A federal
appeals court has ruled the Affordable Care Act's individual mandate
unconstitutional, in a win for Republican-led states attempting to kill the
Obama-era law, but sent back the question of whether the mandate is severable
from the law to the district court.
The ruling by
the three-judge panel of two Republicans and one Democratic appointee came down
along party lines.
"The
individual mandate is unconstitutional because it can no longer be read as a
tax," the majority wrote. But they added, "on the severability
question we remand to the district court to provide additional analysis."
California
Attorney General Xavier Becerra, who led the blue states defending the law, said Wednesday evening
the state "will move swiftly to challenge this decision."
Before landing
at the appeals court, Judge Reed O'Connor in December 2018 ruled the individual
mandate was unconstitutional and "inseverable" from the law as a
whole, striking down the ACA.
Texas and 17
other red states filed suit in 2018, alleging that the ACA is unconstitutional
after the individual mandate was zeroed out in a subsequent federal tax law.
The states also argued the mandate could not be untangled from the rest of the
law, essentially arguing that if the individual mandate is unconstitutional so,
too, is the law in its entirety.
The U.S.
Department of Justice in March reversed its previous stance
and also declared the law should be eliminated.
In one key
question, the court ruled the plaintiffs did have standing to bring the case,
because the mandate forces individual plaintiffs to buy insurance they do not
want and requires the state plaintiffs to bear the costs of complying with the
mandate's reporting requirements. They added that even if they did not have
standing, "there remains a live case or controversy between the plaintiffs
and the federal defendants."
The American
Hospital Association said in a statement Wednesday evening it was disappointed
in the ruling. "Sending the decision back to the federal district court
that invalidated the entire law puts health coverage — and peace of mind — for
millions of Americans at risk," the group wrote.
The case is
nearly sure to wind up eventually at the Supreme Court with the potential to
throw chaos into the insurance markets. Most at risk from the volatility of the
ruling are managed care organizations with a major presence in the exchanges
such as Anthem, Centene and Cigna.
The landmark
act signed into law nearly a decade ago substantially changed the healthcare
landscape. It added coverage protections for people with pre-existing
conditions, instituted Medicaid expansion in many states and required coverage
of certain essential benefits like maternal and preventive care.
More than 19
million Americans gained health coverage from 2010 to 2017 as the ACA went into
effect, according to the Kaiser Family Foundation.
But over the years the law
has been whittled away by Republicans in Congress and through the courts. The
action that most directly precipitated the challenge ruled on Wednesday was the
GOP tax overhaul that zeroed out the individual mandate penalty.
Despite
Wednesday's ruling, the issue is still far from being decided once and for all,
Katie Keith, a lawyer and health policy expert at Georgetown University, told
Healthcare Dive.
"It does
potentially create additional years of uncertainty," she said.
Still, she said
she expected this outcome. "I'm not particularly surprised that this is
how they ruled, seems pretty consistent with oral argument and what they were
asking," she said.
Yet, some legal
experts were very critical of the decision, with one characterizing the ruling
as "ludicrous."
"The Fifth
Circuit decision is a remarkable mix of hubris and cowardice," Nicholas
Bagley, a health law expert and professor at the University of Michigan, wrote
on Twitter. "It's hubris to say that the *unenforceable* individual
mandate is an unconstitutional *command.* And it's cowardice to remand without
grappling with what that means for the rest of the law."
Robert Henneke,
lead counsel for the individual plaintiffs and general counsel for the Texas
Public Policy Foundation, called the decision a victory for the American
people.
"The
court's opinion recognizes that Obamacare continues to injure millions of
Americans like our clients who have lost their choice of doctor, suffered
rationed care, and had their insurance costs skyrocket," he said in a
statement. "This decision puts us one step closer to eventually freeing
the American people from its unconstitutional mandates and regulations."
If the case
does find its way to the Supreme Court, it won't be the first time. The high
court in 2012 upheld the law after the first major challenge, which also
centered on the individual mandate. That decision, however, declared that
Medicaid expansion could not be mandatory for states.
In 2015, the
court ruled ACA plan subsidies could be distributed through the federal
Healthcare.gov site in states that did not set up their own exchange, another
finding in favor of the law.
The ACA was
once again directly challenged in the summer of 2017, but the setting was
Capitol Hill. Republicans attempted to repeal the law, but a memorable thumbs
down from Sen. John McCain of Arizona doomed those attempts.
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