A federal judge in Texas has rejected a request to suspend the Affordable Care Act (ACA) but has questioned attorneys extensively about the provisions that should be allowed to survive following the elimination for the penalty for not having health insurance. This raises the possibility that the conservative judge overseeing the case may rule against some of the provisions of the ACA.
ACA History
The Patient Protection and Affordable Care Act (ACA), which is commonly referred to as Obamacare, is the healthcare reform legislation that was passed by the 111th Congress and signed into law by President Barack Obama in March 2010.
The ACA included provisions that extended coverage to millions of uninsured Americans, eliminated industry practices of denying coverage due to pre-existing conditions and required all Americans to be insured. Failure to maintain minimum insurance coverage resulted in a tax penalty. The ACA’s major provisions came into effect in 2014.
Shortly after the ACA was enacted, the constitutionality of its requirement to maintain minimum health insurance was challenged in several lawsuits. The insurance mandate, Section 5000(A)(a) of the ACA, states, “An applicable individual shall for each month beginning after 2013 ensure that the individual, and any dependent of the individual who is an applicable individual, is covered under minimum essential coverage for such month.”
In National Federation of Independent Business (NFIB) v. Sebelius, the United States Supreme Court concluded that the requirement to purchase health insurance was not a valid exercise of Congress’ power under the Commerce Clause but upheld the provision under Congress’ taxation power.
The NFIB court wrote that “our Constitution protects us from federal regulation under the Commerce Clause so long as we abstain from the regulated activity.” Chief Justice John Roberts, who wrote the controlling opinion, acknowledged that Section 5000A(a) “reads more naturally as a command to buy insurance than as a tax,” but noted there is a duty to adopt a saving construction if “fairly possible.” Justice Roberts then reasoned that Section 5000A(a) was “constitutional … because it can reasonably be read as a tax.”
Tax Cuts and Jobs Act
In December 2017, the Tax Cuts and Jobs Act (TCJA) amended the ACA by eliminating the penalty associated with not maintaining minimum health insurance. The TCJA did not get rid of Section 5000(A), but it reduced the penalty associated with violating the section to $0. The states that filed a suit challenging the ACA argue that the requirement to purchase health insurance is unconstitutional under NFIB without the tax penalty.
The Complaint
Twenty states filed a suit against the United States, the Department of Health and Human Services, Secretary of Health and Human Services Alex Azar, the Internal Revenue Service, and David Kautter, Commissioner of Internal Revenue, because of recent changes to the Patient Protection and Affordable Care Act.
The parties sought declaratory and injunctive relief, arguing that the recently amended ACA forced an unconstitutional and irrational regime onto the States and their citizens. The revised ACA eliminated the penalty on Americans who do not have health insurance but preserved the requirement that all people have coverage.
The states argued that without the tax penalty, the ACA is unconstitutional. The states contend that the majority of the Supreme Court in NFIB held that Congress lacked the constitutional authority to compel citizens to purchase health insurance, but that the court only upheld the law under Congress’ taxing authority because the ACA included a tax penalty that applied to most of those who are required to buy insurance.
The states also argue that since the TCJA eliminates the revenue produced by the ACA, the individual mandate to purchase insurance is no longer constitutional. The states contend that without the individual mandate, the remainder of the ACA should also fail.
They wrote, “Absent the individual mandate, the ACA is an irrational regulatory regime governing an essential market. The ACA’s stated objectives are ‘achiev[ing] near universal [health-insurance] coverage,’ 42 U.S.C. § 18091(2)(D), ‘lower[ing] health insurance premiums,’ and ‘creating effective health insurance markets,’ But without the ‘essential’ mandate, coverage will decrease, premiums will rise, and markets will become irrational. Thus, the post-mandate ACA lacks ‘some footing’ in the ‘realities’ of the health-insurance market and has no ‘plausible policy reason’ for forcing continued compliance.”
The states that brought the suit were: Texas, Wisconsin, Alabama, Arkansas, Arizona, Florida, Georgia, Indiana, Kansas, Louisiana, Mississippi, Missouri, Nebraska, North Dakota, South Carolina, South Dakota, Tennessee, Utah, West Virginia, and the Governor of Maine.
