“A Slow Game of Jenga:” Has a Federal Judge Toppled the Affordable Care Act?

Posted by Robert A. Chu on December 18, 2018
ACA

wood blocks gameLast Friday, in Texas v. United States, Judge Reed O’Connor of the Northern District of Texas (1) declared the Affordable Care Act’s (ACA) individual mandate to be unconstitutional.  In so doing, the Judge, a President George W. Bush appointee, also (2) declared the remaining provisions of the ACA to be “inseverable” and therefore invalid.

Individual Mandate.  As you might recall, the Supreme Court’s 2012 NFIB v. Sebelius decision held that the individual mandate and the shared-responsibility penalty (when viewed as a whole) were constitutional because they fell within Congress’ power to tax.  The provision at the time was found to be a “tax” because, among other things, it produced revenue for the government.  (Under the shared responsibility penalty, non-exempt individuals without health insurance had to pay this tax.).  The Tax Cuts and Jobs Act of 2017 subsequently amended the ACA by reducing the shared-responsibility payment to zero, starting in 2019.  According to the District Judge, when the shared-responsibility payment becomes zero, the individual mandate and the shared-responsibility payment together can no longer be classified as a “tax” and therefore lacks a constitutional hook.

Inseverable.  In addition to declaring the individual mandate unconstitutional, the District Court declared the remainder of the ACA to be invalid because, according to the court, it is inseverable from the individual mandate.  While recognizing that a court should try to refrain from invalidating more of a statute than is necessary, the court found that Congress would not have enacted the remaining provisions of the ACA without the individual mandate.  Relying on the text of the statute and Supreme Court precedent, the District Court found the individual mandate to thus be “an essential part” of the ACA.  The District Court analogized the dispute to be “like watching a slow game of Jenga, [with] each party poking at a different provision to see if the ACA falls.”  Removing the “essential” individual mandate piece, according to the court, has caused the entirety of the ACA to topple over.

There appears to be no immediate effect of the ruling.  CMS Administrator Seema Verma has since tweeted: “The recent federal court decision is still moving through the courts, and the exchanges are still open for business and we will continue with open enrollment. There is no impact to current coverage or coverage in a 2019 plan.”  HHS stated that “[t]his decision does not require that HHS make any changes to any of the ACA programs it administers or its enforcement of any portion of the ACA at this time.”  Similarly, healthcare.gov has a statement that the “Court’s decision does not affect 2019 enrollment or coverage.”

The District Court’s judgment will likely be appealed all the way to the Supreme Court at some point.  Stay tuned.

Robert A. Chu

Robert A. Chu

Rob is a member in the Health Law Practice Group. He primarily represents health care clients in Medicare, Medicaid, and third-party payor reimbursement disputes. Rob also counsels health care clients on regulatory and compliance issues. He was selected as a Super Lawyers Rising Star (Health Care) for 2016-2018.

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