Federal Appeals Court Strikes Down Portion Of Obamacare

Yves here. We featured a Kaiser Health News article earlier this week on continuing legal challenges to Obamacare and what they might mean for patients. This post describes a new ruling that nixed the individual mandate and has put the rest of the law in play.

By Julie Rovner, Chief Washington Correspondent for Kaiser Health News. She was previously health policy correspondent for NPR, and also covered health policy for National Journal’s Congress Daily and for Congressional Quarterly, among other organizations. She is the author of the critically praised reference book Health Care Politics and Policy A-Z, now in its third edition. Originally published at Kaiser Health News

A federal appeals court panel in New Orleans dealt another blow to the Affordable Care Act on Wednesday, agreeing with a lower-court judge that the portion of the health law requiring most people to have coverage is unconstitutional now that Congress has eliminated the tax penalty that was intended to enforce it.

But it is sending the case back to the lower court to decide how much of the rest of the law can stand in light of that ruling.

That most likely means the fate of the law will not be settled before the 2020 election.

The stakes could not be higher. The case is widely expected to end up at the Supreme Court. California Attorney General Xavier Becerra, who is leading a coalition of states defending the health law, announced Wednesday night that he would appeal to the high court immediately. And if the high court — which has upheld the ACA twice since its original passage in 2010 — agrees with the appeals court, the decision could upend the nation’s entire health care system.

“It’s time to get rid of the uncertainty,” Becerra told reporters at a news conference. “Americans don’t need to be jerked around when it comes to their health care.”

Hanging in the balance is not only health coverage for the roughly 20 million Americans directly served by the ACA, but also hundreds of millions more whose health care and coverage have been affected by the thousands of changes enacted in the law. Those include provisions as wide-ranging as changes in Medicare drug copayments, requirements for calorie counts on menus, a pathway for approval of generic copies of expensive biologic drugs and, perhaps most important politically, protections for people with preexisting conditions.

The requirement for coverage, often referred to as an individual mandate, was inserted in the law to give insurers a wide pool of customers since they were now required to cover people with medical conditions. Concerns about losing that guaranteed coverage for preexisting conditions was a potent argument of the Democrats when they made big gains in the 2018 midterm elections.

President Donald Trump heralded the court’s decision, saying that he has long asserted “that the individual mandate, by far the worst element of Obamacare, is unconstitutional.” He said overturning the mandate “will not alter the current health care system” and said his administration will work to protect guarantees of coverage for people with medical problems. But he didn’t give any specifics of how that would work.

Meanwhile, Democrats point out that the law has been working fine without the tax penalty – which was officially eliminated at the beginning of this year. They say that means, by definition, that the mandate is not necessary for the function of the rest of the law.

In the court’s decision, two of the three judges on the panel agreed with the plaintiffs in the case who wanted the law struck down. Judge Jennifer Walker Elrod wrote that “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.”

But at the same time, the appeals court majority declined to say how much else of the law can remain. Instead, it ordered the lower court “to employ a finer-toothed comb … and conduct a more searching inquiry into which provisions of the ACA Congress intended to be inseverable from the individual mandate.”

The third judge on the panel, Carolyn Dineen King, disagreed with both the lower court and the other two judges. In her dissent, she wrote that sending the case back to the lower court “will unnecessarily prolong this litigation and the concomitant uncertainty over the future of the healthcare sector.”

Reaction to the appeals court decision mostly broke along ideological lines.

Democrats were angry. “Tonight’s ruling is a sharp reminder to Americans that a heartless lawsuit supported by Congressional Republicans and President Trump is why vital health care protection, especially protections for people with pre-existing conditions, are in grave danger,” said a statement from Senate Minority Leader Chuck Schumer.

Conservatives were pleased. “Today’s decision reminds us that Obamacare has been on shaky ground since its creation,” said Marie Fishpaw of the conservative Heritage Foundation. “Patients deserve better than the high costs, limited choices and narrow provider networks that Obamacare brought to the health care system.”

