States take sides on new ACA legal challenge

June 20, 2018

Twenty states, led by Texas, have filed a new lawsuit in federal court to declare the entire Affordable Care Act (ACA) unconstitutional under a new legal theory: the Supreme Court had held that the ACA’s individual mandate was a lawful use of Congress’s tax power; but Congress repealed the tax penalizing individuals who refused to purchase insurance as part of last year’s tax overhaul, and the plaintiff states argue that without that tax penalty, the entire ACA should now be considered unconstitutional.

The Trump administration has declined to defend the ACA, and in a letter to Congress, Attorney General Jeff Sessions indicated that the administration agrees in part with the lawsuit. But rather than arguing the entire ACA is unconstitutional, Sessions argued that the court should only sever two consumer protections— the requirements for community rating and guaranteed issue — from the ACA and strike them down. (The ACA contains a “severability” provision that says if a court finds one of its section to be unconstitutional, then the court should only strike down only the parts of the ACA that are tied to the unlawful section, not the entire ACA.) Consumer advocates have argued striking these provisions down would hurt anyone with a pre-existing health condition who needs to purchase health insurance.

In place of the federal government, a coalition of 16 states and the District of Columbia have successfully sought to permission to step in to defend the ACA. Many key stakeholders such as AARP, the American Medical Association, and America’s Health Insurance Plans are filing “friend of the court” briefs in support of the ACA’s constitutionality. Several legal scholars, including several conservative attorneys who had argued the ACA was unconstitutional prior to the Supreme Court’s ruling in NFIB v. Sebelius, disagree with the plaintiff states’ and the Justice Department’s legal argument: “They are asking the court to evaluate the current law on the basis of what the law used to be.”

Among the states in the Eastern Regional Conference, Maine is one of the plaintiffs, and Connecticut, Delaware, Massachusetts, New Jersey, New York, Rhode Island, and Vermont are part of the states defending the ACA.

The lawsuit is just part of the continued uncertainty at the federal level around the ACA. This chaos is a huge challenge for states trying to stabilize their insurance markets. We hope that you will join us at the August CSG-ERC annual meeting and policy forum: on the morning of August 6, the health committee will be host a discussion about ways that states are pursuing to make insurance more affordable and accessible for individuals and families.

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