Court to decide if Congress effectively invalidated ACA when it zeroed out the tax imposed on those without insurance.

The future of the United States‘s Affordable Care Act (ACA), also known as Obamacare, could be at stake on Tuesday when a group of Democratic-led states and the House of Representatives urge a federal appeals court to overturn a Texas judge’s ruling that the US healthcare reform law is unconstitutional.

The arguments are centred on whether Congress effectively invalidated former President Barack Obama’s entire signature healthcare law when it zeroed out the tax imposed on those who chose not to buy insurance.

Republicans have repeatedly tried to repeal Obamacare since its 2010 passage. The Justice Department would normally defend a federal law, but the Trump administration has declined to take that position against a challenge by 18 Republican-led states. Instead, it has filed arguments in favour of lower court’s ruling against the ACA.

A coalition of Democratic state attorneys general led by California Attorney General Xavier Becerra stepped into the void to defend the law. The House intervened after Democrats won control in November’s elections after many focused their campaigns on defending Obamacare.

A three-judge panel of the 5th US Circuit Court of Appeals in New Orleans, Louisiana, including two judges appointed by Republican presidents and one by a Democrat, will take up a ruling by a federal judge in Texas last year that said the entire ACA was unconstitutional. It was unclear when they expected to make a decision on the case.

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Two hours before Tuesday’s arguments were to get under way, about a dozen law students and lawyers had lined up outside the court on a steamy New Orleans summer day to make sure they had seats to view the arguments.

An appellate ruling declaring Obamacare unconstitutional could prompt an appeal to the US Supreme Court, opening the door for the top court to take up the issue in the middle of the 2020 US presidential election.

Political flashpoint

Obamacare, the signature domestic achievement of Trump’s Democratic predecessor has been a political flashpoint since its passage.

Republican opponents call the law an unwarranted intervention by government in health insurance markets, while supporters say striking it down would threaten the healthcare of 20 million people who have gained insurance since its enactment.

In 2012, a divided US Supreme Court upheld most of its provisions, including the individual mandate, which requires people to obtain insurance or pay a penalty.

The mandate compelled healthy people to buy insurance to offset sicker patients’ costs after Obamacare barred insurers from denying coverage to people with pre-existing conditions.

The Supreme Court’s conservative majority argued that Congress could not constitutionally order people to buy insurance. But Chief Justice John Roberts joined the court’s four liberal members to hold the mandate was a valid exercise of Congress’s tax power.

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Republicans in Congress subsequently failed to overturn Obamacare, but in December 2017, Trump signed into law a tax bill passed by a Republican-led Congress that reduced the tax penalty to zero dollars.

A coalition of Republican-led states headed by Texas sued, alleging the tax penalty’s elimination rendered Obamacare unconstitutional.

US District Judge Reed O’Connor in Fort Worth, Texas, agreed in December 2018, saying the individual mandate was unconstitutional because it no longer triggered a tax.

O’Connor, nominated by former Republican President George W Bush, said that because Obamacare called the mandate “essential”, the entire law must be struck down.

The Justice Department initially argued the mandate was unconstitutional but most of Obamacare could be severed from it. But it argues on appeal the law’s balance must be struck down.

‘Republicans will own the consequences’

The ultimate outcome of Tuesday’s case will affect protections for people with pre-existing conditions, Medicaid expansions covering roughly 12 million people, and subsidies that help about 10 million others afford health insurance.

Democrats in the Senate said on Monday that Republicans will pay a political price if the case results in the loss of popular “Obamacare.”

“If they are successful in striking down the Affordable Care Act, Republicans will own all of the consequences,” Senate Democratic Leader Chuck Schumer of New York said on a call Monday with reporters.

US Senate Minority Leader Chuck Schumer, holding a picture of head-injury victim Emilie Saltzman, and House Speaker Nancy Pelosi lead fellow congressional Democrats for remarks on healthcare coverage of pre-existing conditions, on the steps of the in Washington, DC [Jonathan Ernst/Reuters]

On Tuesday, Schumer and House Speaker Nancy Pelosi held up signs with the faces of Americans who they say would be hurt if Republicans succeed in their efforts to overturn the ACA.

“The stakes can’t be higher,” Schumer said. “The faces you see behind us are faces of Americans millions of Americans who will suffer if Republicans succeed in dismantling our healthcare law. Millions of people’s lives nothing less are on the line. If the right-wing wins the lawsuit families from one end of America to the other will lose. Lose their healthcare.”