Texas Judge Rules ACA Unconstitutional

A federal judge in Texas has ruled that the Affordable Care Act (ACA), otherwise known as Obamacare, is unconstitutional.

ACA Background

The Patient Protection and Affordable Care Act (ACA) came into effect in 2014, stopping the industry practice of denying coverage due to pre-existing conditions and requiring that all Americans maintain minimum health insurance. Failure to maintain that minimum coverage resulted in a penalty.

The constitutionality of the minimum insurance requirement was upheld by the United States Supreme Court under Congress’ taxation power in National Federation of Independent Business (NFIB) v. Sebelius.

However, the December 2017 Tax Cuts and Jobs Act (TCJA) amended the ACA by eliminating the penalty for not maintaining minimum health insurance.

Texas v. Azar

Twenty states filed suit against the United States, the Department of Health and Human Services, Secretary of Health and Human Services Alex Azar, the Internal Revenue Service, and David Kautter, Commissioner of Internal Revenue, arguing that the revised ACA was unconstitutional. Essentially, the states argued that the elimination of the health care requirement meant that there was no longer a tax, and no longer constitutional.

The Justice Department filed a brief saying that it would not defend the ACA, so a group of 16 Democratic-led states and the District of Columbia intervened to defend the ACA. A coalition of physician groups filed an amici curiae brief to support the ACA. The participating groups included the American Medical Association (AMA), the American Academy of Family Physicians, the American College of Physicians, the American Academy of Pediatrics (AAP), and the American Academy of Child and Adolescent Psychiatry.

Read OTW’s prior coverage of the case here: “Texas Lawsuit Challenges ACA”(https://ryortho.com/2018/09/texas-lawsuit-challenges-aca/) and “Maryland Sues to Head Off Texas ACA Challenge”.

In a 55-page opinion, Judge Reed O’Connor ruled that the ACA is unconstitutional. He wrote, “The court finds the individual mandate can no longer be fairly read as an exercise of Congress’s tax power and is still impermissible under the interstate commerce clause―meaning the individual mandate is unconstitutional…. [T]he court finds the individual mandate is essential to and inseverable from the remainder of the ACA.”

The Responses Have Been Swift and Angry

The response to Judge O’Connor’s ruling has been swift.

California Attorney General Xavier Becerra released a statement, “Today’s ruling is an assault on 133 million Americans with preexisting conditions, on the 20 million Americans who rely on the ACA for healthcare, and on America’s faithful progress toward affordable healthcare for all Americans…. The ACA has already survived more than 70 unsuccessful repeal attempts and withstood scrutiny in the Supreme Court. Today’s misguided ruling will not deter us: our coalition will continue to fight in court for the health and wellbeing of all Americans.”

The American Academy of Pediatrics released a statement calling “for an immediate appeal of the decision” and urging “the White House to stand by the law and not undermine its stability as the case works its way through the court system.” The AAP said, “This decision comes at a time when the number of children without health insurance has increased. Legislative, regulatory and judicial challenges to the law are having real impacts on the ground. Pediatricians will keep fighting for the children we care for to make sure they can continue to receive the care they need.”

President Trump tweeted his approval of the ruling. He wrote, “”Wow, but not surprisingly, Obamacare was just ruled UNCONSTITUTIONAL by a highly respected judge in Texas. Great news for America!” However, he also tweeted, “As I predicted all along, Obamacare has been struck down as an UNCONSTITUTIONAL disaster! Now Congress must pass a STRONG law that provides GREAT healthcare and protects pre-existing conditions. Mitch and Nancy, get it done!”

Speaker-designate Nancy Pelosi stated, “Tonight’s district court ruling exposes the monstrous endgame of Republicans’ all-out assault on people with pre-existing conditions and Americans’ access to affordable health care.” She continued, “The GOP Congress tried and failed to destroy the Affordable Care Act and protections for pre-existing conditions. Then, in the midterm election, the American people delivered a record-breaking margin of almost 10 million votes against House Republicans’ vile assault on health care. Now, the district court ruling in Republicans’ lawsuit seeks to subvert the will of the American people and sow chaos in the final day of HealthCare.gov open enrollment.”

American Medical Association Blasts Judge’s Decision

The American Medical Association published a memorandum stating that “Judge Reed O’Connor’s decision is a stunning display of judicial activism. Judicial power does not extend to settling policy disputes or exercising general supervision over the other branches of the federal government. Congress declined to repeal the ACA on more than 70 occasions. Yet, this judge has stepped in and single-handedly done what Congress chose not to do―with a weak, unprecedented interpretation of ‘standing,’ a failure to grapple with binding legal precedent, and an indefensible understanding of the interplay between the ACA, the Supreme Court’s decision in NFIB, and the TCJA.”

In its memorandum, the AMA laid out the reasons why it felt that Judge O’Connor’s decision was incorrect and why the current law should remain in place pending resolution of all appeals.

It noted that, “if upheld, the consequences of Judge O’Connor’s decision will be staggering. The ACA expanded access to affordable, quality health insurance, and millions of Americans have gained coverage under the statute. The decision will strip health care from tens of millions of Americans who depend on the ACA; result in higher insurance costs; and sow chaos in the nation’s health care system.”

The AMA argued that the plaintiffs do not have standing to bring the case because they have not suffered any real concrete injury. They do not have to pay taxes if they choose not to obtain health insurance. The AMA stated that the plaintiffs should have sought relief through the legislature, instead of through the courts.

The AMA also argued that the minimal essential coverage provision remains a constitutional exercise of Congress’s taxing power. It noted that a law need not raise revenue to qualify as a tax. It argued that all that is required is that the authority to tax is preserved. This is what Congress did when it amended §5000A to keep the minimum coverage requirement, but reduce the amount of the tax to $0.

The AMA also stated that the minimum coverage provision is severable from the remainder of the ACA. It noted that the 2017 Congress reduced to zero the tax liability for failing to have minimum coverage, but left the remainder of the ACA unchanged. The AMA argued that these actions showed that Congress intended that the rest of the ACA should be enforced as it was before the TCJA was enacted.

What’s Next

The case will likely go to the U.S. Court of Appeals 5th Circuit, and then possibly on to the U.S. Supreme Court.

However, pending the appeal, the law will remain in place. White House Press Secretary Sarah Sanders announced, “Obamacare has been struck down by a highly respected judge. The judge’s decision vindicates President Trump’s position that Obamacare is unconstitutional. Once again, the President calls on Congress to replace Obamacare and act to protect people with preexisting conditions and provide Americans with quality affordable healthcare. We expect this ruling will be appealed to the Supreme Court. Pending the appeal process, the law remains in place.”