Citing claims that the entire health care industry would face chaos if all of the Affordable Care Act (“Obamacare”) were wiped out suddenly, a federal judge in Texas decided on Sunday night to put on hold his ruling that the law is unconstitutional. The postponement is likely to last months, if not longer
As a result, all parts of the law – except one – will continue in operation while an appeal of the judge’s decision goes forward. The one part, to end as of this coming Tuesday, will be the financial penalty that Congress had imposed to help guarantee that individuals would buy health insurance. Individuals will still have a legal duty to get insurance, but there will be no penalty if they refuse to do so.
U.S. District Judge Reed C. O’Connor of Fort Worth issued a 30-page opinion. The decision was issued Sunday night, after the judge apparently had worked on it through the holiday week.
All but one of those 30 pages were devoted to defending his decision against the law’s validity. That appeared to be designed, in part, to try to shore up his ruling when it is tested before higher courts – presumably, first in the U.S. Court of Appeals for the Fifth Circuit. The constitutional question, though, may ultimately have to be decided in a final way by the Supreme Court.
The one page of his opinion dealing with the question of delaying his decision cited arguments about potential disruption of the entire health insurance industry if the ruling went into effect immediately. Those arguments about chaos, the judge wrote, were “well-taken.”
The ACA was passed by Congress in 2010, and most key parts of it have withstood constitutional challenges in the Supreme Court. The law has also withstood more than 60 attempts by Republican-controlled sessions of Congress to repeal the entire law. Currently, more than 20 million Americans have insurance as a direct result of the law.
Last year, Congress decided to reduce to zero – with the change to take effect on Tuesday – the financial penalty that has been assessed up to now on those individuals who fail to obtain health insurance (some people, including low-income individuals, are exempt from that penalty, but still have a legal duty to obtain insurance).
While a group of 19 states had pursued the constitutional challenge which succeeded earlier this month in Judge O’Connor’s court, a separate group of 16 states and the city government of Washington, D.C., entered the case to defend the constitutionality of the law when the Trump Administration chose not to do so.
Even if the coming appeal by the 16 states moves on a fast track in the Fifth Circuit Court and also does so in the Supreme Court, it will be very difficult for a final decision to emerge before the Supreme Court’s current term is expected to end late next June. Under the Supreme Court’s normal schedule, a case has to be granted by no later than January in order to be decided in that term. The Fifth Circuit Court would not complete its part of the appeal review by then.
In the meantime, a new session of Congress opens next week, with the Democrats newly in control of the House. If the lawmakers have the inclination to try to pass new legislation to assure that the health care insurance industry does not collapse if Judge O’Connor’s ruling ultimately were to be upheld, the judge’s Sunday night order appears to provide time for legislative action. States also could attempt to devise new health insurance laws of their own.
With Obamacare still operating, some of its most popular features will continue in operation for the time being. Among those are the requirement that no one can be denied health insurance or be charged higher insurance premiums just because they have a pre-existing medical condition, the provision that youths may remain on their parents’ health insurance coverage until age 26, expansion of medical care options for poor people, a broad array of preventive medical care promises – including free access to birth-control devices and methods for women of child-bearing age, and a series of subsidies to enable lower-income people afford insurance coverage if they buy on the state-run insurance “exchanges” (marketplaces).
The law also mandated a number of cost-saving measures to bring down the high price of medical and hospital treatments. In addition to the individual mandate to buy health insurance, also continuing in effect will be a mandate for employers with a payroll of more than 50 to provide affordable insurance for their workers.
The only provision of the law that Judge O’Connor found to be unconstitutional as written by Congress in 2010 was the so-called individual mandate. That compelled most Americans, if they do not get public health insurance or do not get it from their employer, to obtain health insurance or pay a financial penalty.
But, after striking down that provision in his ruling earlier this month, Judge O’Connor concluded that the individual mandate was such a critical part of the entire Obamacare provisions and reforms that Congress would not have passed any of the many other parts of the law if it could not have the mandate. Since all of other provisions could not be separated from the individual mandate, every facet of the huge law failed constitutional muster, the judge decided.
When Congress last year voted to reduce the penalty to zero, as of January 1, 2019, Judge O’Connor found, that took away the reasoning that the Supreme Court had used in 2012 in upholding the individual mandate’s constitutionality, treating it as a form of tax.
When the judge’s sweeping ruling was issued on December 14, it was in a form that did not appear to be final. That ruling said nothing about delaying the decision’s effective date to allow time for an appeal. All sides then agreed that the decision should not take immediate effect.
Judge O’Connor technically made his December 14 ruling a final decision, and then put the entire ruling on hold “during the pendency” of the appeal.
In choosing to accept the postponement plea by the 16 states defending the law, the judge wrote that he did so “because many everyday Americans would otherwise face great uncertainty” while the appeal went forward
It is now up to the 16 states and D.C. government to formally start the appeal process.
