Source: https://www.americanbar.org/groups/health_law/publications/aba_health_esource/2018-2019/january2019/ppaca/
Timestamp: 2019-04-23 20:35:33+00:00

Document:
Regardless of the ultimate outcome, Judge O’Connor’s decision has once again put questions surrounding the future of PPACA at the forefront of the American healthcare debate.
The Tax Cuts and Jobs Act (TCJA),13 signed into law by President Trump on December 22, 2017, eliminated the penalty associated with failing to maintain minimum essential coverage under PPACA’s Individual Mandate beginning January 1, 2019. At the same time, Congress left in place the Individual Mandate and the rest of PPACA. On February 26, 2018, a group of 20 states,14 led by Texas Attorney General Ken Paxton, filed a lawsuit against the Trump administration seeking to have PPACA declared unconstitutional.15 The states alleged that the elimination of the Individual Mandate penalty in the TCJA without a corresponding elimination of the Individual Mandate rendered the entire PPACA unconstitutional. Two individual plaintiffs, Neill Hurley and John Nantz, joined the lawsuit and alleged that even without the tax penalty they would continue to purchase health insurance because the Individual Mandate remained in place.
In May 2018, Judge O’Connor granted a Motion to Intervene filed by 17 Democratic attorney generals from 16 states16 and the District of Columbia.17 They argued that intervention was proper because the federal government may not adequately represent their interests, specifically regarding the severability of the shared responsibility provision from the rest of PPACA.
This left the intervening states to defend the constitutionality of PPACA.
Oral arguments were held on September 5 and on Friday evening, December 14, Judge O’Connor declared that without the tax penalty, the Individual Mandate is rendered unconstitutional. He also held that because the Individual Mandate is “essential” to PPACA and inseverable from the rest of the law, the entire PPACA is unconstitutional.20 Judge O’Connor issued a declaratory judgment and did not enjoin the law, meaning that it remains in place, at least for the time being.
Without the penalty in place beginning January 1, 2019, there is no negative consequence to an individual failing to maintain minimum essential coverage. However, Judge O’Connor disagreed, and found that the obligation to maintain minimum essential coverage remains a regulatory burden on the plaintiffs and therefore they suffer a cognizable injury.25 He did not address whether the plaintiff states have standing.
The Supreme Court has a strong presumption of severability. Judge O’Connor acknowledged that the Supreme Court has “frequently severed unconstitutional provisions from constitutional ones.”32 The intervening states and an amicus brief submitted by a bipartisan group of law professors argued that finding the Individual Mandate inseverable would be improper when “Congress itself has essentially eliminated the provision in question and left the rest of a statute standing.”33 In short, they argued that by eliminating the Individual Mandate penalty in the TCJA and leaving the rest of PPACA in place, Congress made clear that the Individual Mandate is no longer essential to the operation of PPACA.
Judge O’Connor pointed to the Supreme Court’s decisions in NFIB and King and their representations that the Individual Mandate, guaranteed issue, and community rating provisions are interdependent to infer that the provisions are inseverable. He cited heavily to the dissent in NFIB, which believed that the Individual Mandate and Medicaid expansion were so critical to the design of PPACA that the law becomes inoperative without them. The opinion references the earlier concerns about what would happen to the insurance market were the mandate to be eliminated but the remainder of PPACA to remain in place.
On the first day of the 116th Congress, the House of Representatives filed a Motion to Intervene as a defendant, in order to “defend the validity of the ACA.”49 Interestingly, the House of Representatives is represented by former Solicitor General of the United States Donald B. Verrilli Jr., who successfully defended PPACA in the NFIB and King v. Burwell cases.
Insurers participating in the Exchanges are again expected to be profitable in 2018,63 more insurers are participating in 201964 despite the effective elimination of the Individual Mandate, and premiums are relatively stable.65 Nonetheless, close to nine years after the enactment and subsequent implementation of PPACA by insurers, health systems, employers, consumers, and state and local governments, Judge O’Connor’s decision has the potential to be enormously disruptive to the American healthcare system.
