of the statute. Here cutting to the narrowest extent possible means just removing what’s left with the mandate, not removing the entire thing or removing large parts of the rest. He does mention the text in the statute, but the text in the statute nowhere says that the mandate as it currently exists is inseverable. Indeed, nowhere does it even say that the original mandate was inseverable as such. It just said that it was essential or extremely important to the operation of the rest. Whether or not that was true of the original version of the mandate circa 2010, it’s not true of what’s left now. Finally, what happens if, contrary to my expectations, the Fifth Circuit and ultimately the Supreme Court buys the severability argument that’s advanced by the states? I think it would

set a potentially dangerous precedent and one that people on different sides of the political spectrum have reason to worry about. One big potential impact of this is that it would make the courts in the future reluctant to strike down parts of laws. If striking down one, even a relatively small part of a big law, means that there’s a good chance the whole thing has to go, many courts will be very hesitant to do that. Now, maybe if judges who are as libertarian as I am would not be hesitant. They would say, this is a feature rather than a bug. But probably 99 percent of judges are not like that. They will hesitate to create a situation where the entire statute is lost for want of a small nail, particularly if it’s a politically sensitive, major statute like the ACA. So therefore, I think the end result of this will be the courts will be tempted to allow a lot more unconstitutional activity to go through, which strikes me as a bad thing. Similarly, Congress might become more reluctant to repeal parts of statutes. Obviously, if the key swing voters on the December 2017 tax act, if they had thought that this would lead to the collapse of all of Obamacare, they probably would not have voted for the act, people like Murkowski, Collins, the late John McCain, and so forth. And if in the future Congress thinks that repealing one part of a law could be a big major lock and cause the whole thing to come crashing down, they would be less likely do it. That, too, strikes me as not a very positive consequence of going this route. So I don’t know for sure what the courts will do. I think ultimately they will not go for the severability argument on appeal and in the Supreme Court, but I admit I could be wrong about that. Screwy, surprising things have happened previously in the Obamacare litigation, so we’ll have to see what happens. But it seems to me that on any reasonable interpretation of severability doctrine, this particular severability argument or this particular inseverability argument deserves to lose. Thank you. Thomas P. Miller: Thank you, Ilya. You conjure up visions of whenever you approach ACA litigation, you’re nearing the Bermuda Triangle, and the usual instruments don’t seem to work. Our next speaker is Jim Blumstein, University Professor of Constitutional Law and Health Law and Policy at Vanderbilt Law School and he is director of Vanderbilt’s Health Policy Center. He served as principal investigator on numerous grants concerning managed care, hospital management, and medical malpractice, so you have someone who actually knows health policy here, as well as health law, which is only an option; not just a feature, maybe a bug. He was elected to the National Academy of Sciences Institute of Medicine and was awarded the Earle Sutherland Prize, which is Vanderbilt’s preeminent university-wide recognition for lifetime scholarly contributions. He also served as former Tennessee Governor Phil Bredesen’s counsel on TennCare reform — not as campaign manager for the Senate race, I believe — and he has participated actively in a number of Supreme Court cases, arguing three. Jim is a creative litigation strategist, I would point out. Some of you may recall that he was the key developer of the Medicaid coercion argument that led to the ACA’s Medicaid expansion becoming a voluntary option for the states in the 2012 NFIB v. Sebelius ruling. Jim Blumstein. Jim Blumstein: Thank you. Thanks to Tom for including me in this very distinguished set of panels and the fellow panelists.

It’s been several years since I was at AEI, and I remember under Tom’s leadership, we had a program before the NFIB v. Sebelius case in which we talked about Medicaid expansion. And Tom was very much facilitating that discussion, and no one was really interested in that part of the case except a few of us academics who put forth the theory. I want to start by recognizing that people can sometimes say things that have meanings that are kind of the opposite of what they expect, and I think sometimes in litigation, this is true as well. And I love to tell Yogi Berra stories. But, you know, the Yankees, when he played for the Yanks, trained in St. Petersburg. And he was waiting for his buddy Mickey Mantle outside the training facility. And he was dressed in T-shirt and shorts, and there was a young woman with a tank top and shorts. And she saw Yogi and said, “Yogi, you look pretty cool.” And so Yogi said back to her — because she was dressed the same way — he said, “Well, you don’t look so hot yourself.” That’s not really what he meant to say, but, you know, that comment has more than a temperature dimension to it. And so sometimes things we say are not exactly what we mean, and that was a bit of a malapropism. First, I want to quickly go through the background. Josh and others have touched on this, so I’ll kind of run through this. But basically, in constitutional law, a federal government doesn’t have inherent powers, unlike states. There must be a source of authority to act. And with respect to the Affordable Care Act, the government put forward basically three: the Commerce Clause, the Necessary and Proper Clause, and the taxing power. The Supreme Court, clearly, the five justices held that the Commerce Clause and the Necessary and Proper Clause did not provide a constitutionally valid basis for enacting the Affordable Care Act. The chief justice split with the other four in that coalition of five justices and concluded that the Affordable Care Act could be justified under the taxing power and only under the taxing power. And so, when Congress in 2017 passed a bill as part of the tax cut bill, it undercut the constitutional foundational basis for justifying the individual mandate in the Affordable Care Act. It was no longer revenue raising. It couldn’t be seen as a tax, and I think other fellow panelists have said in this — Ilya — I think I heard him say — I don’t want to put words in his mouth, but I think I heard him say that that he agreed with that point, that the stripping away of the revenue and the tax law undercut the validity of that portion of the Affordable Care Act. So the question then is: How far does the relief go? Is the relief limited to the individual mandate itself, or does it have legs beyond that? And so here’s where we get into our discussion about severability. And basically, I don’t want to kind of redo this, but essentially, the bottom line on severability is you leave as much of the law intact as you can. You give effect to congressional will, and then you ask — and this was added in the Murphy case — is the end result one that Congress would find or that the court would find is acceptable. And we have examples of where the court has struck down laws. I mentioned today prominently where the court struck down or invalidated laws, very significant laws. The Gramm-Rudman-Hollings legislation was struck down in its entirety, and the line-item veto legislation was struck down. And yet we have other examples like the sentencing guidelines, like the Booker case, where the court is kind of trying to find what cuts can be made and to retain the overall theory. I find the Booker case not to be very satisfying as a matter of judicial surgery, but there are precedents on both sides.

