ACA: Still Here Today but for How Much Longer?

Is Obamacare really dead? Only partially dead? Or is it totally alive? It’s all pretty confusing. But the short answer is that Obamacare lives and will continue to do so unless and until the U.S. Supreme Court strikes it down. The good or bad news, depending on how you feel about the issue, is that we’re drawing closer to the moment when the Supreme Court will have the opportunity to make that determination. On the other hand, they may just uphold the law, or at least part of it. And all the while, there remains the possibility, fairly unlikely, that Congress will get together and create a new law to replace Obamacare. If you want more details, keep reading.

The Recent 5th Circuit Ruling

On Dec. 18, the U.S. Court of Appeals for the 5th Circuit issued a ruling striking down part of Obamacare, aka, the Affordable Care Act (ACA), as unconstitutional. Specifically, the court found that the ACA individual mandate, i.e., the requirement that Americans carry health insurance or pay a tax penalty, is unconstitutional. But the Republicans bringing the case, Texas v. United States, didn’t get what they were really hoping for—and even expecting—a ruling finding the entire law unconstitutional. In other words, they recognized that the Fifth Circuit opens the door to saving the body of the ACA by removing the individual mandate tumor.

This position clashes directly with the lower federal court ruling of December 2018 holding that the ACA is a package deal of which the individual mandate is an essential part of that couldn’t be severed from the rest of the law. So, if the mandate was unconstitutional, the whole law must be unconstitutional as well. But the 5th Circuit wasn’t prepared to take it that far. Explain your reasoning and analysis more clearly, it instructed the lower court, and we’ll decide if you’re right.


Practical Impact

The punchline of the 5th Circuit ruling is that it decides nothing and serves only to prolong the case for another year by returning it to the lower court. The 5th Circuit’s ruling that the ACA mandate is unconstitutional is a moot point because Congress has already effectively eliminated the tax penalty for penalty for people who don’t have health insurance. The ruling doesn’t address what’s really at stake, namely the fate of the other elements of the ACA law at risk of being struck down, including:

  • Insurance subsidies for people who acquire health plans through ACA marketplaces;
  • The expansion of Medicaid in three dozen states;
  • The requirement that insurers cover people with pre-existing conditions;
  • The ability of young adults to stay on their parents’ insurance policies until they turn 26; and
  • No-charge preventive care for older Americans on Medicare.

If the entire ACA is declared unconstitutional, an estimated 17 million Americans would lose health care coverage, and more than 50 million people with pre-existing medical conditionals could be denied health insurance.

A complete repeal would also play havoc with insurers by abolishing the ACA marketplaces. This would be devastating to managed care organizations like Anthem, Cigna, Centene that have invested so much to establish themselves in the ACA marketplaces.

Repeal would also have significant ramifications to the extent the ACA is also woven more subtly into many other aspects of the health-care system, from payment formulas for hospitals and doctors to experiments intended to nudge health-care from a system that pays for the quantity of medical services to one based on the value of care patients receive. Additionally, if ACA is declared unconstitutional, it could undermine the Trump administration’s proposals to lower drug prices.

The Latest Twist

Technically, the US v. Texas case isn’t ripe for Supreme Court review because it still has to go back down to the lower court and thence through the 5th Circuit. But on Jan. 3, a coalition of Democratic governors and attorneys general from 20 states argued that the matter can’t wait and took the unusual step of calling on the Supreme Court to step in and decide the case before the Court’s current term ends in June. “Uncertainty threatens adverse consequences for patients, providers and insurers nationwide,” according to their petition.

The ACA 20

The states that filed the petition asking the Supreme Court to rule on the US v. Texas case by June include California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Iowa, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York, North Carolina, Oregon, Rhode Island, Vermont, Virginia, Washington and the District of Columbia, as well as the Governor of Kentucky.

What Happens Next?

For the Supreme Court to take the case on an expedited basis, five of the nine justices will have to agree to hear it. Scheduling constraints dictate that the Court make and publicize its decision on the petition within a few weeks. University of Michigan law professor Nicholas Bagley, writing in the New England Journal of Medicine, suggests that the four liberal justices on the Court may opt to accept the case and then count on persuading Chief Justice John Roberts to do the same and ultimately uphold the law, the same formula that led to the upholding of the individual mandate in NFIB v. Sebelius decided by the Court six years ago. Justice Roberts has twice turned back more substantial challenges to the law and is unlikely to embrace a lawsuit as weak as this one, the professor argues.


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