Federal district court strikes down Affordable Care Act; No immediate impact as likely appeal process gets underway

On December 14, a judge from the United States District Court for the Northern District of Texas issued a ruling that struck down the Affordable Care Act (ACA). However, this does not have an immediate impact on people’s health insurance coverage or consumer protections. The ruling is not an injunction that would halt enforcement of the law, and as the Department of Health and Human Services clarified in a written statement, the ACA remains the law of the land. An appeal of the ruling is expected.

Background on the lawsuit

The district court’s ruling was on a lawsuit, Texas v. Azar, filed earlier this year by 20 Republican-led states. The plaintiffs argued that because Congress, as part of a tax cut bill signed into law last December, reduced the financial penalties tied to the ACA’s individual mandate to zero dollars, the mandate is unconstitutional and therefore the entire ACA should be invalidated. The Department of Justice (DOJ) took the highly unusual step of refusing to defend the law and agreed with the plaintiffs’ argument that the individual mandate is unconstitutional. While the DOJ did not go as far to agree that the entire ACA must also fall, they did argue that the law’s provisions of guaranteed issue and modified community rating, which protect people’s access to coverage regardless of pre-existing conditions, must be struck down.

In response, Democratic attorneys general from 16 states and the District of Columbia intervened in the lawsuit to defend the ACA. In addition, organizations representing hospitals, physicians, insurers, and patients filed their own briefs in court that disputed the arguments of the plaintiffs and the DOJ. The groups described the devastating impact on individuals and the health care system if the court were to rule in the plaintiffs’ favor.

District court decision

In his ruling, federal district court Judge Reed O’Connor sided with the plaintiffs. Because the U.S. Supreme Court in 2012 found that the individual mandate was constitutional as a tax, and Congress subsequently reduced that tax to zero, Judge O’Connor agreed with the plaintiffs’ argument that the individual mandate is unconstitutional. He also reasoned that because the individual mandate is essential to the other provisions of the ACA and cannot be severed from those provisions, then the rest of the ACA is invalid.

Impact of striking down the entire ACA

If the district court’s ruling were to stand, the effect on the health care system would be immense. The following is just some of the impact:

  • 20 million people who have health insurance through the ACA exchanges or the expansion of Medicaid would lose coverage.
  • People with pre-existing conditions could once again be denied coverage or be charged much more in premiums.
  • Plans would no longer be required to cover essential health benefits such as maternity care, mental health services, and prescription drugs.
  • Annual and lifetime dollar limits could be imposed on coverage.
  • There would be no cap on out-of-pocket costs for consumers.
  • Adult children up to age 26 could no longer stay on their parents’ insurance.
  • The requirement to cover preventive services without cost sharing would be eliminated.
  • Payment reforms in the Medicare program would be rescinded.
  • The Centers for Medicare and Medicaid Services (CMS) Innovation Center, which was established through the ACA to test innovative payment and service delivery models that improve quality of care and reduce costs, would be eliminated.

Next Steps

The defendant states have vowed to appeal the ruling, which would occur in the U.S. Court of Appeals for the Fifth Circuit. Democrats in the House of Representatives, who will be in the majority after the new year, have stated that they will move quickly to have the House general counsel formally intervene in the lawsuit on the chamber’s behalf. After a ruling from the court of appeals, the next appeal would occur in front of the U.S. Supreme Court, if they agree to hear the case. In the meantime, the ACA remains the law of the land as the appeals process works its way through the court system.

Posted: | Author: AKF Staff