Health Reform: The Latest Twist in the Legal War on Obamacare

The Affordable Care Act, aka Obamacare, remains alive but certainly not well. When last we left the melodrama, a federal district court in Texas had ruled in favor of Republican Governors challenging the law’s constitutionality (see National Intelligence Report, Jan. 15, 2019). That case is currently with the Fifth Circuit Court of Appeals. And while a ruling isn’t expected until the end of the year, a new twist has occurred with the Justice Department deciding to switch sides in the fight and urge full repeal of Obamacare. Here’s the latest and what it means.

Recap
In the 2012 case called NFIB v. Sebelius, we all thought that the U.S. Supreme Court had decided once and for all that Obamacare was constitutional. But things changed, including the federal laws on which the Sebelius ruling was based, namely the penalty on employers for not offering health insurance to their employees which the Court said was a form of tax that the Congress had a right to impose. But in 2019, the Republicans got rid of the penalty. With the tax gone, Obamacare was once more exposed to constitutional challenge.

Republicans seized the opportunity. Round 1 of the new case, Texas vs. United States, went to the challengers in December when Texas U.S. District Court Judge Reed O’Connor ruled that not just the individual mandate but all of Obamacare was unconstitutional. To prevent panic in the insurance industry, the DOJ asked Judge O’Connor to “stay,” i.e., freeze his ruling, which he agreed to do on Dec. 30, effectively leaving Obamacare in effect unless and until the Fifth Circuit affirms the ruling. And that’s where we are right now—waiting to hear from the Fifth Circuit, which may take until the end of the year.

The DOJ Flip-Flop & What It Means
After initially defending the law, the U.S. Department of Justice has jumped ship and called on the courts to strike down not just the individual mandate but all parts of Obamacare. So, instead of helping the Democratic Governors defend the case, it will issue a brief asking the Fifth Circuit to uphold the lower court ruling.

So, what does it mean? Probably not all that much. Many, including people within the Trump Administration, see the DOJ flip-flop as nothing more than politics. The theory is that the DOJ neither expects nor wants the entire law to be declared invalid, at least until a replacement plan is in place and is just posturing for the 2020 election.

What’s At Stake
But even if it’s a bluff, nobody denies that the stakes are high with about 20 million Americans who stand to lose their health insurance caught in the middle. House Speaker, Nancy Pelosi, has promised new health care legislation to lower costs and protect pre-existing condition provisions. But even if it passes in the House, a Democratic Obamacare bill has little chance of becoming law before 2020. And hopes of a bipartisan resolution are about as unrealistic as hopes can get, especially with a Presidential election looming.

Meanwhile, if the Fifth Circuit calls the DOJ’s bluff and rules all of Obamacare unconstitutional and there’s no replacement in effect, the impact will be devastating with the first casualties including:

• Protections for people with pre-existing conditions;
• ACA Medicaid expansion;
• Requirements for employers to provide health insurance;
• Insurance for children under 26 who get insurance through their parents’ plans.

Other effects:

• Annual and lifetime limits on coverage would again be permitted;
• Caps on out-of-pocket expenses could be eliminated; and
• Insurers could again charge more based on age, gender and profession.