Fifth Circuit strikes down Obamacare individual mandate

NEW ORLEANS (CN) – The Fifth Circuit sided Wednesday with Republican opponents of the federal health care law, finding that the individual mandate tax penalty zeroed out by Congress two years ago is unconstitutional, but it declined to invalidate the entire law.

The long awaited ruling, a major upset to the health care industry, came in the ongoing legal dispute driven by Texas and 17 other Republican-led states and carries with it immense political ramifications ahead of the 2020 presidential election.

“The individual mandate is unconstitutional because it can no longer be read as a tax, and there is no other constitutional provision that justifies this exercise of congressional power,” U.S. Circuit Judge Jennifer Elrod, a George W. Bush appointee, wrote for the 2-1 majority.

But the question of whether the landmark law, a signature legislative accomplishment of former President Barack Obama, will survive in its entirety was sent back to U.S. District Judge Reed O’Connor in Forth Worth, Texas, to render a decision. O’Connor was also appointed by George W. Bush.

The dispute began in 2017 after President Donald Trump and Congress repeatedly failed to legislatively repeal the law known as the Patient Protection and Affordable Care Act, or the ACA. They ultimately removed only the individual mandate tax penalty later that year, however, through the Tax Cuts and Jobs Act.

Texas and a coalition of conservative-leaning states then filed a February 2018 lawsuit in Fort Worth, citing the U.S. Supreme Court’s 2012 ruling that the ACA’s individual coverage mandate was a valid exercise of congressional power so long as the tax penalty exists. A group of Democratic attorneys general stepped in to defend the law, after the Trump administration declined to do so.

Obamacare, as the law has come to be known, expanded Medicaid eligibility and preventive services, banned exclusions for pre-existing condition coverage, and imposed new requirements for employer-provided benefits. It reduced the number of uninsured Americans younger than 64 by 19.1 million people from 2010 to 2017, and provided some 60 million people with access to free preventive services, according to an analysis from the nonpartisan Kaiser Family Foundation.

The case landed in the Fifth Circuit after O’Connor jolted the health care and political systems when he ruled in December 2018 that the entire law is unconstitutional without an individual mandate tax penalty.

U.S. Circuit Judge Kurt Engelhardt, a Trump appointee, joined Elrod in Wednesday’s majority ruling. Senior U.S. Circuit Judge Carolyn Dineen King, a Jimmy Carter appointee, dissented.

King called the district court’s 2018 ruling “textbook judicial overreach” and said there was no reason that any provision in the ACA is inseverable from the coverage requirement.

“I would vacate the district court’s order because none of the plaintiffs have standing to challenge the coverage requirement,” King wrote. “And although I would not reach the merits or remedial issues, if I did, I would conclude that the coverage requirement is constitutional, albeit unenforceable, and entirely severable from the remainder of the Affordable Care Act.”

Texas Attorney General Ken Paxton praised the court’s decision in a statement Wednesday, saying the Fifth Circuit correctly held that the individual mandate is unconstitutional.

“As the court’s opinion recognized, the only reason the Supreme Court upheld Obamacare in 2012 was Congress’ taxing power, and without the individual mandate’s penalty that justification crumbled,” Paxton said. “We look forward to the opportunity to further demonstrate that Congress made the individual mandate the centerpiece of Obamacare and the rest of the law cannot stand without it.”

California Attorney General Xavier Becerra, who led the group of Democratic states defending the law, said Wednesday afternoon that he would swiftly challenge the decision “because this could mean the difference between life and death for so many Americans and their families.”

“This decision could take us to a dangerous and irresponsible place, not just for the 133 million Americans with pre-existing conditions, but for our seniors who use Medicare, our children under the age of 26, and the 20 million additional Americans covered directly through the ACA marketplace,” Becerra said in a statement.

The president of the American Medical Association, Dr. Patrice A. Harris, said the decision leaves “important health insurance protections shrouded in uncertainty despite overwhelming public support for these policies.”

“The decision underscores that the district court’s initial ruling striking down the entire ACA was made without appropriate analysis, ignoring the extensive reach of the law and its many provisions that have no relationship to the individual mandate,” she added. “The AMA will continue our efforts to preserve health insurance coverage and patient protections that the ACA extended to millions of Americans, and will work to ensure the district court understands the extensive scope of the ACA’s many provisions that are unrelated to the individual mandate.”

Congressional Republicans could not agree on a replacement health care law when they tried to repeal the ACA in 2017, and Trump has not yet released the plan he has said is forthcoming.

Consumers who bought health coverage for 2020 on the government’s marketplace can still expect to be insured through the next year. Thursday marks the final day of open enrollment for consumers to sign up for health insurance on the government marketplace.