4.26.18 Obamacare Injunction Brief

Case 4:18-cv-00167-O Document 40 Filed 04/26/18 Page 1 of 62 PageID 505
No. 4:18-cv-00167-O
In the United States District Court

FOR THE NORTHERN DISTRICT OF TEXAS
TEXAS, WISCONSIN, ALABAMA, ARKANSAS, ARIZONA, FLORIDA, GEORGIA, INDIANA,

KANSAS, LOUISIANA, PAUL LEPAGE, Governor of Maine, GOVERNOR PHIL BRYANT OF
THE STATE OF MISSISSIPPI, MISSOURI, NEBRASKA, NORTH DAKOTA, SOUTH CAROLINA,
TENNESSEE, UTAH, WEST VIRGINIA, NEILL HURLEY, and JOHN NANTZ,
PLAINTIFFS,
v.
UNITED STATES OF AMERICA, UNITED STATES DEPARTMENT OF HEALTH AND HUMAN

SERVICES, ALEX AZAR, in his Official Capacity as SECRETARY OF HEALTH AND HUMAN
SERVICES, UNITED STATES INTERNAL REVENUE SERVICE, and DAVID J. KAUTTER, in
his Official Capacity as Acting COMMISSIONER OF INTERNAL REVENUE,
DEFENDANTS.
BRIEF OF PLAINTIFFS IN SUPPORT OF APPLICATION FOR

PRELIMINARY INJUNCTION
[Counsel listed on next page]

No. 4:18-cv-00167-O
BRAD D. SCHIMEL KEN PAXTON

Wisconsin Attorney General Texas Attorney General
MISHA TSEYTLIN JEFFREY C. MATEER

Wisconsin Solicitor General First Assistant Attorney General
KEVIN M. LEROY BRANTLEY D. STARR

Wisconsin Deputy Solicitor General Deputy First Assistant Attorney
General
State of Wisconsin
Department of Justice JAMES E. DAVIS
17 West Main Street Deputy Attorney General for Civil
P.O. Box 7857 Litigation
Madison, Wisconsin 53707-7857
Tel: (608) 267-9323 DARREN MCCARTY
Special Counsel for Civil Litigation
Attorneys for Wisconsin Counsel of Record
AUSTIN R. NIMOCKS
ROBERT HENNEKE Special Counsel for Civil Litigation
Texas Public Policy Foundation
901 Congress Avenue DAVID J. HACKER
Austin, Texas 78701 Special Counsel for Civil Litigation
Tel: (512) 472-2700
Attorney General of Texas
Attorney for Individual-Plaintiffs P.O. Box 12548, Mail Code 001
Austin, Texas 78711-2548
Tel. 512-936-1414
Attorneys for Texas

TABLE OF CONTENTS
INTRODUCTION .......................................................................................................... 1
STATEMENT OF THE CASE....................................................................................... 3
A. Legal Background .......................................................................................... 3
1. The Affordable Care Act and the Individual Mandate ........................... 3
2. NFIB v. Sebelius ..................................................................................... 10
3. The Tax Cuts and Jobs Act of 2017 ....................................................... 15
B. Factual Background .................................................................................... 16
1. The States ............................................................................................... 16
2. The Individual Plaintiffs ........................................................................ 20
STANDARD FOR GRANTING APPLICATION ........................................................ 21
ARGUMENT ................................................................................................................ 21
I. The States Are Likely to Succeed on the Merits Because the Individual
Mandate Exceeds Congress’ Enumerated Powers. .......................................... 21
A. NFIB Already Held That the Commerce Clause and the Necessary
and Proper Clause Do Not Permit Congress to Mandate the Purchase
of Health Insurance. .................................................................................... 21
B. In Light of the Tax Cuts and Jobs Act of 2017, It Is No Longer “Fairly
Possible” to Save the Mandate’s Constitutionality Under Congress’
Taxing Power. .............................................................................................. 22
C. The Unconstitutional Individual Mandate Is Inseverable From the
Remainder of the ACA. ................................................................................ 27
1. As the United States Conceded in NFIB, the Community-Rating
and Guaranteed-Issue Provisions Are Inseverable. ............................. 30
2. As the NFIB Dissenting Justices Concluded, the Major Provisions
of the ACA are Inseverable. ................................................................... 35
3. As the NFIB Dissenting Justices Concluded, the ACA’s Minor
Provisions are Inseverable. .................................................................... 39
II. The States and Individual Plaintiffs Will Suffer Irreparable Harm
Absent an Injunction......................................................................................... 40
A. The Individual Mandate Irreparably Harms the Individual Plaintiffs
and the States by Mandating That They Spend Unrecoverable
Funds............................................................................................................ 41
B. The ACA’s Inseverable Provisions Force the States to Spend

Substantial Funds That Can Never Be Recovered. ................................... 43
C. The ACA Irreparably Harms the States By Preventing Them From
Enforcing Their Own Laws and Policies..................................................... 44
D. The ACA Irreparably Harms the States by Forcing Them to Take
Actions to Solve Problems Created by the ACA. ........................................ 47
III. The Balance of the Equities Favors Injunctive Relief. .................................... 48
IV. A Preliminary Injunction Against the Entire ACA and Its Associated
Regulations Is in the Public Interest. .............................................................. 49
CONCLUSION............................................................................................................. 50
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TABLE OF AUTHORITIES
Page(s)
Cases
Alaska Airlines, Inc. v. Brock,

480 U.S. 678 (1987) .........................................................................................passim
Alfred L. Snapp & Son, Inc. v. Puerto Rico,

458 U.S. 592 (1982) ................................................................................................ 45
ASARCO Inc. v. Kadish,

490 U.S. 605 (1989) ................................................................................................ 42
Awad v. Ziriax,
670 F.3d 1111 (10th Cir. 2012) .............................................................................. 50
Bowsher v. Synar,
478 U.S. 714 (1986) ................................................................................................ 29
California v. Trump,
267 F. Supp. 3d 1119 (N.D. Cal. 2017) .................................................................. 44
Canal Auth. of State of Fla. v. Callaway,

489 F.2d 567 (5th Cir. 1974) .................................................................................. 41
Contender Farms, L.L.P. v. U.S. Dep’t of Agric.,

779 F.3d 258 (5th Cir. 2015) .................................................................................. 44
Exec. Benefits Ins. Agency v. Arkison,

134 S. Ct. 2165 (2014) ...................................................................................... 29, 30
Fla. ex rel. Att’y. Gen. v. U.S. Dep’t of Health & Human Servs.,
648 F.3d 1235 (11th Cir. 2011) ................................................................................ 8
Fla. Med. Ass’n, Inc. v. U.S. Dep’t of Health, Ed. & Welfare,
601 F.2d 199 (5th Cir. 1979) .................................................................................. 21
Free Enter. Fund v. Pub. Co. Accounting Oversight Bd.,

561 U.S. 477 (2010) .......................................................................................... 27, 35
G & V Lounge, Inc. v. Mich. Liquor Control Comm’n,

23 F.3d 1071 (6th Cir. 1994) .................................................................................. 50
Gibbons v. Ogden,
22 U.S. (9 Wheat) 1 (1824) ..................................................................................... 21
- iii -
Glossip v. Gross,
135 S. Ct. 2726 (2015) ............................................................................................ 21
Hill v. Wallace,
259 U.S. 44 (1922) ............................................................................................ 27, 30
Ill. Dep’t of Transp. v. Hinson,

122 F.3d 370 (7th Cir. 1997) .................................................................................. 45
Kimble v. Marvel Entm’t LLC,

135 S. Ct. 2401 (2015) ............................................................................................ 26
King v. Burwell,
135 S. Ct. 2480 (2015) ...................................................................... 6, 10, 33, 34, 37
In re Kollock,
165 U.S. 526 (1897) ................................................................................................ 23
Koog v. United States,

79 F.3d 452 (5th Cir. 1996) .................................................................................... 29
Korte v. Sebelius,
735 F.3d 654 (7th Cir. 2013) .................................................................................. 21
Liberty Univ., Inc. v. Geithner,

671 F.3d 391 (4th Cir. 2011) .................................................................................. 25
Lujan v. Defenders of Wildlife,

504 U.S. 555 (1992) ................................................................................................ 40
Marks v. United States,

430 U.S. 188 (1977) .................................................................................... 10, 22, 26
Maryland v. King,
567 U.S. 1301 (2012) (Roberts, C.J., in chambers) ............................................... 45
Med. Ctr. Pharmacy v. Mukasey,

536 F.3d 383 (5th Cir. 2008) ............................................................................ 27, 28
Minnesota v. Mille Lacs Band of Chippewa Indians,

526 U.S. 172 (1999) .......................................................................................... 28, 38
Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp.,

460 U.S. 1 (1983) ........................................................................................ 10, 22, 26
- iv -
Murphy v. Smith,
138 S. Ct. 784 (2018) .............................................................................................. 41
National Federation of Independent Business v. Sebelius,

567 U.S. 519 (2012) .........................................................................................passim
New Motor Vehicle Bd. v. Orrin W. Fox Co.,

434 U.S. 1345 (1977) (Rehnquist, J., in chambers) ............................................... 45
New York v. United States,

505 U.S. 144 (1992) .............................................................................. 28, 36, 48, 50
Paulsson Geophysical Servs., Inc. v. Sigmar,

529 F.3d 303 (5th Cir. 2008) (per curiam) ............................................................. 41
Planned Parenthood of Greater Tex. Surgical Health Servs. v. Abbott,

734 F.3d 406 (5th Cir. 2013) .................................................................................. 45
Sonzinsky v. United States,

300 U.S. 506 (1937) .................................................................................... 22, 23, 24
Tex. Office of Pub. Util. Counsel v. F.C.C.,

183 F.3d 393 (5th Cir. 1999) .................................................................................. 45
Texas v. United States,

201 F. Supp. 3d 810 (N.D. Tex. 2016) .................................................................... 45

787 F.3d 733 (5th Cir. 2015) .................................................................................. 47

95 F. Supp. 3d 965 (N.D. Tex. 2015) ...................................................................... 45

No. 7:15-cv-00151-O (N.D. Tex.) ............................................................................ 40
Thunder Basin Coal Co. v. Reich,

510 U.S. 200 (1994) ................................................................................................ 41
United States v. Jacobsen,

466 U.S. 109 (1984) .................................................................................... 10, 22, 26
United States v. Kahriger,

345 U.S. 22 (1953) ................................................................................ 11, 23, 24, 25
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Valdez v. Cockrell,
274 F.3d 941 (5th Cir. 2001) .................................................................................. 41
Williams v. Std. Oil Co. of La.,

278 U.S. 235 (1929) .............................................................................. 35, 37, 39, 40
Winter v. Nat. Res. Def. Council, Inc.,

555 U.S. 7 (2008) .................................................................................................... 21
Wyoming ex rel. Crank v. United States,

539 F.3d 1236 (10th Cir. 2008) .............................................................................. 45
Zobel v. Williams,
457 U.S. 55 (1982) ............................................................................................ 29, 30
Constitutional Provisions, Statutes, and Rules
U.S. Const. art. I

§ 8, cl. 1 ....................................................................................................... 11, 22, 23
§ 8, cl. 3 ................................................................................................................... 21
21 U.S.C. § 343 ............................................................................................................. 39
26 U.S.C.
§ 30D ....................................................................................................................... 23
§ 36B ......................................................................................................................... 7
§ 1402(g) ................................................................................................................ 4, 5
§ 1501(b).................................................................................................................. 42
§ 3102 ...................................................................................................................... 22
§ 4191(a).............................................................................................................. 8, 39
§ 4980H ..................................................................................................................... 7
§ 4980I................................................................................................................. 7, 36
§ 5000A(a) ................................................................................................. 4, 9, 15, 41
§ 5000A(b) ........................................................................................................... 4, 15
§ 5000A(c) ................................................................................................................. 4
§ 5000A(d) ....................................................................................................... 4, 5, 25
§ 5000A(e) ................................................................................................. 5, 6, 25, 26
§ 5000A(f)(1)(A)............................................................................................. 5, 26, 42
42 U.S.C.
§ 300gg ...................................................................................................................... 6
§ 300gg-1 ............................................................................................................. 6, 34
§ 300gg-4 ............................................................................................................. 6, 34
§ 300gg-11 ................................................................................................................. 6
§ 300gg-13 ............................................................................................................... 46
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§ 1303 ...................................................................................................................... 29
§ 1315 .................................................................................................................. 8, 39
§ 1395ww .................................................................................................................. 8
§ 1396w ................................................................................................................... 42
§ 1396 ........................................................................................................................ 8
§ 1396a ............................................................................................................ 7, 8, 42
§ 1396c ...................................................................................................................... 7
§ 1396u ...................................................................................................................... 8
§ 1397aa .................................................................................................................. 42
§ 18021 ...................................................................................................................... 6
§ 18022 .............................................................................................................. 6, 7, 8
§ 18091 .......................................................................................................... 8, 26, 30
§ 18091(2)(I) ...............................................................4, 5, 6, 9, 26, 30, 31, 32, 34, 37
§ 18091(2)(A) ............................................................................................................. 5
§ 18091(2)(A) ........................................................................................................... 26
§ 18091(2)(D) ........................................................................................................ 3, 6
§ 18091(2)(E) ............................................................................................................. 9
§ 18091(2)(F) ............................................................................................... 4, 5, 9, 26
§ 18091(2)(H) ............................................................................................................ 9
§ 18091(2)(J) ....................................................................................................... 9, 31
2013 Wis. Act 20, § 1900n ........................................................................................... 46
Health Care and Education Reconciliation Act of 2010,

Pub. L. 111-152, 124 Stat. 1029 ............................................................................... 3
Patient Protection and Affordable Care Act,

Pub. L. 111-148, 124 Stat. 119-1045 ........................................................................ 3
Tax Cuts and Jobs Act of 2017,

Pub. L. 115-97, § 11081, 131 Stat. 2054 .................................................... 15, 23, 32
Wis. Stat.
§§ 149.10-.53 (2011-2012)................................................................................. 45, 46
§ 149.14 ................................................................................................................... 46
§ 632.76(2)(ac) ......................................................................................................... 46
§ 632.895 ................................................................................................................. 46
Tex. Ins. Code

§§ 1506.001-.305 ..................................................................................................... 45
§ 1506.155 ............................................................................................................... 46
Other Authorities
79 Fed. Reg. 8544 (Feb. 12, 2014) ................................................................................. 7
- vii -
Act of May 21, 2013, 83d Leg., R.S., ch.615, 2013 Tex. Gen Laws 1640 ................... 46
Addressing Insurance Market Reform: Hearing Before the S. Comm.

on Health, Education, Labor & Pensions, 111th Cong. 22 (2009) ........................ 34
CBO, An Analysis of Health Insurance Premiums Under the Patient

Protection and Affordable Care Act, at 6 (Nov. 30, 2009),
available at https://tinyurl.com/ CBO2009Report........................................... 35, 42
CBO, The Budget and Economic Outlook: 2018 to 2028 (April 2018),
available at https://tinyurl.com/CBOEconOutlook2018-2028 .............................. 19
CBO, Repealing the Individual Health Insurance Mandate: An

Updated Estimate (Nov. 8, 2017),
available at https://tinyurl.com/CBO2017Report.......................... 15, 16, 24, 35, 42
CBO, Key Issues in Analyzing Major Health Insurance Proposals (Dec.