But many Republicans also know that striking down the law could cause major repercussions to the health system. Sen. Lamar Alexander (R-Tenn.) said in a statement that while he was satisfied that the individual mandate itself might be unconstitutional, “I am not aware of a single senator who said they were voting to repeal Obamacare when they voted to eliminate the individual mandate penalty.”

A group of Republican state attorneys general and governors filed the case, Texas v. United States, in early 2018. They charged that when Congress eliminated the financial penalty for not having insurance as part of its 2017 tax bill, it rendered the rest of the health law moot. That is because the 2012 Supreme Court decision upholding the law said it was the tax that made the law constitutional, since the ACA relied on appropriate taxing powers given to Congress through the Constitution.

Legal scholars on both sides say that logic is flawed, but, in December 2018, U.S. District Judge Reed O’Connor, of the Northern District of Texas, ruled the entire law unconstitutional.

The Trump administration, meanwhile, has taken several positions on the case. Last year, it told the lower court it did not believe eliminating the tax required the entire law to be declared void.

But Justice Department officials said they supported striking down the provisions of the law most closely tied to the tax penalty: the ones requiring insurance companies to sell coverage to people with preexisting health conditions and not charge them more. Those are among the most popular provisions of the law. Democrats’ success in taking back the House in last year’s midterm elections was largely credited to consumers’ fears of losing that provision when Republicans threatened to repeal the health law in 2017.

After the lower-court ruling, however, the administration decided to support the GOP plaintiffs. In March, a Justice Department spokeswoman said officials had “determined that the district court’s comprehensive opinion came to the correct conclusion and will support it on appeal.”

That left a group of Democratic state attorneys general to defend the law, led by Becerra, along with the U.S. House of Representatives, which voted in January, after Democrats formally took over the majority, to join the lawsuit.

But in July, the administration’s position shifted again. In a filing with the court, its attorneys argued that perhaps the health law should be invalidated only in the GOP states that are suing, rather than in all states. It is unclear how that would work.

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  1. rd

    Utterly baffled by the Republican position. Possibly they think they can eliminate health insurance for 10s of millions and then blame the Democrats?

    I haven’t seen a single coherent idea on how to get broad-based health insurance coverage from the Republicans. Trump’s brilliant idea is to use the Canadians to negotiate lower drugs prices that Americans would then import from Canada. He has to do that because the Republicans in Congress won’t negotiate with the drug companies.

    1. inode_buddha

      Nothing really baffling about it, most of my acquaintances are Republican and or Conservative. Their thinking is “Privatize everything because government bad”. And if you can’t afford private health coverage? Too bad, sucks to be you — law of the jungle.

      Last I checked, nobody ever accused a jungle of being civilization.

      1. Joe Well

        But those “conservatives” are overwhelmingly tilting older, mostly 70+. They should very clearly be able to see the endgame wherein the healthcare-industrial/nursing home complex will suck out every last penny of savings they have (unless they have maybe $2 million+ each in savings) until they qualify for Medicaid. I have seen it happen to older relatives.

        In other words, if they are lucky enough to live that long, in very short order they are going to be utterly penniless, at the mercy of society’s tenderness. Why don’t they see their self-interest in making sure society treats the vulnerable and destitute well?

        1. inode_buddha

          The ones that I know, at least, seem to be completely oblivious to the concept of moral hazard, corruption, and greed. It’s a huge blind spot for them.

          It reminds me of the (in)famous scene in Casablanca: “I’m shocked, shocked that there is gambling going on in here!”

          Furthermore, all of them have their medicare and advantage and gap plans and drug plans and whatever else… already.

    2. Oregoncharles

      Arguably, the Dems are in fact to blame, for writing a really bad health insurance bill, which can’t stand up to judicial scrutiny – or Republican politics; as Medicare has.

      1. Cesar Jeopardy

        So far, the ACA has stood up well. But not much can stand up to judicial scrutiny with packed conservative courts.

