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Suit Challenging ACA Legally Suspect, But Threatens Loss of Coverage for Millions

The Trump Administration and 18 Republican state attorneys general are asking the courts to strike down the entire Affordable Care Act (ACA) as unconstitutional. On December 18, 2019, the Fifth Circuit Court of Appeals endorsed part of their argument and sent the case back to the district court to determine how much of the law should fall. The ACA remains the law of the land for now, and legal experts across the political spectrum view the case against it as extremely weak. Nonetheless, the Fifth Circuit decision invites the Administration and the states to keep pressing for full repeal of the law through the courts. If they prevail, 20 million people would become uninsured and millions more could be charged more or denied coverage altogether because they have a pre-existing condition or would lose other important protections.

Lawsuit Background and Trump Administration’s Position

The state attorneys general filed their lawsuit in February 2018. The crux of their argument is that the Supreme Court’s 2012 decision in National Federation of Independent Business v. Sebelius upheld the ACA’s individual coverage requirement under Congress’s taxing power, and the 2017 tax law zeroed out that tax penalty. Without the tax in place, they claim, the coverage requirement is unconstitutional, making the rest of the ACA also unlawful — an argument that ignores Congress’s choice to leave the ACA intact when it zeroed out the tax penalty. District Court Judge Reed O’Connor ruled in their favor and invalidated the entire ACA in December 2018.

From the start the Trump Administration has refused to defend federal law under the ACA, an unprecedented move that seems to have led three senior career attorneys to withdraw from the case and one to resign. But the government’s specific position on the case has changed. In June 2018 the Department of Justice (DOJ) largely agreed with the plaintiffs’ reasoning, but it asked the court to strike down not the entire law but two critical consumer protections that it said were inextricably linked to the mandate: the prohibitions on insurers denying coverage to people with pre-existing conditions (guaranteed issue) and on charging people higher premiums because of their health status (community rating). It has since endorsed striking down the entire ACA, in line with its many legislative and executive attempts to repeal or undermine it.

A group of Democratic attorneys general led by California’s intervened to defend the law in court following the Trump Administration’s refusal to do so.

What Happens if Trump Administration Prevails?

Striking down the ACA would increase the number of uninsured people by 20 million, or 65 percent, the Urban Institute estimates. (Urban also provides estimates by state and demographic group.) It would end not only the ACA’s major coverage expansions — such as Medicaid expansion, premium tax credits, and the health insurance marketplaces ― but other important protections as well, harming tens of millions of people who would remain insured.

  • Insurers could once again put annual and lifetime limits on coverage, including for people with employer plans.
  • Young adults would no longer be able to stay on their parents’ plans up to age 26.
  • Insurers could reimpose cost sharing for preventive services, including under employer plans and Medicare.
  • Reversing the ACA’s changes to how Medicare pays plans and providers and how state Medicaid programs determine eligibility would cause massive disruption.
  • Medicare beneficiaries would face higher prescription drug costs due to the Medicare “donut hole” reopening.

Higher-income households, meanwhile, would reap $45 billion in tax cuts each year, with an average $46,000 per year for those with incomes over $1 million.

If the courts threw out only parts of the law, the result would be nearly as devastating. For example, allowing insurers to again discriminate based on health status would jeopardize coverage for millions who could be charged more, denied coverage for certain diagnoses, or blocked from individual market coverage altogether. Eliminating ACA protections could also let insurers charge higher premiums to women and people in certain occupations, reimpose pre-existing condition exclusions in employer coverage, and make premium tax credits nearly impossible to administer.

Legal Experts Across Political Spectrum Call Case “Absurd,” “Ludicrous”

Legal experts, including experts opposed to the ACA and who supported other legal challenges to the law, almost uniformly agree that the arguments in this case are “absurd” or “ludicrous.” Two Republican state attorneys general (from Montana and Ohio) submitted an amicus brief stating that “to describe [the plaintiffs’ position] is to refute it.” Fifth Circuit Judge Carolyn King’s dissent called the district court opinion striking down the ACA “textbook judicial overreach.” And Republican Senator Lamar Alexander has called the Administration’s position that the 2017 tax bill effectively repealed the ACA “as far-fetched as any I’ve ever heard.”

Chief among the many problems with the plaintiffs’ argument is that it ignores Congress’s unambiguous decision to zero out the individual mandate but leave the rest of the ACA intact. The plaintiffs argue that the mandate is so central to the ACA or its pre-existing condition exclusion that, without it, some or all of the law must be struck down. But while the Congress that passed the ACA said the mandate was important for the reformed insurance market to function, the Congress that zeroed out the penalty decided to keep the other provisions in place. Longstanding legal principles say that Congress, not the court, gets to make that decision — as even a brief from past litigants against the ACA noted.

Major Stakeholders Have Highlighted Catastrophic Effects on the Health System

A diverse group of stakeholders have weighed in to strongly oppose the plaintiffs’ arguments. Briefs were filed by:

What Happens Next?

For now, the ACA remains in effect. California has indicated it will petition the Supreme Court to take up the case now, which requires the agreement of four of the Court’s nine justices. If the Court agrees, it could either expedite review, likely leading to a decision in June 2020, or hear the case on a more regular schedule for a likely decision in 2021. If it denies California’s request, it’s likely that Judge O’Connor on remand would overturn much or all of the law again. That would mean another appeal to the Fifth Circuit Court of Appeals and then the Supreme Court, potentially leaving the fate of the law — and health care for millions — uncertain for years.

States Suing for Immediate End to ACA States Defending ACA
Alabama Nebraska California Minnesota
Arkansas North Dakota Colorado Nevada
Arizona South Carolina Connecticut New Jersey
Florida South Dakota District of Columbia New York
Georgia Tennessee Delaware North Carolina
Indiana Texas Hawaii Oregon
Kansas Utah Illinois Rhode Island
Louisiana West Virginia Iowa Vermont
Maine Wisconsin Kentucky Virginia
Mississippi   Massachusetts Washington



Note: Strikethrough indicates states that have removed themselves from the suit. Italics indicate states joining after the initial filing. Republican attorneys general from Montana and Ohio filed an amicus brief arguing that the mandate is unconstitutional but severable.

December 20, 2019