2008),
available at https://tinyurl.com/CBO2008Report.......................................... 5, 6, 16
Continuation of the Open Executive Session to Consider an Original

Bill Providing for Health Care Reform of the S. Comm. on Finance,
111th Cong. 21-22 (Oct. 1, 2009)............................................................................ 34
H.B. 2539, 99th Gen. Assem., 2d R.S. (Mo. 2017) ...................................................... 47
H.B. 2539, 99th Gen. Assem., 2d Reg. Sess. (Mo. 2017),

available at https://tinyurl.com/Mo-HB2539-2017................................................ 19
H.R. Rep. No. 115-466 ................................................................................................. 24
Health Care and Education Reconciliation Act (H.R. 4872, 111th

Cong.) ........................................................................................................................ 3
Mo. Office of Admin., Summary, The Missouri Budget Fiscal Year 2018
Summary, 1 (2018) (Governor’s proposed budget),
available at https://tinyurl.com/Mo-BudgetFY2018 ............................................. 47
Robert Pear, Health Insurers Offer to Accept All Applicants, on

Condition, N.Y. Times, Nov. 19, 2008,
available at http://www.nytimes.com/2008/11/20/us/20health.html .................... 34
Segal Consulting, First Report—Observations and 2016

Recommendations (March 25, 2015),
available at http://etf.wi.gov/boards/agenda-items-
2015/gib0325/item4c1.pdf......................................................................................... 7
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INTRODUCTION
In National Federation of Independent Business v. Sebelius, 567 U.S. 519
(2012) (hereinafter “NFIB”), a majority of the Supreme Court concluded that when
Congress enacted the Affordable Care Act’s (“ACA”) central provision—the individual
mandate—it sought to accomplish something unconstitutional: impose a legal
requirement that most Americans buy health insurance of the particular type that
the federal government dictates. Id. at 558-61 (Roberts, C.J.); id. at 657 (dissenting
op.). Rather than declare this mandate unconstitutional, however, a different
majority of the Court adopted a saving construction, interpreting the mandate as
part-and-parcel of a tax penalty that applies to many individuals failing to comply
with the mandate, even though the penalty did not apply to many individuals who
are subject to the mandate (for example, those who cannot afford coverage and can
be expected to comply with the mandate by signing up for Medicaid). This
reinterpretation of the ACA to save the law’s constitutionality was only possible
because the judicially combined individual-mandate-and-tax-penalty had the
“essential feature of any tax”—the raising of at least “some revenue”—and thus could
be enacted constitutionally under Congress’ taxing power. Id. at 563-64.
In 2017, however, Congress enacted the Tax Cuts and Jobs Act, which
eliminates entirely the tax penalty that was the linchpin of the Supreme Court’s
saving construction in NFIB, but leaves the mandate in place. In other words,
Congress has now left in the ACA only the standalone mandate that the Supreme
Court has already held Congress cannot constitutionally adopt.
Given that Congress has eliminated the only constitutional basis upon which
the ACA’s central provision survived judicial review in NFIB, the States respectfully
request that this Court preliminarily enjoin Defendants from enforcing the mandate
itself, the community-rating and guaranteed-issue provisions that the United States
in NFIB conceded were inseverable from the mandate, and, ultimately, the entire
ACA. The injunction against the mandate is appropriate because the States have a
clear likelihood of success on the mandate’s unconstitutionality, given the conclusion
of the NFIB majority that Congress has no authority to require the purchase of health
insurance. Extending the injunction to cover the community-rating and guaranteed-
issue provisions follows directly from concessions that the United States made during
the NFIB litigation, based upon explicit statutory text that the mandate is “essential”
to those provisions’ operations. And extending that injunction to the rest of the ACA
is appropriate for precisely the same reasons offered by the four dissenting Justices
in NFIB.
Beyond the likelihood of success on the merits, the States and individual
plaintiffs will suffer numerous irreparable harms absent an injunction. Most directly,
the individual mandate will irreparably harm the States and individual plaintiffs.
Without an injunction, the individual plaintiffs will be forced to continue to purchase
ever-more-expensive, ACA-compliant insurance to comply with the mandate, instead
of purchasing insurance that they believe, in their judgment, fits their needs. And the
States—even those that did not opt into the so-called Medicaid Expansion—will be
forced to pay significantly more in Medicaid reimbursements because, as the
Congressional Budget Office (“CBO”) has repeatedly concluded, people will enroll in
Medicaid simply to satisfy the individual mandate, without regard to whether there
is a tax penalty. These are financial injuries, but they are irreparable because once
the money is spent, it is forever lost, as there is no known avenue for recovery through
the courts.
Having to comply with the remainder of the ACA causes further irreparable
financial harm to the States because they must spend hundreds of millions of dollars
to offer additional health-insurance benefits to their employees or else face
debilitating tax penalties under the employer mandate, and must provide benefits to
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hundreds of thousands of additional Medicaid enrollees. And leaving the ACA in place
will prevent the States as sovereigns from enforcing their own regulations of the
health care market—a quintessential irreparable harm. When the States had the
ability to regulate, they allowed individuals to choose whether to buy health
insurance, established high-risk insurance pools to help individuals in ill health,
enabled cost-sharing, and instituted many other policies that the ACA now preempts
or functionally displaces. Enjoining the ACA will allow the States once again to
exercise their sovereign authority.
The equities and the public interest also strongly favor an injunction. Put
simply, the United States has no legitimate interest in enforcing a provision of the
ACA that a majority of the Supreme Court has already said is unconstitutional. And
once that provision is enjoined, the remainder of the ACA must be enjoined along
with it to prevent the collapse of the insurance market that Congress itself predicted.
STATEMENT OF THE CASE

A. Legal Background
1. The Affordable Care Act and the Individual Mandate
In 2010, Congress sought to transform this Nation’s healthcare system with
the Patient Protection and Affordable Care Act, Pub. L. 111-148, 124 Stat. 119-1045,
and the Health Care and Education Reconciliation Act of 2010, Pub. L. 111-152, 124
Stat. 1029. (Hereinafter, collectively, “the Affordable Care Act,” “the ACA,” or “the
Act.”) President Obama signed the Patient Protection and Affordable Care Act (H.R.
3590, 111th Cong.) into law on March 23, 2010, and the Health Care and Education
Reconciliation Act (H.R. 4872, 111th Cong.) on March 30, 2010. Congress designed
the ACA to achieve three express statutory goals: “near-universal [health-insurance]
coverage,” 42 U.S.C. § 18091(2)(D), “lower health insurance premiums,” id.
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§ 18091(2)(F), and the “creat[ion] [of] effective health insurance markets,” id.
§ 18091(2)(I).
As relevant here, the ACA has three “closely interrelated” features, almost all
located within Title I of the Act, NFIB, 567 U.S. at 691 (dissenting op.):
The Individual Mandate and Tax-Penalty Applicable to Most of Those Who Do
Not Comply With the Individual Mandate. Subsection (a) of section 5000A imposes
an individual mandate on most individuals, whom the Act calls “applicable
individual[s].” 26 U.S.C. § 5000A(a). The statutory text provides: “An applicable
individual shall . . . ensure that the individual . . . is covered under minimum
essential coverage.” Id. The statutory title of this subsection reiterates that it imposes
a “requirement” on applicable individuals “to maintain minimum essential coverage.”
Id. (capitalization altered).
Subsection (b) imposes a tax penalty on many “applicable individual[s]” who
fail to comply with the individual mandate. Id. § 5000A(b). Congress titled this tax
penalty a “Shared [R]esponsibility [P]ayment,” id. § 5000A(b), providing: “If a
taxpayer who is an applicable individual . . . fails to meet the requirement of
subsection (a) . . . then . . . there is hereby imposed on the taxpayer a penalty with
respect to such failure[ ].” Id. § 5000A(b)(1).
Subsection (c) determines the tax penalty amount with a multi-step formula.
Id. § 5000A(c). The penalty would increase gradually through 2016, reaching 2.5
percent of household income or $695 per year (up to a maximum of three times that
amount) per family, whichever is greater. 26 U.S.C. § 5000A(c). After 2016, the tax
penalty would increase annually based on a cost-of-living adjustment. Id.
Congress excluded three categories of people from the definition of “applicable
individuals” and thus from the individual mandate entirely. See id. § 5000A(d)(2)-(4);
id. § 1402(g)(1). Religious individuals who are “conscientiously opposed to acceptance
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of the benefits of any private or public insurance,” id. § 1402(g)(1); see id.
§ 5000A(d)(2)(A), and “member[s] of a health care sharing ministry,” id.
§ 5000A(d)(2)(B). “[I]ndividual[s]” who are “not [ ] citizen[s] or national[s] of the
United States or [ ] alien[s] lawfully present in the United States.” Id. § 5000A(d)(3).
And “individual[s]” who are “incarcerated.” Id. § 5000A(d)(4).
Other numerous people who are subject to the mandate are nonetheless
exempt from the tax penalty. Id. § 5000A(e)(1)-(5). Five classes of people fall into this
category. First, “[i]ndividuals who cannot afford coverage.” Id. § 5000A(e)(1). Second,
“[t]axpayers with income below [the] [tax-return] filing threshold.” Id. § 5000A(e)(2).
Third, “member[s] of an Indian tribe.” Id. § 5000A(e)(3). Fourth, those experiencing
only “short coverage gaps” in health insurance. Id. § 5000A(e)(4). And fifth, those who
receive a “hardship” exemption from “the Secretary of Health and Human Services.”
Id. § 5000A(e)(5). These individuals must obtain “minimum essential coverage” in
order to “comply with [the] mandate, even in the absence of penalties.” CBO, Key
Issues in Analyzing Major Health Insurance Proposals 53 (Dec. 2008), available at
https://tinyurl.com/CBO2008Report (“CBO 2008 Report”).
Congress’ policy basis for subjecting many individuals to the mandate, but not
to the tax penalty, was sensible: for a large group of people—especially the poor—it
would be inequitable to impose a tax penalty, but Congress still wanted to require
them to sign up for ACA-compliant health insurance. A core purpose of the ACA was
to prevent the emergency-room cost-shifting problem—where individuals without
health insurance obtain uncompensated care via an emergency room, inevitably
requiring medical providers to increase costs on those with insurance. See 42 U.S.C.
§ 18091(2)(A), (F), (I); infra at 26. So Congress (i) mandated that these individuals
obtain coverage; (ii) offered them the means to satisfy the mandate through the
Medicaid system, 26 U.S.C. § 5000A(f)(1)(A)(i)-(iii); infra at 25-26; but then (iii)
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exempted them from the tax penalty if they nevertheless failed to comply with the
mandate, § 5000A(e)(1). As the CBO found, “many individuals” who are subject to the
mandate, but are not subject to the penalty, will obtain coverage because of the
mandate “because they believe in abiding by the nation’s laws.” CBO 2008 Report at
53.
Guaranteed Issue and Community Rating. The ACA imposes voluminous
regulations on health-insurance companies, with the most prominent being
“guaranteed issue” and “community rating” requirements. 42 U.S.C. § 300gg to gg-4.
Guaranteed-issue mandates that health-insurance companies “accept every employer
and individual in the State that applies for [ ] coverage,” regardless of preexisting
conditions. Id. § 300gg-1. This prevents health-insurance insurance companies from
completely denying coverage to individuals deemed too high-risk, see NFIB, 567 U.S.
at 547-48 (Roberts, C.J.); King v. Burwell, 135 S. Ct. 2480, 2485-86 (2015), thus
furthering the Act’s goal of “near-universal coverage.” 42 U.S.C. § 18091(2)(D).
Community-rating prohibits health insurers from charging higher rates to
individuals within a given geographic area on the basis of their age, sex, health
status, or other factors. See id. § 300gg, 300gg-4(a)(1); NFIB, 567 U.S. at 547-48
(Roberts, C.J.). Together, these two provisions “are designed to make qualifying
insurance available and affordable for persons with medical conditions that may
require expensive care,” NFIB, 567 U.S. at 685 (dissenting op.), furthering the Act’s
goal of “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).
Other Major Provisions. The Act imposes numerous coverage requirements on
all health-insurance plans, called “essential health benefits”; limits “cost-sharing” on
all plans, see 42 U.S.C. §§ 18021-22; and eliminates coverage limits, id. § 300gg-11.
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The “essential health benefits” “shall include” “ambulatory patient services,
emergency services, hospitalization, maternity and newborn care, mental health and
substance use disorder services,” and numerous other costly services 42 U.S.C.
§ 18022(b)(1) (capitalization altered). “[T]he Secretary” has the statutory authority to
“define [ ] essential health benefits” beyond those expressly listed. Id. § 18022(b)(1).
The Act contains an “employer mandate,” which requires employers of 50 or
more full-time employees to offer affordable health insurance if one employee
qualifies for a subsidy to purchase health insurance on the ACA health-insurance
exchanges. See 26 U.S.C. § 4980H. This necessarily includes municipalities and other
smaller government employers. “Full time employees” are defined as those working
“on average at least 30 hours [ ] per week.” Id. § 4980H(c)(4)(B). An employer’s failure
to offer insurance results in a penalty of $2,000 per year per employee, id. § 4980H(a),
(c)(1), while the failure to offer affordable insurance results in a penalty of $3,000 per
year per employee, id. § 4980H(b); 79 Fed. Reg. 8544, 8544 (Feb. 12, 2014). Also
related to employers, the Act levies a 40 percent excise tax on high-cost employer-
sponsored health coverage, 26 U.S.C. § 4980I. Due to “medical inflation,” “nearly
every employer health plan” will eventually trigger the 40 percent excise tax unless
the employer makes affirmative steps to modify plan offerings. Segal Consulting,
First Report—Observations and 2016 Recommendations, at 61 (March 25, 2015),
available at http://etf.wi.gov/boards/agenda-items-2015/gib0325/item4c1.pdf.
The Act authorizes refundable tax credits to individuals between 100% and
400% of the poverty line to make insurance purchased on the exchanges more
affordable. See 26 U.S.C. § 36B.
The Act substantially expands Medicaid. Most significantly, as a condition for
all Medicaid funding, 42 U.S.C. § 1396c, it requires States to cover all individuals
under 65 earning income below 133 percent of the poverty line, id.
-7-
§ 1396a(a)(10)(A)(i)(VIII), and to provide a new, “[e]ssential health benefits” package,
id. §§ 1396(a)(k)(1), 1396u-7(b)(5), 18022(b). This is the so-called Medicaid
Expansion. Apart from this, the ACA also altered Medicaid in two substantial ways.
First it made two new populations eligible for the program: individuals under age 26
who were enrolled in federally-funded Medicaid when they aged out of foster care, 42
U.S.C. § 1396a(a)(10)(A)(i)(IX), and children ages 6 to 18 who were eligible for the
Children’s Health Insurance Program (CHIP) prior to the ACA, id.
§ 1396a(a)(10)(A)(i)(VII)). Second, it restricted States to considering only one factor
to determine eligibility for populations other than those who have a disability or who
are elderly—Modified Adjusted Gross Income (“MAGI”), 42 U.S.C. § 1396a(e)(14)—
thereby broadening the pool of persons who will meet Medicaid’s income thresholds.
In addition, the Act reduces federal reimbursement rates to hospitals. See 42 U.S.C.
§ 1395ww.
Minor Provisions. The Act contains a grab-bag of minor provisions. For
example, it imposes a 2.3 percent tax on certain medical devices, 26 U.S.C. § 4191(a),
and creates mechanisms for the Secretary to issue compliance waivers to States
attempting to reduce costs through otherwise-prohibited means, 42 U.S.C. § 1315; see
generally NFIB, 567 U.S. at 704-06 (dissenting op.) (describing other “[m]inor
[p]rovisions”); Fla. ex rel. Att’y. Gen. v. U.S. Dep’t of Health & Human Servs., 648 F.3d
1235, 1249 (11th Cir. 2011), aff’d in part, rev’d in part sub nom. NFIB, 567 U.S. 519
(describing all titles of the ACA).
* * *
According to Congress’ own legislative findings, codified in the ACA, the
individual mandate is critical to the functioning of the Act’s major features. See 42
U.S.C. § 18091. These legislative findings identify the individual mandate itself—
“[t]he requirement” to purchase health insurance, id. (emphasis added); compare 26
-8-
U.S.C. § 5000A(a) (“Requirement to maintain minimum essential coverage”
(emphasis added))—making no mention of the separate tax penalty that attaches to
some individuals’ failure to comply with the mandate.
Central among these legislative findings is section 18091(2)(I), which explains
that “if there were no requirement [to buy health insurance], many individuals would
wait to purchase health insurance until they needed care,” 42 U.S.C. § 18091(2)(I),
since the guaranteed-issue and community-ratings provisions would guarantee those
individuals coverage irrespective of their current medical status. So “[b]y
significantly increasing health insurance coverage, the requirement [to buy health
insurance], together with the other provisions of this Act, will minimize this adverse
selection and broaden the health insurance risk pool to include healthy individuals,
which will lower health insurance premiums.” Id. Thus “[t]he requirement is 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.” Id. (emphases added).
Other legislative findings reinforce this point: “By significantly reducing the
number of the uninsured, the requirement, together with the other provisions of th[e]
[ACA], will significantly reduce [health care’s] economic cost,” id. § 18091(2)(E),
“lower health insurance premiums,” id. § 18091(2)(F), and “reduce administrative
costs,” id. § 18091(2)(J). “The requirement is an essential part of [the Government’s]
regulation of economic activity, and the absence of the requirement would undercut
Federal regulation of the health insurance market.” Id. § 18091(2)(H) (emphases
added). “The requirement is essential to creating effective health insurance markets
that do not require underwriting and eliminate its associated administrative costs.”
Id. § 18091(2)(J) (emphases added).
-9-
In sum, Congress specifically found in the statutory text that the provisions of
the ACA’s provisions are “closely intertwined,” such that “the guaranteed issue and
community rating requirements would not work without the coverage requirement
[i.e., the individual mandate].” King, 135 S. Ct. at 2487 (emphasis added); NFIB, 567
U.S. at 547-48 (Roberts, C.J). Upsetting the balance between these core provisions
“would destabilize the individual insurance market” in the manner “Congress
designed the Act to avoid.” King, 135 S. Ct. at 2493.

