Landmark Federal Appeals Case Could End Obamacare

The fate of the Affordable Care Act is at risk as a New Orleans federal appeals court examines Texas vs. the United States. A lower court judge has already ruled the ACA, popularly known as Obamacare, as unconstitutional. If the appeals court upholds this decision, millions of Americans would have jeopardized health care coverage along with countless other far-reaching effects to the economic and health care systems.

The Origins of Texas vs. the United States

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Passed in 2017, the Tax Cuts and Jobs Act eliminated the ACA provision penalizing taxpayers who do not have health insurance. Then, in February 2018, a group of Republican governors and attorney generals from Texas filed a lawsuit to declare the remainder of the ACA as unconstitutional. Their petition cited a 2012 Supreme Court decision that upheld the taxing power of Congress under the ACA, arguing that negating the tax penalty provision thus negates the entire law. Federal district court judge Reed C. O’Connor ruled in favor of Texas in December of that year, effectively ending the ACA.

Defense for the ACA

Democratic leaders have widely argued for the ACA to stand. A group led by California Attorney General Xavier Becerra declared that a lack of affordable health insurance under the ACA would risk the health and well-being of every American. The Trump administration, technically the defendant in the appeal, has frequently changed positions about the constitutionality of the ACA. Most recently, an early July 2019 court filing from the White House Justice Department recommended ending the ACA only in the states involved in the lawsuit.
 
Since the initial lawsuit was filed, more states have become involved. The current list includes:

• Plaintiff states: Texas, Alabama, Arkansas, Arizona, Florida, Georgia, Indiana, Kansas, Louisiana, Mississippi, Missouri, Nebraska, North Dakota, South Carolina, South Dakota, Tennessee, Texas, Utah and West Virginia.
• Intervenor (defendant) states: California, Colorado, Connecticut, Delaware, the District of Columbia, Hawaii, Illinois, Iowa, Kentucky, Massachusetts, Michigan, Minnesota, Nevada, North Carolina, New Jersey, New York, Oregon, Rhode Island, Virginia, Vermont and Washington

What Happens Next

​Most legal scholars have argued that the underlying basis of the case is unwarranted, noting that Congress eliminating only the penalty and not the entire ACA indicates its intent to let it stand. However, the appeal and likely subsequent appeals are expected to proceed. Texas vs. the United States could be a major issue during the 2020 presidential campaign.
 
In July 2019, early arguments in appellate court indicated that most of the Republican judges on the panel find the tax penalty unconstitutional. However, they do not necessarily agree that removal of this provision invalidates the entire ACA. The case is expected to touch on these questions:

• Which court has jurisdiction over the ruling?
• Do the parties who brought the case have standing to do so?
• Is the ACA’s tax penalty provision unconstitutional?
• If so, can this provision be effectively separated from the rest of the ACA?

 
The ability of the administration to create a replacement health insurance system is a major concern of ACA proponents. Many predict a chaotic health care environment if the Supreme Court upholds Judge O’Connor’s ruling, with vulnerable Americans unable to access necessary medical services.
 
For affordable health care coverage from an independent agency, get in touch with Sackett & Associates Insurance Services. You can request a quote for individual or corporate medical policies and follow us on social media for the latest ACA news and updates.