Late in the day on December 14, 2018, a federal judge in Texas ruled the entire Affordable Care Act unconstitutional. The White House was quick to issue a statement saying that pending the appeal process, the law remains in place. This appeal process will take a while and is going to be interesting for sure. However, the main consensus among legal scholars seems to be that it will not overturn the ACA.
The Texas attorney general, with support from 18 GOP counterparts and 2 governors, filed a lawsuit in early 2018 contending that the ACA is unconstitutional based on the tax law passed by Congress last December.
In the Supreme Court’s 2012 ruling, Chief Justice John G. Roberts Jr. wrote for the majority that the penalty the law created for Americans who do not carry health insurance is constitutional because Congress “does have the power to impose a tax on those without health insurance.” Then, as part of the tax overhaul a year ago, Congress pushed through a change that eliminated the ACA penalty around the individual mandate (requiring all Americans have health insurance or pay a penalty) starting in January 2019. The lawsuit argues that, with that penalty gone, there is no longer a tax so the law is no longer constitutional.
Last Friday, US District Judge Reed O’Connor agreed.
Pending the appeal process, the ACA remains in place – no confusion there:
- Individuals covered under the insurance exchanges and Medicaid (more than 23 million people!) will not be affected. Seema Verma, the administrator of the Centers for Medicare & Medicaid Services, which oversees those insurance exchanges, said in a tweet: “The recent federal court decision is still moving through the courts, and the exchanges are still open for business and we will continue with open enrollment. There is no impact to current coverage or coverage in a 2019 plan.”
- Employers must continue to be compliant with the Employer Mandate: 2018 reporting for the IRS is coming up soon so stay the course for 2018 filing and 2019 reporting!
This will ensure that the American health care system, which has been operating under the law for more than five years, will not be thrown into immediate chaos.
The appeal process could easily take a year – a final decision is not expected until 2020.
No matter how O’Connor ruled, legal experts have been forecasting that the Texas case would be appealed and could well place the law again before the Supreme Court, which has upheld the law as constitutional in 2012 and 2015.
And yes, this most recent ruling will be appealed in the US Court of Appeals for the 5th circuit: The 16 Democratic state attorneys general who intervened in the case to defend the health law, immediately vowed to appeal. Also, the House Democrats (being in the majority next year) plan to formally intervene in the appeal process as well.
How will this turn out? That is anybody’s guess. Many legal and healthcare law experts on both sides of previous ACA battles have said the reasoning behind this lawsuit was badly flawed. Most notably in its insistence that the entire 2010 law must fall because one of its provisions may have been rendered invalid by the 2017 tax overhaul legislation. Had Congress meant to take such radical action, they said, it would have said so at the time.
Legal experts also noted that the Supreme Court, where most people believe the case is headed, historically has been reluctant to strike down federal laws, particularly those that have become ingrained in the lives of millions of citizens.
Another sticky wicket: Public sentiment has changed with regards to the ACA or at least some of its most popular provisions:
- Coverage protections for people with pre-existing health conditions
- Guarantee of coverage for what the law deems “essential health benefits” (such as emergency services, mental health and substance abuse treatment, prescription drugs and pediatric care)
- The ability for young adults to stay on their parent’s plans till age 26
- The Medicaid expansion
The ACA has already survived more than 70 unsuccessful repeal attempts and withstood scrutiny in the Supreme Court – this ruling is no different. The ACA roller coaster continues. In the meantime, keep calm and carry on, stay the course with your ACA reporting and filing for your employees. Follow our blog for the most recent news – we promise to keep you updated!
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