2. NFIB v. Sebelius
In NFIB, 26 States—including 15 of the plaintiff-States here—challenged the
constitutionality of the ACA. They argued: (1) that the individual mandate “exceeded
Congress’s powers under Article I of the Constitution,” and (2) that, if the Court
invalidated the mandate, it should enjoin the entire ACA because the mandate could
not be severed from the rest of the Act. NFIB, 567 U.S. at 540-41.
A controlling majority of Justices—via the opinion of Chief Justice Roberts and
the joint dissenting opinion of Justices Scalia, Kennedy, Thomas, and Alito—agreed
with the States that the individual mandate exceeded Congress’ power under the
Commerce Clause. Id. at 558-561 (Roberts, C.J.) (also concluding that the Necessary
and Proper Clause did not alter this conclusion); id. at 657 (dissenting op.); see United
States v. Jacobsen, 466 U.S. 109, 115-17 & n.12 (1984) (binding Supreme Court
precedent derived from combining two-Justice plurality and four-Justice dissent);
Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 17 (1983) (similar);
see generally Marks v. United States, 430 U.S. 188, 193 (1977). Both the Chief Justice
and the four-Justice dissent explained that, although the Court had construed the
Commerce Clause to give Congress “broad authority” over both interstate and
intrastate economic activity, its precedents “uniformly describe the power as reaching
‘activity,’” NFIB, 567 U.S. at 548-49, 551 (Roberts, C.J.); id. at 653 (dissenting op.)
- 10 -
(“The lesson of [the Court’s] cases is that the Commerce Clause . . . is not carte
blanche for doing whatever will help achieve the ends Congress seeks by the
regulation of commerce.”). “The individual mandate, however, does not regulate
existing commercial activity,” “instead” it “compels individuals to become active in
commerce by purchasing a product.” Id. at 552 (Roberts, C.J.); id. at 650 (dissenting
op.) (“[the individual mandate] provides that (nearly) all citizens must buy an
insurance contract”). Therefore, “[s]uch a law cannot be sustained under [the] clause
authorizing Congress to ‘regulate Commerce.’” Id. at 558 (Roberts, C.J.); id. at 652-
53, 657 (dissenting op.) (“If Congress can reach out and command even those furthest
removed from an interstate market to participate in the market, then the Commerce
Clause becomes a font of unlimited power[.]”).
A different majority of Justices—via the opinion of Chief Justice Roberts and
the concurring opinion of Justices Ginsburg, Breyer, Sotomayor, and Kagan—held
that it was “fairly possible,” under the doctrine of constitutional avoidance, to read
the individual mandate and the tax-penalty provisions as a unified tax, supported by
Congress’ tax power. Id. at 563 (Roberts, C.J.). This majority could only adopt this
saving construction because the combined operation of section 5000A contained “the
essential feature of any tax: It produces at least some revenue for the Government.”
Id. at 563-64 (citing United States v. Kahriger, 345 U.S. 22 (1953)); see U.S. Const.
art. I, § 8, cl. 1 (“The Congress shall have Power to lay and collect Taxes . . . to pay
the Debts and provide for the common Defence and general Welfare of the United
States.”). “Indeed, the payment” of the tax penalty was “expected to raise about $4
billion per year by 2017.” NFIB, 567 U.S. at 564 (Roberts, C.J.). Under this tax
interpretation, section 5000A is no longer “a legal command to buy insurance” backed
by a threat of paying a penalty (a threat applicable to many, but not all, individuals
subject to the mandate). Id. at 563. “Rather, it makes going without insurance just
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another thing the Government taxes, like buying gasoline or earning income.” Id.
Individuals who forgo purchasing insurance now must simply “pay money into the
Federal Treasury.” Id. at 574. They are left “with a lawful choice to do or not do a
certain act, so long as [they are] willing to pay a tax levied on that choice.” Id.
The four dissenting Justices rejected the majority’s saving construction as not
a “fairly possible” reading of the text. These Justices explained that section 5000A is
“a mandate that individuals maintain minimum essential coverage [that is] enforced
by a penalty.” Id. at 662 (dissenting op.) (emphasis added). It is “a mandate to which
a penalty is attached,” not “a simple tax.” Id. at 665. The structure of section 5000A
supported this reading: Section 5000A mandates that individuals buy insurance in
subsection (a), and then in subsection (b) it imposes the penalty for failure to comply
with subsection (a). Id. at 663. Section 5000A “exempts [some] people” from the
mandate, but not the penalty—“those with religious objections,” who “participate in
a health care sharing ministry,” and “those who are not lawfully present in the United
States.” Id. at 665 (citations and internal quotation marks omitted). “If [section]
5000A were [simply] a tax” and “no[t] [a] requirement” to obtain health insurance,
exempting anyone from the mandate provision, but not the penalty provision, “would
make no sense.” Id.
Importantly, the Chief Justice agreed that the “most straightforward reading
of” section 5000A “is that it commands individuals to purchase insurance.” Id. at 562
(Roberts, C.J.). As the Chief Justice explained, the “most natural interpretation of
the mandate” is that it is a “command,” not a tax. Id. at 563. “Congress thought it
could enact such a command under the Commerce Clause, and the Government
primarily defended the law on that basis.” Id. Thus, the Chief Justice’s only
disagreement with the four dissenting Justices was whether the saving construction
was “fairly possible.” Id.
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Since only the four dissenting Justices concluded that the mandate in the
original ACA was unconstitutional, only their joint dissenting opinion considered
whether the mandate was severable from the remainder of the ACA. Id. at 691-707
(dissenting op.). In conducting their severability analysis, the four dissenting Justices
considered the ACA in parts: first, its “major provisions”—“insurance regulations and
taxes,” “reductions in reimbursements to hospitals and other Medicare reductions,”
the “exchanges and their federal subsidies,” and “the employer-responsibility
assessment”—and, second, the Act’s “minor provisions.” Id. at 697. The dissenting
Justices concluded that each were nonseverable under either or both prongs of the
Supreme Court’s “well established” severability test. Id. at 691-708. As for the major
provisions, they could “impose enormous risks of unexpected burdens on patients, the
health-care community, and the federal budget” without the individual mandate. Id.
at 697-98. Accordingly, these provisions no longer operate in the manner Congress
intended and would not have been passed independently. See id. at 699-704. As for
the minor provisions, they either fail to “operate in the manner Congress intended,”
because they were designed to supplement the ACA’s major provisions, or Congress
would never have enacted them without the ACA’s core, because they “are ancillary
to [the ACA’s] central provisions” or were “the quid pro quo for [a legislator’s] support”
of the entire Act. Id. at 705. Therefore, the four dissenting Justices concluded “that
all other provisions of the Act must fall” with the mandate. Id. at 691-93.
While the five-Justice majority (the Chief Justice, joined by Justices Ginsburg,
Breyer, Sotomayor, and Kagan) that upheld the mandate did not analyze the
severability of that provision, they did analyze the severability of the ACA’s forced
Medicaid Expansion, which the Court declared unconstitutional. Id. at 529, 581
(Roberts, C.J.); id. at 689 (dissenting op.). As mentioned above, the ACA substantially
expanded Medicaid by “requir[ing] States . . . to cover all individuals under the age
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of 65 with incomes below 133 percent of the federal poverty line” and to offer an
expanded “‘[e]ssential health benefits package.’” Supra at 7-8; NFIB, 567 U.S. at 575-
76 (Roberts, C.J.). The Act attempted to coerce the States’ compliance by
“threaten[ing] to withhold [ ] existing Medicaid funds” from those States “unwilling
[ ] to sign up for the dramatic expansion” of Medicaid under the Act. Id. at 579-80.
Seven Justices concluded that the Medicaid expansion “accomplishes a shift in kind
[from the pre-ACA Medicaid], not merely degree.” Id. at 583. Yet Congress’ spending
power “does not include surprising participating States with post-acceptance or
retroactive conditions” in the manner that Congress “attempt[ed] to do with the
Medicaid expansion.” Id. at 584-85 (citations omitted). Therefore, imposing these
conditions, on pain of losing all existing funding, unconstitutionally commandeered
the States in violation of the Tenth Amendment. See id. at 581 (“[T]he financial
‘inducement’ Congress has chosen is much more than ‘relatively mild
encouragement’—it is a gun to the head.”); id. at 689 (dissenting op.) (“[I]t is perfectly
clear . . . that the offer of the Medicaid Expansion was one that Congress understood
no State could refuse.”).
This five-Justice majority concluded that the remedy for this Tenth
Amendment violation was to sever the forced-Medicaid expansion provisions from the
“existing Medicaid program” and the “other provisions of the Affordable Care Act.”
Id. at 585-88 (Roberts, C.J.). As for “the existing Medicaid program,” the majority’s
severability analysis depended wholly on the presence of a severability clause. The
Chief Justice concluded that’s since “[t]he chapter of the United States Code that
contains [the expansion] contains a severability clause,” this “explicit textual
instruction to leave unaffected [provisions]” intact “confirm[s] that [the Court] need
go no further” in its severability analysis. Id. at 586. Justice Ginsburg, concurring on
this point and writing for four Justices, agreed with the Chief Justice. Id. at 645-46
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(Ginsburg, J., concurring in part, concurring in the judgment in part, and dissenting
in part) (hereinafter “concurring op.”). Justice Ginsburg wrote that “the Medicaid
Act’s severability clause determines the appropriate remedy,” so there was no need
to engage in any further severability analysis. Id. at 645-46. As for the remainder of
the ACA, this five-Justice majority concluded that “Congress would have wanted to
preserve the rest of the Act” without the Medicaid expansion. Id. at 587 (Roberts,
C.J.). The other provisions of the ACA “will remain fully operative as law and will
still function in a way consistent with Congress’ basic objectives” without the forced-
expansion provisions, thus those provisions are severable from the ACA. Id. at 587-
88 (citations omitted).
3. The Tax Cuts and Jobs Act of 2017
In December 2017, Congress enacted, and President Trump signed into law,
the Tax Cuts and Jobs Act of 2017, which reduced the operative parts of
section 5000A(c)’s tax penalty formula to “[z]ero percent” and “$0.” Pub. L. 115-97,
§ 11081, 131 Stat. 2054, 2092 (2017). This change applies after December 31, 2018.
Id. After the Tax Cuts and Jobs Act, section 5000A(a) still contains the individual
mandate in subsection (a), requiring “[a]n applicable individual” to “ensure that the
individual . . . is covered under minimum essential coverage,” 26 U.S.C. § 5000A(a),
but subsection (b)’s tax “penalty” for an individual who “fails to meet th[is]
requirement” is now $0, meaning that it is repealed, id. § 5000A(b). The ACA also
still contains the express legislative findings that the individual mandate—
subsection (a)—is “essential” to the operation of the ACA, as those findings were
untouched by the Tax Cuts and Jobs Act.
The CBO Report for the Tax Cuts and Jobs Act explains that the Act
“eliminate[s]” the “individual mandate penalty . . . but [not] the mandate itself.” CBO,
Repealing the Individual Health Insurance Mandate: An Updated Estimate, at 1
- 15 -
(Nov. 8, 2017), available at https://tinyurl.com/CBO2017Report (“CBO 2017 Report”)
(emphasis added). The CBO report adds that at least “a small number of people who
enroll in insurance because of the mandate under current law would continue to do
so [post elimination of the individual mandate’s penalty] solely because of a
willingness to comply with the law.” Id. Before the passage of the ACA in 2009, the
CBO had concluded that “[m]any individuals” who are subject to the mandate, but
are not subject to the penalty, will obtain coverage “because they believe in abiding
by the nation’s laws.” CBO 2008 Report at 53.

