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A Federal Judge Just Ruled That The Affordable Care Act Is Unconstitutional

In a controversial ruling, a Texas judge has ruled that a minor move by Congress last year is grounds to strike down the entire Affordable Care Act, including preexisting condition protections.

Last updated on December 14, 2018, at 10:49 p.m. ET

Posted on December 14, 2018, at 8:25 p.m. ET

Texas Attorney General Ken Paxton
Tim Sloan / AFP / Getty Images

Texas Attorney General Ken Paxton

WASHINGTON — A federal judge in Texas ruled Friday night that the Affordable Care Act must be thrown out in its entirety, a decision that could eventually lead to millions of people losing their health insurance.

In a dramatic ruling that flies in the face of what most legal experts had argued, US District Judge Reed O’Connor, who sits in Fort Worth, found that a tweak to the Affordable Care Act that Congress made last year makes a key part of the law unconstitutional, which means all of the hundreds of provisions in the over 900-page law, including popular provisions such as protections for people with preexisting health conditions, are invalid. Seema Verma, administrator for the Centers for Medicaid and Medicare Services tweeted that as the case moves through the courts, current and 2019 coverage will not change.

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.

The ruling goes even further than the Trump administration had argued in declaring the ACA’s Medicaid expansion invalid — which would effectively strip health insurance from millions of low-income people.

California Attorney General Xavier Becerra and a coalition of Democratic state attorneys general who intervened in the case to defend the Affordable Care Act are expected to appeal the ruling, and are likely to seek a delay of the ruling while they take the case up to the US Court of Appeals for the Fifth Circuit. O’Connor did not stay his ruling pending any appeal as part of his Friday night order. A Justice Department spokesperson said they are reviewing the decision.

If O’Connor’s decision ultimately stands, it could throw the insurance markets into chaos and return the US to the days when insurance companies could refuse insurance to people with preexisting conditions or charge them exorbitant premiums. It is the most recent of many legal challenges to the ACA, also known as Obamacare, and will likely be appealed to the Supreme Court.

It is not immediately clear what the fallout from the decision will be. O’Connor did not issue an injunction preventing the dismantling of Obamacare, but the Fifth Circuit could do so at any time. With the open enrollment period for the individual markets ending Saturday, it is functionally too late for insurance companies to deny coverage to people with preexisting conditions for next year. Likely there will be no immediate impact.

President Trump tweeted shortly after the ruling, “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 (McConnell) and Nancy (Pelosi), get it done!”

The White House also celebrated the ruling, but said the law remains in place pending an appeal.

“Obamacare has been struck down by a highly respected judge,” it said in a statement. “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.”

Patrick Sison / AP

Becerra, the California attorney general, called the ruling an assault on the estimated 133 million Americans with preexisting conditions. “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,” said Becerra’s statement.

Meanwhile Texas Attorney General Ken Paxton is declaring victory. Paxton praised the ruling as halting an unconstitutional exertion of power by the federal government. “Our lawsuit seeks to effectively repeal Obamacare, which will give President Trump and Congress the opportunity to replace the failed social experiment with a plan that ensures Texans and all Americans will again have greater choice about what health coverage they need and who will be their doctor,” said Paxton’s statement.

The lawsuit was launched by 20 Republican state attorneys general early this year after Congress effectively eliminated the ACA’s individual mandate. Led by Texas, the states argued this rendered the entire ACA is unconstitutional.

The Republican-controlled Congress attempted to repeal the Affordable Care Act in 2016 but fell short because they could not agree on a replacement to preserve preexisting condition protections. Instead, late last year as part of a larger tax bill they made a much more narrow move by eliminating the individual mandate tax penalty on people who could afford health insurance but choose not to buy it.

Experts debated whether removing the penalty would destabilize markets — so far that has not happened — but the vast majority of the ACA was kept in place. Then in February Texas and the other states came forward with what at first seemed like a novel legal argument — that removing the tax penalty makes the individual mandate unconstitutional, which in turn makes the whole law unconstitutional.

Their case rests on a previous legal challenge that nearly overthrew the ACA. In 2012, the Supreme Court had to decide whether Congress had the power to force people to buy health insurance. The court ruled that it did, sort of. Chief Justice John Roberts, who broke with the court’s conservative wing, found that Congress’s taxation powers allowed it to charge a tax penalty to people who don’t buy insurance.

In a late 2017 tax bill Congress reduced the individual mandate tax penalty from $695 to $0. The Texas lawsuit argued that since legality hinges on taxation powers, removing the tax penalty makes the individual mandate unconstitutional. Further, Texas claimed that the individual mandate is so central to the ACA that the entire law must be struck down.

Typically administrations defend federal laws, but the Trump administration instead sided with the Republican-led states and argued much of the ACA should be struck down. While the administration said some portions should be saved, such as Medicaid expansion, it argued that preexisting condition protections should be eliminated. A group of Democratic attorneys general stepped in to defend the law.

Their case hinged on the question of “severability” — if one part of a law is struck down, does the entire law go with it? Legally, this question is settled. The courts err on the side of keeping laws in place, and in ambiguous circumstances they look to the intent of Congress.

“It goes to the principle of legislative supremacy. The courts are very sensitive to Congress’s supremacy when it comes to legislation,” said Yale Law School professor Abbe Gluck.

Legal experts across the spectrum have blasted the Texas lawsuit because, they say, the intent of Congress was clear: The individual mandate was repealed while the rest of the ACA was left to stand.

To get around this, Texas turned to the Congress of 2010. At the time, Democrats were trying to defend the necessity of the individual mandate and argued it is tied intrinsically to preexisting condition protections. The lawsuit cites this Obama-administration argument as evidence these parts of the bill are necessarily intertwined.

Opponents have dismissed that view as a legal absurdity. Since 2010 the mandate was gradually neutered, first through non-enforcement by the Trump administration, then through legislation. But the markets adjusted and preexisting protections remained the law of the land.

Gluck and other legal experts provided an amicus brief that argues Congress’s intent was clear in 2017 when it preserved the ACA while striking down just the individual mandate. They argue it would be a massive breach of precedent for the courts to effectively overrule elected politicians by looking to a different Congress dealing with different circumstances seven years earlier.

“That’s a big invasion of legislative power. … Rarely would you see one tiny provision of a statute that kills a 2,000-page law,” said Gluck. “Sometimes the rule of law has to win out over politics. I’m sorry to be so dramatic, but this case, it’s something else.”

Larry Levitt, senior vice president for health reform at the Kaiser Family Foundation, said that while the ruling has been stayed for now, it could cause insurers to get nervous as the case makes its way to the Supreme Court. That could lead to insurers leaving marketplaces or preemptively raising premiums to account for risk.

There will also be immediate political fallout. Democrats have repeatedly accused Republicans of trying to take away preexisting condition protections. And though Republicans have denied this, they are now in a position where legislative action may be needed to prevent millions of people losing access to insurance. The ACA cut the uninsured rate for non-elderly adults almost in half.

“If Democrats bring up a bill to affirm the ACA’s preexisting condition protections, it could put Republicans who said they were in favor of those protections on the campaign trail on the hot seat,” said Levitt.

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