U.S. District Court Rules ACA Unconstitutional; No Immediate Changes for Employers

U.S. District Judge Reed O’Connor for the Northern District of Texas ruled on Friday that the Affordable Care Act (ACA) is unconstitutional, in its entirety.

A final ruling, however, may be months or even years away. It is important to keep in mind that the Individual Mandate is still in effect for 2018 and does not end until January of 2019. Thus, individuals must still have individual health coverage in order to avoid being penalized.  The other provisions of the ACA, such as the Employer Mandate, continue unchanged until there is an ultimate determination on this controversial and polarizing law.

White House spokesperson Sarah Sanders has stated that “pending appeals, the law remains in effect.” Thus, individuals who recently enrolled in Obamacare insurance programs may (at least for now), be confident that their coverage is unaffected.

The ruling is based on a suit that was filed in February 2018 in the Northern District of Texas.

Friday’s ruling calls into question the legality of the ACA, arguing in part, that the law is unconstitutional since Congress has repealed the tax penalties on individuals who do not have health insurance, also known as the Individual Mandate. The Individual Mandate has long been perceived as the heart of the ACA, and many argue that once that feature is declared unconstitutional, the remainder of the ACA must also be deemed unconstitutional. Legal scholars from both parties have questions as to whether certain portions of the ACA can be severed from the whole and still survive. This legal concept is known as ‘severability’.

This latest ruling traces a portion of its argument to the U.S. Supreme Court’s ruling in 2012 by Chief Justice John Roberts (the GOP swing vote thatupheld the ACA in 2012). That court held that the penalty/tax created for individuals who do not maintain health insurance on themselves is indeed constitutional because Congress does have the power to impose a tax on those without health insurance.

Friday, Plaintiff’s Attorney General Ken Paxton argued that, with the elimination of the health insurance requirement, there is no longer a tax, and therefore the law loses its constitutionality. The theme from the 2012 ruling pertaining to the taxing powers of the government carried over to Friday’s ruling where Judge Reed O’Connor said that the individual mandate requiring people to have health insurance “can no longer be sustained as an exercise of Congress’s tax power.” The judge also concluded that this insurance requirement “is essential to and inseverable from the remainder of the ACA.”

What are the Chances of an All-Out Toppling of the ACA?

Choosing a winner in this battle royale won’t be easy. Many scholars, conservatives and liberals alike, believe that since the authors of the law drafted a severability clause — which holds that killing one part of the law does not necessarily kill the entire law — that it opens the door for this latest ruling to be struck down. Nevertheless, severability clauses will occasionally state that some provisions to the contract or law are so essential to the contract’s purpose and the framer’s intent, that if they are illegal or unenforceable, the contract will be voided.

The plaintiffs, on the other hand, have been fortunate in getting U.S. Justice O’Connor, historically an Obamacare opponent, on their side. The battlefield has been set with various issues yet to be resolved including: Medicaid expansion, individual and employer mandates, pre-existing conditions, severability, and funding.

The case will likely be appealed to the Fifth Circuit Court of Appeals in New Orleans, LA. From there, most legal experts expect it to be referred to the Supreme Court where Trump nominated Supreme Court Justice, Brett M. Kavanaugh will get his first opportunity to take part in arguably one of the most important cases of the 21st century.

While both sides of the aisle gear up for this battle of the ages, one thing is still certain, the ACA is still the law of the land until further notification.


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