Federal appeals court strikes down key part of Affordable Care Act

Richard Wolf | USA TODAY

Show Caption Hide Caption Donald Trump: Republicans will be party of health care President Donald Trump escalated his attacks on Obamacare, a day after his administration asked a federal court to strike down the entire law. Speaking in the Oval Office, he said Republicans "will be the party of great health care." (March 27)

A federal appeals court in New Orleans struck down a major part of the Affordable Care Act on Wednesday, a decision that eventually could jeopardize health insurance for millions of Americans and set up an election-year showdown at the Supreme Court.

The 2-1 ruling against the law's requirement that people buy insurance, rendered by the U.S. Court of Appeals for the Fifth Circuit, represents the latest legal threat to former President Barack Obama's signature domestic policy achievement since it was enacted in 2010.

Prior rulings include two by the Supreme Court, in 2012 and 2015, rescuing the law from challenges that threatened to cripple or eliminate it.

The new challenge stems from the $1.5 trillion tax cut passed by Congress in 2017, which repealed the health care law's tax on people who refuse to buy insurance. That tax was intended to prod them into the health care marketplace rather than letting them seek emergency care while uninsured.

Last December, federal District Judge Reed O'Connor ruled that without the tax, the law could not survive. His ruling was not implemented while it was appealed, but it threatened to wipe out insurance for 20 million people, protection for people with preexisting conditions, subsidies for low-income people, Medicaid expansions in many states, coverage for young adults up to age 26, and more.

The appeals court Wednesday agreed that 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," Judge Jennifer Walker Elrod wrote for the majority.

But rather than strike down the entire law, as O'Connor did, the appeals court panel sent the case back to district court for "additional analysis" on whether the individual mandate can be severed from the rest of the statute. For now, therefore, consumers will not be affected by the court's ruling.

Judge Carolyn Dineen King dissented from the ruling, calling questions about the legality of the mandate without a tax "purely academic."

"The district court’s opinion is textbook judicial overreach," she wrote. "The majority perpetuates that overreach and, in remanding, ensures that no end for this litigation is in sight."

President Donald Trump hailed the ruling as "a win for all Americans." In a statement, the White House called it "a positive step toward moving away from Obamacare, which has failed the American people for too long."

California Attorney General Xavier Becerra, a Democrat, announced within hours of the decision that he plans to appeal to the Supreme Court. If so, it likely would not be heard until the fall of 2020 at the earliest, with a ruling coming in 2021.

"For now, the president got the gift he wanted – uncertainty in the health care system and a pathway to repeal – so that the health care that seniors, workers and families secured under the Affordable Care Act can be yanked from under them," Becerra said.

The battle pits the Trump administration and 18 "red" states led by Texas against the House of Representatives and 16 "blue" states led by California. They argued the case in July before a Fifth Circuit panel that included two judges chosen by Republican presidents, who ultimately ruled against the law, and one appointed by a Democrat, who defended it.

The battle lines had been three-sided until December 2018. While the two sets of states argued for and against the entire Affordable Care Act, the Trump administration wanted only the requirement to buy insurance quashed, along with protections and cost controls for people with preexisting conditions.

But the administration later joined conservative states in calling for the entire law to be dismantled.

Reaction in Congress was divided along party lines.

"This is a blow to our nation’s health care system and the millions of Americans who have gained coverage and protections under the Affordable Care Act," said House Ways and Means Committee Chairman Richard Neal, D-Mass. "Democrats will continue to fight to protect Americans’ access to quality, affordable care."

Sen. John Barrasso, R-Wyo., said the ruling proves "what we all knew: The individual mandate is unconstitutional. Now it will be up to the district court to find what parts of the law survive."