Fifth Circuit Strikes Down ACA’s Individual Mandate, for Now

The “ACA Wars” continue, with the Fifth Circuit holding that the Affordable Care Act’s individual mandate is unconstitutional. In Texas v. United States, 945 F.3d 355 (5th Cir. 2019), the Fifth Circuit addressed yet another challenge to the ACA, this time stemming from Congress’ decision to set the penalty for violating the individual mandate to $0. The Fifth Circuit first engaged in a lengthy evaluation of the plaintiffs’ Article III standing to initiate and continue the case. Ultimately, the court concluded that the plaintiffs had standing because they were still subject to the individual mandate’s demands—even if the financial penalty was now $0.

On the merits, the Fifth Circuit recognized that the Supreme Court’s decision upholding the mandate, Nat’l Fed’n of Indep. Bus. v. Sebelius, 567 U.S. 519, (2012), did so because it was a constitutional “tax.” But now, since the individual mandate no longer “generates at least some revenue for the Government,” it no longer has the “essential feature” of any tax. It therefore was no longer a constitutional exercise of the federal government’s taxing power. Left unanswered is what would happen if a future Congress were to increase the individual mandate’s penalty’ to a non-zero number.

Of course, this is not the end. The Supreme Court is expected to grant certiorari to review the Fifth Circuit’s decision. Further updates will follow.