FEDERAL COURT STAYS ITS DECISION FINDING THE AFFORDABLE CARE ACT UNCONSTITUTIONAL, MEANING THE ACA REMAINS IN FULL EFFECT PENDING APPEAL

             On December 30, 2018, Federal District Court Judge Reed O’Conner of the Northern District of Texas stayed and finalized his December 14, 2018 order finding the entire Affordable Care Act (ACA) unconstitutional, allowing for an immediate appeal.  In a 30-page opinion, Judge O’Conner stated that he did not believe that the states challenging his finding that the ACA was unconstitutional would succeed on the merits, but he found that “because everyday Americans would otherwise face great uncertainty during the pendency of appeal, the Court finds that the December 14, 2018 Order declaring the Individual Mandate unconstitutional and inseverable should be stayed.”  This means that the ACA remains in full effect pending appeal.           

            The case was brought by Texas, 19 other conservative states, and two individuals, seeking a finding that the ACA was unconstitutional and that the entire statute should be struck down because the Tax Cuts and Jobs Act of 2017 (TCAJA) eliminated the ACA’s Individual Mandate that individuals obtain health insurance or pay a tax penalty.  The reasoning behind their argument was that the Supreme Court had originally upheld the ACA as an exercise of Congress’ tax power. 

            In an unusual move, the federal government chose not to defend the ACA.  Rather, the federal government argued that the law was unconstitutional, but that only certain of its provisions should be struck down.  Specifically, the federal government argued that the ACA’s provisions governing pre-existing conditions were inseverable from the Individual Mandate and should be struck down, but that the remaining provisions of the ACA should remain in effect.  If the federal government’s arguments had prevailed, the prohibitions on denying coverage based on pre-existing conditions and charging higher rates based on health conditions would have been eliminated, but the vast majority of the other provisions would have remained in effect.  Sixteen states and the District of Columbia intervened to support the ACA.

            In his December 14, 2018 opinion, Judge O’Conner agreed with Texas and the states challenging the ACA, finding that the “Individual Mandate no longer ‘triggers a tax’” and that, therefore the ACA was unconstitutional.  In that opinion, he also found that the “Individual Mandate ‘is essential to’ and inseverable from ‘the other provisions of’ the ACA” and that the entire law must fall.  The states supporting the ACA had moved for a stay and the federal government supported the motion.  The states opposing the ACA did not take a position on the stay.

            Many legal scholars – both conservative and progressive – have found Judge O’Conner’s legal reasoning to be weak and non-persuasive because the TCAJA did not address any provision of the ACA other than the individual mandate.  The ACA is more than 900 pages long and contained myriad other provisions, including the expansion of Medicaid and changes in Medicare payments to emphasize quality and shared savings, as well as easier enrollment in the Black Lung Program and changes to the Indian Health Service. 

            The stay and order finalizing the December 14, 2018 order allow the case to be appealed to the Fifth Circuit Court of Appeals.  No matter the outcome there, it is likely to be appealed to the United States Supreme Court.           

            The case is Texas et al. v. United States of America, et al., Civil Action No. 4:18-cv-00167 pending the United States District Court for the Northern District of Texas, Fort Worth Division.  The Court’s Order Granting Stay and Partial Final Judgment is linked here.