Federal 5th Circuit Court Signals New Threat to the ACA

Health Care Increasingly Looking Like a Major Campaign Topic for 2020

Background on the 2012 Ruling Upholding the ACA

In the 2012 Ruling that upheld the ACA, Chief Justice Roberts wrote that: “… the Affordable Care Act’s requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a taxbecause the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness.” 

Roberts rejected the Obama Administration's argument that the federal government's authority to regulate interstate commerce provides the authority needed for the ACA to be constitutional (the Court struck down that argument 5-4).  Fortunately, the court held (5-4) that the ACA was constitutional based on the federal government’s taxing authority.

The Texas v Azar Challenge

Last week the 5th US Circuit Court of Appeals heard the Texas v Azar case which, once again, challenges the constitutionality of the Affordable care Act. Arizona is a party to the case and is supporting the suit (to overturn the ACA).

This latest challenge essentially argues that the ACA is no longer constitutional because the tax penalty for not having health insurance has been eliminated. 

All the media reports that I found about the questions they were asking and the statements they were making suggest that the appellate court may rule that the ACA is unconstitutional (now that the tax penalties for not having insurance are gone) - which would send the case up to the Supreme Court.

Protections at Risk

In addition to the coverage that the ACA provides through Medicaid expansion and the availability of Marketplace Plans with subsidies, the ACA has a ton of health insurance reform measures including preventing commercial health insurance companies from:

1) denying someone health insurance because they have a preexisting condition -called the “guaranteed issue” requirement;

2) refusing to cover individual services that people need to treat a pre-existing condition- called “pre-existing condition exclusions”; and

3) charging a higher premium based on a person’s health status - called the “community rating” provision.

Supreme Court Forecast

Because of the makeup of the 5th Circuit Court of Appeals (and the signals they sent through their questions at the hearing this week) the Court will likely uphold O’Connor’s decision to invalidate the ACA and the case will probably end up with the US Supreme Court…  which has a different cast of characters than it did when the ACA was originally upheld back in 2012 by a 5-4 vote.

Since the 2012 decision upholding the ACA, Gorsuch has replaced Scalia and Kavanaugh has replaced Kennedy.  Both Scalia and Kennedy voted to overturn the ACA- so not much on that score has changed.

Chief Justice Roberts voted with the majority that upheld the law. His argument rested on the ACA’s link to the financial penalties for not having health insurance. But remember, the financial penalties for not having health insurance were removed from the IRS tax codes in last year's federal tax overhaul, pulling out the structure that Roberts used in his argument.

The bottom line is that the ACA, including its protections for folks with pre-existing conditions, may very well be in jeopardy if Roberts views the ACA as fundamentally different now that the financial penalties are gone.

Healthcare’s Link to the 2020 Election

If a decision comes from the 5th Circuit in the next couple of months (as is likely) the US Supreme Court could be hearing the case during their October 2019 – April 2020 schedule…  making access to healthcare a sentinel issue in the November 2020 election.

Pre-existing exclusion exemptions, community rating, guarantee issue of health insurance, the availability of Marketplace plans with subsidies, and Medicaid expansion will all be front and center with the electorate. All very personal issues.

Social science suggests that people feel a loss of a benefit much more acutely than a missed opportunity.  In other words, it’s a lot harder to take something away than to not give it in the first place. 

With the American people now accustomed to the benefits that the ACA provides, there could be a backlash against those that take those benefits away.  Just sayin’.