Federal court rules Obamacare unconstitutional — but the law stands for now

A federal judge in Texas has ruled the Affordable Care Act unconstitutional, finding that the law cannot stand now that Congress has rolled back the mandate that everyone carry health insurance or pay a fine.

The new ruling poses a significant threat to the Affordable Care Act’s most popular and most sweeping health insurance reforms. If affirmed at higher courts, it could roll back Obamacare’s ban on preexisting conditions. Insurers would once again be able to charge sick patients higher premiums.

The Trump administration had partially supported this lawsuit, filing a brief asking the court to overturn Obamacare’s ban on preexisting conditions.

“The Court finds the Individual Mandate ‘is essential to’ and inserverable from ‘the other provisions’ of the ACA,” judge Reed O’Connor wrote in a late Friday ruling.

O’Connor’s decision will almost certainly be appealed up to the Fifth Circuit Court of Appeals, which could ultimately send the case to the Supreme Court. It is not entirely clear yet what the ruling will mean for current Obamacare enrollees — or those currently signing up, as the program’s open enrollment period ends at midnight on Saturday.

Legal experts on the left and the right believe the arguments being made by Republican-led states are, on their face, uncompelling and unlikely to succeed in overturning the Affordable Care Act.

At the same time, there is a history of lawsuits that most legal experts thought were unpersuasive nonetheless putting ACA in mortal danger — first the lawsuit against the individual mandate and then the challenge to insurance subsidies.

With this first victory, it becomes a more real possibility that this lawsuit could end up in that category.

Twenty state attorneys general filed this lawsuit against Obamacare in early 2018. They essentially make a two-part argument for why Obamacare is unconstitutional in the wake of Congress’s decision to end the law’s mandate to carry health insurance.

The first part of their argument is over the individual mandate itself. Remember, the 2017 tax bill got rid of the financial penalties for remaining uninsured. But it didn’t totally kill off this part of Obamacare. The mandate to carry health insurance actually still stands as federal law — there just isn’t any fine for those who decide not to comply.

The Supreme Court specifically upheld the individual mandate as a tax. If there the mandate doesn’t have a penalty, the attorneys general argue, then it’s no longer a tax — and thus unconstitutional.

On its own, a court decision that declares the individual mandate unconstitutional wouldn’t be a big deal for Obamacare. The financial penalty is, after all, already gone.

But the state attorneys general take their case a step further. They argue that, if the individual mandate is declared unconstitutional, than the rest of the law needs to fall along with it. Or, as the lawsuit itself puts it: “Once the heart of the ACA—the individual mandate—is declared unconstitutional, the remainder of the ACA must also fall.”

Essentially, the state attorneys general are arguing that the individual mandate isn’t severable from the rest of the law. If the court finds the mandate unconstitutional, then the rest of the law — everything from protections for preexisting conditions to the Medicaid expansion required calorie labeling on menus — has to go down with it.

Usually, a presidential administration defends current law, but the Trump administration took a different approach in this case. It agreed with the conservative states that the mandate and, with it, the law’s rules that prohibits insurers from denying people health insurance or charging them higher rates, should be found unconstitutional.

However, the Justice Department lawyers didn’t go quite as far as the state attorneys general. They told the court that the rest of the law could stand, including the law’s massive expansion of Medicaid to millions of the nation’s poorest citizens.

If the Trump administration’s argument were to prevail, insurers could once again be able to flat-out deny Americans insurance based on their health status. No amount of federal subsidies would protect them. Medicaid expansion would remain, but the private insurance market would no longer guarantee coverage to every American.

Because the Trump administration is not defending the Affordable Care Act in this case, a group of pro-Obamacare attorneys general from 16 states and the District of Columbia swooped in to take over the case.

They argue that Congress clearly understood what it was doing when it reduced the individual mandate penalty to zero dollars. Their intent was to get rid of the penalty but leave the rest of the law standing, and that the courts ought to respect that.

Most legal experts, it’s worth noting, are skeptical of the arguments made in this case — even those that have worked on other legal challenges to the Affordable Care Act. They say that it willfully ignores the intent of the 2017 Congress, which zeroed out the individual mandate penalty without touching the rest of the Affordable Care Act.

”They are asking the court to evaluate the current law on the basis of what the law used to be,” Jonathan Adler, a law professor at Case Western University who supported previous Obamacare challenges, has told Vox. “That whole analysis just doesn’t apply or work anymore.”

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