Supreme Court Pulls ACA Constitutionality Case Away From District Court

The U.S. Supreme Court on Monday agreed once again to determine the fate of the embattled Affordable Care Act in the wake of arguments from the Trump administration and a group of Republican-led states that the entire law should be thrown out.

The justices will hear arguments in a case brought by a coalition of Democratic-led states.

(Related: AHIP Works to Speed Texas v. Azar to Supreme Court)

Those states, along with the U.S. House, defended the law’s constitutionality in the lower appellate court against the effort by the administration and the Republican states to dismantle the law, including such popular provisions as coverage for individuals with pre-existing conditions.

The court has not said when it will hear arguments, but most observers say they expect the court to take up the caase next term.

Texas v. Azar, Texas v. California and California v. Texas

In the high court, the Democratic coalition, led by California, is vying to overturn a December ruling, on Texas et al. v. Azar et al., by the 5th U.S. Circuit Court of Appeals. A divided panel ruled that the individual mandate to purchase health insurance — which the Supreme Court upheld in 2012 as a constitutional tax — was no longer constitutional because Congress in 2017 zeroed out the tax penalty for failure to have insurance.

The panel decision largely affirmed a ruling in December 2018 by U.S. District Judge Reed O’Connor in Texas. But the appellate panel sent back to O’Connor the question of whether Congress intended other provisions of the law to remain operable. O’Connor had earlier decided that the mandate was so central to the law that the entire law must fall.

The high court petition raises three issues stemming from the 5th Circuit decision: whether the Republican-led states and individual plaintiffs lacked standing to challenge the ACA because they had suffered no injury; whether the individual mandate is constitutional, and whether the mandate can be severed from the rest of the act.

The U.S. House filed a separate petition in which House general counsel Douglas Letter told the justices that the 5th Circuit’s decision is destabilizing the insurance market and hospitals’ ability to make long-term investments as well as creating uncertainty about coverage for millions of Americans and small business owners and employees. Letter is assisted by Munger, Tolles & Olson partner Donald Verrilli Jr. and Elizabeth Wydra of the Constitutional Accountability Center.

California Deputy Solicitor General Samuel Siegel represents the Democratic-led states in the petition California et al. v. Texas et al. (Case Number 19-840). Texas and other states have filed a separate action, Texas et al. v. California et al. (Case Number 19-1019). The Supreme Court has now told the parties to submit subsequent filings through the California v.  Texas case.

U.S. Solicitor General Noel Francisco and Texas solicitor general Kyle Hawkins urged the justices not to grant review. Francisco said the 5th Circuit did not “definitively resolve any question of practical significance.” He and Hawkins argued that the high court should wait for a final decision by the lower courts on the issue of whether the ACA can operate without the individual mandate.

“This court should not allow petitioners to leapfrog lower-court consideration based on their own asserted ‘need for certainty,’” Hawkins wrote.

What Could Go Away

If the entire Affordable Care Act is unconstitutional, as argued by the Trump administration’s Justice Department and the Republican coalition, the law’s insurance coverage would end for an estimated 20 million people, including protection for people with pre-existing conditions, the Medicaid expansion in many states, coverage for young persons up to age 26 on their parents’ plans, subsidies for low-income people and a host of other wide-ranging changes.

If the Supreme Court finds that all of the ACA is unconstitutional, that ruling could also have a major effect on many matters unrelated to what members of the general public typically think of as being “Obamacare.”

One part of the ACA, for example, is responsible for narrowing the Medicare Part D prescription drug plan “donut hole,” or the gap between when routine benefits end and catastrophic benefits begin.

Other parts shape how the federal government subsidizes the physician training programs at teaching hospitals, provide funding for programs that train health care providers who work with the elderly, and govern the reporting of physician quality information.

Other Cases

The justices have agreed to decide two other ACA-related issues this term. In December, the court heard arguments in three consolidated cases contending that the federal government broke a statutory promise to pay insurers in the first three years of health benefit exchanges when their costs exceeded the premiums they collected. Not yet scheduled for arguments are two Pennsylvania cases concerning the Trump administration’s expansion of the conscience exception to the contraceptive coverage requirement in the ACA.

— Read Trump Administration Fears ‘Chaos’ If ACA Provisions Blocked Too Soon, on ThinkAdvisor.

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