By Erica Teichert and Susannah Luthi | December
14, 2018 (Story updated on Dec.
15)
A federal judge in Texas on Friday struck down the Affordable Care Act as unconstitutional, ruling that the law's individual mandate could not be severed from the rest of President Barack Obama's landmark healthcare law.
Leaning on the U.S. Supreme Court decision that the ACA is a tax, U.S. District Judge Reed O'Connor said that the entire law was invalidated by the 2017 Tax Cuts and Jobs Act, which zeroed out the individual mandate penalty.
The White House in a statement said they expect the ruling will be appealed. “Pending the appeal process, the law remains in place.”
A federal judge in Texas on Friday struck down the Affordable Care Act as unconstitutional, ruling that the law's individual mandate could not be severed from the rest of President Barack Obama's landmark healthcare law.
Leaning on the U.S. Supreme Court decision that the ACA is a tax, U.S. District Judge Reed O'Connor said that the entire law was invalidated by the 2017 Tax Cuts and Jobs Act, which zeroed out the individual mandate penalty.
The White House in a statement said they expect the ruling will be appealed. “Pending the appeal process, the law remains in place.”
In his ruling, O'Connor
said that in both 2010 and 2017 Congress knew that the individual mandate
couldn't be severed from the popular coverage protections and guaranteed issue.
"In some ways, the question before the court involves the intent of both the 2010 and 2017 Congresses," he wrote. "The former enacted the ACA. The latter sawed off the last leg it stood on."
A spokesperson for California Attorney General Xavier Becerra said defendant states will appeal the decision. The case will now go to the U.S. Court of Appeals for the Fifth Circuit, where the majority of the judges have been appointed by Republican presidents.
Although Democratic attorneys general, lawmakers and policy analysts have repeatedly maintained that the Tax Cuts and Jobs Act zeroed out the penalty rather than eliminated it, O'Connor disagreed. "Until a change in law, there is no shared-responsibility payment," he wrote in his 55-page decision. "True, Congress may reinstate the payment in the future. But that would be a change in law."
O'Connor blasted Democrat attorneys general for trying to "have their cake and eat it too" and called their arguments "logistical gymnastics" as they tried to defend the law.
"Because rewriting the ACA without its 'essential' feature is beyond the power of an Article III court, the court thus adheres to Congress' textually expressed intent and binding Supreme Court precedent to find the individual mandate is inseverable from the ACA's remaining provisions," O'Connor wrote.
The ACA can only stand as it was originally designed by Congress, O'Connor added, saying that lawmakers needed to have the penalty to force people to sign up for exchange insurance.
"All told, Congress stated three separate times that the individual mandate is essential to the ACA,” he said. “That is once, twice, three times and plainly. It also stated that the absence of the individual mandate would 'undercut' its 'regulation of the health insurance market.'"
He also noted that all nine Supreme Court justices who weighed in on the law said the individual mandate and the pre-existing conditions coverage protections, guaranteed issue and community ratings provisions could not be severed.
"Perhaps it is impossible to know which minor provisions Congress would have passed absent the individual mandate,” O'Connor wrote. “But the level of legislative guesswork entailed in reconstructing the ACA's innumerable trade-offs without the one feature Congress called 'essential' is plainly beyond the judicial power."
Twenty Republican state attorneys general initially sued the Trump administration to invalidate the entire law in February, citing Chief Justice John Roberts' opinion. The Trump administration refused to defend the law, but only asked O'Connor to toss the individual mandate. Democratic state attorneys general intervened in the case to protect the law.
The decision throws the fate of the Affordable Care Act into question just one day before open enrollment for 2019 closes. California Attorney General Xavier Becerra said the Democratic coalition will fight O'Connor's decision. "Today's misguided ruling in Texas v. US will not deter us," he wrote on Twitter.
“Today's decision is an unfortunate step backward for our health system that is contrary to overwhelming public sentiment to preserve pre-existing condition protections and other policies that have extended health insurance coverage to millions of Americans,” said Dr. Barbara L. McAneny, president of the American Medical Association. “It will destabilize health insurance coverage by rolling back federal policy to 2009. No one wants to go back to the days of 20% of the population uninsured and fewer patient protections, but this decision will move us in that direction.”
In the wake of the decision, conservative and liberal policy groups and industry jumped to weigh in, with many calling for a stay on the decision until a higher court can review it.
American Hospital Association President Rick Pollack blasted the ruling as putting health coverage of “tens of millions of Americans” at risk “while also making it more difficult for hospitals and health systems to provide access to high quality care.”
Chip Kahn, CEO of Federation of American Hospitals, said: “The judge got it wrong.”
The conservative Heritage Foundation, on the other hand, praised the ruling. The foundation's Marie Fishpaw urged Congress to avoid “any knee-jerk reactions that prop up a failing health law.”
“This legal verdict is a reminder that Obamacare's faulty architecture was created by Washington and we should not expect Washington to make it better,” Fishpaw said.
CMS Administrator Seema Verma said in November that the agency wanted to make sure people with pre-existing conditions will be protected and that Americans have access to affordable insurance even if the Affordable Care Act was struck down. However, she wouldn't provide details on the CMS' plans.
The liberal-leaning Urban Institute ran an economic analysis in August estimating that more than 17 million people would lose coverage through the individual market or Medicaid expansion if the courts strike down the law. This would mean a 50% increase in the number of people currently uninsured in the U.S, according to Urban Institute analysts Linda Blumberg and Sherry Glied.
Matt Eyles, president and CEO of America's Health Insurance Plans, said in a statement that O'Connor's decision was "misguided and wrong," and insurers will continue to participate in the case as it is appealed.
