I have written about Texas v. United States, a case that was receiving little media attention but that was worth watching, here before. That case was decided by a U.S. District Court judge on Friday.
As ACA-watchers know, Congress enacted the Tax Cuts and Jobs Act in 2017 and part of that law eliminated the tax penalty for not having health insurance coverage in place in compliance with the individual mandate under the ACA beginning Jan. 1, 2019.
Twenty states (Idaho is not one of them) then filed suit to challenge the constitutionality of the ACA, as amended, given that the U.S. Supreme Court, in 2012, upheld the ACA’s individual mandate as constitutional under the federal government’s taxing power. Their argument was that without any tax penalty, the individual mandate provision does not generate any revenue, and therefore, the penalty is no longer a tax and the provision is no longer a constitutional exercise of power under the government’s taxing authority.
The argument went further to state that the individual mandate is integral to the ACA and therefore, unlike some provisions in law that are ruled unconstitutional and could be struck, leaving the rest of the law in place, this provision was not severable from the rest of the law and therefore, the entire ACA must be struck down as unconstitutional.
Were the court to agree with plaintiffs in this case, this would have monumental implications for health care in the United States as it would reverse Medicaid expansion, eliminate the federal health insurance exchanges, end tax credits and the health insurance subsidies for lower-income Americans and eliminate the protections in the law that prevent denial of coverage (guaranteed issue) and increased premiums for those with preexisting illnesses (community rating). That is exactly what happened Friday with the issuance of the judge’s opinion.
The case will go up to the Fifth Circuit Court of Appeals and then, very likely, to the U.S. Supreme Court.
Judge Reed Charles O’Connor’s opinion is well reasoned. I would not be surprised if the Fifth Circuit was to affirm it. Ironically, it may be up to Chief Justice John Roberts to once again save the ACA through some creative reasoning, though this will be more challenging given that President Trump has made two conservative appointments to the Supreme Court since the Court last ruled on the ACA’s constitutionality.
I believe that the defendant states that intervened in this case to defend it, given the Trump administration’s announcement that it agreed with plaintiffs that the individual mandate was unconstitutional, made a critical strategic error.
Instead of defending why the individual mandate was still constitutional despite the zeroing out of the penalty (a weak argument in my mind), I believe they should have argued that it was the amendment to the ACA that was unconstitutional, not the underlying ACA, since eliminating the penalty would now render unconstitutional a law that has already been ruled constitutional and one that has been in effect for more than eight years.
It is not clear that that strategy would prevail, but I do think it is a stronger argument than the one defendants offered, and it would provide the Supreme Court with an out if it wanted to find a way, as it did in 2012, to avoid ruling the ACA unconstitutional.
The opinion in this case will be the most impactful change to health care in the U.S. since 2014 if it is allowed to stand, unless Congress acts to reinstate the penalty or to enact a new law that includes most of the features of the ACA (What are the chances of that?). Republicans have indicated that they would enact a law with guaranteed issue and perhaps some modified community rating, but health policy experts and economists have for the most part stated that these provisions will not work without an individual mandate. Now that they have obtained an opinion ruling the individual mandate unconstitutional, how do they create one for their new law?
You can be sure that I will be following this case and weighing in with updates.
David C. Pate, M.D., J.D., previously served as president and CEO of St. Luke's Health System, based in Boise, Idaho. Dr. Pate joined the System in 2009 and retired in 2020. He received his medical degree from Baylor College of Medicine in Houston and his law degree from the University of Houston Law Center.