B. Factual Background
1. The States
The States primarily interact with the health care system and the ACA in three
capacities: as Medicaid participants, as sovereigns that have traditionally regulated
their local health insurance markets, and as large employers that provide health
insurance coverage to their employees.
Medicaid Participants. The individual mandate has caused the States’
Medicaid rolls and costs to increase substantially. Many individuals have met and
will continue to meet their individual mandate obligations by participating in
Medicaid, CBO 2017 Report at 1. This costs the States money because “Medicaid is
funded by both the state and federal governments,” and “cost is determined by the
caseload—the volume or number of individuals served . . . —and cost per client.”
App.027, ¶¶2-3 (Tex.). Apart from the individual mandate, the ACA increases costs
because it requires Medicaid to cover two new groups of people, and requires the
States to use MAGI when determining Medicaid eligibility, a measurement that does
not permit states to consider an individual’s assets or income of certain types. See
supra at 7-8. Additionally, rising health care costs caused by the ACA result in higher
costs to the States through Medicaid.
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Regulating Health Insurance Markets. By fundamentally changing the health
care and health insurance markets across the country, the ACA substantially affects
how the States can regulate health insurance markets. Before the ACA, the States,
as the primary regulators of health care and health insurance, carefully crafted
programs that responded to public needs and preferences. For example, multiple
States created high-risk pools that “operated as an insurer of last resort for people
when private insurers refused to issue coverage to them due to expensive anticipated
medical costs.” App.134, ¶13 (Neb.). These programs “effectively managed the health-
insurance needs of high-risk individuals,” App.074-075, ¶10(a) (Wis.), while
“keep[ing] high-cost individuals from driving up premiums for insurance purchasers
of average or good health.” App.134, ¶13 (Neb.); see App.043-44 ¶¶13-14 (Tex.);
App.140, ¶11 (N.D.). Similarly, States explicitly addressed issues such as cost-
sharing for preventative services, the treatment of preexisting conditions, and the
ability to rescind health insurance contracts for false statements as part of their
comprehensive effort to make their health care insurance markets work for everyone.
See App.074-75, ¶10(b)-(d) (Wis.). And because their regulatory effort was
comprehensive, their decisions not to regulate—such as their decision not to mandate
that individuals purchase health insurance coverage—reflected carefully considered
policy choices, not an abdication of responsibility.
The ACA preempted, or effectively displaced, most of these policy choices, and
the States have been dealing with the consequences ever since. They have spent
countless hours ensuring ACA compliance by, for example, creating programs to help
individuals navigate the ACA, App.042-43, ¶¶10-12 (Tex.), providing direction to
insurers, App.075-76, ¶11(b) (Wis.), and “reading and enforcing thousands of pages
of federal regulations [and] guidance.” App.133, ¶10(Neb.).
- 17 -
But, at this point, simply ensuring compliance with the ACA is the least of the
States’ regulatory worries. “Because of the ACA’s burdensome regulations, many
insurers . . . have left the individual market, scaled back their offerings in the
individual market, or otherwise limited their exposure in the individual market.”
App.072-73, ¶7 (Wis.). “[A] major Wisconsin health insurer, Assurant Health, ceased
its Wisconsin operations because of the ACA,” costing Wisconsin 1,200 jobs. App.073,
¶8(a) (Wis.). United Health Care “withdrew from participation in the Arkansas
exchange” “as a result of ACA costs.” App.093, ¶6 (Ark.). And “[i]n 2017, two major
carriers”—Aetna and Blue Cross and Blue Shield—“exited Nebraska’s individual
market,” because of significant financial losses, leaving only one major carrier in a
State that had 30 major carriers offering coverage in 2010. App.132, ¶¶6-7 (Neb.);
see also App.139 ¶6 (N.D.); see also App.087-89 ¶4 (Ala.) (explaining lack of
competition). 1 Even those States without significant carrier losses have had to deal
with the fact that major carriers are threatening to leave if the market continues to
get worse. App.041-42, ¶¶6-9 (Tex.).
This flight of insurance carriers is part of a vicious cycle of rising premiums
and healthcare costs. See App.073 ¶8(b) (Wis.) (loss of carriers “contributes to the
harms to the individual markets”). “Premiums have consistently risen since the ACA
was enacted,” with the average premium rates rising 17% in 2017 and 42% in 2018.
App.072, ¶7(a) (Wis.); see also App.092-93, ¶5 (Ark.) (“The embedded mandates . . .
have added to health insurer costs in this market putting upward premium pressure
on insurers in the Arkansas market.”). Indeed, the CBO’s April 2018 “Budget and
1Nebraska’s healthcare-insurance market suffered heavily when health insurance co-

ops created by the ACA as an alternative to commercial insurance became insolvent and
other health-insurance providers were required as a matter of state law to “step in with funds
to pay the claims of the more than 80,000 Nebraskans insured” by the co-op. App.134-135,
¶14 (Neb.) (noting that ACA co-ops have “cost taxpayers more than $1.8 billion”).
- 18 -
Economic Outlook: 2018 to 2028” estimates that, under current law, federal outlays
for health insurance subsidies and related spending will rise by about 60% over the
next ten years. CBO, The Budget and Economic Outlook: 2018 to 2028 at 51 (April
2018), available at https://tinyurl.com/CBOEconOutlook2018-2028. It is no surprise,
then, that the only major carrier remaining in Nebraska’s individual market raised
premiums 31 percent in plan year 2018 alone. App.132, ¶7 (Neb.).
The States are now attempting to do what they can to mitigate the effects of
the ACA, re-stabilize the markets, and make health insurance affordable. “[T]he
Wisconsin Legislature passed a reinsurance program in February 2018 to stabilize
the individual market”—a program that is expected to cost $200 million split between
state and federal funds to stabilize the individual market. App.072-73, ¶7 (Wis.). And
in Missouri, a bipartisan committee voted to create the “Missouri Reinsurance
Plan”—a plan that, if instituted, would help stabilize the individual insurance
market. See H.B. 2539, 99th Gen. Assem., 2d Reg. Sess. (Mo. 2017), available at
https://tinyurl.com/Mo-HB2539-2017. Other States may find it necessary to enact
similar programs in the future if the markets continue to destabilize.
Large Employers. The ACA also affects the States as large employers subject
to the ACA’s employer mandate. See supra at 7. Not only have States had to keep up
with rising healthcare costs generally, but they have had to increase their plans’
benefits to ensure that they meet the requirements for “minimum essential coverage.”
This has caused the States to spend significant sums of money—totaling in the
hundreds of millions of dollars—providing employees with new benefits, such as
coverage of dependents up to age 26 and no cost-share coverage for certain
preventative-care services. See App.012-13, ¶¶8-9 (Tex.); App.096, ¶4 (Kan.);
App.126, ¶34 (Mo.); App.142-43, ¶¶4-5 (S.C.). They have also had to allow employees
who work between 30 and 40 hours per week to purchase insurance, thereby
- 19 -
increasing the number of individuals that the States must cover, and therefore, the
States’ costs. See App.014-15, ¶13 (Tex.); App.123, 124 ¶¶23, 26 (Mo.); App.133, ¶9
(Neb.). Moreover, due to medical inflation, the States may be liable to pay the ACA’s
40 percent excise tax if they cannot adjust or reduce their plan costs. See App.082, ¶7
(Wis.); see supra at 7 (explaining excise tax).

2. The Individual Plaintiffs
The individual plaintiffs have been and will continue to be affected by the ACA
because it compels them to purchase expensive ACA-compliant health insurance
instead of cheaper insurance coverage that better fits their needs.
Since 2014, plaintiff John Nantz has purchased minimum essential health
insurance through the exchange because he has been ineligible for health insurance
coverage through an employer, Medicare, Medicaid, or CHIP. App.003, ¶¶5, 8, 10
(Nantz). Purchasing this ACA-compliant health insurance, however, has “greatly
increased [his] health insurance costs” because he cannot “purchase reasonably-
priced insurance coverage that is consumer-driven in accordance with [his] actuarial
risk.” App.004, ¶13 (Nantz). As long as the mandate remains in place, he will
“continue to maintain minimum essential health insurance coverage” to comply with
the individual mandate, “even though doing so is a burden.” App.004, ¶15 (Nantz).
The same is true for plaintiff Neill Hurley. Because of the individual mandate,
he purchases minimum essential health insurance coverage through the federal
exchange (where his premiums have increased every year) instead of purchasing non-
ACA compliant health insurance coverage that would allow him to “obtain[] care from
[his] preferred health care providers” at significantly less cost. App.007-008, ¶¶7-15
(Hurley).
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STANDARD FOR GRANTING APPLICATION

A plaintiff seeking a preliminary injunction must make four showings: (1) “he
is likely to succeed on the merits,” (2) “he is likely to suffer irreparable harm in the
absence of preliminary relief,” (3) “the balance of equities tips in his favor,” and (4) “an
injunction is in the public interest.” Glossip v. Gross, 135 S. Ct. 2726, 2736-37 (2015)
(quoting Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 20 (2008)). The Court may
employ a “sliding scale” approach, issuing the injunction upon a lesser showing of
harm when the likelihood of success on the merits is especially high. Fla. Med. Ass’n,
Inc. v. U.S. Dep’t of Health, Ed. & Welfare, 601 F.2d 199, 203 n.2 (5th Cir. 1979); see
also Korte v. Sebelius, 735 F.3d 654, 665 (7th Cir. 2013).
ARGUMENT
I. The States Are Likely to Succeed on the Merits Because the Individual
Mandate Exceeds Congress’ Enumerated Powers.
A. NFIB Already Held That the Commerce Clause and the
Necessary and Proper Clause Do Not Permit Congress to
Mandate the Purchase of Health Insurance.
The Commerce Clause grants to Congress the power to “regulate Commerce
. . . among the several States.” U.S. Const. art. I, § 8, cl. 3. “The language of the
Constitution” and the Court’s Commerce Clause jurisprudence “presupposes the

