Federal Appeals Court Strikes Down ACA Individual Mandate

This story has been updated.

A federal appeals court today struck down the individual mandate—the heart of the Affordable Care Act (ACA) that requires everyone to have health coverage and lays the groundwork for a risk pool that is more balanced between the sick and the healthy, the young and the old.

However, the appeals panel sent the case back to the federal district court in Texas to determine whether other parts of the law, such as provisions to require plans to cover pre-existing conditions, are constitutional and can exist without the mandate. If the entire ACA was ultimately overturned, up to 20 million Americans could lose health coverage.

The appellate ruling comes the day that open enrollment ended on the exchanges created under the ACA. The December 15 deadline for coverage in 2020 was extended by 3 days due to weekend glitches that kept some from completing applications. The decision is sure to ignite more discussion about healthcare into the Democratic primary for the 2020 presidential contest, as the focus could shift not to expanding coverage through policies such as Medicare for All but to protecting tenets that many have come to expect, including coverage for young adults who can currently stay on their parents’ health plans through age 26.

The appellate judges agreed with the plaintiffs, led by Texas Attorney General Ken Paxson and joined by his counterparts for other Republican-leaning states, that the individual mandate cannot exist without the tax penalty eliminated under President Donald Trump's 2017 tax cut package. Democratic states opposed the challenge, saying that reducing the tax penalty to zero did not eliminate the requirement.

In a 2-1 ruling, the panel called on the district court to review the ACA with "a finer-toothed comb" and "conduct a more searching inquiry into which provisions of the ACA Congress intended to be inseverable from the individual mandate.''

"We do not hold forth on just how fine-toothed that comb should be—the district court may use its best judgment to determine how best to break the ACA down into constituent groupings, segments, or provisions to be analyzed," the ruling states. "Nor do we make any comment on whether the district court should take into account the government’s new posture on appeal or what the ultimate outcome of the severability analysis should be."

In a measure of just how disruptive a full repeal of the ACA could be, President Donald Trump issued a statement seemingly at odds with the decision his own Justice Department made more than a year ago, when it shifted from opposing only the individual mandate and core consumer protections.

"Today’s decision," Trump said, "confirms what I have said all along: that the individual mandate, by far the worst element of Obamacare, is unconstitutional.

This decision will not alter the current healthcare system. My administration continues to work to provide access to high-quality healthcare at a price you can afford, while strongly protecting those with pre-existing conditions. The radical healthcare changes being proposed by the far left would strip Americans of their current coverage. I will not let this happen. Providing affordable, high-quality healthcare will always be my priority. They are trying to take away your healthcare, and I am trying to give the American people the best healthcare in the world."

Paxson said in a statement:

"I applaud the Fifth Circuit’s decision, which reassures the American people that the legal system can be held to its word. As the court’s opinion recognized, the only reason the Supreme Court upheld Obamacare in 2012 was Congress’ taxing power, and without the individual mandate’s penalty that justification crumbled. The Fifth Circuit correctly held that the individual mandate is unconstitutional, and we look forward to the opportunity to further demonstrate that Congress made the individual mandate the centerpiece of Obamacare and the rest of the law cannot stand without it.”

In Texas v. the United States, the Trump administration’s Justice Department changed course from its original stance to argue that the entire law is unconstitutional. This puts the administration in the position of opposing a law that includes the creation of the Center for Medicare and Medicaid Innovation (CMMI), upon which the administration has built many of its cost-control programs in oncology care delivery and a highly touted program in kidney care designed to bring dialysis into the home. CMMI authorization is also behind some of the Trump administration’s efforts to control drug costs, an important priority of HHS Secretary Alex Azar.

Fear from voters of a complete rollback of the ACA, including coverage for pre-existing conditions, was a factor in the Republicans’ loss of control of the House of Representatives in 2018.

A leading Democrat weighed in after the ruling.

“Make no mistake, this has been Republicans’ health care plan all along,” said Representative Frank Pallone, D-New Jersey, chairman of the House Energy and Commerce Committee. “There is no secret Republican plan to protect the hundreds of millions of Americans that will be harmed should the rest of the ACA be struck down by the lower court. Their only goal is to eliminate the ACA and the consumer protections it provides, sending us back to the days when insurance companies could freely discriminate against people because they didn’t think they were healthy enough.

“The good news is the fight isn’t over,” Pallone said. “Democrats will continue to fight this meritless decision. The health and wellbeing of millions of Americans is on the line and we will keep fighting to protect their health care.”

Patrice A. Harris, MD, MA, president of the American Medical Association, noted that the appellated court decision "underscores that the district court’s initial ruling striking down the entire ACA was made without appropriate analysis, ignoring the extensive reach of the law and its many provisions that have no relationship to the individual mandate.."

“In the meantime," she said, "the benefits and protections enacted in the ACA are still in place and the AMA encourages uninsured individuals and families in the handful of states where enrollment is still open to seek health insurance coverage offered by the ACA marketplaces.”