The Training Wheels Theory of Obamacare’s Individual Mandate

We could get a decision any day now from the Fifth Circuit Court of Appeals on whether the entire Affordable Care Act has been rendered unconstitutional by the 2017 Republican tax law. While we wait, it’s worth lifting up a novel argument in defense of the ACA offered in court by the insurance lobby: that the individual mandate operated as little more than a set of training wheels to get the law up and running.

The theory behind the latest legal attack on Obamacare is that the law cannot be severed from its allegedly now-unconstitutional individual mandate, which Congress gutted (by adjusting its tax penalty to $0) in 2017. The red state attorneys general challenging the law — with the backing of political appointees at the Department of Justice — point to legislative history and language in the ACA indicating that the 2010 Congress that enacted the law thought that an individual mandate was essential to its broader private market coverage expansion. The supposed conclusion to be drawn, the AGs argue, is that because the 2010 Congress said the mandate was essential, now that the 2017 Congress has repealed the mandate, the courts must step in and finish the job by wiping out the rest of the law.

There is, to put it mildly, some massive logical and legal gaps in the argument against Obamacare. For one, it deceptively cross-conflates the legislative intents of two different Congresses. For another, it asks the court to make an unnecessary severability judgment, even though the 2017 Congress already affirmatively determined that the individual mandate could be severed from the rest of the law, by repealing only that provision. And for yet another, the Obamacare challengers have twisted themselves into arguing around a sort of Schrodinger’s mandate — one that’s simultaneously alive enough to still compel people to purchase health insurance, but too dead to have any constitutional basis.

Those internal contradictions ought to doom this case before any reasonable court of law. But alas, the red state AGs wisely filed their case with compadre Judge Reed O’Connor in the Northern District of Texas, who promptly rubber-stamped their anti-Obamacare claims. The case is now on appeal in the conservative Fifth Circuit, which could issue a decision at any time.

That’s where America’s Health Insurance Plans — the trade association for the insurance industry — stepped in. AHIP had long insisted that an individual mandate was essential to Obamacare’s functioning, and consistently opposed Republican efforts to repeal the individual mandate, arguing that this would destabilize the insurance market.

But with the mandate now gone, AHIP has threaded a clever argument about the role the mandate was always meant to play. In an amicus brief filed in the Fifth Circuit, AHIP writes:

At the ACA’s inception in 2010, Congress found the individual mandate “essential to creating effective health insurance markets in which improved health insurance products that are guaranteed issue and do not exclude coverage of pre-existing conditions can be sold.” 42 U.S.C. § 18091(2)(I) (emphasis added). That carefully chosen language, however, cannot be read as a declaration that the guaranteed-issue and community-rating requirements could never be effective without the mandate. The district court conflated the initial creation of individual markets under the ACA with their continuation years after becoming established fixtures of the health care landscape.

That is to say, the individual mandate was essential to creating Obamacare’s private coverage expansion, but not to sustaining it. The mandate operated like a set of training wheels that could be safely removed once the law was up and running. And that’s what Congress did in 2017 when it zeroed out the mandate’s tax penalty: it removed Obamacare’s training wheels.

Of course, that’s not at all what Congress was doing. Repealing the individual mandate was the Republican Congress’s attempt to save face on years of promises of full Obamacare repeal — it was what full repeal was whittled down to after a full year of lacking the votes to take down the whole enchilada.

But the “training wheels” theory is apiece with the head-in-the-sand counter-history embraced by the anti-ACA litigants and Judge O’Connor, who actually wrote that that the 2017 Congress “intended to preserve the Individual Mandate because the 2017 Congress, like the 2010 Congress, knew that provision is essential to the ACA.”

Empirically, the “training wheels” view of the individual mandate also looks retrospectively correct. Dating back to 2008, there was an intra-Democratic Party debate over whether the U.S.’s high rate of uninsurance was caused by unaffordability or choice. Were people going without insurance because they couldn’t afford it, or because they were healthy and didn’t want it? That in turn raised the question of whether insurance coverage ought to be expanded by generous subsidies (to make coverage more affordable) or by a compulsory mandate to carry coverage (to eliminate voluntary opt-outs).

Obamacare ultimately adopted a mix of both: subsidies that could have been more generous, and an individual mandate that could have been stronger. After the law launched, it seemed clear that what it could not withstand was the loss of both the subsidies and individual mandate, as one legal challenge attempted. But the individual mandate has now been lifted, and Obamacare’s markets have not cratered. Unsurprisingly, it seems like affordability was the crisis all along — that making coverage more affordable through subsidies is enough to draw most people into the insurance pool, with or without the force of law. Barack Obama was right after all.

So perhaps the individual mandate was just a safety guard needed to get the law off the ground. Perhaps it was the price that the insurance industry demanded to embrace the coverage expansion: an assurance that insurers wouldn’t just be taking on new people with costly illnesses under the law. Now that the law is established and stabilized, that safety guard is no longer needed.

We’ll soon find out whether a federal court of appeals will jump at its chance to knife Obamacare. But it would be a grave miscarriage of justice to so casually effect a judicial repeal of a law providing health care to millions of people, just because Congress did away with a set of outgrown training wheels.