In the meantime, after close to nine years of implementation, and well beyond the point where PPACA’s reforms and consumer protections have become intertwined with the American healthcare system, a legal challenge has again left the fate of PPACA in doubt.
42 U.S.C. § 18001 et seq. (2010).
See generally NFIB v. Sebelius, 132 S.Ct. 2566 (2012); Burwell v. Hobby Lobby Stores, Inc., 134 S.Ct. 2751(2014); King v. Burwell, 135 S.Ct. 2480 (2015).
Robert Pear, Democrats Won a Mandate on Health Care. How Will They Use It?, NY Times, Nov. 10, 2018, https://www.nytimes.com/2018/11/10/us/politics/health-care-democrats-congress.html.
The case is Texas, et al. v. United States, et al., and California et al. (Civil Action No. 4:18-cv-00167).
Benjy Sarlin, Midterm Exit Polls: Health Care Is Top Issue For Voters, NBC News, Nov. 6, 2018, available at https://www.nbcnews.com/politics/elections/midterm-exit-polls-2018-n932516.
Peter Sullivan, Five Health-Care Priorities for Dems in Next Congress, The Hill, Nov. 26, 2018, available at https://thehill.com/policy/healthcare/417947-five-health-care-priorities-for-dems-in-next-congress.
https://twitter.com/GregAbbott_TX/status/1074714563445223426; See also Alex Ruoff, Court Ruling Sparks Bipartisan Push to Preserve Health Insurance, Bloomberg, Dec. 15, 2018.
NFIB v. Sebelius, 567 U.S. 519 (2012).
Poverty Guidelines, HHS Office of the Assistant Secretary for Planning and Evaluation, available at https://aspe.hhs.gov/poverty-guidelines.
Tax Cut and Jobs Act, Pub. L. No. 115-97, (Dec. 22, 2017), https://www.congress.gov/bill/115th-congress/house-bill/1/text.
Alabama, Arizona, Arkansas, Florida, Georgia, Indiana, Kansas, Louisiana, Mississippi, Missouri, Nebraska, North Dakota, South Carolina, South Dakota, Tennessee, Texas, Utah, West Virginia, Wisconsin, and Governor Paul LePage of Maine (who left office at the end of 2018).
California, Connecticut, Delaware, Hawaii, Illinois, Kentucky, Massachusetts, Minnesota, New Jersey, New York, North Carolina, Oregon, Rhode Island, Vermont, Virginia, and Washington.
Letter from Attorney General Jeff Sessions to Hon. Paul Ryan, June 7, 2018, https://www.justice.gov/file/1069806/download.
Texas, et al. v. United States, et al., and California et al.,No. 4:18-cv-00167, slip op. at 2 (N.D. Tex. Dec. 14, 2018).
See 26 U.S.C. § 5000A.
Texas at p. 35, citing to INS v. Chadha, 462 U.S. 919, 931-35 (1983); Alaska Airlines v. Brock, 480 U.S. 678, 684-97 (1987); New York v. United States, 505 U.S. 144, 186–87 (1992); and Buckley v. Valeo, 424 U.S. 1, 108–09 (1976).
Brief of Amici Curiae Jonathan H. Adler, Nicholas Bagley, Abbe R. Gluck, Ilya Somin, and Kevin C. Walsh in Support of Intervenors-Defendants’ Opposition to Plaintiffs’ Application for Preliminary Injunction, available at https://theincidentaleconomist.com/wordpress/wp-content/uploads/2018/06/Texas-v.-US-Law-Profs-Amicus-Br.pdf.
See 42 U.S.C. § 18091.
Emphasis in original. Texas at p.40.
Sheryl Gay Stolberg, Robert Pear and Abby Goodnough, Ruling Striking Down Obamacare Moves Health Debate to Center Stage, NY Times, Dec. 15, 2018, available at https://www.nytimes.com/2018/12/15/us/politics/obamacare-ruling-health-care.html.
Pelosi Statement on District Judge Ruling in GOP Lawsuit Against Pre-Existing Condition Protections and the Affordable Care Act, Dec. 15, 2018, available at https://www.democraticleader.gov/newsroom/121418-4/.
State of Maryland v. United States of America, D. Md., No. 1:18-cv-02849.
