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Analysis

States Arguing Over ACA in Texas Courtroom

By Steven Porter  
   September 05, 2018

Could this be 'the most dangerous effort to destabilize the American healthcare system yet'? We'll see, but not just yet.

As confirmation hearings continue Wednesday morning in Washington, D.C., for a nominee poised to bring a reliably conservative majority to the U.S. Supreme Court that could shape health policy for decades to come, lawyers for 20 conservative states are gathering in a federal courtroom more than 1,300 miles away, hoping to make their own lasting mark on American healthcare.

The conservative states filed a lawsuit in February to argue the entire Affordable Care Act was rendered unconstitutional when Congress zeroed out the tax penalty tied to the Obama-era law's individual mandate. They will argue Wednesday morning that U.S. District Judge Reed O'Connor in Fort Worth, Texas, should use a preliminary injunction to put the ACA on hold while the legal challenge proceeds.

This inflection point could have wide-ranging consequences, especially if O'Connor were to side with the plaintiffs. Although it's too soon to tell how O'Connor will rule, he has previously blocked regulations that had used the ACA's prohibition of sex-based discrimination to bar insurers and providers from discriminating against transgender patients and women who had undergone an abortion.

"I cannot overstate how much this lawsuit threatens individual and public health," Georges C. Benjamin, executive director of the American Public Health Association, wrote in a dire Los Angeles Times op-ed Tuesday.

Citing data from the Urban Institute, Benjamin argued that overturning the ACA would cause "a catastrophic loss of coverage," with more than 17 million people losing health insurance next year alone.

"This lawsuit could be the most dangerous effort to destabilize the American healthcare system yet," he wrote.

But the actual consequences of a preliminary injunction would not be immediate and might not stick, since the defendants would quickly appeal any such decision, taking the matter all the way to the Supreme Court if necessary, as Julie Rovner wrote Tuesday for Kaiser Health News.

The Intrigue
 

What makes this suit so intriguing is the way it's being handled by the named defendants. Although the conservative states sued the federal government, the Trump administration's Department of Justice agreed with the plaintiffs on certain points.

The plaintiffs, led by Texas, argue that the entire ACA is legally inseverable from the individual mandate. Since the Supreme Court ruled in 2012 that the individual mandate was authorized by congressional power to tax and since Congress canceled the mandate's tax penalty effective in 2019, the mandate (and, therefore, the entire law) cannot stand, the plaintiffs argue.

Although the DOJ disagrees with the plaintiffs' argument overall, it agrees with the notion that the mandate is unconstitutional and inseverable from key ACA provisions, prompting a contingent of more liberal states, led by California, to step up in defense of the law.

Expect to hear more about this notion of severability. Five law professors who have previously disagreed with each other on ACA-related matters agreed in an amicus brief that the plaintiffs and DOJ are approaching severability in this case in an "exactly backward" fashion.

"They disregard the clearly expressed intent of Congress and seek judicial invalidation of statutory provisions that Congress chose to leave intact," the professors wrote. "Accepting their invitation to rewrite the ACA under the guise of 'severability' would usurp Congress's role and inject incoherence into this critical area of law."

Steven Porter is an associate content manager and Strategy editor for HealthLeaders, a Simplify Compliance brand.


KEY TAKEAWAYS

Conservative states argue the ACA was rendered unconstitutional in its entirety when the individual mandate's tax penalty was canceled out.

The DOJ contends that zeroing out the mandate's penalty rendered only the mandate and two key provisions unconstitutional.

Liberal states defend the ACA in its entirety, arguing that the judge should not impose a preliminary injuction while the case is pending.

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