Affordable Care Act Faces Its Latest Legal Challenge

Lindsey CopelandMedicare WatchLeave a Comment

This week, the U.S. Court of Appeals for the Fifth Circuit heard oral arguments in Texas v. U.S., the latest legal challenge to the Affordable Care Act (ACA). The appeals court is reviewing a federal trial court’s December 2018 decision invalidating the ACA.

The underlying lawsuit was brought in 2017 by 20 Republican state attorneys general and governors plus two individuals, challenging the constitutionality of the ACA’s individual mandate and related tax penalty.

The individual mandate requires that most people maintain a minimum level of health coverage or pay a financial penalty to the Internal Revenue Service. The Supreme Court previously upheld these ACA provisions in 2012, finding the mandate to be an appropriate use of Congress’s power to tax.

Subsequently, in the 2017 tax bill, Congress reduced the mandate’s penalty to zero. Plaintiffs in Texas v. U.S. then filed suit, arguing that absent a financial penalty the mandate is no longer a tax, and the Supreme Court’s previous reasoning is no longer valid. They claim the penalty—and the entire ACA—must fall as a result. The district court agreed with this flawed argument, finding both that the individual mandate is unconstitutional and that the court cannot sever it from the rest of the law and leave the remainder of the ACA in place.

If the lower court’s ruling is upheld and the ACA is invalidated, the results would be catastrophic, particularly for older adults and people with disabilities. Such a finding would cause millions of Americans to lose health coverage, while jeopardizing it for millions more, including an estimated 133 million Americans under 65 with pre-existing conditions who rely on the ACA’s coverage and consumer protections. Those approaching Medicare eligibility would be disproportionately impacted, as the likelihood of having a pre-existing condition increases with age: up to 84% of those ages 55 to 64—31 million individuals—have a pre-existing condition for which they could be denied coverage or charged an unaffordable rate absent the ACA’s important protections.

The health law’s improvements to the Medicare program would also go away—including provisions setting Medicare Advantage payments based on the equivalent costs in Original Medicare, expanding coverage for preventative care, and closing the Part D donut hole. These changes have been critical to strengthening beneficiary access and affordability, as well as the program’s sustainability.

Importantly, the ACA is still the law of the land. The Fifth Circuit has placed a stay on the lower court’s decision, meaning that no action can be taken until the higher court issues a ruling, which could take months. That decision could then also be appealed—perhaps eventually to the Supreme Court—prolonging the stay that is currently in place.

Medicare Rights continues to be troubled by the lower court’s decision and the Department of Justice’s failure to defend the law in court. We urge states and the Trump Administration to abandon efforts to undermine the ACA, and instead favor efforts to improve health care and coverage for all Americans.

Read more about the lower court’s decision.

Read about the Department of Justice’s decision to try to invalidate the ACA.

Share This Post