Does the tax reform law invalidate the ACA? 20 GOP states say it does.

A group of 20 Republican-led states have filed a new lawsuit against the federal government claiming the Affordable Care Act's (ACA) individual mandate, and therefore the entire law, is unconstitutional.

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The Supreme Court in 2012 upheld the ACA's individual mandate, ruling that although Congress could not force U.S. residents to purchase insurance, lawmakers could impose a tax penalty on individuals who did not enroll in health coverage.

Lawsuit details

The states, led by Texas AG Ken Paxton (R) and Wisconsin AG Brad Schimel (R), filed the new lawsuit in the U.S. District Court in the Northern District of Texas. They note in the lawsuit that a recently enacted tax reform law eliminates the individual mandate's tax penalty starting in 2019 by setting the penalty at $0. The AGs argue that by zeroing out the tax penalty, the tax reform law has rendered the individual mandate, and by extension the entire health reform law, unconstitutional.

The states note that the tax reform law "eliminated the tax penalty of the ACA, without eliminating the mandate itself." The lawsuit argues, "What remains, then, is the individual mandate, without any accompanying exercise of Congress' taxing power, which the Supreme Court already held that Congress has no authority to enact."

The lawsuit also argues, "Once the heart of the ACA—the individual mandate—is declared unconstitutional, the remainder of the ACA must also fall." According to the lawsuit, the ACA does not include a so-called "severability clause," that would allow the rest of the law to stand if part of the law is struck down. As a result, the lawsuit claims that if part of the ACA is invalidated, the whole law should be invalidated.

The states also claim that the ACA has harmed states by undermining their sovereignty. In addition, the lawsuit states that several health insurers have stopped selling coverage in their individual markets because of the ACA, resulting in state residents having limited health insurance options. Further, the states claim that the ACA's individual mandate has encouraged more U.S. residents to enroll in Medicaid and CHIP, which ultimately shifted more costs onto states.

The states involved in the lawsuit are: 

Comments

Paxton in a statement said, "The U.S. Supreme Court already admitted that an individual mandate without a tax penalty is unconstitutional." He added, "With no remaining legitimate basis for the law, it is time that Americans are finally free from the stranglehold of Obamacare, once and for all."

The Department of Justice did not immediately respond to a request for comment regarding whether the federal government plans to defend the ACA in court, according to Reuters (Baker, "Vitals," Axios, 2/27; Beech, Reuters, 2/26; Haberkorn, Politico, 2/26; Teichert, Modern Healthcare, 2/26; States' lawsuit, accessed 2/27).

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