And so my bottom line here is that severability doctrine is quite imprecise. There are some broad parameters, but there’s tremendous amount of judicial flexibility. And the courts are asking a difficult question of whether some excisions can stand or whether, as a result of some of the excisions, the whole law must fall. And that is to say, a court may undo the entire structure because of the uncertainties of what Congress would have wanted, the uncertainties of how all the pieces fit together, whether you have so much — let’s cut out, you have essentially a termite-infested structure, and the whole thing has to go as a result. And so I think there’s an element of political determination as well. And to dress it up with my former teacher, Alex Bickel, who talked a lot about dialogue between the courts and the political branches. And ultimately, the idea is the courts undo a portion, who should redo the legislation? And Bickel was famous for saying, “That’s a dialogue where courts should kick back to Congress and let Congress redo the political dimensions.” In my reading, that’s essentially what the district judge did in the Texas case, is that he kicked it back and said, “We’re going to undo everything,” and then force the Democrats and Republicans, as much as they don’t like to talk to each other these days, to come back and provide a political fix. And I’m going to undo everything, set the table, and in a sense, force the parties to come back and renegotiate this. So in the ACA, the ACA — and Justice Ginsberg says this in the NFIB case — tried to retain a market-based approach, not a Medicare or a Social Security approach. Justice Ginsberg recognized that Congress could have established a social welfare approach but didn’t do so. What the objective of ACA was was to keep a market-based approach in place and then to offset some of the adverse consequences of the market-based approach when you add these social welfare provisions to it. So that’s basically what they tried to do. And what makes a market work in insurance is that a market assumes that there are similarly situated people in a pool. And maybe 20 percent in the pool are going to get really sick, 80 percent may not really have a good deal out of their insurance, and at the end of the day, you buy into the pool because you think you may be one of the 20 percent, in a sense, you hope it’s the 80 percent. But in any event, you pay in willingly because you’re insuring against a risk, against a risk that may occur, not one that has already occurred. And the problem with the guaranteed issue provision is that it undermines insurance. There are a lot of things you can say about the guaranteed issue provision, but you can’t call it insurance. It’s not insurance, any more than buying life insurance when you’ve been diagnosed with cancer. Everyone knows intuitively that that won’t work. Or with my students, I give the example of your neighbor has a fire and the wind is blowing in your direction and you call your insurance company and say, “Oh, sign me up for fire insurance.” Well, it may be that you really need fire insurance then, but it’s not insurance. It’s a form of after-the-fact social welfare judgment. It’s a social insurance idea, not a traditional insurance idea. So what crosses the gap here? What marries these two ideas of traditional insurance and social insurance? And the problem is that you need some folks willing to pay the 80 percent so that the 20 percent in the insurance pool who need it can get their health insurance. And by the way, I always like to tell the students, I never feel cheated at the end of a year when I don’t collect on my life insurance. I never feel cheated that I lost my premiums.

Actually, every year I celebrate in January. I made it through another year, and I’m very happy. And I’ve yet to feel cheated. But that’s the idea, but if I need — Thomas P. Miller: Did they give you a lousy T-shirt? Jim Blumstein: But if I follow the rationale of guaranteed issue, if I got sick during that year when it was too late to sign up and had a preexisting condition, that would be gaming the system. And it would be in my interest. I would much rather buy “insurance” when I know I really needed it, but that’s not the nature of insurance. So there are many things that you can say about guaranteed issue. You can’t say it’s insurance. It’s just not insurance. And to say it’s insurance is a misnomer. That’s why I start with Yogi Berra. It’s not insurance. It’s social insurance if anything. And so then the question is: What did the ACA do? The problem is there’s no incentive to sign up if you can always get insurance, and that will diminish the pool. And states had that example beforehand, a dozen states or so, and there was a death spiral. Well, there may not be a death spiral now because of the subsidies, but it has adverse consequences. And so when you take the mandate away, which is what the 2017 tax law did, we can expect that there will be many fewer people who will not sign up. And that takes away the deal because you no longer have a substitute for a market. The substitute for the market was coercion. In a market, you don’t need coercion because the incentives are to sign up if you want to insure against the risk. Once you have guaranteed issue, you need to find a way to put dollars into the pool so that the sick will really have the dollars necessary to support them when they get sick, when they need it. So as I said, there may be a need for coverage, but the guaranteed issue is not insurance as we know it. So the government recognized this. And no one has talked about this, and I’m surprised in the context of the ACA. People care about preexisting conditions. This last election showed that that was a big concern. But in my terminology, what that means is that there’s a strong constituency for treating health care as social insurance, and, in fact, the new wave or the new articulation of single payer is really to transform and to get rid of a private insurance market and to transform medical care to social insurance and to give up on traditional insurance. And that’s a hotly contested issue. Certainly, the politics were not there in 2010. So what does that mean in terms of what the ACA did? The ACA wasn’t going to kick in for four years. It was passed in 2010. It became law — operative in 2014. And so the benefit of ensuring those who have preexisting conditions was going to kick in at the same time that the coerced payments, the individual mandate was going to kick in, and the court and the Congress recognized the two were inextricably linked to each other. But that didn’t mean that there wasn’t a problem between 2010 and 2014. And what did the ACA do? It created high-risk pools for those four years. It didn’t create a mandate for even- handed treatment for those with preexisting conditions. This was a recognition that one was inextricably interrelated with the other — is that you had basically four years in which the problem of people with preexisting conditions wasn’t going to be handled, not through a nondiscrimination rule, a civil rights paradigm, but through the actual funding of pools. And Tom has written about this, and I actually think that’s the long- run solution.

If the Republicans know what they’re doing, they will find a way to fund a coverage for those with preexisting conditions and not undermine the insurance market. But we’ll see. That requires appropriation of real money. And people say they care about this issue, but they’re not willing to pay for it. So, I mean, some of this is a shell game. But the high-risk pool strategy was in the law, and it was in the law until the individual mandate kicked in. Okay, so will the market work? There’s some evidence that the subsidies will offset the experience that we saw in the states before the enactment of the Affordable Care Act, but still no one disagrees. But that’s — we don’t know. The new law just went into effect last month. That’s a lot of projection by the Congressional Budget Office. We don’t know where that’s going to turn out. But the CBO thinks that the subsidies will end the “death spiral.” But certainly, they don’t deny and nobody can deny that for the 20 percent or 25 percent who are not subsidized, the prices will spiral tremendously. And I think, clearly, Congress would not have caused this kind of effect for the 25 percent had they known that that’s what was going on in 2010. So I think ultimately when you look at the history, the reality of what Congress did and then ultimately the insight of the Justice Department and the enforcement mechanisms, I think that the deference that’s owed to the Justice Department as the enforcer ultimately I think — and that’s where I was before the district court decision. I think that where the Justice Department came out is likely where the courts will come out, where the court of appeals will come out, and I think ultimately the Supreme Court will come out on this case. And some deference will be given to the Justice Department on that and this internal justification within the Affordable Care Act itself. Now, what the surprise was in the district court opinion is how far-reaching the invalidation was, and I must say, I didn’t think the court would go that far. I’ve reread the joint dissent in NFIB. I’ve read the district court’s decision here, and I’ve moved from “I don’t think that’s what’s going to happen” to an agnostic position. I think it’s not unreasonable to expect that a court will say, basically for dialogic reasons and also because fixing the law requires something like the Booker case, the sentencing guidelines case, where the court is going to have to figure out what stays and what doesn’t stay, what stays and what doesn’t stay. And I think the district court, I think, did quite a good job. There’s been a lot of criticism. I know that Ilya has written about this, but I think it’s actually Jonathan Adler and Abby Gluck on the brief wrote a rather uncharitable op-ed piece on this. I think it’s a tougher case. I think it’s a harder case about what the right answer is, and it requires courts to figure out and to repair what a political determination is about who are the winners and who are the losers. There are taxes in this law. There are reductions in payment to Medicare in this law, all premised upon an architecture that is supposed to fit together. And if you lose one part, I think you go back and ask the hypothetical, “What would Congress have done?” They won no Republican votes. They won in the Senate. They had 60 votes, which was the minimum they needed to offset a filibuster. And so any single senator would have killed the bill, and many parts of the bill were aimed at getting the individual votes. Harry Reid was a master at crafting together the politics of the Affordable Care Act. So at the end of the day, I think the question is: What is the role of the court here? And the court has often said that it wants to play the least political role possible the most deference. And that’s a fair question to ask. What is the least political role?

