Obamacare Unconstitutional - Or Maybe Not?

Obamacare Unconstitutional - Or Maybe Not?

Tue, 01/08/2019 - 14:26

A federal judge in Texas struck down Obamacare. U.S. District Judge Reed O’Connor ruled that the mandate requiring people to purchase health insurance was unconstitutional and thus the entire Affordable Care Act was unconstitutional. The ruling has little immediate practical impact.

Scales of Justice

The lawsuit

The lawsuit was filed in February 2018 by Texas attorney general Ken Paxton. An interesting fellow who describes himself as a tea party conservative. He was indicted in 2015 for security fraud and is currently awaiting trial.

♦ Mr. Paxton filed his lawsuit on behalf of 18 Republican attorney generals and 2 Republican governors. The Houston Chronicle reported that the emphasis for this suit was really coming from ultra conservative groups outside of Texas.

• The argument is that the requirement that people have health insurance – known as the individual mandate – is unconstitutional and therefore the entire law is unconstitutional.

→ In 2012, the Supreme Court upheld the Affordable Care Act but struck down the provision that was to have expanded Medicaid nationwide. At that time, the court was split with four justices concluding that the individual mandate was outside of Congress’ power and with four justices thinking that the mandate was constitutional.

♦ Chief justice Roberts split the difference and concluded the tax penalty was within Congress’ right and therefore the individual mandate was valid.

→ At the end of 2017, a tax bill was signed into law that zeroed out the tax penalty. Starting in 2019, there would no longer be a tax penalty for not having health insurance. There would still be a requirement to have health insurance (the individual mandate) but no penalty would be enforced for not complying.

♦ The lawsuit argues that with the tax penalty eliminated the individual mandate would be unconstitutional now. And if the individual mandate were unconstitutional then the entire law would also be unconstitutional since it cannot be separated into parts.

• Legal scholars — even some conservatives who oppose the law — have called Texas’ argument unconvincing. The argument that the whole law should be doomed by problems with one provision is a massive stretch.

Scholars who favor and oppose Obamacare as a policy matter have lined up against Texas.

• The common thread is that a tax can still be a tax even if it currently collects no revenue. The average person would probably need a few beers to understand that logic.

Why Texas?

Texas is a solid red state. Texas did not create a state exchange for health insurance and instead relies upon the federal marketplace.

Texas steadfastly refuses to expand Medicaid while at the same time running the nation’s highest uninsured rate.

♦ Texas has closed the most rural hospitals of any state with 13 hospitals closing since 2010, some that money from Medicaid could have helped save.

Texas also sued the federal government over the health care law in 2015, challenging a fee that states were required to pay to cover the cost of the law.  Attorney General Ken Paxton led that charge also.

Why this place?

Well, it’s simple. You can’t always choose your judge, but you can often choose your courthouse.

• The lawsuit was filed in federal court in Wichita Falls, Texas. It is home to Judge Reed O’Connor, a conservative appointed by President George W. Bush.  Since 2015, almost half of challenges to the federal government that Texas filed in district courts have landed in O’Connor’s courtroom.

Two years ago, Judge O’Connor issued a nationwide injunction against an Obama administration rule that forbid providers of health care from discriminating based on gender identity.

• Judge O’Connor has shown he would be the most receptive judge for the plaintiffs, making Texas the best place to try to drive a stake into Obamacare.

The Trump administration also encouraged the folks in Texas. In a rare move the Trump administration instructed the Department of Justice to NOT defend the law. The Trump administration said that it agreed with certain features of Texas’ case.

♦ The Trump administration did not go as far as Mr. Paxton. The Department of Justice, in a court brief, contended that once the insurance mandate’s penalty is gone that will invalidate the Affordable Care Act’s consumer protections.

Just before the brief, three Department of Justice lawyers resigned rather than be a part of this case.

• In the brief, the administration is saying they believe insurance companies should be free to return to charging more to cover people with pre-existing medical conditions. The administration also argued that many other parts of the law could be considered legally distinct and thus can continue.

March 26, 2019

President Trump changed his mind.  He now says the entire Affordable Care Act should be struck down.  Republican lawmakers up for re-election are now in a panic. The Democrats are already turning the President's actions into a rallying cry for the 2020 elections.

July 9, 2019

A three judge panel in New Orleans just heard arguments. The court consists of two Republican appointed judges (one by President Trump) and one Democrat appointed by Jimmy Carter. The tone of the judges’ questioning had a partisan feeling. Now, legal analysts are not so sure the court won't side with the Texas ruling. If that happens, the next stop will be the Supreme Court right in the middle of the 2020 election.

It is not clear why the Trump administration is so gung ho about killing parts of the law that actually help the average person and instead pursues a course that would benefit insurance company profits.

• Knowing that the majority of Americans view protections for pre-existing conditions as a very positive benefit of the ACA, the administration asked that any decision be postponed until after that the mid-term elections.  Judge O’Connor complied.

♦ On December 14th, Judge O’Connor ruled that with elimination of tax penalties last year, the individual mandate could no longer be considered constitutional. Judge O’Connor decided that the individual mandate was an “essential” part of Obamacare and as such the entire law, rather than just the individual mandate, was unconstitutional.

Does the ruling change anything?

For right now, no. The ruling has little immediate practical impact.  The ruling is on hold pending an appeal.

• The defense of the law has fallen on a coalition of 17 Democratic attorney generals lead by California Attorney General Xavier Becerra.

The Trump administration appears to be taken a little by surprise. The administration now says: it shares the view that the individual mandate is invalid, but it does not support the challengers’ argument – and the judge’s decision – that all parts of the law were invalid.

Even the Trump administration realizes their fellow Republicans who pursued this lawsuit may have done the party more harm.

• The people who brought the lawsuit are mostly from GOP stronghold states where they don’t have to worry about re-election.

With Republicans getting beaten up in the mid-terms, saber-rattling against the ACA right now doesn’t go over very well, especially if the Democrats keep the issue alive in the public’s mind until the 2020 elections.

♦ An appeal will start in the U.S. Court of Appeals for the Fifth Circuit. With the mid-term elections putting the House firmly in Democratic control, the House is expected to join the appeal. The appeal is likely to succeed.

Court arguments and delays could cause the appeal to take months to get through the court. It is possible the Supreme Court may yet get involved, but it is also as likely that an appeal to the Supreme Court will be dropped out of pressure to avoid disaster in the 2020 elections. And there is always the chance the Supreme Court will punt this one to the Appeals Court.

• As Senate Democratic leader Chuck Schumer of New York said, “Voters will remember. What will stand is Republican ownership of such a harmful and disastrous lawsuit.”

Health care was the top issue for about one-fourth of the voters in the November election, ahead of immigration and jobs. The people most concerned about health care supported Democrats.

♦ Democrats will certainly not let voters forget.

Republicans are most worried that Democrats will launch a fear-mongering campaign in 2020. Judge O’Connor’s ruling feeds that fire.

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