If you are in the benefits business you have already heard about a December 14, 2018 ruling by a federal trial court judge in Texas, that the entirety of the Affordable Care Act is unconstitutional. The following 5 takeaway points put the ruling into context and provide some indications of where things could head from here.
1. For now, the ACA remains in effect.
The ruling did not stop the government, via “injunction,” from continuing to enforce the ACA as it currently stands. Instead it reached a legal conclusion (holding) that (a) the individual mandate (which imposed a tax on individuals who failed to secure coverage) was integral to the whole ACA (“the ACA keystone”), that (b) the individual mandate was constitutional because it fell within Congress’s power to levy taxes (as determined by the Supreme Court in NFIB v. Sebelius), and that (c) the reduction of the tax imposed under the individual mandate to $0 (via the 2017 Tax Cut and Jobs Act) rendered the individual mandate, and hence the entire ACA, unconstitutional. The Departments of Health and Human Services (“HHS”) and the IRS were defendants in the Texas court case, supporting the ACA, and following the ruling the Trump Administration issued a statement that HHS “will continue administering and enforcing all aspects of the ACA as it had before the court issued its decision.” As one consequence, applicable large employers (ALEs) must continue to comply with employer shared responsibility rules (both offers of coverage, and ACA reporting due in early 2019).
2. The ruling is not the last word on the ACA’s fate.
As mentioned the ruling is at the trial court level in the federal court system. It almost certainly will be appealed to the Fifth Circuit Court of Appeals and then possibly to the Supreme Court. Legal scholar Nicholas Bagley has opined that the Fifth Circuit Court may have little patience for the court’s holding. The appeals process could take months, in any event.
3. The ruling creates uncertainty re: the ACA’s fate.
The ACA has survived two Supreme Court challenges, plus two years of full control of Congress and the White House by its most severe opponents. It had seemed to reach safe ground in recent months; indeed, some ACA concepts such as no pre-existing condition exclusions and coverage of dependents to age 26 had broad appeal in the mid-term elections, including among some Republicans. With the Texas court’s ruling, the ACA’s fate is back in watch and wait mode. Resolution of the uncertainty will have to await completion of the legal processes described in Point No. 2. Generally speaking, uncertainty is not good for employers, insurers, or the general economy, so eyes will be on how these sectors react in the wake of the ruling.
4. The political landscape has changed since the last time the ACA’s constitutionality was in question.
As mentioned, some ACA provisions now appear to be “baked in” to the public’s concept of government entitlements. Unlike in prior years, elected officials are now loathe to align themselves with the law’s total repeal. (Even the HHS notice regarding continued enforcement of the ACA expressly mentioned the ban on pre-existing condition exclusions.) So reaction to the ruling from known ACA foes has been measured, if made at all. Prior legal setbacks for the ACA have become political footballs, but public debate over the issues hopefully will have a more civil tone, this time around.
5. As the ACA’s fate hangs in the balance, more radical health care reform proposals are just around the corner.
Some of the newly empowered Democratic winners of the mid-term elections are entering Washington, D.C. with ideas for health care reform that go far beyond what the ACA accomplished, including single payer systems. Single payer systems, including, for instance, a major expansion of the Medicaid program, would disrupt the nexus between healthcare and employment that exists for many Americans. These concepts first got broad national attention in the last presidential campaign and you can expect buzz around them to increase as the next presidential election in 2020 approaches.