Federal Judge Strikes Down Affordable Care Act

This story has been updated.

A federal judge in Texas ruled that the Affordable Care Act (ACA)'s individual coverage mandate is unconstitutional and that the rest of the law must also fall.

The decision in the case, Texas v Azar, was made in favor of the 20 Republican-led states that sued the federal government over the constitutionality of the ACA, or Obamacare, and it throws into question the very notion of pre-existing condition protections and other facets of the ACA, such as the expansion of health coverage through Medicaid in some states. Those healthcare issues played a key role in the outcome of midterm elections in November.

The decision, coming on the eve of the end of open enrollment of the ACA in most of the country, represents a victory for the Trump administration, which tried and failed to repeal the ACA in Congress. Instead, it has been trimming the protections for pre-existing conditions, which are a key part of the ACA, even while the president and health officials claimed they were still supported.

The court ruling does not change anything immediately about healthcare coverage through the individual markets and open enrollment continues through the end of December 15.

But the decision by District Court Judge Reed O’Connor likely sets up a showdown in the Supreme Court, as Democrats, who will retake the House of Representatives in January, have pledged to protect the law.

California Attorney General Xavier Becerra, who led the 16 Democratic states that defended the law, called the decision "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.”

He vowed that Democratic attorneys general would appeal the ruling to the US Court of Appeals 5th Circuit. If the appeals court allows the lower court ruling to stand, it would be heard by a Supreme Court remade by President Trump, who appointed conservative jurist Brett Kavanaugh.

Plaintiffs led by Texas Attorney General Ken Paxton tied their argument to the Supreme Court’s 2012 ruling that upheld the ACA, in which Chief Justice John G. Roberts Jr wrote that the penalty for Americans who do not carry health insurance is constitutional because Congress has the power “to impose a tax on those without health insurance.”

But that tax was removed as part of the 2017 tax overhaul plan that Congress passed and President Trump signed a year ago. The penalty will be eliminated in January, although some Republicans have discussed passing legislation to require coverage for pre-existing conditions. Polls have shown this is the most popular part of the ACA, after the provision that requires insurers to allow young adults to stay on family plans until they are 26 years of age.

In a statement, Paxton cheered the ruling. “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.”

In his decision, O'Connor noted the relationship between the individual mandate and the ACA. “Finally, Congress stated many times unequivocally—through enacted text signed by the President—that the Individual Mandate is ‘essential’ to the ACA. And this essentiality, the ACA’s text makes clear, means the mandate must work ‘together with the other provisions’ for the Act to function as intended.”

When Congress revisited the ACA in 2017, it took out the individual mandate penalty without expressly overturning the rest of the law, including protection for pre-existing conditions. But the ACA did more than just protect consumers with pre-existing conditions, set 10 essential health benefits for insurance plans, or allowed young adults to remain on their parents’ insurance.

It also allowed states to expand Medicaid, if they chose, to cover more of the working poor. That helped push the nation’s uninsured rate down from 17% in 2013, before the ACA was implemented, to an all-time low of 10% in 2016. The reductions were even more striking in states that expanded Medicaid.

Of note, while O'Connor's ruling discusses the connectedness of the ACA's parts, Medicaid expansion does not depend in any way on the individual mandate, and voters in Idaho, Nebraska, and Utah approved expansion in the November election.

O'Connor commented on the intent of Congress in the separate actions: “In some ways, the question before the Court involves the intent of both the 2010 and 2017 Congresses. The former enacted the ACA. The latter sawed off the last leg it stood on. But however one slices it, the following is clear: the 2010 Congress memorialized that it knew the Individual Mandate was the ACA keystone,” the judge wrote.

In a joint statement, health advocacy groups— the American Cancer Society Cancer Action Network, American Diabetes Association, American Heart Association, American Lung Association, and National Multiple Sclerosis Society—blasted the ruling and noted the effect that the ACA has had on the uninsurance rate. The groups, which filed an amicus brief to defend the law, said it “improved patients’ ability to prevent, detect and treat their disease.”

“This decision threatens to resurrect barriers to health care for people with serious illnesses including cancer, heart disease, stroke, lung disease, diabetes and those with neurological conditions. If the ruling stands, anyone with a pre-existing condition could be charged more for health coverage or denied access to coverage altogether,” the statement said. “The court should have respected the will of Congress, instead of ruling to invalidate the law at the expense of the 27 million Americans who will lose their health care by 2020, according to Congressional Budget Office estimates.”

America’s Health Insurance Plans (AHIP), which represents many insurers, also called the decision “misguided and wrong.”

Other groups criticizing the decision included the American College of Physicians, AARP, and the American Public Health Association.

US Representative Frank Pallone, D-NJ, who is poised to become chair of the House Energy and Commerce Committee in January, criticized the ruling, which came the day before the deadline for open enrollment on the exchanges. "This reckless court decision endangers the lives of millions of Americans who are going to lose their healthcare. It is an ideological decision in a case that has no legal merit," said Pallone, an author of the 2010 landmark law, in a joint statement with other ranking Democrats on key committees with jurisdiction over healthcare.