        1. paintedjaguar

          Stood up well? Yeah, tell that to the inhabitants (I’m one) of the third of the states that never adopted the Medicaid expansion. The erosion of Obamacare was utterly predictable, at least in broad outline. I know because I did predict it and considered that one of the main arguments against passing such an inadequate Rube Goldberg scheme. And I’m nobody special, just a guy on the Net. In fact I’m of the opinion that this outcome was expected.

    3. GM

      There are two separate issues here.

      The Republicans want to dismantle the individual mandate because they see the ACA as a step towards properly socialized health care.

      But, a lot of average people want to see it gone too, for very different reasons though. Because if you making 30K a year and are stuck with a shitty Bronze plan with all sorts of deductibles, co-pays, and low network coverage, you are still essentially without insurance for most practical purposes. But you are still mandated to pay what is essentially an ever increasing and more onerous deeply regressive private tax.

      My bet is that a lot of people who would otherwise vote with both hands for a true Soviet-type health care system (which is the only health care system that has been proven in practice to truly work; forget Bernie’s weak sauce half-baked proposal) if such an option existed, still voted for Trump in large part because he promised to abolish Obamacare. For that precise reason — it was a cure that for many was worse than the disease.

  2. Jim A.

    So the GOP is poised to “catch the car” and take coverage away from several million Americans. The politics are almost as interesting as the result is tragic.

  3. inode_buddha

    “It’s time to get rid of the uncertainty,” Becerra told reporters at a news conference. “Americans don’t need to be jerked around when it comes to their health care.”

    This is why we need single payer, M4A. Because both the ACA and private insurers jerk us around far too much in addition to financially bleeding us to death.

    1. Arizona Slim

      As mentioned here before, I’m being YouTube-stalked by ads from the Partnership for America’s Health Care Future. They’re all about how scary and awful those one-size-fits all government health care plans are.

      I can’t help to see what those stalkers say in response to this development. Because, whether they like it or not, it looks like M4A is all but inevitable.

    2. Joe Well

      I thought the exact same thing when I read that. It seemed like an argument in favor of M4A, but it’s an establishment Dem who is saying it.

      1. Susan the Other

        It actually isn’t necessary to strike down Obamacare in order to offer a new medical system. Obamacare is a travesty. All our pols need to do is M4A because it will be an instant success. And Obamacare will die quickly on its own from acute attrition. Going after Obamacare is pointless at best. So that’s why it is being done. Red herring. Trump has dropped hints that his administration and the Republicans are working on a great new medical plan. I don’t believe a word of it. I’m only wondering what free-enterprise medicine will accomplish in UK hospitals. My guess is a huge debacle. But it its always possible that we will learn just how destructive our medical insurance and our private pharma is if our “hospital administrators” can participate in the UK and make some small profit from a protected medical system. Of course, that is just drawing out the misery ad infinitum for us here. We need affordable medical services now, not ten years from now when reality is undeniable. Even for the profiteers.

        1. ambrit

          I’m afraid that “profiteers” act on the principle enunciated by one of the biggest profiteers of recent memory, Karl Rove, “…we’ll act again, creating other new realities.”
          The ‘profit’ principle is the ultimate expression of narcissism.

      2. MyLessThanPrimeBeef

        Regardless of how we got here, if this favors M4A, I think smart politicians, whether opportunistic or sincere, will seize on this opening.

        And that would be good news.

      1. flora

        adding: The bill had to be killed of course, because govt acting to protect its citizens from outrageous corporate price gouging would be an unjustifiable govt intrusion into the sanctity of ‘the market’. And as everyone knows, ‘the market’ is infallible. /s

    3. davidgmillsatty

      People who are not on Medicare do not understand that it is not free and that private insurance is not part of the equation. I pay about $135 a month for Part B that is deducted from my SS check. Then I pay $130 a month to United Health care for a Supplemental Policy to cover me for what Medicare does not. Then I pay $15 a month (the least possible premium because I don’t have any expensive prescriptions but if I did I would need far greater coverage) to Humana.

      My daughter who gets a decent silver plan under the ACA pays $227 a month after her subsidies and her income is greater than my SS check.

