ACA Ruled Unconstitutional by Federal Judge

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Posted: December 21, 2018 by Staff Writer

After three months, a federal judge in Texas ruled on Friday, December 14, 2018, that the Patient Protection and Affordable Care Act (ACA) is unconstitutional. In his ruling, U.S. District Judge Reed O’Connor of the Federal District Court in Northern Texas said the ACA’s requirement that most Americans have health insurance or face a tax does not comply with the U.S. Constitution.

In a 55-page opinion, the judge noted that because the ACA contains no “severability clause” (or a provision that lets the health care law survive if part of it is nullified), all of the ACA is invalidated by the tax bill enacted by Congress in late 2017 that eliminated the penalty for individuals not having health coverage.

Judge O’Connor writes “All told, Congress stated three separate times that the individual mandate is essential to the ACA. That is once, twice, three times and plainly. It also state the absence of the individual mandate would undercut its regulation of the health insurance market.”

The U.S. Supreme Court previously ruled the ACA individual mandate is constitutional because it is a tax protected by the federal Anti-Injunction Act.

No Immediate Impact

Democrats who support the ACA have vowed to appeal the Texas decision, so it is unlikely the judge’s ruling will have an immediate impact on the ACA.

As the administrator for the Centers for Medicare & Medicaid Services (CMS) said following the judge’s announcement, the measure is still working its way through the courts system. Ultimately, some legal experts expect a reversal by the U.S. Supreme Court.

The national deadline for ACA plan enrollment for 2019 was Saturday, December 15, 2018. The extended deadline for 1/1/19 coverage from the state-run exchange in California is December 21, 2019. Covered California will continue to take applications through mid-January for coverage effective February 1, 2019.

One possible response by Congress might be to establish a new individual mandate penalty – perhaps as low as $10 – or by adding a severability provision to the ACA. With the House of Representatives not currently in session (observing a “District work period” through year-end), it’s likely the new Democrat-lead House would begin consideration of such measures in January 2019.

We will continue to monitor actions in the courts and in Congress and will share updates when available.

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