Obamacare Fire Alarm: Federal District Judge in Texas Rules ACA Unconstitutional
Mike Mish Shedlock
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
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
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.
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