      1. inode_buddha

        Under M4A, all those separate charges would disappear. The deal you’re getting is one hell of a lot cheaper than what private insurance costs, but of course you paid into the system your whole life, so you *should* get a deal.

        As a single guy no dependents nonsmoker etc. my premium was nearly $800/month, and I was only making 2k/month to begin with. But I didn’t qualify for subsidies because I made too much or something, and the company offered a plan… the company pays 200/mo.

        Either way, I’m screwed. You should see what my coworkers with kids were paying. And not a man in the whole place is making more than 17/hr. I wonder how people even survive sometimes.

    4. Danny

      Becerra just wants to ensure that taxpayers and low income property owners subject to Medi-Cal clawbacks keep being forced to pay tribute to protect the free health care for his loyal voter and future voter base in California.

      “Undocumented immigrant adults make up the majority of California’s uninsured population, about 58 percent, according to the Insure the Uninsured Project.”

      “The measure signed by Gov. Gavin Newsom on Tuesday extends coverage to low-income, undocumented adults ages 25 and younger for the state’s [Full Scope] Medicaid program. Since 2016, California has allowed children under 18 to receive taxpayer-backed health care despite immigration status. And state officials expect that the plan will cover roughly 90,000” people.


      Get your hand-wringer’s tote bag with every donation. The Lumpen are just as important as the MacArthur Foundation and Pew Charitble Trust in supporting NPR.

  4. Oh

    Meanwhile, back Obama is enjoying government paid health insurance for himself and his family at the luxurious mega mansion in Martha’s Vineyard. He doesn’t give a (family blog) at the 90% who he refused the same government paid single payer plan. What a country!

    1. Danny

      And I bet he will expect the taxpayers to bail him out when his beachfront property is inundated by global warming. I thought he was so intelligent, why would he buy endangered property there?

  5. Andrew Thomas

    Senator Lamar Alexander is either an idiot or thinks that is what we all are. The deciding vote on the ACA in the Supreme Court when it went before them was Roberts, whose decision was based upon the existence of a tax penalty to enforce the individual mandate. When they got rid of the penalty, the ACA became unconstitutional pursuant to the analysis of the the swing vote on the constitutionality of the ACA. And that was the whole point of doing it.

    1. davidgmillsatty

      The argument for its unconstitutionality was that healthcare was not interstate commerce and thus it was something that Congress could not regulate.

      The interstate commerce argument really was very tenuous. Not only is heath care interstate it is global. So the court was going to have to do some serious gyrations to come to the conclusion that health care is not interstate commerce.

      They kind of intimated they were going to decide that way, but such a decision would be an opinion highly divorced from the facts.

      There is also Medicare that has existed for decades and it would seem that if the court held that the ACA violated the interstate commerce clause then Medicare would as well.

      We also have two new justices since then and no telling how they would see the situation even though they are conservative.

  6. JTMcPhee

    What ever happened to the vast powers the federal government used to have under the Commerce Clause? https://www.stltoday.com/opinion/columnists/health-insurance-and-the-commerce-clause/article_5965ff21-4a0f-5156-a4aa-38b4da63da6e.html.

    Of course, 350 million people needing more or less health care, and their distressed and lost productivity and wages, are per the “conservatives” not part of the stream of commerce, so how dare the federal government intrude on the sanctity of [adhesion] contracts…

    Where there’s a will, there’s a way.

    I’d note that the Fifth Circuit has always been the venue choice for “conservatives” and “big bidness.”