Is it to figure out whether the insurance companies are getting unduly screwed or not? Is it to say whether the Medicare reduction in hospital payments was inappropriate or the payment for these various taxes that were designed to pay for the benefits? Hard to say, and under the circumstances, I’ve come toward leaning — although I’m not quite over the line yet. I’ve come toward leaning to think that the district judge is right in this case that the politics are such that courts can undo but the Congress has to redo. And this is the bicameral idea of dialogue is that ultimately, there’s enough support for the Affordable Care Act’s other provisions that by putting this into the political forum, there may actually be a salutary effect, which is guess what? The Democrats and the Republicans may have to talk to each other, and it may force the conversation where grown-ups will be in the room and have these conversations. As Tom mentioned, I worked for Democratic Governor Phil Bredesen when we were doing TennCare reform. I would recommend that he be involved and help to solve this problem as a good kind of mediator, in-between person, a Democrat but who doesn’t mind talking to Republicans and, in this case, hiring one to help them do TennCare reform. So I think that’s where I am at this point. Whether the court finally — should the court go there? Is its institutional integrity at risk? I think this is something the court has to weigh. I think it will turn ultimately on three of the justices — two of the justices who were not here, Chief Justice Roberts, who didn’t opine about this issue. And, you know, part of me says they should take the easier case, which is support the Justice Department position. There’s another part of me that says the court can really help to repair the political system here, but that it’ll come at some political cost to the court. So what would I do if I were on the court? Stay tuned. It’s hard to know. I ain’t going on the courts, but stay tuned for what others are going to do. And I could see — even if I were asked by some of the justices of what to do, I could see a fair case to be made on both sides. And I have to end by remembering Harry Truman’s comment about he always wanted to have a one-armed economist because all the economists he can consulted said, “On the one hand this and on the other hand this.” And I’m sorry, on this issue I’m a two-armed economist, not a one-armed economist. I think there’s strong arguments. They cut both ways, and neither side is frivolous. It’s asking for projection about political outcomes that I don’t feel is certain at this point. Thank you. Thomas P. Miller: Thank you, Jim. We could, on the other hand, just line them up end to end as another way to deal with one-armed economists. We’re a few grown-ups short of that room you’re envisioning, but we’ll see what happens. I should have mentioned earlier, since you alluded to him, that Jon Adler was unable to make it today. He was too busy getting ready for a Strange New Respect award as our one-time ally. We kid because they love — Jim Blumstein: What’s that? Respect? I wouldn’t know. Thomas P. Miller: It’s Tom Bethell’s old American Spectator Award, first given I think to Justice Kennedy, but a long line of Republicans who had grown in office otherwise received it. About 25 years ago more or less. Our final speaker is Ted Frank, director of litigation and cofounder of the Hamilton Lincoln Law Institute, a public-interest law firm. He’s argued a number of Supreme Court cases and

Federal Court of Appeals cases, winning a number of landmark decisions on civil justice reform issues. The New York Times calls him the leading critic of abusive class action settlements. The Wall Street Journal referred to him as a leading class action reform advocate and praised his work exposing dubious practices by plaintiffs’ attorneys in class actions. On the other hand, he wrote the vetting report of vice presidential candidate Sarah Palin for the McCain campaign, so there’s that as well. You win some; you lose some. Ilya Somin: Is that in his bio? Ted Frank: I didn’t put that in my bio. Everything I’ve been doing was just to get that off the first line of my obituary. Thomas P. Miller: It’s good penance. I’ll just complete the rest because Ted’s done a lot of important work. He’s formerly a legal scholar here at the American Enterprise Institute and also at the Manhattan Institute. He’s on the executive committee of the Federalist Society’s Litigation Practice Group, and he clerked for Frank Easterbrook in the Seventh Circuit and graduated from University of Chicago Law School. Ted Frank. Ted Frank: Thanks for having me. It’s a privilege to be back at AEI, and this is my first time on the game show stage, so excited about that. We heard in the first session Ronald Reagan talking about the importance of simplicity. And I will endorse that by not repeating so much of what we’ve heard before, because so many of the panelists have covered what I wanted to cover. So let me endorse Professor Blumstein in saying that what Congress has done has created an incoherent statute that does create problems and possibly dooms it to a death spiral. But in the words of Justice Scalia, he wished he had a stamp that said, “Stupid but constitutional,” and I think that’s what we have here. Because I endorse what Professor Somin said about the severability arguments, and to that, I’d like to add. You know, I am definitely one that when you’re trying to define congressional intent, you don’t look at the tweets. You don’t look at the — you don’t even look at the committee reports, which can be often written by lobbyists in hopes of influencing later courts. And who’s to know what the intent of Congress is when you have 435 legislators and 100 senators on top of that. But here, this isn’t a close question on these things. We know the intent of Congress was not to repeal Obamacare in its entirety because they tried to do that and they didn’t have the votes. We know, whatever the intention of Congress was, it was not to reaffirm the findings of what they did the initial time around. Because they took the initial Rube Goldberg device of the ACA and its mandate, which was strikingly ineffective because it wasn’t harsh enough, and then they completely nullified it and turned it into a hortatory command. And, of course, government does hortatory commands all the time. You have commercials breaking eggs and talking about drugs and telling you not to smoke and things like that. And they’ve turned Obamacare into the same sort of hortatory commands, with perhaps even less effectiveness. So we know that, despite the death spiral, that they’ve probably doomed the ACA, too. The intent was not to get rid of the ACA in its entirety. It was not option three that they wanted us to issue and like [inaudible] to die. So we’re left with Josh’s option one and option four.

And to me, option four has a certain appeal to it. You have a statute that not only is constitutional; it’s quote, unquote “unquestionably” constitutional because the Supreme Court said so. And you now have an act of Congress that has arguably done something that is unconstitutional, and I think here we’re sort of getting into an eschatological choreography because we’ve been asked to assume that what Congress did was unconstitutional in turning the mandate into a hortatory command. But once we have that assumption, well, what follows from that, we have a constitutional act, and then we have an unconstitutional act. You can undo the constitutional act and restore the constitutional act that was passed by Congress. “Ted, that’s absurd, you’re now saying that the courts are creating a tax increase.” And I will acknowledge, that is pretty absurd, which I think creates the underlying problem with the initial assumption we’re making that a tax cut is somehow unconstitutional. But now that we have that assumption, one way we can undo it is by undoing the tax cut because we have — or we can take what Justice Kavanaugh would probably do is what is the narrowest thing you can do, and that’s the option one. You hold the mandate as a whole is now stricken because we have decided that the hortatory command grants you standing to ask for it to be held unconstitutional. So here it is. It’s unconstitutional. There’s no more hortatory command, and everything is exactly the way it is because we don’t — I don’t think there’s anything in the record of whether the hortatory command actually forces people to do things that they don’t want to do. As we know from the initial first few years of Obamacare, the problem was is that even the $700 or so penalty was not enough to get people to buy insurance and was dooming the — the entire Rube Goldberg device to its sort of death spiral, which is now accelerated. So, as much as I hate to contradict my former client, Professor Blackman — Josh Blackman: But professor, you’re my lawyer. You’ll screw me over. This is awful. Ted Frank: Former lawyer, so I can be against you on a different matter. As much as I hate to disagree with Professor Blackman, who’s obviously had far more influence on this area of the law than I have, we have — I don’t think the court actually has the problem with the blue pencil of rewriting statutes. And we know this because we’ve seen Justice Roberts do it. We saw him do it in Free Enterprise Fund v. PCAOB. We saw him do it to a certain extent when he declared the mandate to be a tax, notwithstanding everybody insisting that it wasn’t a tax and getting the law passed. And to a certain extent we saw him do it in King v. Burwell. So if you’re making predictions about what the courts going to do, even assuming that they get to the point where they say that the tax cut in hortatory commands is now unconstitutional or grandstanding for somebody to ask for it to be declared unconstitutional, I don’t think that they’re going to be reluctant to either take option one or option four and strike what the more recent act did. So that was hopefully very simple, and I see I’m well within my time, so we have more time for questions. Thomas P. Miller: That was fine, Ted. Let me just start off this way. I didn’t have to go outside the Federalist Society to generate disagreement on this. This is a pretty wide dispersal pattern, and now you could argue about the magnitudes within the membership. Is it just the bizarre nature of where we’ve been with