Sahil Kapur, GOP Stuck in a ‘Lose-Lose’ Dilemma with Judge’s Obamacare Ruling, Bloomberg, Dec. 18, 2018.
Richard Gonzales, Federal Judge Strikes Down Affordable Care Act as Unconstitutional, NPR, Dec. 14, 2018, available at https://www.npr.org/2018/12/14/677000626/federal-judge-strikes-down-affordable-care-act-as-unconstitutional.
See Nicholas Bagley, The Latest ACA Ruling is Raw Judicial Activism and Impossible to Defend, The Washington Post, Dec. 15, 2018, available at https://www.washingtonpost.com/opinions/2018/12/15/latest-aca-ruling-is-raw-judicial-activism-impossible-defend/?noredirect=on&utm_term=.87578632af32; Jonathan H. Adler, Breaking: District Court Judge in Texas Holds ACA is Unlawful, The Volokh Conspiracy, Dec. 14, 2018, available at https://reason.com/volokh/2018/12/14/breaking-district-court-judge-in-texas-h; Abbe R. Gluck and Jonathan H. Adler, What the Lawless Obamacare Ruling Means, NY Times, Dec. 15, 2018, available at https://www.nytimes.com/2018/12/15/opinion/obamacare-ruling-unconstitutional-affordable-care-act.html?rref=collection%2Fsectioncollection%2Fopinion&action=click&contentCollection=opinion&region=stream&module=stream_unit&version=latest&contentPlacement=3&pgtype=sectionfront.
Stephen Grocer, Obamacare Ruling Hits Health Care Stocks, NY Times, Dec. 17, 2018, https://www.nytimes.com/2018/12/17/business/dealbook/obamacare-ruling-health-care-stocks.html.
Status of State Action on the Medicaid Expansion Decision, Kaiser Family Foundation, Nov. 26, 2018, available at https://www.kff.org/health-reform/state-indicator/state-activity-around-expanding-medicaid-under-the-affordable-care-act/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D.
September 2018 Medicaid & CHIP Enrollment Data Highlights, Medicaid.gov, available at https://www.medicaid.gov/medicaid/program-information/medicaid-and-chip-enrollment-data/report-highlights/index.html.
See 42 U.S.C. § 1315a.
Kaiser Family Foundation Health Tracking Poll – November 2018: Priorities for New Congress and the Future of the ACA and Medicaid Expansion, Kaiser Family Foundation, available at https://www.kff.org/health-reform/poll-finding/kff-health-tracking-poll-november-2018-priorities-congress-future-aca-medicaid-expansion/.
Individual Insurance Market Performance in Mid-2018, Kaiser Family Foundation, https://www.kff.org/health-reform/issue-brief/individual-insurance-market-performance-in-mid-2018/.
Insurer Participation on ACA Marketplaces, 2014 – 2019, Kaiser Family Foundation, available at https://www.kff.org/health-reform/issue-brief/insurer-participation-on-aca-marketplaces-2014-2019/.
2019 Premium Changes on ACA Exchanges, Kaiser Family Foundation, available at https://www.kff.org/health-costs/issue-brief/tracking-2019-premium-changes-on-aca-exchanges/.
Jeff J. Wurzburg is a counsel in the San Antonio office of Norton Rose Fulbright and a member of the healthcare practice group. His practice focuses on healthcare regulatory, coverage and payment, transaction, compliance, and policy matters. Mr. Wurzburg works with hospital systems, provider groups, accountable care organizations, managed care companies, durable medical equipment suppliers, and other entities on healthcare matters. Prior to joining Norton Rose Fulbright, he served as an attorney in the United States Department of Health and Human Services (HHS) Office of the General Counsel in Washington, D.C., where he advised the Centers for Medicare & Medicaid Services and the Center for Medicare & Medicaid Innovation. He advised on a wide-ranging portfolio that included Affordable Care Act regulations, guidance, and litigation as well as the development and testing of innovative healthcare payment and service delivery models. He is a frequent contributor to Norton Rose Fulbright's healthcare law blog, the Health Law Pulse. He may be reached at jeff.wurzburg@nortonrosefulbright.com.

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