On December 18, 2019, three judges from the Fifth Circuit Court of Appeals in New Orleans issued a decision in the case of Texas v. United States (Texas) and held that the Affordable Care Act (ACA) individual mandate is unconstitutional. The courts are now further considering that question and also the much broader question of whether the entire ACA should be declared unconstitutional.
The invalidation of the entire ACA would have far-reaching implications for most U.S. citizens, including Kansans, who obtain health care through Medicaid and the Children’s Insurance Program (CHIP), Medicare and private health insurance. Since the law was enacted in 2010, the ACA and the regulations implementing the law have changed numerous parts of these programs.
- Medicaid: Certainly the most significant change has been the option to expand the program for adults age 19 to 64, along with changes designed to provide states with new options for providing services and improving the quality of care provided to beneficiaries.
- Medicare: One of the largest sections of the ACA addresses the operation of the Medicare program — the ways health care providers are paid for providing services to seniors, new models of care to improve the quality and accessibility of services, prescription drug coverage, and the sustainability of the program.
- Private Insurance: The ACA has drastically changed the way that health insurers do business and employers provide coverage for their employees. Kansas employers of all sizes who purchase coverage for employees through health insurance companies now offer plans with additional benefits. All employers, including large employers who provide coverage through self-funded health plans, make coverage available for employees’ young-adult children up to age 26. Individuals who purchase individual coverage directly from insurance companies through the Kansas marketplace have a choice of plans that provide a standardized set of benefits, coverage for pre-existing conditions, no annual or lifetime limits on coverage, and enhanced information designed to help them identify and select coverage.
The Texas Case
The media coverage of this case has been hit or miss, so here is our attempt to give you the skinny on this potentially monumental court decision currently winding its way through the federal judicial system.
The Texas case — originally filed in the U.S. District Court for the Northern District of Texas in February 2018 by plaintiffs consisting of Republican governors and attorneys general from 18 states, including Kansas, plus two additional individual plaintiffs — questioned the constitutionality of the ACA individual mandate after Congress “zeroed out” the individual mandate penalty starting in 2019 when it enacted the Tax Cuts and Jobs Act of 2017. The two individual plaintiffs in the case argued that the mandate, even without the penalty, still “compelled” them to purchase insurance. In arguing that the mandate was now unconstitutional, the Texas plaintiffs referred to the case of National Federation of Independent Businesses v. Sebelius (NFIB), in which the U.S. Supreme Court upheld the constitutionality of the mandate in 2012 because it was a tax imposed by Congress.
In the Texas case, plaintiffs also argued that since the individual mandate is such a key element of the ACA, it cannot be severed, or separated, from the rest of the law, and the entire ACA is now invalid and should not be enforced. The plaintiffs asked the district court to enjoin, or prohibit, the Department of Health and Human Services (HHS) and the Internal Revenue Service (IRS) from enforcing the entire ACA and all regulations implementing the law, and specifically asked the court to strike down the law’s guaranteed issue and community rating provisions. Although HHS and the IRS recommended that only those two provisions were inseverable from the individual mandate and should be invalidated, the district court judge ruled in favor of the Texas plaintiffs in December 2018 and held that the mandate was unconstitutional and could not be severed from any other part of the ACA.
When HHS and the IRS elected not to fully defend against the lawsuit, Democratic attorneys general from 16 other states and the District of Columbia, who were allowed to intervene, or join, the case in May 2018 to defend the ACA, appealed the case to the Fifth Circuit in January 2019. At that time four additional states and the Democrat-led U.S. House of Representatives also were allowed to intervene.
During the appeal of the case, HHS and the IRS argued for the first time that the court should not enjoin enforcement of the entire ACA but only those provisions that are “necessary to remedy the plaintiffs’ injuries” and also argued that the law should only be invalidated in the plaintiffs’ states. In the 2-1 opinion issued by the Fifth Circuit, the court, while finding that the mandate was unconstitutional, elected to remand, or return, the case to the district court in Texas for additional analysis on the issue of severability. It then directed the district court to (1) “explain with more precision what provisions of the ACA are not severable from the individual mandate,” and (2) consider the newly suggested relief by HHS and the IRS, which was not presented to the district court, of enjoining the enforcement of only those provisions that injure the plaintiffs or declaring the ACA unconstitutional only as to the plaintiffs’ states and the two individual plaintiffs.
The Supreme Court?
Although the Fifth Circuit remanded the case to the Texas district court, which could possibly take another year or more, 21 Democratic state attorneys general and the U.S. House of Representatives appealed the Fifth Circuit decision to the U.S. Supreme Court on January 3, 2020, and asked the Court to hear the case during its current term, which ends in June, and issue its decision to resolve the uncertainty about the status of the ACA. The Court generally does not consider cases that come to it before lower court rulings are final. The Trump administration filed its response to the appeal on January 10 opposing the expedited review, arguing that the Fifth Circuit’s decision does not warrant the Court’s immediate review at this time. In the meantime, the ACA will remain in effect whether the case returns to the district court or moves on to the Supreme Court, until a final decision is reached.
The Kansas Health Institute supports effective policymaking through nonpartisan research, education and engagement. KHI believes evidence-based information, objective analysis and civil dialogue enable policy leaders to be champions for a healthier Kansas. Established in 1995 with a multiyear grant from the Kansas Health Foundation, KHI is a nonprofit, nonpartisan educational organization based in Topeka.