Obamacare Fire Alarm: Federal District Judge in Texas Rules ACA Unconstitutional

Mike Mish Shedlock

A federal judge struck down Obamacare in entirety now that Congress has eliminated a penalty for those who opt out.

In 2017 Congress approve and Trump signed a measure that would eliminate the penalty for not buying health insurance. That measure will start in 2019.

The Supreme court ruled 5-4 in 2012 that Obamacare was legal. One of the reasons the court cited was the penalty was a tax. Now that the tax is gone, U.S. District Judge Reed O’Connor, an appointee of President George W. Bush, ruled that the entire Obama-era health law is invalid.

The ruling sides with 20 Republican states that brought a lawsuit seeking to strike down the ACA.

Trump Chimes In

Unconstitutional Disaster

Five Alarm Fire

The Wall Street Journal reports Federal Judge Rules Affordable Care Act Is Unconstitutional Without Insurance-Coverage Penalty

“This is a five alarm fire—Republicans just blew up our health care system,” Sen. Chris Murphy (D., Conn.) said in a statement. “The anti-health care zealots in the Republican Party are intentionally ripping health care away from the working poor, increasing costs on seniors, and making insurance harder to afford for people with preexisting conditions.”

The ruling, while invalidating the law, didn’t immediately block enforcement of the ACA, a situation that could trigger widespread uncertainty in the near term. Some states could stop enforcing or administering the law, including Medicaid expansion, starting Jan. 1, when the elimination of the penalty takes effect.

Democratic states that had intervened in the lawsuit said they would quickly seek an appeal to the Fifth U.S. Circuit Court of Appeals. Ultimately, the case could reach the Supreme Court. The decision Friday thrust the future of the 2010 law on unstable terrain just before the busiest final days for sign-ups during the ACA’s open-enrollment period.

“It will destabilize health-insurance coverage by rolling back federal policy to 2009,” said Barbara McAneny, president of the American Medical Association.

A deeply divided Supreme Court upheld the ACA in 2012, treating the insurance penalty as a tax and ruling that such a tax was within Congress’s power.

With the tax no longer in place starting in 2019, the insurance mandate can no longer be upheld on that basis and is now unconstitutional, Judge O’Connor said Friday. And because the mandate is so central to how the entire ACA operates, the whole law must fall, the judge said.

Gaming the Outcome

Also consider What ACA Ruling May Mean for Millions of Americans’ Health Coverage.

These things are difficult to predict, but the confirmation of Justice Brett Kavanaugh in October won’t necessarily determine the outcome of this case if it reaches the high court. The man Justice Kavanaugh replaced, Justice Anthony Kennedy, was the swing vote in so many high court cases, but not those on the ACA. He was a dissenter who wanted to strike down the health-law in 2012 but was with the 6-3 majority in upholding the ACA insurance subsidies in 2015.

A key factor is that Chief Justice John Roberts, a conservative, wrote both opinions upholding the ACA. He would almost surely remain the central figure if this case reached the Supreme Court. If the chief justice believed the Texas ruling was incorrect, the court would likely have the votes to again uphold the health law, even if Justice Kavanaugh were to conclude that the ACA should be invalidated.

My Guess

I suspect Obamacare would survive a supreme court challenge by a 5-4 margin if the case gets there, which itself may be a tossup.

If the Appeals Court rejects the Texas District decision, I believe the Supreme Court will not hear the case, ending the matter ... sort of.

Elimination of the mandate forcing people to buy insurance will eventually make Obamacare so unwieldy that Congress will have to opt for a complete overhaul.

So, even if the case gets to the Supreme Court, the Court may well decide on the premise "You broke it, you fix it" even if they are highly unlikely to phrase it precisely that way.

Yet, Democrats will be in control of the House making the entire setup extremely contentious.

Mike "Mish" Shedlock

Comments (36)
No. 1-11
Curious-Cat
Curious-Cat

The rule requiring coverage of pre-existing conditions was always the Achilles heel of ACA. Eliminating penalties for non-participation (as a proxy for requiring all to participate) makes ACA eventually unsustainable. It's a dead duck without significant modification.

wootendw
wootendw

"...the confirmation of Justice Brett Kavanaugh in October won’t necessarily determine the outcome of this case..."

What about Trump's other SCOTUS appointee, Neil Gorsuch? Anyone know where his humble opinion might lie?

Ted R
Ted R

Exactly.

Top-GUN
Top-GUN

If it's Required to cover Pre Existing Conditions it's not insurance it's Welfare.. You can't buy car insurance for existing dents and damage. You can't buy house insurance for a house that's on fire.... The Only Problem with Health Care in our Country is to much government, and BTW, all federal meddling in health care is Un Constitutional...

2banana
2banana

You like your doctor...you can keep your doctor.

You premiums will go down by average of $2500.

We have to pass obamcare to see what is in it.

A "lack of transparency" and the "stupidity of the American voter" - we Grubered some folks


Corruption at it finest - all to buy the votes of the free sh*t army.

hmk
hmk

It curious that countries with universal healthcare spend about half per capita as the US with much better health outcomes. We spend about 19% of GDP while Canada spends about 9-10%. We have the worst health outcomes; rank dead last. We are behind former soviet block countries and even Ecuador. WTF.

Realist
Realist

Hmk is correct. The US pays twice as much as other developed countries and has much poorer results. Eventually the US will arrive at a single payer system, but not until they spend trillions trying everything else.

Zardoz
Zardoz

This plan to sabotage the ACA might have worked, if not for the dumpster fire in the Whitehouse. People are mad enough at the depravity the republicans are enabling that the democrats will have full control of the government in 2020, and the ACA will be Scrapped in favor of single payer. Trump may be playing 4d chess, but he’s getting beat badly. Pelosi will continue to spank him in public, if he has the courage to show himself anywhere but one of his staged rallies.

sunny129
sunny129

One can plan to have 2 out of 3 (Cheap, Pronto & Best) but NOT all the THREE!

American public should approach this pragmatically but not with dreamy expectations!

jackn303
jackn303

Obama Care is already disintegrating. My son is an insurance specialist. He is directing families with no preexisting conditions insured through Obama Care to become a member of an association supporting individual insureds at half the premium. Already the Obama Care site in Connecticut has had another 50% increase in premiums

her_hpr
her_hpr

The 'problem' with that stance in what do you do with those that do not have the necessary resources to pay for care . . . unless you let these persons 'die in the street' other people will have to pay for their care . . . and making that payment dependent on voluntary charity makes it so the only photogenic with a good story will be able to raise the money . . .


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