Special Sunday Edition

US District Court Finds Affordable Care Act Unconstitutional

On Friday evening, Judge Reed O’Connor of the US District for Northern Texas issued a partial summary judgement and declared the personal mandate of the Affordable Are Act (ACA) unconstitutional. While the 55 page ruling has detailed legal reasoning, it is, on the whole very readable for non-lawyers. Here is the essence of the case and its decision:

The ACA was passed in 2010 with plans for most of its features (like the insurance exchanges and Medicaid expansion) to start in 2014. After passage, the National Federation of Independent Businesses filed a lawsuit against the federal government [NFIB v. Sebelius, 567 U.S. 519, 530–38 (2012)] claiming the law was unconstitutional. Two parts to the law were challenged- the Medicaid expansion requirement and the mandatory insurance requirement that was part of the creation of insurance exchanges. The case reached the Supreme Court in 2012.

The Medicaid provision required states to expand Medicaid or face withholding of all Medicaid funds. Regarding this provision , the Supreme Court found that it was coercive and thus struck it down. Medicaid expansion provisions remain but are not mandatory.

The insurance provision was the more contentious and ambiguous, and is the subject of the current decision. The focus was on the constitutionality of the mandate as it related to the Commerce Clause of the Constitution. This clause gives Congress the authority to regulate interstate commerce. However, it does not give Congress the right to compel commerce. Therefore, the plaintiffs claimed the mandate requiring everyone to heave health insurance was unconstitutional and not covered by the Commerce Clause. Chief Justice Roberts, in writing for the majority, issued an opinion that took many by surprise:
An individual who did not have health insurance was compelled to pay a fine to the US Treasury, the amount of which was linked to the offender’s income. The Internal Revenue Service was charged with collecting this fine as part of annual income tax payments. Therefore, this fine behaved like a tax. Because Congress has the right to levy taxes, the mandate was constitutional. Thus, the mandate and its “tax penalty” provision became linked.

On 12/22/2017, Congress passed Public Law No: 115-97.P- called the Tax Cuts and Jobs Act (TCJA) of 2017. Article VIII (Sec. 11081)--Individual Mandate states: “This section repeals the penalty for individuals who fail to maintain minimum essential health coverage as required by the Patient Protection and Affordable Care Act (commonly referred to as the individual mandate).” The idea thus arose that if the penalty (tax) is eliminated and the penalty was the reason for the constitutionality of the mandate (which still exists), then the law is now unconstitutional.

As a result of the TCJA repeal, attorneys general from the states of Alabama, Arizona, Arkansas, Florida, Georgia, Indiana, Kansas, Louisiana, Mississippi, Missouri, Nebraska, North Dakota, South Carolina, South Dakota, Tennessee, Texas, Utah, West Virginia, Wisconsin, as well as Governor Paul LePage of Maine and individuals Neill Hurley and John Nantz sued the federal government to invalidate the ACA. Joining the federal government as “Intervenor Defendants” were the attorneys general for the states of of California, Connecticut, Delaware, Hawaii, Illinois, Kentucky, Massachusetts, Minnesota, New Jersey, New York, North Carolina, Oregon, Rhode Island, Vermont, Virginia, and Washington, and the District of Columbia. Practically speaking it was a group of Republican states against a group of Democratic states and the federal government.

Three stances were put forth:
1. The plaintiffs claimed that because the penalty was inextricably linked to the mandate (which still exists) and because the mandate is an essential element of the insurance provisions, the whole law should be ruled unconstitutional.

2. The federal government agrees that the mandate is unconstitutional but claims that the rest of the provisions still apply. In other words, it is severable form the rest of the law. Recall that many Republicans ran on platforms promising that the preexisting condition exclusion in the ACA would be protected. If the Republican plaintiffs won their case, these protections would vanish.

3. The Democratic attorneys general disagreed with all the plaintiffs’ claims.

Judge O’Connor decided that the penalty was, indeed, inextricably linked to the mandate and that a ruling on the mandate could not be severed from its integral role in the law. Therefore:
”For the reasons stated above, the Court grants Plaintiffs partial summary judgment and declares the Individual Mandate, 26 U.S.C. § 5000A(a), UNCONSTITUTIONAL. Further, the Court declares the remaining provisions of the ACA, Pub. L. 111-148, are INSEVERABLEand therefore INVALID. The Court GRANTS Plaintiffs’ claim for declaratory relief in Count I of the Amended Complaint.” [Emphases and caps are the court’s.]

What happens now? Nothing as far as the insurance exchanges. This ruling will undoubtedly be appealed, at least by the Democratic attorneys general. Barring unforeseen circumstances, it is also likely bound for the Supreme Court- where two Trump appointees will add a new dimension to its proceedings. What about restoring the penalty? Highly unlikely with a Republican-controlled Senate and White House.

Stay tuned….