the ACA that leads us in this place? Or is there something underlying in how the courts go about their business that maybe brings this more to the fore? Is it an institutional problem or a one-off and just a long, strange trip in terms of this piece of legislation? Josh Blackman: Oh, this is a long, strange trip, and I think the biggest difference between the ACA today versus the ACA in 2012 is the political force. Every Republican is falling in line with the ACA’s protection for guaranteed issue, and the notion that a court can then set those provisions aside would be devastating to the Republican Party. I’m not popular for what I’m doing, right? Texas is not popular for what they’re doing. Thomas P. Miller: You don’t need to talk about your personal life. Josh Blackman: Oh, no, no, my personal life, there is none. This challenge is not popular. The dynamics are very different. President Trump in the same breath says, “I want to protect preexisting conditions” and also “I want the court to set aside the preexisting conditions.” It’s very difficult. Ilya Somin: There’s been a lot of interesting and unusual stuff in the ACA litigation to this point, but I think this case is very different in its dynamics. You know, the previous ones largely divided the expert community along ideological lines. If you were a conservative libertarian constitutional law expert, high likelihood you thought that the individual mandate and the Medicare and Medicaid expansion were unconstitutional, which I did think. Whereas if you were a liberal, high likelihood you thought they were perfectly fine. Here, Josh is almost the only expert of any prominence who has publicly spoken out in favor of the position either of Texas or the one that Justice Department has taken, so this is sort of a more screwy and weird argument. That doesn’t by itself mean that it’s wrong, though I think it’s wrong for substantive reasons that I explained before. But I think whereas the previous litigation divided people along standard lines of division about federalism and mandates and the nature of congressional power and the like — you know, it split them along the lines that you’ve seen for a long time in the community of experts around this issue, this case I think is more of a moon shot or more of a Hail Mary or whatever you want to call it. That doesn’t mean it’s absolutely impossible for it to succeed. Sometimes, you know, the Miami miracle happens, and much to my annoyance, the Patriots fan, they got that Hail Mary and scored, you know, the 69-yard completion on that weird pass. But this I think is more like that than what we saw in the previous rounds of Obamacare litigation. Thomas P. Miller: It sounds like the phrase you’re searching for is orphan lawsuit. We’re not having many paternity fights, but let me — Ilya Somin: But there are 20 states that are filing it. Thomas P. Miller: That’s correct. The AGs. Ilya Somin: So there is some political muscle behind this lawsuit, which gives it some measure of credibility. But it’s striking that in the expert community, outside of those immediately involved politically, there’s very little support for the severability argument. There is a lot of support for the argument that what’s left with a mandate is unconstitutional. I support that myself. But the big political stake is on, you know, this other stuff. Does it invalidate any of the rest of the ACA?

Jim Blumstein: But it’s not only ideological. I think part of the issue is what happens once the law would be repaired in the way you describe, and I think then you have the Justice Department as the enforcement agency coming in and saying, “Given our expertise as the enforcers, at least the guaranteed issue part and the community rating part have to go.” It’s not a political choice. And that’s where I think Josh’s insight that the politics have changed could lead to a bigger bang. And I think the fact that the politics have changed would suggest that the court would say, “Here’s the time for dialogue.” And that’s what the district judge in Texas has done — is to say, “We’re not going to kind of piecemeal this. Ultimately it’s not targeted only at one part of it. The whole law is going to have to fall and be redone.” So I mean, you know, I don’t think that’s — I’m still not there myself about where I think it’s going to come out. But I really disagree on the question of guaranteed issue and community rating. I think that there will be deference to the administration, and that would be a way to split this. And I think that ultimately, that may or may not be popular. I think the Republicans would be smart to have in place a stream of dollars for high-risk pools, which I still think is the better way of dealing with preexisting conditions rather than in a sense undoing the insurance market. Thomas P. Miller: Is there a statute of limitations on, for want of a better phrase, owning up to past fictions? I mean, we’ve built a big pile of things that supposedly this law was about, the program was about, and then we’ve moved that line in different ways. Some of this is really a timing issue. I know, Ilya, you’re arguing the 2017 Congress pretty much blew all that up, and Josh is saying, “No, some of the stuff they did in 2010 still matters.” Whether its findings of fact — once upon a time, CBO said a lot of stuff but now those “canons” don’t fire in the same direction the way they used to in terms of the impact of the mandate. So, where’s the intent, and whose intent, at what point in time? And what was Congress doing or not doing, or is everybody pretty much out to lunch? Josh Blackman: Sure. I’ll take just a slight exception with my former professor and my former attorney, ganging up on me. I don’t think that it’s a neutered mandate, and if you don’t believe me, that’s fine. In November 2017, the Congressional Budget Office and the Joint Committee on Taxation wrote a report, and the report said, quote, “With no penalty at all, only a small number of people would enroll in insurance because the mandate under current law would continue to do so solely because of a willingness to comply with the law.” That’s not Josh. That’s this Joint Committee on Taxation and CBO. The number is small, right? I don’t know what that number is, but it’s a fairly small number. At least for some people, the mandate still has its legal effect, and if that mandate still has some legal effect, it’s small. Its bitty-bitty. But if that mandate still has some legal effect, then Congress’ findings in 2010 about the mandate being essential still hold. And in the findings from 2010, there was no mention of the penalty. There was only a mention of the mandate. If you read John Roberts’ opinion on the mandate, he doesn’t even mention the penalty. The litigants in 2012 understood the mandate and the penalty are

