POLITICS

Court Rules Obamacare Mandate Unconstitutional, Puts Entire Law At Risk

It's a win for Republicans trying to destroy the Affordable Care Act and sure to prompt an appeal to the Supreme Court.

A federal appeals court on Wednesday ruled that the Affordable Care Act’s “individual mandate” is unconstitutional, putting insurance for 20 million Americans in jeopardy and threatening to throw the health care system into chaos.

What happens next will likely depend on the Supreme Court, where the case is almost certainly headed, although it may be a while before it gets there. The law will remain in place at least until that happens.

The ruling from the U.S. Court of Appeals for the 5th Circuit in New Orleans upheld key elements of a controversial, widely criticized decision that a district court handed down last year. The lower court had held that a GOP-controlled Congress rendered the entire statute unconstitutional in 2017 when it eliminated the Affordable Care Act’s tax penalty for people who violated the law’s individual mandate to have health coverage.

The 2-1 decision by the three-judge panel is not a full endorsement of that ruling, because it argues that parts of the Affordable Care Act unconnected to the individual mandate might be constitutional. For that reason, the appeals court remanded the case back to U.S. District Judge Reed O’Connor in Fort Worth, Texas, to decide which (if any) parts of the law can stay in force.

“In terms of what it does, it decides that the individual mandate is unconstitutional ― and that a big chunk of the ACA may be invalid,” Nicholas Bagley, a University of Michigan law professor, told HuffPost. “But it doesn’t say how much or how little is invalid, and leaves it to Judge O’Connor [to decide].”

State Democratic officials who are defending the law plan to immediately appeal the ruling directly to the Supreme Court, California Attorney General Xavier Becerra said at a news conference held after the 5th Circuit issued its ruling. The Supreme Court already has rejected two other challenges to the constitutionality of Obamacare.

“Today’s decision in Texas v. Azar is a win for all Americans and confirms what I have said all along: that the individual mandate, by far the worst element of Obamacare, is unconstitutional,” President Donald Trump said in a statement. Trump also stated that his administration will continue implementing the Affordable Care Act while the case goes through the courts.

Whether or not the high court takes the case right away, it’s virtually certain to hear the case at some point. And if it rules against the Affordable Care Act, as the lower courts have, the effects would be far-reaching and devastating.

The Affordable Care Act has transformed the U.S. health care system by opening up state Medicaid programs to more than 12 million low-income people and offering subsidies to more than 9 million low- and middle-income insurance buyers. The law also imposed new rules protecting people with preexisting conditions, guaranteed a basic minimum set of benefits under private insurance policies and eliminated yearly or lifetime caps on how much medical care insurance will cover. The Urban Institute projects that throwing out the law would leave 20 million more Americans uninsured, a 65% increase. 

If the Affordable Care Act comes off the books, the number of Americans without coverage would skyrocket and those preexisting condition protections would vanish. And despite Trump’s repeated assertions, neither the White House nor congressional Republicans have a plan at the ready to mitigate the damage this ruling would do to the health care system.

“Americans must not be fooled: Republicans have no plan to lower costs and expand health care coverage, only a lawsuit that takes it all away,” Senate Minority Leader Chuck Schumer (D-N.Y.) said in a statement.

A final decision to end Obamacare would also have significant political ramifications, although it is unclear, given that the case has been sent back to a lower court, whether a ruling from the Supreme Court would come before or after the 2020 election.

It’s Still About The Individual Mandate

The central issue in the lawsuit is whether, by reducing the Affordable Care Act’s individual mandate penalty to zero, Trump and the then-GOP-controlled Congress in 2017 introduced a fatal constitutional flaw into the program — one that requires the courts to wipe it out entirely.

Legal experts from across the political spectrum, including some who were vocal advocates of previous challenges to the Affordable Care Act, have called the argument unfounded and nonsensical

But on the 5th Circuit panel, two Republican appointees, Jennifer Walker Elrod and Kurt Engelhardt, found it persuasive. The third judge, Democratic appointee Carolyn Dineen King, voted to keep the law in place.

Led by Texas Attorney General Ken Paxton, Republican officials from 20 states brought this lawsuit in February 2018. The Trump administration allied itself with them four months later, refusing to defend the Affordable Care Act in court — a highly unusual move, as the administration in power typically defends federal laws in court even when the president does not support them. 

The plaintiffs in Texas v. U.S. (also known as Texas v. Azar) are the Republican attorneys general from Alabama, Arizona, Arkansas, Florida, Georgia, Indiana, Kansas, Louisiana, Missouri, Nebraska, North Dakota, South Carolina, South Dakota, Texas, Utah and West Virginia, as well as Mississippi Gov. Phil Bryant. GOP officials from Maine and Wisconsin were part of the lawsuit until their Democratic successors withdrew from the case following the 2018 elections.

Without the backing of the federal government, a group of Democratic state attorneys general, led by Becerra of California, were left to stand in as defendants. Numerous organizations representing physicians, hospitals and other segments of the health care system also oppose the lawsuit

“This could mean the difference between life and death for so many Americans,” Becerra said Wednesday. “For now, at least, President Trump got his gift that he wanted: uncertainty in the health care market and a pathway for the repeal of the Affordable Care Act.”

Democratic attorneys general from California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Iowa, Kentucky, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York, North Carolina, Oregon, Rhode Island, Vermont, Washington state and the District of Columbia are defending the Affordable Care Act in court. The Democratic-led House of Representatives joined the defense in February, but the state officials remain the lead defenders in the case.

