Industry Buzz: Obamacare Repeal Sends Tremors through Insurance Markets

What came as a Christmas gift to many Republicans may be a lump of coal in the stocking of many others. On December 14, a federal judge in Texas ruled that the entire Affordable Care Act (aka, Obamacare), is unconstitutional.  While a group of attorneys general from Democratic states are promising to appeal the decision, the new more conservative make up of the Supreme Court makes ACA's ultimate fate less then certain.

Background
Six years ago, the U.S. Supreme Court in NFIB v. Sebelius upheld Obamacare stating that, because the mandate with the penalty could be considered a federal tax, it was a constitutional exercise of the U.S. Congress's powers. Then, when the Republicans came into power in Washington, they lowered the penalty for not having health insurance to $0 beginning in 2019.

The plaintiffs in Texas v. United States argue ACA in its entirety should now be thrown out because:

• Since Sebeliusupheld the individual mandate as constitutional because, with the penalty, it could be considered a tax, zeroing out of the penalty to $0 in 2019 makes the mandate unconstitutional.
• Since the individual mandate is not severable from the rest of the law, the entire ACA should be invalidated.
• The judge in Texas, Judge Reed O'Connor of the Federal District Court in Fort Worth agreed, and declared the individual mandate unconstitutional and all the remaining provisions of ACA invalid.

So What Happens Now?
A group of Democratic attorney generals are promising to repeal the decision to the Fifth Circuit court of appeals, a circuit known for leaning conservative, so Judge O'Connor's decision is likely to be upheld.  From there the case is likely to ultimately going to the Supreme Court, which previously upheld ACA as constitutional.  The new more conservative make-up of the court, since Justice Brett Kavanaugh has been seated, however, could mean that ACA could ultimately wind up on the ash heap of history. 

Pending the appeal of the case, the law remains in effect, so everything remains the same as the case winds it's way through the courts.

If the law is ultimately found to be unconstitutional, and the entire ACA is declared invalid the following will be impacted:

• 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.
• Annual and lifetime limits on coverage will again be permitted.
• Caps on out-of-pocket expenses can be eliminated.
• Insurers can again charge more based on age, gender and profession.
• Non-insurance-related ACA provisions such as:
  • Closing of the Medicare drug donut hole,
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  • Creation of the Center for Medicare and Medicaid Innovation
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  • Restaurant menu labeling.

Future Democratic speaker of the House, Nancy Pelosi, vowed that when Democrats take control of Congress next month it would "move swiftly to formally intervene in the appeals process to uphold the lifesaving protections for people with pre-existing conditions and reject Republicans' effort to destroy the Affordable Care Act." Given that the US Senate and presidency are in Republican hands, however, it's unlikely that anything can be accomplished legislatively to maintain the ACA.