different legal provisions. It was litigated that way, and because it was written in that way, I think it still exists till today. I think the mandate is basically a non sequitur for most Americans, but for a small number of people, it does matter. And for that reasoning, Congress’ findings in 2010 still should be given some force. Ilya Somin: I think those findings clearly apply to the law as it existed at the time, and the assumption was that it wouldn’t be just limited to the effect that they were seeking to that small number of people who would be influenced by this even without the penalty. What they wanted was a much larger number of people so as to avoid the kind of problems that Jim Blumstein was talking about. So I think it just defies belief that those findings were either meant or understood at the time or anytime since then to refer to a mandate that’s neutered in the sense that it only applies to a small number of people whose decisions would actually be changed by it. If you want to push the neutering analogy somewhat farther, you might say that, you know, some sperm are still swimming through the channel but not nearly enough to actually impregnate anybody. Josh Blackman: It only takes one, Ilya. Ilya Somin: Actually, it takes more than one to give you — many more than one actually — Thomas P. Miller: We’re not even in the first trimester. Ilya Somin: To give you actually a statistically significant chance of causing a pregnancy, and that what’s going on here. There may not be enough sperm even with the $695 penalty. There definitely aren’t enough without any penalty. Josh Blackman: But what if one of the sperm is Michael Phelps? I’m done, I’m done, I’m done. Ilya Somin: It’s still not enough. Thomas P. Miller: We’ll move out of that thing. Jim Blumstein: I think that there are two points about — I had this listed as kind of to talk about if we — in the Q&A. I think all that we can look at in the 2017 law is that it was a tax law, and there were internal constraints within Congress about what could or couldn’t be considered. So, now there’s an argument that, okay, the Republicans tried and didn’t succeed in repealing and replacing it. And there’s a broader political context. I’ll address that in a second, but the first is I don’t think you can draw the inference, one, that the Congress had said, “Well, you know, we’ll leave it the way it is. We think that’s best.” I think the most you can say is the Congress didn’t address that issue, and when it could under the rules and what it could do is it eliminated the tax. And that has the effect of making the rest of law — of the mandate unconstitutional. Now, one can determine from political failure, certainly, this is not a frivolous argument. But I think it’s not a persuasive argument at the end of the day. One can point to Youngstown Steel and the concurring opinion of Justice Frankfurter in which he talked about Congress’ consideration of seizure and then not voting for it was tantamount to prohibiting it, okay? So, you know, if I were writing a brief, I would cite that support, but ultimately that doesn’t

really pass after the Chadha line of cases, which is to say that the problem with that is the president didn’t have a chance to veto and it was never presented to the president. So ultimately, I think that part of Youngstown Steel was on very questionable grounds, and to draw an inference about what the Republicans could or couldn’t do in 2017 is not strong in light of the internal structure of the ACA itself, the phase-in of the provisions on guaranteed issue, the risk pools, and so forth. So ultimately, I don’t think it’s a frivolous argument, but I think it’s not a persuasive argument. Thomas P. Miller: How much of this is what people criticize lawyers for doing? Which is you’re stretching something as far as you can in a literal sense and saying, “We’re going to make you be stuck with it until you can get out of that box because we have the overlay of what this is supposedly.” The official language said one thing, and the underlying reality turned out to be very different. Jim Blumstein: Can we talk about politics for a minute? I think ultimately, you know, we are all academics, and we want to see how courts handle these things. But there’s another political dimension here — is that the Republican Party used an awful lot of political capital to put two justices on the Supreme Court. I think Chief Justice Roberts can’t be ignorant of that. He is trying to maintain some independence and so forth, but there’s a political dimension. The Trump supporters will go in berserk if they don’t get something out of this deal. Thomas P. Miller: They may already be there. Jim Blumstein: If they don’t get something out of the deal, which would be a minimum of what the Justice Department says is enforceable. So, I mean, I think we can’t be totally ivory tower-ish here as well — is that there are a lot of blood and sweat that went into the Kavanaugh appointment, the Gorsuch appointment, to the president’s constituency supporting the appointment of judges who will see the law in a certain way. And so I think that that’s a kind of an overlay here that we don’t like to talk about. I don’t like to talk about it, but I think one has to see that. And the courts can come away with taking out a middle ground, which will be the Justice Department position, which is where I openly think that they’ll come out. But to ignore that is to ignore the reality. Thomas P. Miller: Well, in 2012 staring down the barrel of the gun, it was like, no, we can’t do this because of other things as real-world practical consequences. We’re seven years later, maybe eight years later. This is an awful lot — courts knocking out big programs. That’s an awful lot to unravel, even if you try to buy some time and pretend that the parties will come together. Doesn’t that just put like a practical curb on whatever you might want to imagine in Supreme Court fantasy league as opposed to what real people do? Ted Frank: I mean, one major difference in the political change is, when you’re striking down Obamacare in 2012, you still have a functioning market that the world can return to. And that has been wiped out by seven years of ACA, and there’s nothing in place for it. And it would be chaos. And it would be a lot of political capital for the Supreme Court to come down with a 5–4 decision of getting rid of the guaranteed issue and community rating. And it’s not just Justice Roberts that wants to preserve that but Justice Kavanaugh, who had a very contentious confirmation proceeding, so I’m told, has an interest in demonstrating himself to be an independent justice and not Trump’s puppet.

Thomas P. Miller: So chaos is someone else’s brand. Ilya Somin: So I think if we’re going to look at political aspects of this and how those might influence the courts, there’s both sort of a doctrinal aspect and a broader political aspect. The doctrinal aspect is that if you’re going to look at the politics or whatnot and consider in terms of measuring congressional intent, then you can’t have it both ways. You can’t under one hand say, well, what the 2017 Congress did doesn’t really count in terms of intent because of the rules about taxes, but at the same time ignore the broader context, that in fact, they did it as a tax measure because they couldn’t get the broader type of repeal. So, if Congress had wanted the broader t repeal and had the votes to do it, they would have been able to. So I think that’s pretty crucial. On the question of the justices and their political calculations, yeah, probably some Trump supporters might be disappointed if this case doesn’t go the way that — taxes sort of the way that the Justice Department wants it to go. But if you look at, you know, where Trump’s core support is, it’s not among the people who really want to get rid of community rating or guaranteed issue. It’s among people who want to do things like build the wall. And if anything, Trump relative to the other GOP candidates in 2016 was noted for his total unwillingness to cut social welfare programs like Obamacare or like social care and Medicare and the like, and he always claimed that he would keep, you know, the preexisting conditions things in place. So I doubt that the justices will feel like, you know, they disappointed some big Trump constituency if they don’t go taxes his way on this. Whereas on the other hand, Roberts may well feel — and Kavanaugh and others as well, that, you know, they will spark a massive backlash on the left and maybe even on the center if they do do this, which they’re very conscious, I think, of things like that. The left is talking about possible court packing when and if they get into power, so I don’t know if that stuff will really play and have an impact or not. I think they could just resolve this if it gets to Supreme Court just based on fairly simple standards of severability doctrine. I don’t believe this is a closed case on that. But if they do start weighing these non-doctrinal calculations about where is the biggest political risk, it is likely that the biggest political risk from John Roberts’ point of view is in striking down all or most of the ACA and that he will regard that as more risky than either choosing one of the other options, the simplest of which is just simply to get rid of the residual mandate, or alternatively something we haven’t talked about to say, “Well, there’s no standing here.” That’s a possible rule. Josh Blackman: Let me pile on John Roberts for a minute, if I may. This is his fault, right? If John Roberts had just said, “This is an exercise of the commerce power, go home,” we wouldn’t be sitting here. For the last seven years, I thought, “Huh, maybe Obamacare becomes unconstitutional.” It’s like Schrodinger’s mandate, right? Depending on the price, the penalty goes up and down. There was even a blog post in 2014 where there was one place in California that paying for insurance was actually less than paying the penalty for some rich people, and I said, “Aha, Obamacare is now unconstitutional.” I was thinking of standing, right? This is Roberts’ fault. He created this bizarre reality where we have this fluctuating mandate that hinges upon these guardrails of the penalty being raising revenue, whatever, right?

