ACA Unconstitutional - Texas Ruling
  • Health Care Policy & Compliance

What the Texas ACA Ruling Means for the Future of Health Care Policy

Late last week, a federal judge in Texas ruled that the Affordable Care Act (ACA) is unconstitutional in its entirety.

Obviously, that's big news, with potential ramifications for every aspect of the U.S. health care system. But before we jump to any conclusions, let's take a closer look at exactly what happened, what it means and what we can expect to happen next.

What Happened?

Back in February of this year, a group of Republican governors and state attorneys general, led by Texas Attorney General Ken Paxton, sued to repeal the ACA. They argued that the law's individual coverage mandate is unconstitutional and that, without it, the rest of the law cannot stand.1

At issue in the suit was whether the individual mandate still compelled Americans to buy health coverage after Congress reduced the penalty to zero dollars as part of the December 2017 tax reform bill. When the Supreme Court upheld the mandate as constitutional in 2012, it argued that the individual mandate penalty was part of Congress's taxing power and therefore legal. However, with the penalty now zeroed out, the plaintiffs claimed that the individual mandate had become unconstitutional and that the remaining provisions of the ACA are therefore invalid.

On Friday, Dec. 14, Judge Reed O’Connor of the Federal District Court in Fort Worth agreed with them.2

So What?

If Judge O’Connor’s decision ultimately stands via affirmation from the Supreme Court (see below), millions of Americans could end up losing their health insurance. This includes those who gained coverage through the ACA's Medicaid expansions, as well as those who currently receive subsidized private insurance through the law's online health exchanges.

Additionally, the so-called "employer mandate" would go away, and companies with 50 or more full-time employees would no longer be required to offer minimum essential health coverage to at least 95 percent of their full-time workforce.

Also gone would be:

  • Requirement of insurers to cover young adults up to age 26 under their parents' health plans
  • Ban on annual and lifetime limits for essential health benefits
  • Protections for pre-existing conditions
  • Cap on out-of-pocket costs

Of course, the impact of all of these results would depend on the presence and content of a plan to replace the ACA, which has been promised but so far unfulfilled by Congressional Republicans. It's entirely possible that many of the protections included in the ACA, particularly those for pre-existing conditions, would ultimately show up in a replacement plan—especially now that Democrats control the House of Representatives.

Now What?

It's important to remember that, for now, the ACA remains in effect. The case will head to the Fifth Circuit Court of Appeals and, if affirmed there, on to the Supreme Court. Unless and until the Supreme Court has its say (many legal experts predict that likely wouldn't be until 2020), the Texas ruling has zero impact on the standing of the law.

That means 1) consumers currently relying on the ACA for coverage and/or enjoying the law's protections can continue to do so, 2) companies who are required to comply with the ACA's employer mandate and reporting requirements must continue to do so, and 3) health insurance carriers must continue to operate under the regulation of the ACA.

For now, the Texas ruling is just the most recent example of the political wrangling that's become synonymous with health care in America. But it's an important reminder that the benefits industry is an ever-evolving space, and we must always be ready to adapt to changes in regulation and compliance requirements.

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1.Axios: There's a new lawsuit over the ACA's individual mandate

2. Axios: Federal judge says ACA must be thrown out