March 26, 2019

The entire ACA should be struck down, DOJ argues in ‘stunning’ reversal

Daily Briefing

    The Department of Justice (DOJ) in a legal filing Monday said a federal appeals court should strike down the entire Affordable Care Act (ACA) as unconstitutional, changing its previous position that the court should only strike down parts of the law.

    Your cheat sheets for understanding health care's legal landscape

    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 attorneys general (AGs) from 20 Republican-led states in February 2018 filed a lawsuit in the U.S. District Court in the Northern District of Texas, in which they noted that because a 2017 tax reform law set the tax penalty to $0, the individual mandate could no longer be considered a valid use of Congress' taxation authority. Further, they argued that without the individual mandate, the entire health reform law is unconstitutional.

    DOJ, which has declined to defend the ACA in the suit, in an initial brief largely agreed with the 20 states challenging the ACA's constitutionality, saying the individual mandate is no longer constitutional because the tax penalty was eliminated in 2019. But unlike the GOP states, DOJ said such a ruling should not invalidate the entire law.

    Instead, DOJ had argued the courts should strike down only some of the ACA's consumer insurance protections, such as 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 its limits on how much insurers can charge people based on gender and age.

    U.S. District Judge Reed O'Connor in December 2018 ruled that eliminating the individual mandate's tax penalty rendered the mandate unconstitutional. He also ruled that the ACA cannot be severed from the mandate, meaning the entire ACA must be struck down. O'Connor wrote in his ruling, "[T]he individual mandate 'is so interwoven with [the ACA's] regulations that they cannot be separated. None of them can stand.'"

    Democratic AGs from 18 states and the District of Columbia, which are defending the ACA in the case, appealed O'Connor's ruling to the 5th U.S. Circuit Court of Appeals and asked that the case be expedited. DOJ had appealed O'Connor's ruling as well, seeking to narrow its scope.

    DOJ changes course on appeal

    But DOJ changed course in its latest legal filing, and now is urging the 5th U.S. Circuit Court of Appeals to affirm O'Connor's ruling and invalidate the entire ACA. DOJ in the filing said it no longer is "urging that any portion of the district court's judgment be reversed."

    Kerri Kupec, a DOJ spokesperson, said the department "has determined that the district court's comprehensive opinion came to the correct conclusion and will support it on appeal." DOJ in Monday's court filing said it plans to submit a brief in support of the 20 Republican-led states that are challenging the ACA's constitutionality.

    The Democratic AGs who are defending the law in the case will have 21 days to respond to DOJ's brief once it is filed.

    Democratic AGs, House file opening briefs defending the ACA

    In their opening brief also filed Monday, the Democratic AGs argued that there is no legal basis for the entire ACA to be struck down, and that the AGs from the 20 Republican-led states do not have legal standing in the case.

    The House, which also is helping to defend the ACA in the case, in a separate opening brief made similar arguments.

    Potential implications

    The U.S. health care system likely would experience major disruptions if the appeals court affirms O'Connor's ruling and strikes down the entire ACA. Millions of U.S. residents could lose their health care coverage because the ACA's exchanges and Medicaid expansions would be eliminated. Striking down the law also would affect a number of health care policies, including payment reforms aimed at addressing high drug costs and the approval pathway for biosimilars.

    However, legal experts have said they do not expect DOJ's new filing will have an effect on how the appeals court will rule on the case.

    Tim Jost, an emeritus professor at the Washington and Lee University School of Law, said, "I can't believe that even the 5th Circuit would" affirm O'Connor's ruling, adding, "It would be like invalidating the Interstate Highway System, causing chaos on an unimaginable scale. It's conceivable that the entire Medicare payment system would collapse."

    Nicholas Bagley—a professor of law at the University of Michigan, who called DOJ's latest filing "stunning" and "jaw-dropping"—said, "The sheer irresponsibility of the notion that you would rip the [ACA] out of the American health care system without having any prospect for a transition plan, or much less a replacement, is extraordinary." Bagley said he expects the Supreme Court would intervene in the case if the appeals court affirms O'Connor's decision, but would decline to hear the case if the court reverses O'Connor's ruling.

    House Speaker Nancy Pelosi (D-Calif.) in a tweet posted Monday wrote that Democrats will "fight relentlessly" to preserve "affordable, dependable health care" (Baker, Axios, 3/25; Baker, "Vitals," Axios, 3/26; Stanley-Becker, "Morning Mix," Washington Post, 3/26; Luthi, Modern Healthcare, 3/25; Lotven, Inside Health Policy, 3/25 [subscription required]; Diamond, "Pulse," Politico, 3/26; Bagley, Incidental Economist, 3/25).

    Cheat sheet: What you need to know about the ACA

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    The Patient Protection and Affordable Care Act, otherwise known as the ACA, is the comprehensive health care reform bill passed by Congress in March, 2010. The law reshapes the way health care is delivered and financed by transitioning providers from a volume-based fee-for-service system toward value-based care.

    Download the ACA cheat sheet to get a quick overview of this significant U.S. health care legislation.

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