We’re here because of him, and I was to make another mess and make even a deeper mess, so I blame John Roberts for a lot of things. Ilya Somin: A lot of people deserve blame. I opposed the tax ruling. I thought it was just straight-up unconstitutional. It’s not a tax. It’s sort of Rube Goldberg contraption and why it is a tax, very few people were, you know, particularly persuaded by that. But in fairness, it’s also the fault of the Republican Party for not being able to get together to come up with a more effective Obamacare repeal. It’s the fault of the Democrats for designing Obamacare the way they did in the first place. It’s the fault of the public for their poor understanding of economics and public policy for voting for the politicians who did this. So there’s plenty of blame to go around here. But I’m not convinced that blowing up severability doctrine is the way to get out of the situation. Thomas P. Miller: You left out the libertarians, if you’re spreading that blame around. Ilya Somin: I think most of us are largely blameless. We oppose both — we opposed the enactment of Obamacare. We opposed the individual mandate. Most of us in toto, and the libertarian health care experts have a variety of policy proposals that wouldn’t rely on, you know, this kind of contraption to try to increase access to health care and reduce cost. Our fault is that we don’t have more influence than we do. Ted Frank: Two things. I think we’ve been very fortunate that Chuck Schumer and Nancy Pelosi have not gone to President Trump and said, “We would like to get rid of Obamacare and replace it with this single-payer health care program we call Trumpcare.” Thomas P. Miller: Scottish version. Ted Frank: And we don’t have a president with a coherent policy framework. And if they had done that, we would have a president who would endorse it, and then a base that would support it at 80 percent. Now, the Democrats might oppose at 80 percent, and we might find that the country is now 60–40 in favor of the free market. And Ilya has written very persuasively on that sort of political ignorance. But everywhere where Justice Roberts has disappointed the conservative base, it’s where he’s been following. And it’s interesting that we mentioned Bickel because I’ve always thought of Roberts as being a conservative in the Bork Bickelian sense, most of all. But in the sense of really the least dangerous branch and restricting the court to only intervening where it comes down to the political structure of the First Amendment, political speech, and political workings of the Constitution and everything else narrow and defer to the political branches. If you look at that framework, that explains Free Enterprise Fund. That explains what happened in the first two ACA cases. And I think it will predict what happens if the Fifth Circuit puts the Supreme Court in the position of having to decide this. Jim Blumstein: I think that I agree with Ted on this issue with respect to the chief justice. I may be the only one who thinks that he actually handled the tax issue correctly from a broader Supreme Court role point of view. I don’t disagree that doctrinally, he was not on strong grounds, but in terms of institutionally, for a court to strike down a popular administration’s major social legislation looks very Lochnerian. And I think ultimately, you know, for the court to find a way to uphold the legislation, even if it’s on, dare I say, trumped-up grounds, I think was actually institutionally justifiable. It was not — as I said, it was not the only answer. But I think it was not even the best answer,

which he acknowledged, but it was a plausible answer. So I think in 2012, that was not — although I would have preferred a different outcome, I actually supported this outcome. I think that this becomes a reasoned and reasonable position. I think the world has changed in 2019 from 2012, and I think that my sense of kind of where things are. And my chief piece of evidence for that is how the Supreme Court just handled the capital punishment case. I lived through these — well, yes, thank you, that’s a bad way to say it. I’ve witnessed because we had three executions in Tennessee this last year, and I’ve seen how the abolitionists handle these capital punishment cases. And it’s turned me from a kind of middle-of-the-road person to a pretty tough on the defendants person on how this has been handled. And finally, I interpret the court saying, “Enough is enough. These are issues that can be important, that can be adjudicated after this person is dead. There’s 10 other people waiting. If we really have to have any mom in the chamber, if that’s a First Amendment requirement, fine, someone else can raise it. This guy has committed a heinous crime, and he’s going to be executed. And I think that that explains how they wouldn’t give a hearing that they’ve had enough, and I think that that’s ultimately where 2019 is different from 2012. Thomas P. Miller: There have been a couple of quick-staging remarks about, you know, if this gets past the Fifth Circuit to the Supreme Court. And we’re not yet at Supreme Court fantasy league. So let’s dive down into the Fifth Circuit for just a moment. I think Josh and Ilya have a good feel for that more recently. It’s a different kind of composition of the judges there. What’s the shot? Josh Blackman: Well, let me — was that your question for me? Thomas P. Miller: Anybody. Josh Blackman: I’ll go first. You know, I live in Houston. I pay attention to the Fifth Circuit. It is a fairly conservative court, but more importantly, as these sorts of cases are appealed, they get tighter. I agree with Jim. Judge O’Connor’s opinion had some good parts and some parts that, you know, I think could have been strengthened a bit, and I think that’s a factor. Thomas P. Miller: He should have cited you more often. Josh Blackman: Yeah, the parts he didn’t cite me were the problems. But the problem is when cases start out, they’re somewhat raw and new. As they go upstairs, briefing gets tighter on both sides. Now you have three judges instead of one thinking about it. If there’s an en banc proceeding — I think, there’s what, 11 or 12 judges in the Fifth Circuit? I can’t remember, 15, 16? Ilya Somin: It’s actually 15. Josh Blackman: Fifteen, yeah. Thank you, Ilya. Thomas P. Miller: A lot of new ones. Josh Blackman: So there are a lot of judges. This will get better and again, my one refrain since you asked about this case is: Don’t ridicule this. Don’t dismiss it. Don’t laugh at it.

There are arguments here that might be right or might be wrong, but this is not frivolous. And when someone says an argument is frivolous and I write a 70-page paper responding to that, you know, there’s stuff, right? There are arguments to be had, and some of the arguments have been applied to and some of them haven’t. So I look forward to these arguments being fully vetted by everyone. Ilya? Ilya Somin: Yeah, so, I can’t know for sure what will happen on the Fifth Circuit. I did work there, but that was 16, 17 years ago. But I do think, for the reasons I said before, this is a very weak argument, and I don’t think — with due respect to Josh, I don’t think there’s anything in the 70 pages that makes it that much stronger. And therefore, I think there’s a high likelihood that the Fifth Circuit will reject it, either just for the reasons I mentioned, or they do have the option of saying there’s no standing here, which might be a very tempting argument for at least some of the judges. Even though I personally disagree with the view that there’s no standing, there’s a lot of people who take a narrower view of what’s appropriate standing than I do, including a lot of people on the right. And therefore, you know, that’s another way that it could be gotten rid of. Now, that said, as I said in my original presentation, we shouldn’t be too confident about what might happen with this kind of Obamacare litigation, in that any argument that has the backing of 20 states and of the Justice Department in some sense has entered mainstream discourse, whether it’s worthy of entering mainstream discourse or not. And therefore, there’s a nonfrivolous chance that a court will accept it. But I think the odds are against it. And I think more likely than not, this case will die at the Fifth Circuit either based on standing or based on them ruling, you know, that this stuff is severable and therefore — Thomas P. Miller: Just to understand the sequence. I mean, the Fifth Circuit has to uphold something to get to the Supreme Court. Ilya Somin: Well, as a matter of theory, whatever the Supreme Court — I’m sorry, whatever the Fifth Circuit decides in theory whoever loses — Thomas P. Miller: In theory. Ilya Somin: But in practice, the Supreme Court almost certainly will take the case only if the Fifth Circuit upholds the district court ruling at least in part — that is to say, either that they strike down the entire ACA as Texas wants to do or they strike down guaranteed issue and community rating as the Justice Department wants to do. If either of those two things happen, the Supreme Court will almost certainly take the case. If the case gets dismissed on standing or they rule that the residual mandate is severable, then I think it’s very unlikely that the Supreme Court will take the case. Thomas P. Miller: And the catch up Democratic case got knocked out of court recently, which would have created a hypothetical conflict. Ilya Somin: Yeah. So, again, I think if any court of appeals, whether the Fifth Circuit or some other one, rules that this stuff is (A) the residual mandate is unconstitutional and (B) the rest is not severable or a lot of the rest are not severable, that will get to the Supreme Court. Any other kind of ruling that ends up as either kicking on procedural grounds or ends up deciding that the only thing that goes is the residual mandate, that probably will not go to the Supreme Court. That would be my prediction.