    And the author of the current opinion is a George Bush appointee. Too bad the effing Dems have just rubber-stamped another posse of “conservative” judges with the usual sigh of “we had no choice…bipartisanship…”

  7. JTMcPhee

    Too bad “we” can’t work up an approach to health care and medicine like the one found in Bhutan, a tiny little nation, as documented in “The Patient Multiple,” a book on that nation’s approach by Jonathan Taee. The linked site opens with this observation:

    Bhutan is a landlocked country nestled into the foothills of the Himalaya. It’s relative isolation from international influence in turn with progressive governing policy over the last century has ensured its rich cultural, religious and environmental continuity. This opening chapter introduces this fascinating country, looking specifically at some of the major cultural, institutional and economic contexts that inform the patient experiences discussed later in the book. http://www.jonathantaee.com/the-book.html

    Of course the response is obvious, “We are not Bhutan. Not even a bunch of Bhutans kind of associated by fortuitous geography and historical accidents. Hardly a Bodhisatva among us…”

  8. BoyDownTheLane

    I remember the tale of the lady who went to the fashionable boutique in some upscale village and wanted to buy, as a decorative hairpiece, a ribbon that had been tied and knotted into a beautiful flower. At the cash register, when she was told the price, she balked and exclaimed. “But it’s just a long ribbon…!” Whence the proprietress pulled one end and unraveled the entirety and handed it to the lady and said “That’ll cost you seventy-five cents.”

    Personally, I’m saving my nickels and dimes so I can buy and install my very own whole-body magnetic resonance imaging system in my garage. I’ve already willed any body to medical school.

    I for one, being fortunate enough to live in a state (Massachusetts) that has set the standard for public health for well over a century and which regulates intensively but with care and diligence everything (and everyone) to the delivery of health care; and being fortunate enough to have married a nurse with experience in emergency care, internal medicine practice management, case management and rehabilitative medicine; and being fortunate enough to be covered for medical care by her employer for 20 years, the #2 (and occasionally #1) best-ranked health care plan in the US (NCQA) — now because of age rolled over into their top-ranked Medicare supplement plan, do not understand what all the fuss is about. Open enrollment comes around this time of year every year. Everyone has choices, said the Little Red Hen.

    1. ambrit

      You left out the sarcasm tag.
      Little Red Hen also has choices. The choices being as to what manner of preparation she is subjected to. She can chose between being: roasted, baked, fricasseed, deep fried, par broiled, sauteed in little strips…the choices are well nigh endless! Thank Colonel Sanders for the choices ‘our’ markets give us!

      1. inode_buddha

        All the choices for Little Red Hen will make her equally dead, just like the choices the American public has. However, in the Deep South they use chicken guts for catfish bait.

  9. JohninMN

    The new spending bill includes a $373 billion tax cut for the health care industry. Included is the repeal of three Obama Care taxes:
    40% tax on “Cadillac” health care plans
    2.3% medical device tax
    the health insurance tax

    Part of Pelosi’s statement: “Democrats are protecting the quality, affordable health care of millions by permanently repealing health care taxes”. Huh?


    1. JTMcPhee

      Thanks for that. Is the MaddowScreamMedia making any noise about all the rest of what the rats are doing In “the world’s greatest deliberative body,“ making all kinds of such things “all nice and legal,” while our cat’s attention is all on RussiaRussiaRussia and othe shiny objects like “UkraineGate ™” and The Somber Impeachment?

    2. Pat

      The Cadillac tax was a head fake race to the bottom which you couldn’t escape. The way the tax was sold was it was going to hit the insurance plans that you people imagined CEO s would have OR those high priced overwhelmingly comprehensive plans that union members get depending on the audience. The way it was designed is it was based on premium cost. The business was happy to absorb the cost for their overcompensated top management, while union plans struggled to keep the premiums below the level that triggered the tax. This meant increased deductibles and copays, along with coverage cuts. Making adequate coverage provide less healthcare While costing the employees more, most of whom saw no pay increase. But let’s go back to the trigger, there was no means to increase the trigger for inflation for a product which sees annual increases sometimes in double digit percentages. IOW, as insurance gets more and more expensive ALL insurance would trigger the tax meaning even the cheapest plan was going to get hit eventually, but not before they were all cut or adjusted to the point where the insured costs exceed the premiums and are too expensive for most people to actually use, employer based or not.
      IMHO the plan was to keep the Cadillac tax until 90% or more of employer based insurance was essentially catastrophic coverage with high deductibles and 50% co insurance.

      Like No Child Left Behind, the evil was in the details, (all schools would fail eventually).

