More than 130 million Americans are waking up this Saturday morning to the news that their health coverage has been thrown into doubt.
That’s because, late Friday night, a federal judge in Texas effectively invalidated the Affordable Care Act — including its exchange health plans, Medicaid expansion and its provisions affecting Medicare’s prescription drugs benefit — lock, stock and barrel.
As my colleague Noam Levey reports, Judge Reed O’Connor didn’t issue an injunction against the law, so the federal and state governments still can enforce it, for now. Indeed, Medicare and Medicaid Administrator Seema Verma, who oversees the ACA, said Friday that “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.”
On the other hand, President Trump crowed on Twitter that “Obamacare has been struck down as an UNCONSTITUTIONAL disaster!” He happens to be wrong, technically, but that hasn’t stopped him in the past.
(Marty Lederman of Georgetown Law School explains that the judge didn’t technically “strike down” the law, but merely issued a declaratory judgment that the individual mandate is unconstitutional, and stated that it follows that the rest of the law must be invalid; if he really wanted to shut down the law, he would have issued an injunction against its enforcement.)
Legal experts across the political spectrum say O’Connor’s decision is so flawed and threadbare of logic that it’s likely to be overturned, and rapidly, by the 5th Circuit U.S. Court of Appeals in New Orleans. It could also be tossed by the Supreme Court, which has upheld the constitutionality of the ACA twice.
If that happens, removing a last-gasp challenge to the law filed by Texas and 19 other red states, the ACA could end up stronger than ever, its provisions etched into the American healthcare system for the long term.
But in today’s political and juridical environment anything can happen. So supporters of the law, who are now the majority of Americans, need to keep their fingers crossed.
The Texas case was the latest iteration of conservatives’ eight-year campaign against the Affordable Care Act, which included scores of repeal attempts in Congress and six trips to the Supreme Court. This time around, the red states argued that when the Republican Congress reduced the penalty for not carrying health coverage to zero — a provision of the tax cut signed by President Trump last December — the result was to nullify the whole law.
Their position was endorsed by the Trump administration, which withdrew its defense of the law before O’Connor in June, thus making the unconstitutionality of the law official Trump doctrine. But 16 blue states, led by California, won the right to defend the law in the federal government’s stead. On Friday, California Attorney General Xavier Becerra promptly denounced the ruling and pledged that “our coalition will continue to fight in court for the health and well-being of all Americans.”
Here are some of the provisions that would be overturned if O’Connor’s ruling is allowed to stand: The ACA’s system of premium subsidies for low- and moderate-income households; Medicaid expansion in the 37 states that have accepted it as well as in Nebraska, Idaho and Utah, where voters approved expansion last month, and in Maine, where a Democratic governor is poised to implement expansion after voters approved it in 2017; the ACA’s rule allowing young people to stay on their parents’ health plans up to age 26; a narrowing of the “doughnut hole” that saddles some Medicare enrollees with higher costs for prescription drugs.
Among the most important effects would be the eradication of ACA rules protecting people with preexisting medical conditions from being turned away for insurance or charged higher premiums than the general population. All those provisions have proven to be popular with the general public.
It’s proper to observe that the plaintiff states maneuvered carefully to bring their case before O’Connor by filing it in a branch courthouse where he’s the only federal judge on call. They know their man: O’Connor was a Senate Republican staff functionary without judicial experience when he was named to the bench by George W. Bush in 2007.
Since then, he’s been a reliable vote against progressive programs in almost all particulars, ruling against gun control measures, Obamacare’s rules against gender discrimination, and Obama administration rules barring discrimination against transgender public school students.
Legal authorities were braced for Friday’s ACA ruling from O’Connor, who had made no secret during proceedings in his Fort Worth courtroom of his disdain for the law. Many thought he might invalidate the ACA’s rules requiring insurance companies to accept all applicants and forbidding them to charge more for people with preexisting conditions. They were were shocked by the breadth of his conclusion that the whole law had to go. “Absolutely insane” was the judgment of Nicholas Bagley of the University of Michigan law school, a long-term supporter of the ACA.
But his view was echoed by Jonathan Adler of Case Western Reserve law school, a conservative who was the architect of a legal strategy that aimed to overturn much of the law’s premium subsidies (but was rejected by the Supreme Court in 2015). Adler called O’Connor’s decision “surprising — and surprisingly weak” and added, “I do not believe this opinion is long for this world. However superficially plausible the plaintiff states' claims initially appear, they melt upon inspection.”
Let’s take a quick look at O’Connor’s reasoning. He asserts that in enacting the law in 2010, Congress stated that the individual mandate was “essential” to the operation of the ACA. The mandate imposed a tax penalty on anyone without a health plan. Because the Supreme Court had found the tax penalty to be constitutional, O’Connor wrote, when Congress reduced the penalty to zero, the individual mandate became unconstitutional. (The reduction actually takes effect Jan.1, 2019.)
The reason, he wrote, is that Congress made no provision for “severability” in the ACA — that is, providing that if some of its elements were overturned, the others would remain in force. O’Connor argues that the 2017 Congress, which zeroed out the tax penalty, didn’t say what it intended to happen to the rest of the law. “There is no answer,” he wrote, so the 2010 Congress’s view that the law must stand or fall in conjunction with the mandate must prevail.
The flaw in this reasoning, as Bagley, Adler and others point out, is that the 2017 Congress did make its view of severability clear. It did so by invalidating the tax penalty, but not repealing the law. So in 2017, Congress had come around to the view that the rest of the ACA could survive without the mandate.
“We know for certain that [Congress] believed it could safely ditch the mandate penalty and keep the rest of the ACA intact,” Bagley wrote in June. “We know because that’s what it did.”
The chief imponderable from O’Connor’s ruling is its political impact. Even if it’s tossed out on appeal, the ruling demonstrates how far Republicans will go to undermine the Affordable Care Act. As Ezra Klein posits at Vox.com, that’s an object lesson for Democrats and other supporters and beneficiaries of the ACA, and a signal that they should push ahead on their proposals for Medicare for all or other single-payer or universal health coverage ideas.