Jim Blumstein: I just have to say that I heard the same thing about the Medicaid expansion. Ilya was good enough to say a nice word about some op-ed that I did, but I briefed and wrote about it afterwards and went around the country speaking about it. And that turned out to be the only winning argument on the other side. And I will say there were many dismissive arguments that we had to deal with on the other side. So I’m not saying you’re wrong, but I would also say that the history of the ACA is that surprises come out. I think the fact that the Justice Department’s taking the position that it has is a stronger argument for the other — Thomas P. Miller: After all, Chuck Wepner went 15 rounds, so it’s possible. Ilya Somin: Yeah. So I was in a position in the previous ACA litigation, I agreed with the Medicaid expansion argument, but I didn’t think it would succeed. And the reason why I and even most of those experts who agreed with it didn’t think it would succeed was because we didn’t think the court was actually serious about the coercion of issue. And it turned out they were serious. But importantly, there was a basis for that argument in the previous doctrine. We just didn’t think, and it turned out we were wrong not to think, that the Supreme Court was going to enforce the doctrine in that area. Here, there is not even in my mind and mind of the most experts a basis for it in the existing doctrine, which makes it different. That doesn’t mean that, you know, the justices can’t decide, “We know what we want to blow up some of the existing doctrine we interpreted.” They can do that if they want. You know, that possibility exists. Or they can say, you know, “We’re going to defer to the Justice Department,” and actually, that’s very unlikely that they would do something they otherwise wouldn’t do just to defer to the Justice Department on something like this, but this is a different situation. Jim Blumstein: I don’t see how the existing — I guess, I certainly think one can make that claim with respect to the ancillary provisions, but the Justice Department provisions would not go along with that, would not be blowing up the previous doctrine. In fact, it would be pretty easy to fit within previous doctrine, which is why I think the Justice Department kind of stopped where it did. And it’s based upon both an understanding of the insurance markets and understanding of the phasing provisions of the ACA with respect to preexisting conditions. And in terms of intent, I think it’s pretty clear — again, you think the 2017 is important, but I think if you look back to the enacting Congress, it never would have gotten enacted. That’s why the Obama administration was so dogged in wanting to preserve the whole structure, the individual mandate. I mean, otherwise, why defend it? Ilya Somin: So, what to give away here is the reference to enacting Congress, irrelevant to enacting Congress if the one they created to mandate that exists now or what’s left of it, not the one in 2010, and it’s just not plausible, I think, to believe that there is a congressional intent either in 2010 or in 2017 to say that a mandate that’s virtually neutered is actually essential to the rest. I think that’s the problem under existing doctrine or frankly under any reasonable version of the doctrine. Ted Frank: I share my — my co-panelists’ frustration that conservative views on unconstitutional controversial issues are often ridiculed and not given fair shakes by academia and the press. But though they laughed at Galileo, they also laughed at Bozo the

Clown. Sometimes there are weak arguments that are being made that, you know, we should be standing up against. Thomas P. Miller: I will do a little bit of a heat check for our very patient audience. We’ve had a long discussion. We can continue it on. I wanted to see if anyone had any particular questions or comments in the form of a question. So we start down front with Sara. Just to give a fast ID and then your question. Q: Sara Hansard with Bloomberg Law. I just want to clarify, it seems like most of you are saying that you don’t think that the individual mandate — now that it’s been neutered as you said — you don’t think that it’s constitutional anymore. You just have some — most of you think that they won’t throw out the rest of the law. I’m assuming you do think that the mandate is still — I’m trying to get a clear reading on you don’t think the individual mandate is still constitutional anymore. It’s that what I’m hearing? Ted Frank: I would take the position that a mandate without any penalties isn’t really a mandate and doesn’t have a constitutional problem. It’s no different than a “Please don’t smoke” ad. Josh disagrees with me and — and has whatever CBO finding on that. But in the absence of so much as a slap on the wrist, I think it’s just a hortatory speech by the government. Ilya Somin: So I think I also disagree with Ted on this little bit. Not only Ted but a number of commentators have said, “Well, if the mandate has no attached penalty, it’s not really a mandate anymore. It’s like an ad.” But I think the difference between this and an ad is that there’s still a text in the law which says, “You must do X.” It doesn’t impose any penalty if you fail to do X, but the text is still there. And therefore, if what the text tells you to do is something that Congress doesn’t have the power to tell you to do, then it’s still unconstitutional in my view, even if there isn’t an attached penalty. You know, some people say, “Well, there are a few other laws like this, like the flag code, which has these instructions for what you must do with the American flag. But there’s no penalty if you fail to do it or you hang up the flag in a wrong way or you dirty it in the wrong way.” I’m pretty comfortable in saying that, you know, maybe the flag code is unconstitutional too. I think the Republic — as shocking as it may be to say this, I think the Republic will survive the striking down of the flag code if this were to actually happen. And I would say the same thing here that if mandating X is otherwise not within the power of Congress, then that law cannot be saved merely by the absence of a penalty. But, of course, some respected legal commentators, Ted and others, disagree with that and would say that, “If there’s a lack of a penalty, then it doesn’t matter whether the mandate is otherwise within Congress’ power or not because that’s just Congress expressing their opinion,” or something like that. Josh Blackman: I’ll add one addendum. The ACA’s mandate applies to some people and not others. The law exempts some aspects of the population: Native Americans, people who are incarcerated, those who not here lawfully. Not others, right? I think this differs from other criminal statutes like the flag-burn provision, which apply a specific conduct. This statute applies to some people by virtue of their existence, and I think if the mandate still exists, it’s unconstitutional. Thomas P. Miller: All right, we’ll go back there.