existence of commercial activity to be regulated” as a necessary requirement for
Congress to act under the Commerce Clause. NFIB, 567 U.S. at 550 (Roberts, C.J.);
see id. at 649 (dissenting op.). “To go beyond [this limitation], and to say that the
failure to [act] . . . affects commerce so that [activity] can be federally compelled, is to
extend federal power to virtually everything.” Id. at 657 (dissenting op.). Accordingly,
Congress’ “power to regulate” under the Commerce Clause “assumes there is already
something to be regulated.” Id. at 550 (Roberts, C.J.) (citing Gibbons v. Ogden, 22
U.S. (9 Wheat) 1, 188 (1824)); id. at 649 (dissenting op.).
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A controlling majority of the Supreme Court has already held that Congress
cannot enact the individual mandate under its Commerce Clause authority. “[T]he
individual mandate does not regulate existing commercial activity;” rather, it
“compels individuals to become active in commerce by purchasing a product,” NFIB,
567 U.S. at 552 (Roberts, C.J.); id. at 649 (dissenting op.); see Jacobsen, 466 U.S. at
115-18 & n.12; Moses H. Cone, 460 U.S. at 17; see generally Marks, 430 U.S. at 193.
The mandate “forces individuals into commerce precisely because they elected to
refrain from commercial activity,” NFIB, 567 U.S. at 558 (Roberts, C.J.); id. at 657
(dissenting op.). “If [the individual mandate] ‘regulates’ anything, it is the failure to
maintain minimum essential coverage,” “[b]ut that failure—that abstention from
commerce—is not ‘Commerce.’” Id. at 649 (dissenting op.). Therefore, the “law cannot
be sustained under a clause authorizing Congress to ‘regulate Commerce.’” Id. at 558
(Roberts, C.J.); id. at 657 (dissenting op.). While “Congress thought it could enact
such a command” under the Commerce Clause, “[t]he Federal Government does not
have the power to order people to buy health insurance.” Id. at 562, 575 (Roberts,
C.J.) (emphasis added); id. at 657 (dissenting op.); see also id. at 558-61 (Roberts,
C.J.) (also holding that the Necessary and Proper Clause does not support individual
mandate).
B. In Light of the Tax Cuts and Jobs Act of 2017, It Is No Longer
“Fairly Possible” to Save the Mandate’s Constitutionality Under
Congress’ Taxing Power.
The Tax Clause grants to Congress the power to “lay and collect Taxes . . . to
pay the Debts and provide for the common Defence and general Welfare of the United
States.” U.S. Const. art. I, § 8, cl. 1. Congress can use this authority to achieve a
variety of goals consistent with its view of the “common Defence and general Welfare
of the United States,” like collecting funds for government programs, e.g., 26 U.S.C.
§ 3102 (social-security taxes), discouraging undesirable activity, e.g., Sonzinsky v.
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United States, 300 U.S. 506, 514 (1937), or incentivizing purchases, e.g., 26 U.S.C.
§ 30D. But no matter Congress’ goals, a statute is only valid under the Tax Clause if
it is “productive of some revenue” for the Government. Sonzinsky, 300 U.S. at 514.
The “some revenue” requirement for any valid exercise of the tax power is well-
established and, so far as the States can determine, has never been subject to any
exceptions. This requirement follows directly from the Tax Clause’s constitutional
text, given that only revenue-generating taxes could be “collect[ed],” be used to “pay
the Debts,” or “provide for the common Defence.” U.S. Const. art. I, § 8, cl. 1
(emphases added). This requirement is also deeply grounded in the Supreme Court’s
tax-power jurisprudence. For example, in In re Kollock, 165 U.S. 526, 536 (1897), the
Supreme Court upheld a tax on “oleomargarine”—although one aim of the tax was
“to prevent deception in the sale” of that product—because “its primary object” (the
Court “assumed”) was “the raising of revenue.” Similarly, in Sozinsky, the Court
upheld a “special excise tax of $200 a year” on “every dealer in firearms”—although
the tax was designed to “interpose[ ] an economic impediment” on some firearms
dealings—because the tax “produc[ed] some revenue.” 300 U.S. at 511-14. And in
United States v. Kahriger, 345 U.S. 22, 28 & n.4 (1953), overruled in part on other
grounds by Marchetti v. United States, 390 U.S. 39 (1968), the Court upheld a tax on
“wagering,” although “the revenue obtained [from the tax]” was arguably “negligible,”
because even a “negligible” collection “produces revenue.”
After the Tax Cuts and Jobs Act of 2017, Pub. L. 115-97, section 5000A no
longer raises “some revenue” for the Government, thus the Tax Clause loses all
relevance to the constitutional analysis. The Tax Cuts and Jobs Act reduced the
operative parts of section 5000A’s tax-penalty formula to “Zero percent” and “$0,”
Pub. L. 115-97, § 11081, meaning “the amount of the individual responsibility
payment[ ] enacted as part of the Affordable Care Act” (i.e., subsection (b) of section
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5000A) is now “reduce[d]” to “zero,” H.R. Rep. No. 115-466, at 324. Importantly, the
Act “eliminated” only the “individual mandate penalty . . . but [not] the mandate
itself.” CBO 2017 Report at 1 (emphasis added). So after this 2017 change,
section 5000A(a) still requires “[a]n applicable individual” to “ensure that the
individual . . . is covered under minimum essential coverage,” but section 5000A(b)’s
“penalty” for an individual who “fails to meet th[is] requirement” is now $0. See CBO
2017 Report 1 (explaining that some individuals will purchase insurance because of
the mandate, even absent a tax penalty). Since section 5000A now fails to raise at
least “some revenue,” this provision cannot be justified under Congress’ authority
under the Tax Clause. See Sonzinsky, 300 U.S. at 514; Kahriger, 345 U.S. at 28 & n.4.
The conclusion that section 5000A, post-Tax Cuts and Jobs Act, no longer finds
support in the Tax Clause follows directly from the reasoning in NFIB. In NFIB, a
majority of the Court (Chief Justice Roberts, along with Justices Ginsburg, Breyer,
Sotomayor, and Kagan) read section 5000A’s individual mandate and associated tax
penalty as a single tax on “going without insurance” as a matter of constitutional
avoidance, id. 567 U.S. at 562-63 (Roberts, C.J.), because a different majority had
concluded that the straightforward reading of section 5000A (a mandate to buy
insurance, backed up for some by a tax penalty) exceeded Congress’ Commerce Clause
authority, see id. at 548, 562 (Roberts, C.J.); id. at 657 (dissenting op.). The Tax
Clause’s “some revenue” requirement was “essential” to the majority’s ability to give
section 5000A the combined mandate-tax-penalty saving construction. The Court
explained that its combined reading of section 5000A(a) and section 5000A(b) was
“fairly possible,” id. at 563 (Roberts, C.J.), only because the combination “yields the
essential feature of any tax: It produces a least some revenue for the Government.”
Id. at 564 (citing Kahriger, 345 U.S. at 28 n.4). The tax-penalty provision of section
5000A(b) was, at the time of NFIB, “expected to raise about $4 billion per year by
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2017” for the Government. Id. The Government endorsed the “some revenue”
requirement, citing the requirement in its brief to the Court in NFIB in support of
the saving construction. See Br. for Fed. Gov’t on Minimum Coverage Provision 54,
NFIB, 567 U.S. 519 (“In short, the [originally enacted] minimum coverage provision
will plainly be ‘productive of some revenue’ and thus satisfies a key attribute of
taxation.”). 2
While the Chief Justice accepted the saving construction because, in his view,
it was a “fairly possible” one, he made clear that “the statute reads more naturally as
a command to buy insurance than as a tax.” Id. at 574-75 (Roberts, C.J.). “The most
straightforward reading of the mandate is that it commands individuals to purchase
insurance,” not that it taxes those who choose to forgo insurance. Id. at 562. The four
dissenting Justices agreed with this reading of section 5000A, only parting ways with
the Chief Justice on the availability of the Court’s saving construction. Those
dissenting Justices concluded that section 5000A was “a mandate that individuals
maintain minimum essential coverage” that was (prior to the Tax Cuts and Jobs Act)
“enforced by a penalty” for most individuals. Id. at 662 (dissenting op.). “What the
statute says . . . is entirely clear”: it is a “command[ ]” that applicable individuals
acquire health insurance, a “legal requirement,” and an “assertion of regulatory
power”—not “a simple tax.” Id. at 663-65.
The dissenting Justices looked further to the statutory structure of section
5000A as confirmation of their reading. Id. Section 5000A imposes the mandate and
the tax penalty in separate subsections and exempts different categories of people
from each. Compare 26 U.S.C. § 5000A(d)(2)-(4), with id. § 5000A(e)(1)-(5). This
2 Similarly, when Judge Wynn addressed the constitutionality of the individual

mandate, he explained that the “some . . . revenue” requirement was one of three
“essential[ ]” features that a tax must exhibit to be “constitutional.” Liberty Univ., Inc. v.
Geithner, 671 F.3d 391, 418 (4th Cir. 2011) (Wynn, J., concurring).
- 25 -
exemption framework is perfectly logical, given Congress’ express objectives with the
ACA, see generally 42 U.S.C. § 18091, as best seen from the law’s treatment of those
who “cannot afford coverage,” 26 U.S.C. § 5000A(e)(1). Congress wanted those who
“cannot afford coverage” to obtain health-insurance coverage in order to eliminate the
strain on the medical system from their uncompensated emergency-room care, see 42
U.S.C. § 18091(2)(A), (F), (I), so it included these individuals in the mandate.
Congress also provided a means for these individuals to comply with the mandate
through Medicaid. 26 U.S.C. § 5000A(f)(1)(A)(ii). But since these individuals are, by
definition, of less financial means, Congress exempted these individuals from the tax
penalty for noncompliance with the mandate. Id. § 5000A(e)(1).
After the Tax Cuts and Jobs Act, the Chief Justice and the four dissenting
Justices’ “most straightforward reading” of section 5000A as a mandate to purchase
insurance is the now the only available reading. NFIB, 567 U.S. at 562 (Roberts, C.J.);
id. at 661 (dissenting op.); see Jacobsen, 466 U.S. at 115-18 & n.12; Moses H. Cone,
460 U.S. at 17; see generally Marks, 430 U.S. at 193. Section 5000A no longer raises
“some revenue,” meaning it now lacks the “essential feature of any tax,” NFIB, 567
U.S. at 564 (Roberts, C.J.), and renders the alterative saving construction no longer
“fairly possible,” id. at 563 (Roberts, C.J.), or constitutionally permissible. The only
reading that remains available is its “most natural interpretation,” in the Chief
Justice’s words: it is “a command to buy insurance,” a command that “[t]he Federal
Government does not have the power” to impose. Id. at 563, 574-75 (Roberts, C.J.); id.
at 657, 662 (dissenting op.); see generally Kimble v. Marvel Entm’t LLC, 135 S. Ct.
2401, 2409 (2015) (amended statutory language controls over a prior judicial
interpretation of the unamended language). Accordingly, the individual mandate is
unconstitutional.
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C. The Unconstitutional Individual Mandate Is Inseverable From

the Remainder of the ACA.
When a court declares a portion “of a more comprehensive statute”
unconstitutional, “the question arises” whether the appropriate remedy is to enjoin
only the unconstitutional portion, a larger portion of the statute, or the entire statute
itself. NFIB, 567 U.S. at 691 (dissenting op.); see Alaska Airlines, Inc. v. Brock, 480
U.S. 678, 684-85 (1987). The scope of a court’s injunctive remedy depends upon
whether the unconstitutional provisions are “severable” from provisions that are
constitutional; if they are, then the Court will enjoin only the specific unconstitutional
provisions. See Alaska Airlines, 480 U.S. at 684-85. If the unconstitutional provisions
are inseverable, the Court will enjoin all inseverable provisions of the statute. See id.
Typically, the severability inquiry proceeds in two steps, both of which must
be satisfied for a provision to be severable. See id. at 684-85; NFIB, 567 U.S. at 692-
94 (dissenting op.); see generally Med. Ctr. Pharmacy v. Mukasey, 536 F.3d 383, 401
(5th Cir. 2008).
Beginning with the first part, provisions are inseverable if they would not
“function in a manner consistent with the intent of Congress” after the
unconstitutional provision is enjoined. Alaska Airlines, 480 U.S. at 685; Med. Ctr.
Pharmacy, 536 F.3d at 401. If the operation of the unconstitutional provision is “so
interwoven with” the intended operation of the other provisions “that they cannot be
separated,” then “[n]one of [the provisions] can stand.” Hill v. Wallace, 259 U.S. 44,
70 (1922). In other words, this inquiry asks whether the constitutional provisions
(standing without the unconstitutional provisions) are “fully operative as a law,” Free
Enter. Fund v. Pub. Co. Accounting Oversight Bd., 561 U.S. 477, 509 (2010); see Med.
Ctr. Pharmacy, 536 F.3d at 403-05, not whether they would simply “operate in some
coherent way” not designed by Congress, NFIB, 567 U.S. at 692 (dissenting op.).
- 27 -
Provisions that clear the first part of the severability standard must then clear
the second inquiry. Under this inquiry, provisions are inseverable if “the Legislature
would not have enacted [them] . . . independently of” the provisions found
unconstitutional, even if those provisions operated in some otherwise meaningful
way. Alaska Airlines, 480 U.S. at 684; NFIB, 567 U.S. at 692-93 (dissenting op.).
Courts look to whether the statute at issue “embodie[s] a single, coherent policy” or a
“predominant purpose,” and if the unconstitutional provisions were necessary to that
purpose. Minnesota v. Mille Lacs Band of Chippewa Indians, 526 U.S. 172, 191
(1999); see Med. Ctr. Pharmacy, 536 F.3d at 403 (“Severing [a provision] would leave
[ ] other considerable [provisions] intact, and they would continue to effect Congress’s
purpose.” (emphasis added)). If so, then the other provisions—which would be
“operati[onal]” under part one of the test, but would not by themselves further
Congress’ “predominant purpose” for the broader statute—would be inseverable. See
Mille Lacs Band, 526 U.S. at 191. If the “purpose of the Act is [ ] defeated by the
invalidation” of an unconstitutional provision, the Court “may [not] leave the
remainder of the Act in force.” New York v. United States, 505 U.S. 144, 187 (1992).
Given that both parts of the severability standard are “essentially an inquiry
into legislative intent,” Mille Lacs Band, 526 U.S. at 191, a textual instruction in the
statute as to severability carries presumptive, or even dispositive, sway without need
to resort to the full-blown, two-part inquiry. In NFIB, for example, after the seven-
Justice majority held the forced Medicaid expansion provision unconstitutional, the
Chief Justice concluded that the provision was severable from the existing Medicaid
regime solely because that regime “includes a severability clause.” 567 U.S. at 585-
86 (Roberts, C.J.). This “explicit textual instruction” “confirm[ed]” that the Court
“need go no further” on the question of whether “to leave unaffected” the remainder
of the Medicaid program in light of its holding on the forced-expansion provision:
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Congress already provided that all other provisions “‘shall not be affected.’” Id. at 586
(quoting 42 U.S.C. § 1303). Justice Ginsburg—writing for four Justices—agreed with
this severability-clause-only approach: “the Medicaid Act’s severability clause
determines the appropriate remedy,” so there was no need to engage in any further
severability analysis. Id. at 645-46 (concurring op.). This focus on textual indications
of Congress’ intent as to severability, see, e.g., Alaska Airlines, 480 U.S. at 686 (“The
[severability] inquiry is eased when Congress has explicitly provided for severance by
including a severability clause in the statute.”), or non-severability, see, e.g., Zobel v.
Williams, 457 U.S. 55, 65 (1982) (“we need not speculate as to the intent of the [ ]
Legislature; the legislation expressly provides that invalidation of any portion of the
statute renders the whole invalid”), appears in many Supreme Court decisions, see
Exec. Benefits Ins. Agency v. Arkison, 134 S. Ct. 2165, 2173 (2014) (“the statutory
text” may make “‘evident’ . . . that Congress would have preferred no statute at all” if
the Court were to declare one part of the statute invalid); Bowsher v. Synar, 478 U.S.
714, 735 (1986) (the Court “need not enter” the severability-analysis “thicket” when
“the language of the [statute] itself settles the issue”); accord Koog v. United States,
79 F.3d 452, 462 (5th Cir. 1996) (“Where Congress itself has provided the
[severability] answer . . . [this answer] may be overcome only by ‘strong evidence.’”
(emphasis added)).
In the present case, because the ACA’s individual mandate is unconstitutional,
the question becomes what portions, if any, of the ACA can survive a severability
analysis. Given the complexity of the ACA, it is useful to divide the law’s remaining
provisions into three tranches: (1) the community-rating and guaranteed-issue
provisions, (2) the ACA’s remaining major provisions, and (3) the ACA’s minor
provisions. See generally NFIB, 567 U.S. at 697-706 (dissenting op.). Each tranche is
- 29 -
inseverable from the unconstitutional individual mandate under either the explicit
statutory text, the two-part severability inquiry, or both. See id.

