June 8, 2018

DOJ won't defend ACA in latest challenge. What does that mean?

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    The Department of Justice (DOJ) in a brief filed in a federal court Thursday said it will not defend the Affordable Care Act (ACA) in a lawsuit claiming the ACA's individual mandate, and therefore the entire law, is unconstitutional.

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    Separately, 16 states and the District of Columbia, which were granted legal standing to intervene in the case, on Thursday filed a brief defending the ACA.

    Lawsuit details

    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.

    But a group of 20 Republican-led states, led by Texas Attorney General (AG) Ken Paxton (R) and Wisconsin AG Brad Schimel (R), in February filed a lawsuit in the U.S. District Court in the Northern District of Texas, in which they claimed that a recently enacted tax reform law eliminates the individual mandate's tax penalty starting in 2019 by setting the penalty U.S. residents must pay for remaining uninsured under the ACA at $0. The AGs in the suit argued 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 in the lawsuit noted that the tax reform law "eliminated the tax penalty of the ACA, without eliminating the mandate itself." The lawsuit argued, "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 argued, "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 claimed that if part of the ACA is invalidated, the whole law should be invalidated.

    The states also claimed that the ACA has harmed states by undermining their sovereignty. In addition, the lawsuit stated 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 claimed 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.

    DOJ largely sides with states challenging ACA's constitutionally

    DOJ in the brief said it will not defend the ACA in the suit, and asked the federal court to strike some of the law's key provisions, the Wall Street Journal reports.

    DOJ in the brief largely agreed with the 20 states challenging the ACA's constitutionality, saying the individual mandate will no longer be constitutional once the tax penalty is eliminated in 2019. DOJ also argued that, as a result of the individual mandate no longer being constitutional as of 2019, some of the ACA's consumer insurance protections also will not be valid, according to the Washington Post. In particular, DOJ in the brief said the ACA's ban on insurers denying people health coverage or charging them higher premium rates based on pre-existing medical conditions, as well as limits on how much insurers can charge people based on gender and age, would no longer be constitutional. DOJ in the brief stated, "This court should hold that the ACA's individual mandate will be unconstitutional as of January 1, 2019, and that the ACA's guaranteed-issue and community-rating provisions are inseverable from the mandate."

    However, DOJ in the brief said many of the ACA's other provisions could stand without the individual mandate, because certain provisions can be deemed legally distinct from the individual mandate. For example, DOJ in the brief did not argue that the ACA's Medicaid expansions should be suspended, the Post reports.

    DOJ in the brief also disagreed with the states' request that the court issue a preliminary injunction to entirely suspend the ACA as the case is heard. DOJ in the brief said the individual mandate will become unconstitutional in 2019, and, as such, "the injury imposed by the individual mandate is not sufficiently imminent" to suspend the law at this time.

    Attorney General Jeff Sessions in a letter sent Thursday to House and Senate leaders wrote that President Trump approved DOJ's decision to not defend the ACA. Sessions in the letter acknowledged that it is uncommon for DOJ to choose to not defend an existing law, but noted that it is not unprecedented. DOJ "in the past has declined to defend a statute in cases in which the president has concluded that the statute is unconstitutional and made manifest that it should not be defended, as is the case here," he wrote.

    According to the Post, three DOJ attorneys—Eric Beckenhauer, Rebecca Kopplin, and Joel McElvain—withdrew from the case before the department filed the brief. Nicholas Bagley, a University of Michigan law professor, said, "You take your name off a brief because you believe the arguments being made are not good-faith arguments." 

    Reaction

    DOJ's move does not have any immediate effects on any ACA provisions, but the Post reports that it does place the ACA "on far more wobbly legal footing in the case," and "raises the possibility that major parts of the law could be struck down." According to Politico's "Pulse," the case still must move through the courts, and many experts have said they do not believe the 20 states challenging the ACA will prevail in the lawsuit.

    California AG Xavier Becerra (D), who has filed a motion in the case in support of the ACA, said, "The … lawsuit is based on a dubious legal claim with the sole goal of stripping Americans of their health care."

    Don Verrilli, who served as solicitor general under former President Barack Obama's administration and successfully defended the ACA in the 2012 Supreme Court case, criticized DOJ's decision, saying the department "has a duty to defend federal laws when reasonable arguments can be made in defense of the law."

    Bagley in a blog post expressed similar criticism, writing, "If [DOJ] can just throw in the towel whenever a law is challenged in court, it can effectively pick and choose which laws should remain on the books." He continued, "That's not a rule of law I recognize. That's a rule by whim. And it scares me."

    Robert Henneke of the Texas Public Policy Foundation called the brief "a death blow to the ACA" that "shows … Trump [is] standing by his word to repeal ObamaCare even as Congress remains gridlocked and fails to act."

    Timothy Jost, a professor emeritus at Washington and Lee University, said DOJ's stance "would be breathtaking in its effect," adding, "Of all of the actions the Trump administration has taken to undermine individual insurance markets, this may be the most destabilizing."

    Jost noted that DOJ's brief comes at a time when insurers participating in the exchange markets have to file premium rates for 2019 individual health plans with state regulators, and raises questions about whether insurers will have to set equal prices for all their customers, including those with pre-existing conditions. He said, "What's an insurer that is setting rates now supposed to do, because the court will not have a decision until early summer or late fall."

    Larry Levitt, senior vice president for health Reform at the Kaiser Family Foundation (KFF) and senior advisor to KFF's president, said, "Any time there's uncertainty about the future, insurers are going to build extra cushion into their premiums to make sure they get revenues while they can" (Armour, Wall Street Journal, 6/7; Goldstein, Washington Post, 6/7; Beech/Lambert, Reuters, 6/7; Scott, Vox, 6/7; Diamond, "Pulse," Politico, 6/8).

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