Texas Judge Rules ACA Unconstitutional but Law Remains in Effect

By Higginbotham on December 17 , 2018


Last Friday, Texas Federal District Court Judge Reed O’Connor ruled the Affordable Care Act (ACA) unconstitutional, finding that because Congress eliminated the fine for not complying with the individual mandate, the mandate is no longer permissible under Congress’s taxing power and is thus unconstitutional. The states pursuing the lawsuit had argued that because the individual mandate is “essential” to and inseverable from the ACA, the entire law should be found invalid. The plaintiffs in this case were made up of 20 Republican state attorney generals and governors, while the defendants were made up of attorney generals from 16 Democratic states. (In an odd twist, the Department of Justice was ordered not to defend a current law, which it normally is tasked with doing. In fact, in a parallel lawsuit in Maryland, the Department of Justice is being asked to enforce the current law and even argues that the zeroing out of the individual mandate penalty by Congress is itself unconstitutional.) Even though legal experts on both the left and the right believed that the arguments set forth by the plaintiffs were uncompelling and unlikely to succeed in overturning the ACA, Judge Reed agreed with the arguments. However, the law remains in effect, will likely be stayed and is certainly to be appealed to the Fifth Circuit Court of Appeals and most likely make its way back to the Supreme Court.

If the judge’s ruling were to be upheld, it would essentially roll back the entire ACA, including, among other provisions:

  • Coverage of pre-existing conditions;
  • Prohibition against annual and lifetime limits;
  • Dependent coverage to age 26;
  • Medicaid expansion;
  • Premium tax credits for purchasing individual coverage; and
  • The employer mandate (and therefore, reporting).

While it seems that this case is destined for the Supreme Court, many legal scholars believe that the Court will overturn Judge Reed’s decision. For one, while there have been new judges added to the Court since the original NFIB vs. Sebelius decision that verified the constitutionality of the ACA in 2012, the same five justices – Roberts, Ginsburg, Breyer, Sotomayor and Kagan – are still on the bench. Additionally, many believe that the Justices do not wish to set a precedent whereby a small tweak to an existing law could invalidate the whole law itself.

Again, the defendants have already stated their desire to appeal the decision, and by not enjoining the ACA, Judge Reed’s decisions leave the law’s provisions intact – for now. We will keep you updated as new information in these cases becomes available.


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Tags: Compliance


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