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Federal judge rules Affordable Care Act unconstitutional

December 15, 2018

On the eve of the Affordable Care Act enrollment deadline, a federal judge in Texas threw into question the entire law by declaring it unconstitutional.

On Friday evening, U.S. District Judge Reed O’Connor ruled that the massive health care law known as Obamacare, in place since 2010, is invalid because of a change in the federal tax law. Saturday is the final day to sign up for health plans on the federal exchange.

The legal fight, which many say is far from over, is rooted in Texas as critics of the law are said to have handpicked O’Connor’s court in Fort Worth to launch their challenge.

In February, Texas Attorney General Ken Paxton, joined by 19 other attorneys general across the country, filed suit in O’Connor’s court, contending that the health law lost validity when Congress late last year passed its tax reform and reduced the penalty to zero for not carrying insurance. With that piece of taxation gone, the law becomes unenforceable, the lawsuit alleges.

“Once the heart of the ACA — the individual mandate — is declared unconstitutional, the remainder of the ACA must also fail,” the suit said.

A pillar of the ACA was a requirement that almost everyone in the country have health insurance. The individual mandate is deeply unpopular among many but is still considered vital to spread the risk pool among healthy people so the sick could be covered. Under the law, the past practice of medical underwriting allowed insurers to charge higher premiums to those with chronic medical needs or deny them altogether.

The lawsuit, once brushed aside as frivolous and going nowhere, received a boost in June from the White House when the Trump administration directed the Department of Justice not to defend the existing law.

Reaction to the ruling Friday night was swift and visceral among the law’s backers.

“This will mean 1 million Texans are now unsure of their insurance coverage,” said a shaken Ken Janda, CEO of Community Health Choice, a Houston-based insurer whose member base typically consists of lower-income residents who often did without coverage before the ACA.

He added that his company will honor its policies under the law “as long as we can.”

Elena Marks, CEO of Episcopal Health Foundation, which seeks to improve the access to health care for Texans, said: “If this lawsuit succeeds in invalidating the ACA and its protections, the leaders of Texas will have to answer to the residents of Texas about what they are going to do now to ensure coverage. We are back to 2010.”

“If this wasn’t the answer, what is your answer?” she posed to Texas leaders.

But in Austin, Texas leadership was taking a victory lap Friday night.

“Today’s ruling enjoining Obamacare halts an unconstitutional exertion of federal power over the American health care system while our multistate coalition lawsuit works its way through the courts,” Paxton said in a statement. “Our lawsuit seeks to effectively repeal Obamacare, which will give President Trump and Congress the opportunity to replace the failed social experiment with a plan that ensures Texans and all Americans will again have greater choice about what health coverage they need and who will be their doctor.”

Should the decision Friday end up before the U.S. Supreme Court, it will be the third time since the law’s passage that the high court has ruled on its constitutionality.

This challenge is rooted in that first decision, in 2012. In that fight, the high court ruled that the penalty created by the ACA for most Americans who do not carry health insurance is in fact constitutional because Congress “does have the power to impose a tax on those without health insurance.”

As part of the 2012 decision, the justices, however, ruled that states could decide individually whether to expand Medicaid, the federal health coverage for the poor, to scoop up more lower-income people and give them government health coverage. Texas remains one of 14 states that has refused.

That decision was followed by a second decision in 2015 that upheld the validity of federal subsidies to lower premiums based on income. But health policy experts say the current U.S. Supreme Court is potentially more conservative, throwing its fate into jeopardy.

One of the ironies of the timing of the ruling Friday is that it comes just over a month after the midterm elections in which health care, especially the protection provided by the existing law for those with chronic and pre-existing conditions, became a rallying cry.

Democrats hammered Republican opponents for their opposition to the ACA and their repeated attempts to repeal it. As the election neared, even many Republicans said they had always supported a prohibition against insurers limiting or denying coverage of those who had pre-existing conditions.

The lawsuit, in its dismantlement of the law, would eliminate protections for those with pre-existing conditions as well as other measures such as caps on coverage amounts.

It has been opposed by a coalition of 17 democratic attorneys general, led by California Attorney General Xavier Becerra, who have said that while the tax law does lower the tax penalty to zero, that does not invalidate the entire law.

“It is regrettable that politicians can only offer costly legal attacks on the Affordable Care Act, instead of options for lowering the costs of decent health insurance coverage for Americans,” said Vivian Ho, a health economist at the Rice University’s Baker Institute for Public Policy, in a statement to the Chronicle Friday night.

jenny.deam@chron.com

twitter.com/jenny_deam

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