Trump's Team Asks Court to Let ACA Underwriting Rules Die in 2019

Texas and other states that oppose the ACA have responded by filing a suit in the U.S. District Court for the Northern District of Texas. The states argue that, because the TCJA has eliminated the individual mandate penalty, the ACA individual mandate is no longer a tax law.

If the mandate provision is no longer a tax provision, the 2012 Supreme Court ruling should no longer protect the individual mandate provision from legal challenges, the states say.

The states want the court to declare the mandate to be unconstitutional.

Because the ACA contains no severability clause protecting the rest of the law from the effects of the nullification of part of the law, a ruling killing the individual mandate should kill the rest of the ACA, the states say.

Intervenors

The Texas district court judge, Judge Reed O’Connor, still has to rule on the request Texas and Texas’ allies have made for the preliminary injunction.

O’Connor has said that, once he has issued his ruling, the parties will have 30 days to respond.

One wrinkle that could keep the case alive, even if the states that oppose the ACA and the Trump administration want to resolve the case in favor of Texas and its allies, is that California, New York and other states that support the ACA have asked to intervene.

O’Connor issued an order on May 16 that grants California and other states that support the ACA official intervenor status. O’Connor has told those states they can submit pleadings to the court along with the other parties.

Health Insurers React

Analysts at Standard & Poor’s and Moody’s Investors Service have said that large health insurers’ remaining individual major medical operations look stable right now, but that uncertainty about ACA rules and subsidies could cause problems in the future.

Health insurers are trying to lock in individual and small-group major medical policy language, benefits and rates for 2019 now.

America’s Health Insurance Plans (AHIP), a trade group for health insurers, today put out a statement arguing that eliminating the current underwriting rules for 2019 would lead to major disruption in the individual major medical market.

“Initial filings for 2019 plans have shown that, while rates are higher due to the zeroing out of the individual mandate penalty, the market is more steady for most consumers than in previous years, with insurance providers stepping in to serve more consumers in more states,” AHIP says in the statement.

“We agree with the [Trump] administration that a preliminary injunction should not be granted to the plaintiffs. We also agree that the Affordable Care Act’s (ACA) provisions affecting Medicaid, Medicare Advantage, and Medicare Part D should remain law. However, we believe that a declaratory judgment would have the same destabilizing effect as a preliminary injunction, and therefore should not be granted.

“Zeroing out the individual mandate penalty should not result in striking important consumer protections, such as guaranteed issue and community rating rules that help those with pre-existing conditions. Removing those provisions will result in renewed uncertainty in the individual market, create a patchwork of requirements in the states, cause rates to go even higher for older Americans and sicker patients, and make it challenging to introduce products and rates for 2019. Instead, we should focus on advancing proven solutions that ensure affordability for all consumers.

“Final resolution of this case will take time, given that the litigation is in its preliminary stages at the district court, and any ruling will be subject to appeal. AHIP will file an amicus brief that opposes the state plaintiffs’ request for emergency relief, and provides more detail about the harm that would come to millions of Americans if the request to invalidate the ACA is granted in whole or in part.”

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