1. As the United States Conceded in NFIB, the Community-
Rating and Guaranteed-Issue Provisions Are Inseverable.
a. As the United States conceded in NFIB, “the guaranteed-issue and
community-rating provisions of the Act are inseverable from the minimum-coverage
provision[s],” Br. for Fed. Gov’t on Severability 11, NFIB v. Sebelius, 567 U.S. 519,
because of the specific findings that Congress inserted into the statutory text, and
which remain in the statutory text today, see 42 U.S.C. § 18091(2). That point cannot
be understated and is dispositive of the severability analysis. Although Congress
removed the tax penalty in 2017, Congress retained the express, statutory findings
that the individual mandate is central to the viability of the community-rating and
guaranteed-issue provisions.
These findings make plain that Congress believed that the community-rating
and guaranteed-issue provisions are “so interwoven” with the mandate “that they
cannot be separated” or “stand” alone, Hill, 259 U.S. at 70, providing reason enough
to declare those provisions inseverable based upon Congress’ explicit statutory text,
see NFIB, 567 U.S. at 586 (Roberts, C.J.); id. at 645-46 (concurring op.); Exec. Benefits,
134 S. Ct. at 2173; Zobel, 457 U.S. at 65.
The ACA’s statutory text states that “[t]he requirement [to buy health
insurance] is 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). As the United States conceded in NFIB, “the minimum coverage provision is
necessary to make effective the Act’s guaranteed-issue and community-rating
insurance market reforms.” Br. for Fed. Gov’t on Severability 26. The Government
explained that “Congress’s findings expressly state that enforcement of [community
- 30 -
rating and guaranteed issue] without a minimum coverage provision would restrict
the availability of health insurance and make it less affordable—the opposite of
Congress’s goals in enacting the Affordable Care Act.” Id. at 44-45. This is so because,
“in a market with guaranteed issue and community rating, but without a minimum
coverage provision, ‘many individuals would wait to purchase health insurance until
they needed care.’” Id. at 45 (quoting 42 U.S.C. § 18091(2)(I)). This “adverse selection”
problem would cause premiums to “go up, further impeding entry into the market by
those currently without acute medical needs, risking a ‘marketwide adverse-selection
death spiral.’” Id. at 46; 42 U.S.C. § 18091(2)(J). This is why Congress “twice
described” minimum coverage “as ‘essential’” to “the guaranteed-issue and
community-rating reforms” in the ACA’s text. Br. for Fed. Gov’t on Severability 46-
47. In sum, “without a minimum coverage provision, the guaranteed-issue and
community-rating provisions would drive up costs and reduce coverage, the opposite
of Congress’s goals.” Id. at 26.
“Congress had firm empirical support for its conclusion that the minimum
coverage provision is essential to make the guaranteed-issue and community-rating
reforms effective.” Id. at 47. Prior to the ACA, “a number of States had enacted
guaranteed-issue and community-rating requirements without a minimum coverage
provision.” Id. Overall, “premiums increased and coverage decreased” in these States,
the very adverse-selection problem the text of the ACA identifies. Id. at 48-50
(discussing experiences in Washington, Kentucky, New Hampshire, Maine, and
Massachusetts). Indeed, Congress was gravely warned, prior to the ACA, that “‘if [it]
put’ . . . guaranteed issue and community rating [on the insurance industry, it] ‘must
also mandate the individual to be insured or the market will blow up.’” Id. at 47 (citing
Congressional Record).
- 31 -
Other findings in the ACA memorialize this exact warning. Guaranteed issue
and community rating without the mandate would create an “adverse selection”
problem where “many individuals [ ] wait to purchase health insurance until they
need[ ] care,” since insurance companies may no longer deny coverage to such
individuals, or charge those individuals more than other covered individuals. 42
U.S.C. § 18091(2)(I). To correct for the increased costs imposed on the insurance
companies from those individuals, insurance companies would either raise premiums
on everyone or dilute the quality of their health-insurance plans. See id. To eliminate
the need for that corrective action, the coverage requirement forces “healthy
individuals” into the health insurance market, “broaden[ing] the health insurance
risk pool” to create “effective health insurance . . . products.” Id.
None of the foregoing conclusions change in light of the Tax Cuts and Jobs Act
of 2017. The only change that the Tax Cuts and Jobs Act makes to the ACA is to
reduce the individual mandate’s associated tax-penalty formula to “[z]ero percent”
and “$0.” Pub. L. 115-97, § 11081. This change does not alter the structure of the
ACA: After this single change, the individual mandate of section 5000A(a) still
requires “[a]n applicable individual” to “ensure that the individual . . . is covered
under minimum essential coverage.” Moreover, all of the ACA’s express statutory
findings—including, notably, the finding that mandate to purchase insurance is
“essential” to the Act’s operation, 42 U.S.C. § 18091(2)(I)—also remain. Therefore, all
of the considered severability concessions made by the United States during NFIB—
that the individual mandate is inseverable from (at least) guaranteed-issue and
community rating—retain their full force.
b. Even if this Court were to look beyond this statutory text to uncover
congressional intent under the more open-ended two-part severability inquiry, the
- 32 -
guaranteed-issue and community-rating provisions would fail both parts of that
analysis, providing two independent bases for finding inseverability.
As for the first part—whether those two provisions would not “function in a
manner consistent with the intent of Congress” after the individual mandate is
enjoined—Congress declared its intent with an inseverability clause included within
the ACA. Alaska Airlines, 480 U.S. at 685-86. Further, there was ample empirical
support from the experiences of many States that had enacted community rating and
guaranteed issue, but not a mandate. Infra at 31. In those States, premiums rose and
coverage became less accessible—the exact opposite of the intent of the Affordable
Care Act. Id. Indeed, the Supreme Court has twice recognized Congress’ design here:
“[G]uaranteed-issue and community-rating reforms . . . sharply exacerbate” the
problem of “healthy individuals” forgoing coverage “until they become sick”; “[t]he
individual mandate was Congress’s solution to th[is] problem[ ].” NFIB, 567 U.S. at
548 (Roberts, C.J.). “The[ ] three reforms” of the Affordable Care Act—community
rating, guaranteed issue, and an individual mandate—are “closely intertwined,” such
that “the guaranteed issue and community rating requirements would not work
without the coverage requirement.” King, 135 S. Ct. at 2486-87. In sum, they are
inseverable from the mandate.
The second part of the severability analysis renders the community-rating and
guaranteed-issue provisions inseverable from the mandate as well. Congress’ “design
of the Act [was] to balance the costs and benefits affecting each set of regulated
parties”: “individuals, insurers, governments, hospitals, and employers.” NFIB, 567
U.S. at 694-95 (dissenting op.). Yet “without a minimum coverage provision, the
guaranteed-issue and community-rating provisions would drive up costs and reduce
coverage, the opposite of Congress’s goals.” Br. for Fed. Gov’t on Severability 26
(emphasis added); compare Alaska Airlines, 480 U.S. at 684; NFIB, 567 U.S. at 693
- 33 -
(dissenting op.). Put another way, enforcing the community-rating and guaranteed-
issue provisions in the absence of the mandate would upset the balance Congress
struck in the ACA, id. at 694-95 (dissenting op.), causing the very access and
affordability problems that “Congress designed the Act to avoid,” King, 135 S. Ct. at
2493. As the Supreme Court later explained in King v. Burwell, the “guaranteed issue
and community rating requirements would not work without the coverage
requirement [i.e., section 5000A].” Id. at 2487 (emphasis added). The mandate is a
direct subsidy to insurance companies to “balance the costs” imposed by community
rating and guaranteed issue, necessary because those latter provisions force these
companies to cover all individuals, no matter their health status, without charging
higher rates. See 42 U.S.C. § 300gg-1 to gg-4. Without the mandate, “individuals
would wait to purchase health insurance until they needed care.” King, 135 S. Ct. at
2486 (quoting 42 U.S.C. § 18091(2)(I)). This “adverse selection” problem, id., would in
turn “impose risks on insurance companies and their customers,” NFIB, 567 U.S. at
698 (dissenting op.), requiring the raising of premiums to prohibitively expensive
levels, 42 U.S.C.§ 18091(2)(I). 3 Indeed, around the time of the ACA’s enactment, the
CBO estimated that guaranteed issue and community rating, in isolation from the
mandate, would raise premiums in the individual market by 27 to 30 percent. See
CBO, An Analysis of Health Insurance Premiums Under the Patient Protection and
3 Many insurance companies and industry groups conditioned their endorsement of

the ACA on its inclusion of a mandate. See, e.g., Addressing Insurance Market Reform:
Hearing Before the S. Comm. on Health, Education, Labor & Pensions, 111th Cong. 22 (2009)
(submission of Ronald A. Williams, Chairman & CEO, Aetna Inc.) (“[W]e at Aetna have been
speaking out in support of an individual coverage requirement[.]”); Robert Pear, Health
Insurers Offer to Accept All Applicants, on Condition, N.Y. Times, Nov. 19, 2008, at A3012,
available at http://www.nytimes.com/2008/11/20/us/20health.html. And Congress could not
have enacted the law without these groups’ support. As one of the Act’s main architects said:
removing the mandate would “gut[ ] and kill[ ] health reform.” Continuation of the Open
Executive Session to Consider an Original Bill Providing for Health Care Reform of the S.
Comm. on Finance, 111th Cong. 21-22 (Oct. 1, 2009) (statement of Sen. Baucus).
- 34 -
Affordable Care Act, at 6 (Nov. 30, 2009), available at https://tinyurl.com/
CBO2009Report (“CBO 2009 Report”). And in 2017, the CBO estimated that,
“repealing the mandate and . . . making no other changes to current law,” would
result in premiums rising by 10 percent per year relative to “baseline projections.”
CBO 2017 Report at 1. Such an unmitigated spike in costs is directly contrary to the
“manner” in which Congress designed the ACA to “function,” meaning community
rating and guaranteed issue cannot stand without the mandate. Alaska Airlines, 480
U.S. at 685; compare Free Enter. Fund, 561 U.S. at 509 (regulatory board could
operate in manner Congress intended without unconstitutional tenure provision,
since it retained all its powers); Williams v. Std. Oil Co. of La., 278 U.S. 235, 243
(1929) (“division” could not operate in manner legislature intended since its sole duty
of fixing gasoline prices was unconstitutional).

2. As the NFIB Dissenting Justices Concluded, the Major
Provisions of the ACA are Inseverable.
As the dissenting Justices explained in NFIB, the major provisions of the
ACA—beyond community rating and guaranteed issue—are inseverable under either
or both prongs of the severability test. 567 U.S. at 691-703 (dissenting op.). 4 These
major provisions are the “insurance regulations and taxes,” “reductions in

reimbursements to hospitals and other Medicare reductions,” the “exchanges and
their federal subsidies,” and “the employer responsibility assessment.” See id at 697.
They are predominantly located in Title I, and failing to invalidate them would
“impose significant risks and real uncertainties on insurance companies, their
customers, all other major actors in the system, and,” inevitably, “the government
treasury”—all in “absolute conflict with the ACA’s design of ‘shared responsibility.’”
Id. at 698-99.
4 Only the four dissenting Justices had occasion to fully consider these severability
questions, since only they would have struck down the mandate. See supra at 13.
- 35 -
Insurance Regulations And Taxes. The ACA’s insurance regulations and taxes
(beyond the mandate, community rating, and guaranteed issue) include the “essential
health benefits” coverage requirements, the limits on “cost-sharing” on all plans, and
the elimination of coverage limits. These regulations impose “higher costs for
insurance companies” that could “dwarf the industry’s current profit margin.” NFIB,
567 U.S. at 698 (dissenting op.). Congress intended the individual mandate—along
with the forced Medicaid expansion, invalidated in NFIB—to offset these increased
costs. See id. Thus, without the mandate, maintaining these regulations and taxes
“would impose significant risks and real uncertainties on insurance companies, their
customers, all other major actors in the system, and the government treasury.” Id. at
699. This “undermine[s] Congress’ scheme of ‘shared responsibility’” within the ACA.
Id. (quoting 26 U.S.C. § 4980I); compare Alaska Airlines, 480 U.S. at 685; New York,
505 U.S. at 187.
Reductions In Reimbursements To Hospitals And Other Reductions In
Medicare Expenditures. The ACA “reduces [Medicare and Medicaid] payments by the
Federal Government to hospitals,” because the mandate compels individuals to
obtain coverage to “reduce uncompensated care, which will increase hospitals’
revenues,” which will then “offset” the “reductions” and “reimbursements.” NFIB, 567
U.S. at 699 (dissenting op.) (“This is typical of the whole dynamic of the Act.”). So
“[i]nvalidating the key mechanisms for expanding insurance coverage . . . without
invalidating the reductions in Medicare and Medicaid, distorts the ACA’s design of
‘shared responsibility.’” Id.; compare Alaska Airlines, 480 U.S. at 685.
Health Insurance Exchanges and Their Federal Subsidies. “The ACA requires
each State to establish a health-insurance ‘exchange’” where individuals may
purchase individual health-insurance policies. NFIB, 567 U.S. at 701 (dissenting op.).
The Act then “allocate[s] billions of federal dollars” to issue subsidies to purchase
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plans on the exchanges, subsidies which are valued according to the cost of premiums
on the exchanges. Id. Without the individual mandate, community rating, and
guaranteed issue, neither the subsidies nor the exchanges will function as Congress
intended. Compare Alaska Airlines, 480 U.S. at 685. Congress designed those
provisions to keep the cost of premiums on the exchanges in check; without them, the
Government would have to increase drastically the federal subsidies in lock step with
the rising premiums. NFIB, 567 U.S. at 701 (dissenting op.). “The result would be an
unintended boon to insurance companies, an unintended harm to the federal fisc, and
a corresponding breakdown of the ‘shared responsibility’ between the industry and
the federal budget that Congress intended.” Id. at 702; see King, 35 S. Ct. at 2493-94
(describing interconnectedness of the exchanges with other ACA provisions). Indeed,
if the exchanges and tax subsidies operated without community rating, the end result
would be the federal government paying insurance companies to charge higher rates
to individuals with preexisting conditions: the very practice Congress sought to end
with the ACA. See § 18091(2)(I); compare Alaska Airlines, 480 U.S. at 685. As for the
exchanges themselves, “[i]n the absence of federal subsidies to purchasers, insurance
companies will have little incentive to sell insurance on the exchanges.” NFIB, 567
U.S. at 702 (dissenting op.). Without participating insurance companies, operating
the exchanges would be futile—a market with nothing for sale. Compare Williams,
278 U.S. at 238, 243; Alaska Airlines, 480 U.S. at 684.
Employer-Responsibility Provisions. The Act requires employers “to make a
payment to the Federal Government if they do not offer insurance to employees and
if insurance is bought on an exchange by an employee who qualifies for the exchange’s
federal subsidies.” NFIB, 567 U.S. at 703 (dissenting op.). Since the operation of the
employer-responsibility provisions is keyed to whether an employee buys insurance
“on an exchange” and “qualifies for the exchange’s federal subsidies,” if the Court
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invalidates the subsidies and the exchanges, then no employee could purchase on the
exchange or qualify for a subsidy, so “there [would be] nothing to trigger the
employer-responsibility” provisions. Id.; compare Alaska Airlines, 480 U.S. at 684.
Further, “the preservation of the employer-responsibility assessment” in the face of
the above-described invalidations “would upset the ACA’s design of ‘shared
responsibility,’” leaving “employers as the only parties bearing any significant
responsibility.” NFIB, 567 U.S. at 703 (dissenting op.). “That was not the
congressional intent.” Id.; compare Alaska Airlines, 480 U.S. at 685; Mille Lacs Band,
526 U.S. at 191.
Medicaid Expansion. Finally, the ACA substantially expanded Medicaid by
“requir[ing] States . . . to cover all individuals under the age of 65 with incomes below
133 percent of the federal poverty line” and to offer an expanded “‘[e]ssential health
benefits’ package.” NFIB, 567 U.S. at 575-80 (Roberts, C.J.). While in NFIB a seven-
Justice majority held the forced state-expansion unconstitutional, a five-Justice
majority concluded that an optional state-expansion, without the danger of losing
existing funds, was constitutional. Id. at 587-88. Nevertheless, this optional
expansion is still inseverable from the individual mandate. The goal of the ACA is
“‘near-universal’ health insurance coverage” via “‘shared responsibility.’” Id. at 694,
696 (dissenting op.). “The whole design of the Act is to balance the costs and benefits
affecting each set of regulated parties,” not “to impose the inevitable costs on any one
[group].” Id. at 694. Leaving only the optional Medicaid expansion operative, while
all other major regulations fall, upsets this “shared responsibility.” Accord id. at 704
(similar conclusion for employer-responsibility payment); compare Alaska Airlines,
480 U.S. at 685. Further, Congress designed this Medicaid expansion to “offset the
cost to the insurance industry imposed by the ACA’s insurance regulations and
taxes.” NFIB, 567 U.S. at 689-90 (dissenting op.). Because those regulations and taxes
- 38 -
are inseverable, see supra at 34-36, the corresponding Medicaid-expansion benefits
should also be inseverable, because a contrary conclusion would not comport with
Congress’ intent to enact a regime that “balance[d] the costs and benefits.” NFIB, 567
U.S. at 694 (dissenting op.); compare Williams, 278 U.S. at 238, 243; Alaska Airlines,
480 U.S. at 684.

