ACA's individual mandate struck down in court ruling

The individual mandate of the Affordable Care Act, which requires individuals to have health insurance coverage or face a penalty, has been declared unconstitutional by the Fifth Circuit Court. The ruling is a victory for the Republican-led lawsuit to overturn the ACA. However, it still leaves other elements of the ACA without a decision, including the popular provision of healthcare coverage for those with pre-existing conditions.

In the ruling the Fifth Circuit Court also ordered a lower court to review the rest of the law to decide if any other parts­­––or the ACA in its entirety––should also be ruled unconstitutional. The individual mandate hinged on a tax penalty that was imposed under the ACA, but it was stripped by Republicans in 2017 in their 2018 budget law. By reducing the penalty to $0, Republicans argued the mandate was unconstitutional. And the courts agreed.

“The individual mandate is unconstitutional because it can no longer be read as a tax, and there is no other constitutional provision that justifies this exercise of congressional power,” the ruling reads.

The case was launched by 20 Republican governors and attorneys general in 2018 and was the biggest threat to the ACA to date, with the healthcare law having previously survived other court challenges. The Department of Justice under President Trump refused to defend the law, as the agency typically does, and Democratic states instead stepped in. Indeed, the Trump administration supported overturning the ACA. At the end of last year, a Texas judge ruled then entire healthcare law unconstitutional, and the case had been in the appeals court since.

The latest decision already faces an appeal from California’s Attorney General Xavier Becerra.

The ruling means the other ACA provisions hanging in the courts could be resolved after the 2020 election. In addition, the Americans with pre-existing conditions and those that are covered under the expanded Medicaid from the ACA are also in limbo with respect to their future healthcare coverage. An estimated 54 million Americans have a pre-existing conditions, according to the Kaiser Family Foundation.  

“This ruling injects uncertainty and chaos in the health care system,” ACAP Chief Executive Officer Margaret A. Murray said in a statement following the ruling Wednesday. “It will especially wreak havoc upon the lives of many who depend on subsidized Marketplace coverage or Medicaid expansion.”

ACAP represents 70 Safety Net Health Plans that cover roughly 20 million people.

The American Medical Association also agreed that the ruling thrusts Americans into uncertainty.

“Today’s decision leaves important health insurance protections shrouded in uncertainty despite overwhelming public support for these policies,” AMA President Patrice A. Harris, MD, MA, said in a statement. “The decision underscores that the district court’s initial ruling striking down the entire ACA was made without appropriate analysis, ignoring the extensive reach of the law and its many provisions that have no relationship to the individual mandate.”

While the case has been moving through the courts, several individual states have prepared for the loss of the ACA by providing provisions to their residents. Louisiana, Nevada, New Mexico and California have approved or are reviewing legislative action to provide healthcare insurance assistance such as subsidies to high-cost patients, coverage gap solutions and other rules that would prohibit the denial of coverage.

While the rest of the lawsuit moves back to the lower courts, the AMA urges individuals to still seek coverage, including from the ACA marketplace.

Other industry groups also voiced their concern over Wednesday’s ruling.

“We had hoped the appeals court would have ruled outright that the entire ACA is valid, rather than returning the case back to the district court,” Matt Eyles, president and CEO of America’s Health Insurance Plans (AHIP), said in a statement. “The district court’s original decision to invalidate the entire ACA was misguided and wrong––and if the district court reaches the same conclusion as before, it will be misguided and wrong again.”  

"Today’s decision is unfortunate because it leaves this critical law that so many Americans depend on in limbo,” said Federation of American Hospitals (FAH) President and CEO Chip Kahn. “Without question, this decision stretches out the timeline on the final fate of pre-existing conditions and other important protections in the ACA. We hope that the courts will act with dispatch to ensure that the vital provisions of the ACA remain in place."