Word From Washington: New Challenges to ACA

Earlier this year, Texas together with 19 other states (“plaintiffs”) filed a lawsuit challenging the constitutionality of the Affordable Care Act (ACA). The US Department of Justice (DOJ) – which normally defends federal laws against such challenges – unexpectedly chose to side with the plaintiffs when it filed its brief on June 7th. The DOJ argued that key ACA protections for people with pre-existing conditions are unconstitutional. Here’s what we know so far about this lawsuit.
Hasn’t the US Supreme Court already ruled on the ACA’s constitutionality? Yes! In 2012, the Supreme Court upheld the ACA – and, specifically, the ACA’s “individual mandate” provision, which imposes financial penalties on people who don’t buy health insurance – as a valid exercise of the government’s taxing power.
So what are the plaintiffs’ grounds for bringing a new lawsuit? Congress (after many unsuccessful efforts to “repeal and replace” the ACA in 2017) passed a tax bill last December that chipped away part of the health law. The tax law repealed the ACA penalty for violations of the individual mandate. The ACA individual mandate remains on the books, but the penalty enforcing the individual mandatewill expire effective January 1, 2019, thanks to the tax law.
The plaintiffs argue that, with no penalty in place, the ACA’s individual mandate can no longer be considered a tax. Instead it amounts to a mere requirement to buy insurance – a requirement that is beyond the federal government’s power to impose. And because the individual mandate is such a central part of the ACA framework, the plaintiffs argue, its invalidity means that the court should overturn the ACA in its entirety. In the plaintiffs’ view, the mandate is not “severable” from the rest of the ACA: with the mandate gone, the rest of the law must also fall
[The DOJ’s position is a little less far-reaching than the plaintiffs’ stance. The DOJ concedes that some important ACA provisions (tax credits, ACA insurance Exchanges, Medicaid expansion, etc.) survive despite the repeal of the individual mandate penalty. But DOJ says that the ACA’s pre-existing conditions protections are not severable from the individual mandate and can’t continue in effect if the mandate is invalid.]
What will happen next? California and 16 other states have intervened in the case to defend the ACA. The lawsuit will proceed in federal district court in Texas. Once the district court issues a decision, the losing party could appeal the court’s ruling to the US Fifth Circuit Court of Appeals and possibly on to the US Supreme Court.
Many legal experts (both pro- and anti-ACA) see little merit to the plaintiffs’ and DOJ’s arguments in this litigation. These experts note that when Congress passed the 2017 tax bill, it chose to leave the ACA’s insurance protections in place. This seems to show that Congress did, in fact, consider the individual mandate severable from the rest of the health law. But earlier litigation over the ACA has sometimes produced unexpected results, so we will continue to watch this matter closely.
What does the lawsuit mean for my insurance coverage? Nothing, for now. The consumer protections of the ACA remain in force while the case is litigated through the courts. The insurance industry’s trade association (AHIP) warns, though, that the litigation may further destabilize insurance markets for 2019. Insurers are filing their proposed rates for next year’s insurance plans now and the uncertainty created by the lawsuit may fuel premium increases for 2019, even before the court issues its decision.
If the courts were ultimately to rule as the DOJ requests, the result would be devastating to many people with bleeding disorders or other pre-existing conditions. People who buy insurance on the individual market could again be denied coverage outright, or could be charged much higher premiums, based on their health status. If the courts were to rule in favor of the plaintiffs (going beyond the position staked out by the DOJ), the effects would be still more sweeping, and would impact people with job-based coverage and Medicaid coverage as well as people who buy insurance in the individual market. The plaintiffs have asked the courts to dismantle the ACA root and branch. Protections for people with pre-existing conditions would disappear, as would the ACA’s Medicaid expansion; tax credits to help people buy insurance if they don’t get coverage through their jobs; standards for what benefits health plans must cover; the prohibition on annual and lifetime caps; the limits on yearly out-of-pocket costs; the right to keep kids on parents’ plans to age 26; and more.
HFA will continue to update you about the ongoing litigation. We can’t affect what happens in the lawsuit.  But we can and must continue our efforts to advocate for the affordable, quality coverage that we need, in all the other forums available to us, and at the state and federal levels.Please stay tuned – and thank you for your interest and engagement.