Q: Hi, Paul Heldman with Heldman Simpson Partners. Let’s just talk about June 2020 and maybe later — I’m interested in your timing, as question one. But also, if the Supreme Court decides to take the Justice Department position or the O’Connor position, how does that play out practically? Does the court create a special master? Do they create a transition period? How do they think about the unwinding of the law in the new market? Ilya Somin: So that’s a really good question, and I think this is an additional reason why — if you assume the justices will be influenced by political considerations, this is an additional reason why they might not want to do it. And that is that — you know, as Ted mentioned, this is a really big beast that has been around for several years that has fundamentally changed the structure of the health care market, I think in not so good ways. Other people think in beneficial ways. But either way, unwinding this big structure is going to be extremely difficult, and there might have to be some kind of transition period for it. There is previous precedent relating to things like what do we do when we’ve had school segregation for many decades and, you know, do you then have — when we say that’s unconstitutional, we then have to immediately disaggregate similar other cases. Much of that experience with trying to get to do this gradually under the supervision of judges was not an easy one. It was not an entirely happy one, and the court may be willing to do it in cases where they either think (A) there’s a lot of political support for it or (B) they think there’s a really important constitutional principle to be vindicated that they believe, you know, must be upheld, as I think was true with Brown v. Board of Education. I do not believe — I could be wrong, but I do not believe there is a five-justice majority that thinks there’s a principle here that’s worth going through this kind of pain. And to the extent that justices are influenced by these kinds of practical difficulties, especially, by the way, in the middle of an election, right, with the 2020 election. If you think of Roberts as somebody who doesn’t want the court to be a major football in the middle of an election, the court trying to oversee this transition process in the middle of the 2020 election is another kind of thing that I suspect that’s not the sort of thing that Roberts wants to see playing out on TV every day, if it happens during election. Like I said before, I think they could well just get rid of this on standard doctrinal grounds and not even think about these political considerations. But if in Roberts’ mind or other justices’ mind this is a close call doctrinally, it could be that their mind would be tipped against the O’Conner position or the DOJ position based on the practical difficulties like that. Thomas P. Miller: Fifteen, 20 years, they could work it out. Ilya Somin: Yeah, desegregation ultimately took 15–20 years, yes. This maybe probably would be less complicated, but it would be far from trivial. Jim Blumstein: Yeah, I don’t disagree on Roberts’ perspective. I do think Ilya overstates the impact on the market because it will not affect the group market, the self-insured market, the ERISA. It won’t affect Medicare and Medicaid. So it will be a sliver of the market, and what you’re doing is restoring the ability of insurance companies to do experience rating and look at other factors and other insurance considerations. Justice Scalia never liked that perspective overruling, but I think that here if they wait till the next enrollment period, it’s not anything like desegregation. I think that that way overstates the complexity that would be involved.

And I think there would be also state options. There are state laws. In some states, they would expand or establish or reaffirm guaranteed issue. So I think the practical problems, which are very real — and I agree with Ilya’s perspective that the chief would not want to get the court in the middle of that. But I don’t think that the guaranteed issue or the community rating is anywhere near the order of magnitude of anything — even the sentencing guidelines and certainly not desegregation and any of those big institutional reforms or the Apprendi cases. I mean, there’s many cases where the court has gotten itself into a thicket and continues to have to deal with it, but this I think is actually a lot easier and not as big as the broader issues that would happen if everything went. I think that would be — I mean, because if everything goes, then you’re talking about grant programs. You’re talking about other kinds of benefits that people are getting as a result that are financial benefits, and I think that is a practical matter, even though to the point where I think that may happen, I think that would be much more disruptive. And I think those considerations would be significant. Just on these two, I don’t think it’s as big a deal. Thomas P. Miller: We have time for one final question. Robert? Q: Thank you. Thank you, Robert Book, researcher at George Mason University. I’m going to throw — my background is an economist. I’m going to throw out one fact that might or might not be relevant and then ask a question. Thomas P. Miller: We have no room for economists here. This is only law. Q: Okay, so I got a law connection, too. Now you got me. I don’t remember that fact. A couple of years ago when the individual mandate really was in effect and really did have a penalty connected with it, there were more people with exemptions to the penalty than paying the penalty. And if you add those two groups together, that was more people than were buying insurance on the individual market. So, you really had the question of the effectiveness of the mandate, if it’s legally relevant. It certainly doesn’t look like it’s economically relevant. Now my question is the economic logic tying guaranteed issue and community rating to the individual mandate is that if you have guaranteed issue and community rating, which we like to have because, you know, we like it, the market will fall apart in this adverse selection cycle with premiums going up if you don’t get everyone in. And the idea was the individual market was it was supposed to get everyone in. If I understood the logic of the original claim of unconstitutionality, it was the individual mandate was unconstitutional because nothing in the Constitution gives Congress the authority to make people buy health insurance and pay a penalty if they don’t. If that’s gone away, then how is it — if they decided that that’s instead constitutional because it’s a tax and the tax goes away, how does that make it unconstitutional? Those three provisions were tied together by economic logic but not necessarily by constitutional logic. So if you want to pass something that has no individual mandate and guaranteed issue and community rating, it’s stupid. It’s not going to work. But the simple fact that you got rid of the tax or penalty shouldn’t — I don’t see how that makes it unconstitutional. Ilya Somin: There’s really two issues here. One is the argument on severability is not that the rest becomes unconstitutional but rather that the rest becomes something that Congress

wouldn’t have enacted. But for the part that is unconstitutional and, therefore, the rest has to go even though Congress put — Q: But now they have enacted it. Ilya Somin: Yes, so that’s the debate, right? The debate is that what is it exactly that they did in 2017. And my view, I think, is similar to yours that what they did in 2017 is that they’ve created a system where you have guaranteed issue and community rating but you no longer have a mandate with any real effectiveness. Your first point goes to the question of, well, maybe the mandate even with the $695 penalty wasn’t all that effective. I think that’s true. I don’t think that necessarily means that it wouldn’t be considered essential if we had had the same litigation in 2010 or 2012 because there you did have pretty strong evidence to Congress at the time thought it was essential even if they turn out to be wrong. On the other hand, the fact that the mandate turned out to be relatively ineffective at increasing enrollment between 2010 and 2017 is relevant perhaps to understanding Congress’ intent in 2017 in that it strengthens the case, at least at the margin, for the idea that Congress was willing to say like, “Let’s roll the dice on what happens if we have the rest of the ACA left in place but a mandate that’s largely neutered.” Maybe not completely neutered but, you know, 99 percent neutered or whatever you want to call it. That, as it turns out, you know, the expectations in 2010 were probably wrong (A) because the penalty was too small to really bring in a lot of people and (B) because even that small penalty as a practical matter often wasn’t enforced against the people who didn’t obey the law. Even under the Obama administration, the IRS wasn’t all that aggressive at ferreting out these people and making them pay their fines or whatever. So from a standpoint of somebody who thought that, you know, buying Obamacare exchange insurance that was too expensive or too unpleasant or whatever, they can make calculations of not that much chance that I will be caught, and if I am caught, well, we have to pay $695 plus some interest, and that’s a lot less that I’d have to pay if I actually bought one these insurance plans. Thomas P. Miller: We can go down a lot of rabbit holes. And we’ve been down there, and we may be down there again. There was a lot of divergence between the functional aspects of the ACA and the political deal that first got it passed, as opposed to what it became later. In any case, Jim was quoting Yogi Berra before, and I would say, “It’s not over till it’s over.” And then it takes a little while longer in this area of law. But thank you very much for staying with us this far, and thank our panelists. [End]