  10. Oregoncharles

    Personally, I think that striking down the Mandate is both good news and good law. Its presence was a direct measure of what bad law (and how Republican) the ACA is.

    That said, it would be destructive to strike down the whole thing without a replacement ready, preferably M4All. That would be based on the claim that the Mandate is necessary to make the whole thing work; I think that claim was BS from the start. It’s really a large, juicy bone thrown to the vulturous insurance companies. Look at the details: ” changes in Medicare drug copayments, requirements for calorie counts on menus, a pathway for approval of generic copies of expensive biologic drugs and, perhaps most important politically, protections for people with preexisting conditions.” – of those only the very last has any connection at all with the Mandate. Covering preexisting conditions makes nonsense of the whole idea of insurance; it’s like taking out a car policy AFTER you have an accident. In a way, it’s useful just for that. The theory is that, without the mandate, people will wait till they’re sick to take out insurance (ignoring all the other benefits); but the evidence so far is that the Mandate is quite ineffective. People get insurance if they think it’s in their interest, not if they think it isn’t, Mandate be damned. It’s been unenforceable for more than a year now; did people stop getting medical insurance?

    I’d say there’s a strong case that the Mandate is simply unnecessary, so the rest of the bill doesn’t depend on it – especially the more useful elements. The justification was purely theoretical, and didn’t pan out. We’ll see whether the defenders make that argument – but with it struck down, they have little choice.

    1. Oregoncharles

      IOW, I think they’ll strike the Mandate, already a dead letter without enforcement, and leave the rest standing, as killing it would gore some very powerful oxen.

  11. Bob Hertz

    Once again we have the spectacle of Republicans digging in to repeal the ACA without any sustematic plan to replace it.

    If the ACA is repealed, I assume that the Medicaid expansion comes to an end. Hospitals and doctors who are finally getting paid to treat the poor will protest.

    I assume that individual market subsidies end. 9 or 10 million persons will drop coverage.

    The insurance industry can come out with underwritten products, but few will be able to buy them.

    Do the Republicans understand this, or are they just bomb-throwers on this issue?

    1. ambrit

      I’m guessing that the Republicans are “bomb throwers” here. Destroy something for the sake of hurting one’s “enemies.”
      The essential task of the Republican Party, since at least the Robber Baron Era has been to protect the property of the “haves” from the demands and needs of the “have nots.”
      Now the Democrat Party has come ‘out of the closet’ in favour of the same philosophy. Why the Republicans are opposing the Democrat own goals is a puzzle.
      I guess that the Republican motto has become: “Too Much Is Never Enough.”

    2. DHG

      The whole system collapses, all of it, insurance including all govt run programs and the delivery system. Republicans dont give a damn about anyone or anything anymore.

      1. Xrystia

        M4A is a good campaign slogan but what does it really stand for? Is it what seniors who signed up for “Traditional” (government) Medicare? If yes then what happens to the huge billion dollar insurance industry. I haven’t heard either Bernie or Warren address this issue. The insurance industry is currently blasting ads for Medicare “Advantage “ totally confusing seniors who are never told they have another option — traditional Medicare. Advantage has a closed network whereas traditional allows one to go to any physician or hospital that accepts Medicare.

        I’m 72 enrolled in traditional. So is my husband. We also carry a supplemental policy through AARP (UNH). My husband had 2 cancer surgeries and I just had a full hip replacement. Medicare plus the supplemental ($760/min for both of us) covered everything. We did not pay a penny for the3 surgeries. The supplemental coved the co-pay. We are very lucky that we can afford the supplemental insurance.

        So in all the campaigning for M4A what will be done about the insurance companies? They will not lay down and die to make room for Medicare. I see some version of Medicare Advantage as maybe politically possible which means limited networks and limited care.

        1. inode_buddha

          I think it may be a good idea to look at how the Dutch and Germans manage it. All the usual insurance companies are still there, but they are required to meet a government minimum for all citizens. Anything above and beyond that is optional, and the person pays extra for that.

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