"This decision denies coverage to more than 100 million Americans, including seniors, veterans, children, people with disabilities, hardworking Americans with low incomes, young adults on their parents' plans until age 26, and millions of Americans with pre-existing conditions," Eyles said.
"In some ways, the question before the court involves the intent of both the 2010 and 2017 Congresses," he wrote. "The former enacted the ACA. The latter sawed off the last leg it stood on."
A spokesperson for California Attorney General Xavier Becerra said defendant states will appeal the decision. The case will now go to the U.S. Court of Appeals for the Fifth Circuit, where the majority of the judges have been appointed by Republican presidents.
Although Democratic attorneys general, lawmakers and policy analysts have repeatedly maintained that the Tax Cuts and Jobs Act zeroed out the penalty rather than eliminated it, O'Connor disagreed. "Until a change in law, there is no shared-responsibility payment," he wrote in his 55-page decision. "True, Congress may reinstate the payment in the future. But that would be a change in law."
O'Connor blasted Democrat attorneys general for trying to "have their cake and eat it too" and called their arguments "logistical gymnastics" as they tried to defend the law.
"Because rewriting the ACA without its 'essential' feature is beyond the power of an Article III court, the court thus adheres to Congress' textually expressed intent and binding Supreme Court precedent to find the individual mandate is inseverable from the ACA's remaining provisions," O'Connor wrote.
The ACA can only stand as it was originally designed by Congress, O'Connor added, saying that lawmakers needed to have the penalty to force people to sign up for exchange insurance.
"All told, Congress stated three separate times that the individual mandate is essential to the ACA,” he said. “That is once, twice, three times and plainly. It also stated that the absence of the individual mandate would 'undercut' its 'regulation of the health insurance market.'"
He also noted that all nine Supreme Court justices who weighed in on the law said the individual mandate and the pre-existing conditions coverage protections, guaranteed issue and community ratings provisions could not be severed.
"Perhaps it is impossible to know which minor provisions Congress would have passed absent the individual mandate,” O'Connor wrote. “But the level of legislative guesswork entailed in reconstructing the ACA's innumerable trade-offs without the one feature Congress called 'essential' is plainly beyond the judicial power."
Twenty Republican state attorneys general initially sued the Trump administration to invalidate the entire law in February, citing Chief Justice John Roberts' opinion. The Trump administration refused to defend the law, but only asked O'Connor to toss the individual mandate. Democratic state attorneys general intervened in the case to protect the law.
The decision throws the fate of the Affordable Care Act into question just one day before open enrollment for 2019 closes. California Attorney General Xavier Becerra said the Democratic coalition will fight O'Connor's decision. "Today's misguided ruling in Texas v. US will not deter us," he wrote on Twitter.
“Today's decision is an unfortunate step backward for our health system that is contrary to overwhelming public sentiment to preserve pre-existing condition protections and other policies that have extended health insurance coverage to millions of Americans,” said Dr. Barbara L. McAneny, president of the American Medical Association. “It will destabilize health insurance coverage by rolling back federal policy to 2009. No one wants to go back to the days of 20% of the population uninsured and fewer patient protections, but this decision will move us in that direction.”
In the wake of the decision, conservative and liberal policy groups and industry jumped to weigh in, with many calling for a stay on the decision until a higher court can review it.
American Hospital Association President Rick Pollack blasted the ruling as putting health coverage of “tens of millions of Americans” at risk “while also making it more difficult for hospitals and health systems to provide access to high quality care.”
Chip Kahn, CEO of Federation of American Hospitals, said: “The judge got it wrong.”
The conservative Heritage Foundation, on the other hand, praised the ruling. The foundation's Marie Fishpaw urged Congress to avoid “any knee-jerk reactions that prop up a failing health law.”
“This legal verdict is a reminder that Obamacare's faulty architecture was created by Washington and we should not expect Washington to make it better,” Fishpaw said.
CMS Administrator Seema Verma said in November that the agency wanted to make sure people with pre-existing conditions will be protected and that Americans have access to affordable insurance even if the Affordable Care Act was struck down. However, she wouldn't provide details on the CMS' plans.
The liberal-leaning Urban Institute ran an economic analysis in August estimating that more than 17 million people would lose coverage through the individual market or Medicaid expansion if the courts strike down the law. This would mean a 50% increase in the number of people currently uninsured in the U.S, according to Urban Institute analysts Linda Blumberg and Sherry Glied.
Matt Eyles, president and CEO of America's Health Insurance Plans, said in a statement that O'Connor's decision was "misguided and wrong," and insurers will continue to participate in the case as it is appealed.
"This decision denies coverage to more than 100 million Americans, including seniors, veterans, children, people with disabilities, hardworking Americans with low incomes, young adults on their parents' plans until age 26, and millions of Americans with pre-existing conditions," Eyles said.
Erica Teichert assigns, edits and directs news coverage for
Modern Healthcare’s website and magazine. She previously served as the
publication’s New York bureau chief and legal reporter. Before joining Modern
Healthcare in 2016, she worked at Law360 as legal newswire’s first D.C. bureau
chief after three years as a court reporter covering the U.S. Supreme Court,
D.C. Circuit and other federal courts and agencies. Prior to that, she worked
as an associate editor for FierceMarkets. She has a bachelor's degree in
communications with a print journalism emphasis from Brigham Young University.
Susannah Luthi covers health policy and politics in Congress
for Modern Healthcare. Most recently, Luthi covered health reform and the
Affordable Care Act exchanges for Inside Health Policy. She returned to
journalism from a stint abroad exporting vanilla in Polynesia. She has a
bachelor’s degree in Classics and journalism from Hillsdale College in Michigan
and a master’s in professional writing from the University of Southern
California.
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