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Is this little-noticed case the downfall of the ACA?

By Dr. David C. Pate, News and Community
July 3, 2018

A case challenging the constitutionality of the Affordable Care Act (“ACA”), filed by 20 states – Idaho is not one of them – in Texas, has received little attention in the media but deserves attention.

Plaintiffs are asking the court to rule the ACA unconstitutional in part or in whole, declare any rules or regulations promulgated pursuant to the unconstitutional portions of the ACA unlawful, and prevent the government and its agencies from enforcing any of the unconstitutional portions of the ACA.

It is the argument of the plaintiffs that, because the part of the ACA that they challenge as being unconstitutional is so integral to the functioning of the ACA, the court should not merely strike those provisions of the ACA but the entire ACA itself.

Plaintiffs seize on the effect of a law passed last year by Congress that amended the ACA, eliminating the tax penalty associated with the individual mandate. The individual mandate is that provision of the ACA that requires most Americans to maintain ACA-compliant health insurance coverage.

There is a tax penalty that is imposed on those who do not maintain this insurance coverage. Starting in 2019, under the recently enacted amendment, the tax penalty is eliminated by reducing the tax to zero.

In 2012, the U.S. Supreme Court decided a case in which different plaintiffs challenged the constitutional ability of Congress to pass a law that imposed a mandate requiring most Americans to purchase health insurance. The federal government has expansive rights to regulate interstate commerce, but the court was reluctant to further expand the federal government’s rights to compel people to enter interstate commerce.

The court ultimately decided that Congress could not enact the individual mandate under the Commerce Clause powers, but saved the law from being ruled unconstitutional by determining that the mandate and its associated penalty were a lawful exercise of Congress’ taxing power under the Constitution by construing the penalty to be a tax.

Plaintiffs in the current case point to the Constitution, which states that a tax raises revenue “to pay the Debts and provide for the common Defence [sic] and general Welfare of the United States.”

The plaintiffs argue that when Congress passed, and the president signed into law, the Tax Cuts and Jobs Act of 2017, which reduced the tax penalty associated with the individual mandate to zero, the penalty no longer raised revenue and it therefore no longer qualifies as a tax.

If the penalty is no longer considered a tax, the individual mandate is no longer constitutional as a lawful exercise of Congress’ taxing power, the argument goes. Because this was the only basis upon which the U.S. Supreme Court held the ACA’s individual mandate to be constitutional in 2012, plaintiffs assert that the court must now rule the individual mandate to be an unconstitutional overreach of power by the Congress, and because the individual mandate is an integral and essential part of the ACA, the ACA must be rendered unconstitutional in its entirety.

Attorney generals from 15 states and the District of Columbia have filed a motion to intervene and defend the ACA since they fear the Trump administration will not defend this lawsuit. These attorneys general have not yet submitted their brief arguing that the zeroing out of the tax penalty does not render the law unconstitutional, so I don’t know how strong their defense of the ACA will be.

But if the states filing this lawsuit are successful in their claims, it will have significant consequences for the health care industry. And since the claims are not frivolous or obviously without merit, this case is worth watching.

About The Author

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.