3. As the NFIB Dissenting Justices Concluded, the ACA’s
Minor Provisions are Inseverable.
Should the Court enjoin the major provisions (or enjoin just Title I) of the ACA,
it should also declare inseverable all other minor provisions scattered throughout the
ACA and enjoin them. See NFIB, 567 U.S. at 704-06 (dissenting op.). The Act’s minor
provisions include, for example, a tax on medical devices, 26 U.S.C. § 4191(a), a
mechanism for the Secretary to issue compliance waivers to States, 42 U.S.C. § 1315,
regulations on the display of nutritional content at restaurants, 21 U.S.C.
§ 343(q)(5)(H), and “a number of provisions that provide benefits to the State of a
particular legislator”—which were “[o]ften . . . the price paid for [the legislator’s]
support of a major provision,” NFIB, 567 U.S. at 704 (dissenting op.) (“The ACA is
over 900 pages long.”). Each of the Act’s minor provisions fails at least one part of this
standard.
The first part of the severability analysis—whether the provisions would
“function in a manner consistent with the intent of Congress” absent the invalid
provisions, Alaska Airlines, 480 U.S. at 685—renders inseverable all miscellaneous
“tax increases,” like the medical-device tax, NFIB, 567 U.S. at 705 (dissenting op.).
Without the main provisions of the Act, “the tax increases no longer operate to offset
costs, and they no longer serve the purpose in the Act’s scheme of ‘shared
responsibility’ that Congress intended.” Id. This part also invalidates the Act’s
lingering administrative measures, like the provisions for States to obtain compliance
waivers from the Secretary of HHS, see 42 U.S.C. § 1315, since these remaining
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administrative provisions would serve no meaningful purpose. Compare Williams,
278 U.S. at 238, 243.
The second part of the standard—“whether Congress would have enacted the
remaining provisions standing alone”—renders inseverable all other minor
provisions, like the regulation of nutritional displays and the “provisions that provide
benefits to the State of a particular legislature.” NFIB, 567 U.S. at 693, 704
(dissenting op.). “There is no reason to believe that Congress would have enacted
them independently,” id. at 705, given that they are “mere adjuncts of the [main]
provisions of the law,” Williams, 278 U.S. at 243, and only (if at all) tangentially
further the law’s main purpose of near-universal affordable care.
II. The States and Individual Plaintiffs Will Suffer Irreparable Harm
Absent an Injunction. 5
Since the day it was enacted, the ACA has irreparably harmed the States and
many individuals across the country: the individual mandate has caused many
individuals either to purchase insurance they do not need or to enroll in programs for
which the States bear a tremendous financial burden; States are spending millions
of dollars as employers and as sovereigns to comply with the ACA’s provisions; States
are prevented from enforcing their own laws and policies despite being the traditional
regulator of insurance markets; and multiple States have been compelled to exercise
their sovereignty to ameliorate the problem of skyrocketing insurance costs.
These harms are significant but mostly lawful under NFIB6—at least until
January 1, 2019. At that point, they are unlawfully borne, necessitating injunctive
relief. Even if the ACA is considered the “status quo” in 2019, there is no “particular
5 These irreparable harms also provide the States’ standing to bring this suit. See
Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992).
6 Some of the plaintiff States have challenged various parts of the ACA on separate
grounds. See, e.g., Texas v. United States, No. 7:15-cv-00151-O (N.D. Tex.).
- 40 -
magic in [that] phrase.” Canal Auth. of State of Fla. v. Callaway, 489 F.2d 567, 576
(5th Cir. 1974). Because “the currently existing status quo itself is causing . . .
irreparable injury, it is necessary to alter the situation so as to prevent [that] injury.”
Id. And the sooner an order issues enjoining the ACA, the better, both so that all
States and individuals can prepare to operate and live without the ACA and so that
there is time for any party to obtain appellate review.

A. The Individual Mandate Irreparably Harms the Individual
Plaintiffs and the States by Mandating That They Spend
Unrecoverable Funds.
It is well established that spending money to comply with a law constitutes
irreparable harm when there is no established avenue through which that money can
later be recovered. See Paulsson Geophysical Servs., Inc. v. Sigmar, 529 F.3d 303, 312
(5th Cir. 2008) (per curiam) (“The absence of an available remedy by which the
movant can later recover monetary damages may be sufficient to show irreparable
injury.” (cleaned up)); see also Thunder Basin Coal Co. v. Reich, 510 U.S. 200, 220-21
(1994) (Scalia, J., concurring) (“[A] regulation later held invalid almost always
produces the irreparable harm of nonrecoverable compliance costs.”). Both the
individual plaintiffs and the States face this irreparable harm if the individual
mandate is not enjoined.
The individual plaintiffs will be forced to purchase—with no hope of later
recovery—health insurance that they neither need nor want. This is because, even
without an accompanying tax, the individual mandate is just that—a mandate. The
statutory text provides: “An applicable individual shall . . . ensure that the individual
. . . is covered under minimum essential coverage.” 26 U.S.C. § 5000A(a) (emphasis
added). And as the Supreme Court recently reiterated, “the word ‘shall’ usually
creates a mandate, not a liberty,” Murphy v. Smith, 138 S. Ct. 784, 787 (2018)
(emphasis added); see also Valdez v. Cockrell, 274 F.3d 941, 950 (5th Cir. 2001) (“The
- 41 -
word ‘shall’ is mandatory in meaning.”). That is why each of the individual plaintiffs
has purchased health care insurance and will continue to do so until unless and until
the individual mandate is enjoined, at which point they will switch to alternative,
less expensive plans that do not provide “minimum essential coverage.” See App.004,
¶¶13, 15 (Nantz); App.008, ¶¶13, 15 (Hurley).
The States, on the other hand, will have to pay substantial and unrecoverable
amounts in Medicaid and CHIP reimbursements because the individual mandate
forces people into these programs. As the CBO has twice explained, at least some
people obtain health insurance solely out of a “willingness to comply with the law,”
whether or not they are threatened with a tax penalty for non-compliance. CBO 2017
Report at 1; see also CBO 2009 Report at 6 (“many individuals” will comply with the
mandate despite not being subject to a penalty). And the ACA specifically provides
that enrolling in Medicaid—a program for which the States share coverage expenses
for enrollees—complies with the mandate. ACA § 5000A(f)(1)(A)(ii). It necessarily
follows that many individuals will do just what Congress expected and comply with
the mandate by applying for and enrolling (if eligible) in either Medicaid or CHIP.
See generally 42 U.S.C. §§ 1396-1396w (Medicaid); 42 U.S.C. § 1397aa (CHIP). That
inevitability, which substantially increases the States’ Medicaid and CHIP costs, is
not a product of “unfettered choices made by independent actors,” ASARCO Inc. v.
Kadish, 490 U.S. 605, 615 (1989), but is a necessary and intended consequence of the
ACA, which requires covered individuals to secure health insurance, and leaves these
programs as the only practical mechanisms for many poor individuals to comply with
the mandate, see ACA § 1501(b); 26 U.S.C. § 5000A(f)(1)(A).
- 42 -
B. The ACA’s Inseverable Provisions Force the States to Spend

Substantial Funds That Can Never Be Recovered. 7
The ACA’s inseverable provisions, if not enjoined, will only add to the
irreparable financial harm that the individual mandate inflicts on the States.
For one, unless the “employer mandate” is enjoined, the States will continue to
spend millions of dollars on expanded employee health-insurance coverage. Under
the employer mandate, the States must offer their full-time employees (and qualified
dependents) “minimum essential coverage under an eligible employer-sponsored
plan,” or else pay a substantial tax penalty. See supra at 7. The States have complied
with this mandate and will continue to do so after January 1, 2019 to avoid the
penalty—but at significant cost. Texas has already spent $473.2 million in fiscal years
2011 through 2017 to provide ACA-mandated health insurance benefits to its
employees that it had not previously provided. App.017, ¶19 (Tex.); cf. id. (noting
that during this same time, Texas received only $241.9 million in off-setting benefits).
Indeed, in fiscal year 2017 alone Texas paid $19.2 million to cover newly eligible
dependent children and $27.2 million to provide new, no-cost-share coverage for
certain preventative care services. See App.012-13, ¶¶8, 9 (Tex.). Missouri is in the
same boat. Apart from the millions it has already spent, Missouri estimates that
keeping its Consolidated Health Care Plan compliant with the ACA will cost “nearly
$3 million” in 2019. App.126, ¶34 (Mo.). And other states are no different. See
App.143, ¶5 (S.C.) (net financial impact to South Carolina from providing expanded
ACA coverage from 2011 through 2017 was $29.2 million); App.096, ¶4 (Kan.);
App.147-51, ¶¶4-11 (S.D.); App.080-83, ¶¶4-8 (Wis.). These costs—for these states
and others—will continue to pile up, with no ability to recover them later.
7 Harms caused by provisions inseverable from an unconstitutional provision are both

directly relevant to the proper scope of the injunction under traditional equitable principles,
and support a party’s standing to bring the lawsuit. See Alaska Airlines, 480 U.S. at 683.
- 43 -
For another, unless the ACA’s mandatory Medicaid provisions are enjoined,
the States will spend millions of dollars providing Medicaid to individuals who would
not be eligible for Medicaid but for the ACA. The requirement that States determine
Medicaid eligibility using MAGI, 42 U.S.C. § 1396a(e)(14), alone imposes substantial
costs by adding hundreds of thousands of individuals to the States’ Medicaid rolls.
See App.024, ¶7 (Tex.); App.033-038, ¶¶4-14 (Tex.); App.112-114, ¶¶8-15 (Mo.);
App.102-106, ¶¶5-12, 15-16 (Miss.). The same is true—though to an admittedly lesser
extent—with the ACA’s command that the States open up Medicaid to individuals
that were previously in foster care and to individuals that were previously in CHIP.
See, e.g., App.021, App.024, ¶¶2, 7 (Tex.).
And pulling back from these specific, inseverable provisions, it is critical that
the States must spend significant time, effort, and money to ensure that they meet
all of the ACA’s vast and complex rules and regulations. See App.075-076, ¶11 (Wis.);
App.133, ¶10 (Neb.); App.112-113, ¶¶7, 13 (Mo.); App.151-152, ¶¶12-14 (S.D.). This
“increased regulatory burden” and the costs associated with meeting it are both
irreparable injuries that will continue unless this Court enters an injunction. See
Contender Farms, L.L.P. v. U.S. Dep’t of Agric., 779 F.3d 258, 266 (5th Cir. 2015) (“An
increased regulatory burden typically satisfies the injury in fact requirement.”
(citation omitted)); California v. Trump, 267 F. Supp. 3d 1119, 1133 (N.D. Cal. 2017)
(holding that a State “incurring significant administrative costs” to respond to federal
action suffers irreparable harm).

C. The ACA Irreparably Harms the States By Preventing Them
From Enforcing Their Own Laws and Policies.
The ACA, both its core individual mandate and the rest of its inseverable
provisions, irreparably harm the States as sovereigns because it prevents them from
applying their own laws and policies governing their own health-care markets. It is
well-established that “[S]tates have a sovereign interest in ‘the power to create and
- 44 -
enforce a legal code.’” Tex. Office of Pub. Util. Counsel v. F.C.C., 183 F.3d 393, 449
(5th Cir. 1999) (quoting Alfred L. Snapp & Son, Inc. v. Puerto Rico, 458 U.S. 592, 601
(1982)). Thus, whenever “a State is enjoined by a court from effectuating statutes
enacted by representatives of its people, it suffers a form of irreparable injury.”
Maryland v. King, 567 U.S. 1301, 1301 (2012) (Roberts, C.J., in chambers) (quoting
New Motor Vehicle Bd. v. Orrin W. Fox Co., 434 U.S. 1345, 1351 (1977) (Rehnquist,
J., in chambers)); see also Planned Parenthood of Greater Tex. Surgical Health Servs.
v. Abbott, 734 F.3d 406, 419 (5th Cir. 2013) (“When a statute is enjoined, the State
necessarily suffers the irreparable harm of denying the public interest in the
enforcement of its laws”).
That irreparable injury is no less real when a federal law—not a federal court—
prevents a State from administering its own law and policy preferences. See Ill. Dep’t
of Transp. v. Hinson, 122 F.3d 370, 372 (7th Cir. 1997) (holding that a State has
standing where it “complains that a federal regulation will preempt one of the state’s
laws”); see also Wyoming ex rel. Crank v. United States, 539 F.3d 1236, 1242 (10th
Cir. 2008) (holding that a State has standing to defend the efficacy of its expungement
statute from threatened federal preemption). As this Court has held, federal law that
“conflict[s] with [a States’] policies and practices,” Texas v. United States, 201 F. Supp.
3d 810, 834-35 (N.D. Tex. 2016), is a quintessential irreparable harm. See Texas v.
United States, 95 F. Supp. 3d 965, 981-82 (N.D. Tex. 2015) (finding irreparable injury
where federal rule would require State of Texas to act contrary to State law).
The ACA’s myriad requirements do just that. Both Wisconsin and Texas,
among other States, for example, established and operated high-risk insurance pools
that “effectively managed the health-insurance needs of high-risk individuals.”
App.074-075, ¶10 (Wis.) (citing Wis. Stat. §§ 149.10-.53 (2011-2012)); see also Tex.
Ins. Code §§ 1506.001-.305. These pools explicitly addressed difficult and contentious
- 45 -
issues such as the treatment of preexisting conditions, see Tex. Ins. Code § 1506.155,
and the appropriate scope of coverage, see Wis. Stat. § 149.14. But after the Supreme
Court’s decision in NFIB v. Sebelius holding the ACA lawful, both Texas and
Wisconsin had to repeal their high-risk pool laws because they could no longer serve
any functional purpose. See Act of May 21, 2013, 83d Leg., R.S., ch.615, 2013 Tex.
Gen Laws 1640, 1640 (abolishing Texas Health Insurance Pool); Wis. Stat §§ 149.10-
.53 (2011-2012), repealed by 2013 Wis. Act 20, § 1900n; App.074-075, ¶10 (Wis.);
App.043-044, ¶¶13-14(Tex.). See also App.134, ¶13 (Neb.) (explaining Nebraska’s
high-risk pool). Without injunctive relief from this Court, the States are prevented
from reinstating these high-risk pools and regulating the insurance market as they—
and not the federal government—see fit.
The same is true for other laws that are still on the books and would
immediately draw new breath with an injunction. Wisconsin, for instance, chose to
permit cost-sharing for preventative services, see App.075, ¶10(b) (Wis.) (citing Wis.
Stat. § 632.895)—but is now preempted from continuing this policy because the ACA
limits “cost sharing,” see 42 U.S.C. 300gg-13. Similarly, Wisconsin addressed the
problem of insurance coverage for individuals with preexisting conditions by
permitting insurers to apply preexisting condition exclusions only for a 12-month
period. See App.075, ¶10(c) (Wis.) (citing Wis. Stat. § 632.76(2)(ac)). Once again,
though, the ACA chose a different path that preempts Wisconsin from continuing its
established policy to prevent runaway health insurance costs. Simply put, each State
regulated the health insurance markets as it saw fit before the ACA, and many of
those laws will spring back into action as soon as the ACA is enjoined. See App.133,
¶11 (Neb.) (“[T]he ACA harms Nebraska because it has preempted Nebraska law,
preventing Nebraska from regulating health insurance in the manner it sees fit.”);
App.093, ¶7 (Ark.) (similar); App.139, ¶9 (N.D.); App.087-089, ¶4 (Ala.).
- 46 -
D. The ACA Irreparably Harms the States by Forcing Them to Take

