Analysis: Appeals Court Preparing to Strike Down Obamacare?

The context: For those of you who have been loosely tracking the various legal challenges to Obamacare, yesterday marked a significant milepost along the path to what many see as an inevitable Supreme Court showdown. A three-judge panel from the 11th Circuit Court of Appeals heard oral arguments in an Atlanta courtroom yesterday afternoon; at issue was a January ruling by federal judge Roger Vinson, who sided with a coalition of 26 states challenging the constitutionality of Obamacare. Vinson determined that the central pillar of the law -- the individual mandate -- violates the Constitution and cannot be severed from the rest of the legislation. He therefore invalidated the full statute. The Obama administration immediately appealed the decision, setting the stage for the next round of legal fisticuffs.

The players: In one corner was the Obama administration's acting Solicitor General, Neal Katyal, representing the government and defending the controversial new law. In the other corner was skilled constitutional advocate and former US Solicitor, Paul Clement, representing the states. Each of the three judges on the panel boasted an unique partisan pedigree: One was appointed and elevated exclusively by Republican presidents (Reagan, then Bush Sr.), another was appointed by a Republican (Reagan) and elevated by a Democrat (Clinton), and the third was both appointed and elevated by Bill Clinton. As the Time piece linked above suggests, the panel's ideological diversity likely raises the stakes of its ultimate ruling.

The upshot: With all eyes -- ears, actually; audio of the oral arguments was streamed by C-SPAN -- trained on the court, one question reigned: How receptive were the judges to each side's legal case? The Associated Press analysis of the hours-long exchange suggests that opponents of Obamacare may have cause for cautious optimism:

Judges on a federal appeals court panel on Wednesday repeatedly raised questions about President Barack Obama's health care overhaul, expressing unease with the requirement that virtually all Americans carry health insurance or face penalties. All three judges on the 11th Circuit Court of Appeals panel questioned whether upholding the landmark law could open the door to Congress adopting other sweeping economic mandates.

The Atlanta panel did not immediately rule on the lawsuit brought by 26 states, a coalition of small businesses and private individuals who urged the three to side with a federal judge in Florida who struck down the law. But the pointed questions about the so-called individual mandate during almost three hours of oral arguments suggests the panel is considering whether to rule against at least part of the federal law to expand health coverage to tens of millions of Americans.

CATO's Ilya Shapiro followed the proceedings with rapt attention, and rendered his own qualified verdict:

In the most important appeal of the Obamacare constitutional saga, today was the best day yet for individual freedom. The government’s lawyer, Neal Katyal, spent most of the hearing on the ropes, with the judicial panel extremely cautious not to extend federal power beyond its present outer limits of regulating economic activity that has a substantial aggregate effect on interstate commerce.

Countless times, Judges Dubina and Marcus demanded that the government articulate constitutional limiting principles to the power it asserted. And countless times they pointed out that never in history has Congress tried to compel people to engage in commerce as a means of regulating commerce. Even Judge Hull, reputed to be the most liberal member of the panel, conducted a withering cross-examination to establish that the individual mandate didn’t help that many people get affordable care, that the majority of people currently without coverage would be exempt from the requirement (presumably due to their income level).

In short, while we should never read too much into an oral argument, I’m more optimistic about this case now than any other.

One additional note about today's hearings: Under intense questioning, Solicitor General Katyal repeatedly asserted that the federal government has the authority to implement the individual mandate under its power to levy and collect taxes. Quote - "It functions like a tax, and is a tax." Whether this argument holds legal water is for the judges to determine. Politically, though, it was a jarring statement. Why? Because throughout the national healthcare debate, President Obama adamantly insisted that the individual mandate was not a tax. Recall this spirited 2009 interaction with ABC News' George Stephanopoulos:

Now that the bill is law, and it's threatened by a spate of significant legal challenges, the Obama administration is arguing precisely the opposite of what the President of the United States repeatedly claimed to be the truth prior to the bill's passage. I've said it before, and I'll say it again: The case for Obamacare was built on false promises, half-truths, and outright lies. If it isn't struck down by the courts as an unacceptable federal intrusion into every citizen's life, it must be repealed.