Texas court ruling puts ACA back in spotlight, defenders plan appeal

On December 14, 2018, a federal district court in Texas found that the entire Affordable Care Act (ACA) was unconstitutional due to a change to the ACA brought on by the 2017 tax law. The decision, Texas v. the United States, came before the final day of open enrollment for ACA coverage for 2019.

As previously blogged, 20 states and two individual Texans argued that the ACA was unconstitutional because Congress eliminated the ACA’s penalty for individuals who fail to comply with the individual mandate. In a 2012 case, the Supreme Court held that the ACA’s individual mandate was a valid exercise of Congress’s tax power because individuals who failed to comply faced a tax penalty. But in 2017, Congress passed a tax law that eliminated the penalty.

The district court agreed with the plaintiffs’ argument: when Congress eliminated the penalty, then individual mandate could no longer be considered an exercise of the congressional power to tax. But in a surprise to many legal observers, the district court held that the entire ACA, including its Medicaid expansion and its payment reforms, were all unconstitutional. Some legal observers argued that the court should have severed the part of the law it ruled unconstitutional from the remainder of the ACA.

Although the ruling has created great uncertainty in the ACA’s future, the court’s decision does not immediately halt the ACA’s implementation. The Centers for Medicare and Medicaid Services (CMS), which oversees many of the ACA’s coverage and payment reforms, sent out tweets and other statements urging stakeholders to continue to follow the law. Additionally, the defendants supporting the ACA will appeal the decision to the Fifth Circuit Court of Appeals, and a similar case is pending in Maryland.

Among the states in the Eastern Regional Conference, Connecticut, Delaware, Massachusetts, New Jersey, New York, Rhode Island, and Vermont are part of the states defending the ACA. The outgoing governor of Maine is one of the plaintiffs, but the state’s incoming governor is likely to remove her office as a plaintiff.