Actions to Solve Problems Created by the ACA.
Multiple States are being forced to take actions to fix problems, including
market instability and rising health care costs, that are directly caused by the ACA.
Wisconsin was recently compelled to enact a reinsurance program estimated to cost
$200 million (split between state and federal funds) because the ACA’s regulations of
the individual market have caused health-insurance premiums to rise substantially.
App.072-073, ¶7 (Wis.) (“In 2017, average premium rates rose 17%, and in 2018 they
increased by 42%.”). “Without Wisconsin’s intervention, plans in the individual
market would either not be offered, or would be prohibitively expensive.” App.073, ¶7
(Wis.). Missouri is on its way to doing something very similar. A bipartisan committee
there voted unanimously to create the “Missouri Reinsurance Plan” that would also
help stabilize the markets and lower insurance costs, H.B. 2539, 99th Gen. Assem.,
2d R.S. (Mo. 2017)—an urgently needed step considering that the State appears likely
to have to make more than $572 million in cuts across its budget due to faster-than-
projected growth in health-care expenditures that are at least partially attributable
to the ACA, Mo. Office of Admin., Summary, The Missouri Budget Fiscal Year 2018
Summary, 1 (2018) (Governor’s proposed budget), available at https://tinyurl.com/Mo-
BudgetFY2018.
Of course, the ACA did not mandate that States ameliorate the ACA’s adverse
effects. But the Fifth Circuit has held that a “forced choice between incurring costs”
and changing the law is “itself an injury.” Texas v. United States, 787 F.3d 733, 749
(5th Cir. 2015). And that is exactly what is happening here. The States are “being
pressured,” id., to stave off runaway healthcare costs, see App.072-074, ¶¶7-8 (Wis.),
counter the threat of major insurance companies leaving the market, see, e.g.,
App.042, ¶¶9 (Tex.) (noting increase in insurer threats to leave the market), and
otherwise minimize the ACA’s harmful effects. The States may do nothing and bear
- 47 -
the full budgetary brunt of ACA, or they may enact new laws at substantial cost that
they would not enact but for effects of the ACA, cf. New York, 505 U.S. at 188. Either
way, they are irreparably harmed by the ACA.
III. The Balance of the Equities Favors Injunctive Relief.

The core of this case is the individual mandate, and there should be no question
that the equities of enjoining that provision overwhelmingly favor plaintiffs. The
United States has no cognizable interest in enforcing a provision that a majority of
the Supreme Court has already found unconstitutional absent a saving construction
that is no longer available as of January 1, 2019. The plaintiffs, on the other hand,
have a significant interest in enjoining the individual mandate. Every day that the
mandate stays in place despite its unconstitutionality is a day that individuals are
forced to carry insurance against their will, that the States are prevented from
regulating in a way that affords individuals’ choice, and that the States lose money
due to increased Medicaid enrollment. See supra at 41-42.
Enjoining only the individual mandate—while permitting the rest of the ACA
to operate until final judgment—would be inconsistent with Congress’ intent because
Congress made clear through its findings, enshrined in the United States Code and
preserved in the 2017 amendments, that it did not intend for the ACA’s other
provisions—including the community-rating and guaranteed-issue provision as well
as the Act’s other major and minor provisions—to survive independent of the
individual mandate. See supra at 27-40. Because the ACA is not designed to operate
without the individual mandate, the United States has no equitable interest in
keeping these provisions in place during the pendency of this litigation, once the
individual mandate is enjoined. Indeed, keeping these provisions in place for the time
it would take to conclude this litigation is sure to do more harm than good because,
without healthy individuals being compelled to buy insurance to offset the costs
- 48 -
associated with the guaranteed-issue, community-rating, and other provisions, the
ACA will “drive up costs and reduce coverage,” Br. for Fed. Gov’t on Severability 26—
causing even further financial harm to the States as sovereigns and employers. Put
another way, if this Court agrees with the States that some or all of the other
provisions of the ACA is inseverable from the mandate, no public good could possibly
come from leaving those provisions in place during the pendency of this litigation.
The balance of the equities favors an injunction that is issued promptly, even
though the injunction cannot be effective until January 1, 2019. An injunction, for
example, issued on December 31, 2018 will be far less effective than an injunction
issued promptly after briefing is complete, both because individuals will make
insurance decisions during fall open-enrollment periods and because the States
cannot turn their employee insurance plans and Medicaid operations on a dime. See
App.126, ¶33 (Mo.) (“Missouri Consolidated Health Care Plan is currently structuring
the benefits and policies for the 2019 plan year and bases its activities on knowledge
of whether the ACA is still federal law.”); App.096, ¶6 (Kan.) (stating that the State
“is currently in its design stage for the 2019 Plan year”). Nor can they begin to work
in earnest on retaking their role as the chief regulator of their local insurance
markets until they are reasonably sure that they will prevail on the merits of their
claim. And the same is true for those States that wish to remain under the ACA—to
the extent they would assert that they are harmed by an order enjoining the ACA,
they should be afforded sufficient time to prepare for that eventuality. Time to
prepare is key, necessitating an injunction sooner rather than later.
IV. A Preliminary Injunction Against the Entire ACA and Its Associated
Regulations Is in the Public Interest.
Just as the States have a strong interest in enjoining the ACA’s individual
mandate, so too does the public. Courts have held that “it is always in the public
- 49 -
interest to prevent the violation of a party’s constitutional rights.” Awad v. Ziriax,
670 F.3d 1111, 1132 (10th Cir. 2012) (quoting G & V Lounge, Inc. v. Mich. Liquor
Control Comm’n, 23 F.3d 1071, 1079 (6th Cir. 1994)). And, “[a]s Alexander Hamilton
put it, ‘the Constitution is itself, in every rational sense, and to every useful purpose,
A BILL OF RIGHTS.’” NFIB, 567 U.S. at 535 (Roberts, C.J.) (quoting The Federalist
No. 84, at 515 (C. Rossiter ed., 1961)). So Congress’ mandate that every American—
with few exceptions—purchase health insurance is not some amorphous violation of
a powers provision, but rather is a violation of the public’s right not to have the federal
government exceed the powers delegated to it by the People. It is always in the public
interest to prevent this violation.
And, once again, the United States’ own admissions and Congress’ own
findings that the ACA will not function without the individual mandate conclusively
demonstrate that enjoining the entire Act is in the public interest. See supra at 27-
40. If that were not sufficient—and it is—failing to enjoin the entire ACA would also
harm the public interest because it would prevent the States from exercising (or
deciding not to exercise) their sovereignty in an area that they traditionally regulate.
As Chief Justice Roberts articulated in NFIB, this is not merely a harm to the States
because “State sovereignty is not just an end in itself: Rather, federalism secures to
citizens the liberties that derive from the diffusion of sovereign power.” NFIB, 567
U.S. at 536 (quoting New York, 505 U.S. at 181). Enjoining the ACA effective January
1, 2019, will prevent unlawful federal regulation of healthcare markets and re-
establish state sovereignty.
CONCLUSION
The Court should issue a preliminary injunction, enjoining Defendants from
enforcing the Affordable Care Act and its associated regulations.
- 50 -
Dated, April 26, 2018 Respectfully Submitted,
BRAD D. SCHIMEL KEN PAXTON

Wisconsin Attorney General Attorney General of Texas
MISHA TSEYTLIN JEFFREY C. MATEER

Wisconsin Solicitor General First Assistant Attorney General
KEVIN M. LEROY BRANTLEY D. STARR

Wisconsin Deputy Solicitor General Deputy First Assistant Attorney
General
State of Wisconsin
Department of Justice JAMES E. DAVIS
17 West Main Street Deputy Attorney General for Civil
P.O. Box 7857 Litigation
Madison, Wisconsin 53707-7857
Tel: (608) 267-9323 /s/ Darren McCarty
DARREN MCCARTY
Attorneys for Wisconsin Special Counsel for Civil Litigation
Texas Bar No. 24007631
darren.mccarty@oag.texas.gov
/s/ Robert Henneke
ROBERT HENNEKE AUSTIN R. NIMOCKS
Texas Bar No. 24046058 Special Counsel for Civil Litigation
rhenneke@texaspolicy.com
Texas Public Policy Foundation DAVID J. HACKER
901 Congress Avenue Special Counsel for Civil Litigation
Austin, Texas 78701
Tel: (512) 472-2700 Attorney General of Texas
P.O. Box 12548, Mail Code 001
Attorney for Individual-Plaintiffs Austin, Texas 78711-2548
Tel: 512-936-1414
Attorneys for Texas
- 51 -
Additional Counsel
STEVE MARSHALL JOSH HAWLEY

Attorney General of Alabama Attorney General of Missouri
LESLIE RUTLEDGE DOUG PETERSON

Attorney General of Arkansas Attorney General of Nebraska
MARK BRNOVICH WAYNE STENEHJEM

Attorney General of Arizona Attorney General of North Dakota
PAM BONDI ALAN WILSON

Attorney General of Florida Attorney General of South Carolina
CHRISTOPHER M. CARR MARTY JACKLEY

Attorney General of Georgia Attorney General of South Dakota
CURTIS HILL HERBERT SLATERY, III

Attorney General of Indiana Attorney General of Tennessee
DEREK SCHMIDT SETH REYES

Attorney General of Kansas Attorney General of Utah
JEFF LANDRY PATRICK MORRISEY

Attorney General of Louisiana Attorney General of West Virginia
- 52 -

4.26.18 Obamacare Injunction Brief

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4.26.18 Obamacare Injunction Brief

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4.26.18 Obamacare Injunction Brief

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Case 4:18-cv-00167-O Document 40 Filed 04/26/18 Page 1 of 62 PageID 505

In the United States District Court

TEXAS, WISCONSIN, ALABAMA, ARKANSAS, ARIZONA, FLORIDA, GEORGIA, INDIANA,

UNITED STATES OF AMERICA, UNITED STATES DEPARTMENT OF HEALTH AND HUMAN

BRIEF OF PLAINTIFFS IN SUPPORT OF APPLICATION FOR

[Counsel listed on next page]

BRAD D. SCHIMEL KEN PAXTON

MISHA TSEYTLIN JEFFREY C. MATEER

KEVIN M. LEROY BRANTLEY D. STARR

Attorneys for Texas

B. The ACA’s Inseverable Provisions Force the States to Spend

Alaska Airlines, Inc. v. Brock,

Alfred L. Snapp & Son, Inc. v. Puerto Rico,

ASARCO Inc. v. Kadish,

Canal Auth. of State of Fla. v. Callaway,

Contender Farms, L.L.P. v. U.S. Dep’t of Agric.,

Exec. Benefits Ins. Agency v. Arkison,

Free Enter. Fund v. Pub. Co. Accounting Oversight Bd.,

G & V Lounge, Inc. v. Mich. Liquor Control Comm’n,

Ill. Dep’t of Transp. v. Hinson,

Kimble v. Marvel Entm’t LLC,

Koog v. United States,

Liberty Univ., Inc. v. Geithner,

Lujan v. Defenders of Wildlife,

Marks v. United States,

Med. Ctr. Pharmacy v. Mukasey,

Minnesota v. Mille Lacs Band of Chippewa Indians,

Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp.,

National Federation of Independent Business v. Sebelius,

New Motor Vehicle Bd. v. Orrin W. Fox Co.,

New York v. United States,

Paulsson Geophysical Servs., Inc. v. Sigmar,

Planned Parenthood of Greater Tex. Surgical Health Servs. v. Abbott,

Sonzinsky v. United States,

Tex. Office of Pub. Util. Counsel v. F.C.C.,

Texas v. United States,

Texas v. United States,

Texas v. United States,

Texas v. United States,

Thunder Basin Coal Co. v. Reich,

United States v. Jacobsen,

United States v. Kahriger,

Williams v. Std. Oil Co. of La.,

Winter v. Nat. Res. Def. Council, Inc.,

Wyoming ex rel. Crank v. United States,

Constitutional Provisions, Statutes, and Rules

U.S. Const. art. I

21 U.S.C. § 343 ............................................................................................................. 39

2013 Wis. Act 20, § 1900n ........................................................................................... 46

Health Care and Education Reconciliation Act of 2010,

Patient Protection and Affordable Care Act,

Tax Cuts and Jobs Act of 2017,

Tex. Ins. Code

79 Fed. Reg. 8544 (Feb. 12, 2014) ................................................................................. 7

Addressing Insurance Market Reform: Hearing Before the S. Comm.

CBO, An Analysis of Health Insurance Premiums Under the Patient

CBO, Repealing the Individual Health Insurance Mandate: An

CBO, Key Issues in Analyzing Major Health Insurance Proposals (Dec.

Continuation of the Open Executive Session to Consider an Original

H.B. 2539, 99th Gen. Assem., 2d R.S. (Mo. 2017) ...................................................... 47