“The Trump administration’s indefensible assault on Americans’ health care in the courts continues to threaten catastrophe in the lives of families across the country,” House Speaker Nancy Pelosi (D-Calif.) said in a press release. “We will continue our fight in the courts and in the Congress to defend and strengthen affordable health care for all Americans.”

The case was seen as a long shot at first, given how little even conservative scholars thought of its merits. But Judge O’Connor in Texas sided with the GOP officials and the Trump administration when he decided last December that the entire law is unconstitutional, setting up the new appeals court ruling. 

In a dissent that took exception to virtually every element of the majority’s ruling, 5th Circuit Judge King portrayed the lawsuit, the lower court ruling and the appeals court’s decision as absurd.

“Without any enforcement mechanism to speak of, questions about the legality of the individual ‘mandate’ are purely academic, and people can purchase insurance ― or not ― as they please. No more need be said; it has long been settled that the federal courts deal in cases and controversies, not academic curiosities,” King wrote. 

If the challengers were also to prevail at the highest court in the land, the effects of a ruling to invalidate the entire Affordable Care Act would touch virtually all aspects of the American health care system, which remade itself in significant ways to comply with the Affordable Care Act.

Ultimate Effects Of A Ruling Could Be Devastating

The bluntest consequences of eliminating the entire law would be the millions of newly uninsured Americans. Funding for the Medicaid expansion would disappear, leaving people with earnings just above the poverty line without access to health care. Likewise, the tax credit subsidies that allow customers to buy private insurance on the law’s exchange marketplaces would go away, making coverage unaffordable.

But coverage for every American would change significantly. The Affordable Care Act’s guarantee that insurance companies can’t deny coverage based on preexisting conditions would go away, reopening the door for insurers to reject customers based on their medical histories or charging them exorbitant prices that are higher than those assessed to healthier policyholders.

Those who retained coverage they purchase themselves also would lose the guarantee that insurance plans would cover basic needs like hospitalizations, prescription drugs and maternity care. Those who have coverage from employers could again face annual and lifetime limits on how much their policies would cover. People with prescription drug coverage from Medicare would face higher out-of-pocket costs.

It would also end various programs from the law designed to improve patient safety in hospitals, reduce wasteful Medicare spending and improve health care quality. Calorie counts on chain restaurant menus also would no longer be required.

It was this potential to upend the entire law that gave the two 5th Circuit judges pause. They said that decisions over whether to throw out the entire law, or to keep parts of it, call for “a careful, granular approach” and that they were “not persuaded that the approach to the severability question set out in the district court opinion satisfies that need.”

In sending the ruling back to O’Connor, the 5th Circuit judges did not offer much in the way of new guidance, so it is unclear just how differently O’Connor would rule this time.

Whatever he decides, the 5th Circuit ruling still represents a victory for Trump and his allies, who in 2017 tried and failed to pass legislation repealing President Barack Obama’s signature domestic policy achievement.

But they never gave up on their crusade to roll back the law, and last year the Trump administration took the highly unusual step of having the Justice Department file a brief on behalf of the lawsuit. Prior to this maneuver, three Justice Department lawyers removed their names from the brief, and one 20-year veteran of the department quit. Trump nominated the lead lawyer who signed the brief, Chad Readler, for a federal judgeship the same day the department submitted its brief; the Senate confirmed him this March.

Initially, the Trump administration asked the court to eliminate only the law’s protections for people with preexisting conditions, but later revised its stance by siding with the Republican state officials who wanted to invalidate the entire law.

The core question in Texas v. U.S. is about the Affordable Care Act’s individual mandate. The mandate, which as written originally imposed a fine on people without health insurance, was also the subject of the first major Supreme Court ruling on the health care law.

In that 2012 decision, Chief Justice John Roberts, writing for a 5-4 majority, said the mandate was a valid exercise of congressional authority to levy taxes. But the 2017 Republican tax bill, which Trump signed into law, reduced the penalty to zero while leaving the rest of the mandate’s legislative language in the statute.

In Texas v. U.S., the plaintiffs contend that the mandate still exists, only now it’s unconstitutional because with no monetary penalty attached it cannot be a tax. And because Congress in 2010 believed the mandate was an essential piece of the law’s framework, the lawsuit claims, the rest of the Affordable Care Act must now come off the books, too.

The argument’s strained logic has provoked not just criticism but also some outright derision, even from conservative and libertarian lawyers who helped to craft and promote previous lawsuits against the Affordable Care Act.

In Wednesday’s ruling, the 5th Circuit judges endorsed the argument about the tax and the mandate’s constitutionality. “The individual mandate is unconstitutional because it can no longer be read as a tax, and there is no other constitutional provision that justifies this exercise of congressional power,” the judges wrote.

Whether that means the rest of the law must now come off the books is the question now facing Judge O’Connor and, maybe someday, the Supreme Court.

O’Connor’s original ruling endorsed the argument of the plaintiffs: that the courts must respect the will of Congress. But ― as critics of his decision pointed out ― whether or not Congress in 2010 really thought the mandate was essential, by 2017 Congress had quite obviously decided otherwise, because it reduced the penalty to zero fully aware that the rest of the Affordable Care Act would continue to operate.

The 5th Circuit judges appeared to acknowledge this fact, noting that “the opinion gives relatively little attention to the intent of the 2017 Congress.” But it did not provide more direct guidance on which parts of the law O’Connor should spare.

This article has been updated with additional information about the court ruling and the background of the case and with statements from political leaders.

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