ACA Update

SCOTUS Agrees to Rule on Obamacare for the Third Time

Before the coronavirus outbreak, the health care issue that kept millions of Americans up at night was the future of Obamacare, aka, the Affordable Care Act (ACA or Obamacare). Having already having survived two legal challenges, the ACA is now set to come under the U.S. Supreme Court’s scrutiny for a third time. The announcement came in early March.

 Obamacare in Court: Rounds 1 and 2

The first time Obamacare was found constitutional was in 2012 when the Supreme Court held that the law’s requirement that most Americans obtain insurance or pay a penalty was a legal exercise of Congress’s power to assess taxes. But the fun was just beginning.

In 2015, the high court held that the federal government can provide nationwide tax subsidies to help poor and middle-class people buy health insurance, rejecting an argument that the subsidies were available only in states that had created marketplaces, known as exchanges, to allow people who lack insurance to shop for individual health plans.

The Latest Court Case

A new election and change in Court personnel inspired the third and latest challenge, this one from a group of twenty Republican state attorneys general and governors. The new challenge zeroed in on the elimination of the mandate penalty to $0 in 2019. The argument: To the extent previous rulings upholding the ACA were predicated on Congressional taxing power, elimination of the mandate undermined the law’s constitutionality.


In Dec. 18, 2018, a U.S. district court in Texas agreed with the argument and proceeded to rule that the entire ACA law should be struck down. On appeal, a federal appeals court agreed that, without the penalty, the individual mandate was unconstitutional; however, it sent the case back to the district court to once again decide if the entire ACA was unconstitutional. By remanding the case to its point of origin, the court of appeals’ non-decision decision likely prolonged the case for at least one more year.

The Appeal for SCOTUS Intervention

With the insurance market and millions of Americans twisting in the wind, the U.S. House of Representatives and political leaders from a group of blue states asked the Supreme Court to fast-track review in an attempt to bypass a lengthy legal battle, so that a decision on the case would be made before the elections in November. But in January, the Court refused finding that the question wasn’t yet ripe for high court intervention.

So, the House and blue staters tried a different legal tactic. Having lost their bid for fast-track review, the asked the Court to hear their appeal in the ordinary course, contending that Supreme Court review was warranted because part of a federal law had been held to be unconstitutional, which is often reason enough for the justices to agree to hear a case. They added that the lower courts’ rulings had created doubt about the balance of the law.

In urging the court to deny review, the Trump administration called on the justices to wait for a definitive ruling from the lower courts. “Immediate review is unwarranted in the case’s present posture,” according to the administration’s brief, “because the court of appeals did not definitively resolve any question of practical consequence.” But the Supreme Court brushed the argument aside and agreed to hear the case.

What Happens Next?

 While the Court has not announced a definitive schedule, legal experts expect that the case is likely to be heard sometime in the Fall of 2020, maybe even before the election. Any decision on the case, however, is not likely until the spring or early summer of 2021.

Of course, it’s impossible to predict how the Supreme Court justices are going to rule. The fact that it has previously rescued Obamacare from legal challenges is no guarantee that it will do so again, especially given the addition of two conservative leaning justices appointed by President Trump since then. Defenders of Obamacare are hanging their hopes on the fact that Chief Justice Roberts twice sided with justices upholding the law. Some legal scholars suggest that he would not have taken the case if he thought the votes were there to have it declared unconstitutional. However, even if that is true, there is always the chance that the Chief Justice might have miscalculated.

And yet another variable is the health of Justice Ruth Bader Ginsburg. What if she should again fall ill in the next few months and leave the Court? And what if President Trump were to appoint her successor before the case reached the time of judgment? Would there be any hope left of saving the law in those circumstances?

There’s one more thing to consider, namely, the possibility that the Court will choose to overturn the mandate and only a few other select provisions, like the preexisting conditions rules, which were very much linked to the mandate when the law was drafted. But that’s not what the Republican states or the Trump administration are asking for. They want the whole law tossed out.

Takeaway: What Happens If ACA Is Found Unconstitutional?

If the Court ultimately declares Obamacare unconstitutional, it would be as if Congress repealed Obamacare without any replacement law. Everything would go including:

 Protections for preexisting conditions;

  • Subsidies that help people purchase insurance;
  • The Medicaid expansion; and
  • Provisions unrelated to insurance, like nutrition requirements for food labels.

 According to the Urban Institute, repeal of Obamacare would leave large swaths of the country uninsured. The number of uninsured would increase by approximately 20 million, or 65 percent nationally. The increase would be most heavily concentrated among:

  • People with the lowest incomes (below 200 percent of the federal poverty level);
  • Young adults; and
  • Residents of the South and West.

 States that expanded Medicaid would also bear the brunt. The Urban Institute projected their uninsured rates would nearly double if the law were overturned. The uninsured rate for black Americans would increase from 11 percent to 20 percent, and there would also be a dramatic spike in the uninsured rates among Hispanics.




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