Appeal of ACA unconstitutionality ruling now includes U.S. House of Representatives
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Appeal of ACA unconstitutionality ruling now includes U.S. House of Representatives

The appeal of a federal district court decision that the Affordable Care Act (ACA) is unconstitutional now includes the House of Representatives and 21 Democratic state attorneys general. On February 14, 2019, the Fifth Circuit Court of Appeals granted one request by the House and another by four state attorneys general to join an appeal of Texas v. Azar first filed in January 2019. The court, however, denied a request by the states to expedite the appeal.

Texas v. Azar was filed in February 2018 by 20 Republican state attorneys general and governors who argued the ACA’s individual mandate was unconstitutional after the Tax Cuts and Job Act (TCJA) eliminated the associated penalty for not being insured (a change that went into effect in 2019). In 2012, the U.S. Supreme Court upheld the individual mandate in National Federation of Independent Businesses (NFIB) v. Sebelius, arguing the mandate’s penalty was a tax, which falls under Congress’ authority.

The Department of Justice (DOJ) did not defend the individual mandate and agreed with the plaintiffs that parts of the ACA cannot be severed from the mandate, including the ban on pre-existing condition exclusions and community rating.

In May 2018, Democratic state attorneys general from 16 states and Washington D.C., intervened in the case, arguing the mandate’s constitutionality and that, if the mandate was found unconstitutional, the ACA could still stand without it.

On December 14, 2018, Reed O’Connor, a federal judge in Texas, ruled that since the TCJA eliminated the fine related to the individual mandate, the mandate was no longer an exercise of Congress’ tax power and, thus, unconstitutional. O’Connor ruled that since the mandate “is essential to” and “inseverable” from the other provisions of the ACA, the entire law was unconstitutional. On December 30, O’Connor issued a stay and partial final judgment related to his decision, which allowed for the ensuing appeal by several states and now the House of Representatives.

To learn more about the ongoing litigation, please click here.

Estimates from the Kaiser Family Foundation indicate that 52 million adults between the ages of 18 and 64—or 27 percent of U.S. adults—would be unable to receive coverage under pre-ACA practices in most states. In the 4th quarter of 2018, the uninsured rate in the U.S. hit its highest level since before the individual mandate went into effect in 2014, according to Gallup.

Baker Tilly healthcare specialists have experience helping payors navigate the changing regulatory environment related to the ACA; for more information, contact our team.

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