AG Rutledge part of Texas lawsuit to end Affordable Care Act

Arkansas Attorney General Leslie Rutledge is participating in a 20-state lawsuit seeking to end the Affordable Care Act.

Filed in February, the suit says the law, otherwise known as Obamacare, is unconstitutional because last year’s tax cuts invalidated the provision the Supreme Court used to justify the law’s existence.

In 2012, justices ruled in National Federation of Independent Business v. Sebelius that Congress could not force individuals to purchase health insurance, but the Affordable Care Act’s mandate requiring them to do so was constitutional because the penalty for violating it was a “tax.” Chief Justice John Roberts wrote the opinion.

But last year, the penalty was removed through the Tax Cuts and Jobs Act passed by Congress and signed into law by President Trump Dec. 22. The legal theory is, starting next year, there will be no “tax.”

“Following the enactment of the Tax Cuts and Jobs Act of 2017, the country is left with an individual mandate to buy health insurance that lacks any constitutional basis. …Once the heart of the ACA – the individual mandate – is declared unconstitutional, the remainder of the ACA must also fall,” the suit says.

The suit says the ACA without the individual mandate becomes “an irrational regulatory regime governing an essential market.” The mandate was created in order to improve health insurance markets and is necessary for the law’s “guaranteed issue” provision, the requirement to insure individuals without regard to pre-existing conditions. Many believe that without the mandate, individuals would wait until they needed medical care before obtaining insurance.

Eighteen attorneys general and two governors are participating in the suit. All are Republicans. Sixteen states and the District of Columbia are defending the law. All have Democratic attorneys general, although Minnesota is participating through its Department of Commerce. The plaintiffs filed a motion for a preliminary injunction April 26. Meanwhile, U.S. Attorney General Jeff Sessions’ Justice Department filed a brief in June saying it would not defend the law. Traditionally, attorneys general argue for upholding existing statutes.

In a press conference June 27, Rutledge said the removal of the penalty changed the legal equation.

“We believe that it is no longer constitutional, that the chief justice no longer has that crutch to lean on and prop up the Affordable Care Act,” she said.

Asked why Arkansas is involved in a Texas lawsuit, Rutledge said, “The Affordable Care Act impacts Arkansans.” She said if the ACA is ruled unconstitutional, then states can revisit their health care policies freed from the law. The result would be that “there’s not a one-size-fits-all that hurts Americans, but certainly, from my standpoint is whether or not it’s constitutional.”

The Affordable Care Act required states to expand Medicaid eligibility for individuals with incomes up to 138% of the federal poverty line. In the NFIB case, justices ruled that states could not be compelled to expand their populations. Many Republican-leaning states, including Texas, did not. In 2013, Arkansas did expand its population, but it obtained a waiver from the federal government allowing it to use those federal dollars to purchase private health insurance for those individuals.

As of the beginning of June, 274,810 Arkansans were enrolled in the expansion, according to Arkansas Department of Human Services spokesperson Marci Manley. This year under a 94-6 match, the program is bringing more than $1.9 billion in federal dollars into the state, while Arkansas’ match is $104 million. Next year, the federal-state split will be 93-7. Starting in calendar year 2020, the match is 90-10.

The program was created by Republican lawmakers and Gov. Mike Beebe’s administration. Originally known informally as the “private option,” it was embraced by Gov. Asa Hutchinson, who has obtained further waivers including one requiring some recipients to work or engage in other activities. He renamed it Arkansas Works and took advantage of the federal dollars it produced to pass tax cuts in 2015 and 2017. Further tax cuts are planned for 2019.

If the Affordable Care Act were declared unconstitutional without a replacement, it would mean the end of federal funding for Arkansas Works.

But Arkansas Works has its detractors in the Legislature, who say it’s an unaffordable expansion of government involvement in health care. During most legislative sessions, it has barely obtained the 75% legislative majority needed for funding.

Rutledge said she “certainly had conversations with the governor with regard to Arkansas joining the lawsuit.”

Hutchinson said Rutledge had made him aware of her intentions before filing the lawsuit on July 2, and that he was “good with it.” Asked if he wanted the state to participate, Hutchinson said, “We didn’t even have that conversation.”

Hutchinson said he supports repealing the Affordable Care Act and believes the individual mandate is unconstitutional, a position he has previously stated. However, he said Congress must enact something in its place that would provide flexibility and prevent services from being disrupted.

“‘It would be problematic if the court struck it down and Congress did not enact a substitute that gives the states the flexibilities needed,” he said. “But I’m all for that replacement with something that gives the states flexibility, more options to manage their own program and that gives the commitment of shared responsibility, which includes the continued federal funding that will allow us to manage those programs in a way that meets the needs of the individual states.”

Asked if he were confident that Congress would actually pass that replacement, Hutchinson said, “Congress does have a way of responding to urgent circumstances, and if the Affordable Care Act was struck down on this new argument, then … that would give a lot of momentum for Congress to actually deal with the issue. So wait and see.”

Ray Hanley, president and CEO of the nonprofit Arkansas Foundation for Medical Care, said, “Arkansas would be harmed considerably if this effort succeeded.” While he called the ACA “an imperfect law,” Arkansas Works has helped prevent rural hospitals from closing as they have in other states. Meanwhile, it’s helped reduce premium increases in the overall individual market by creating a more robust insurance pool. The federal dollars coming into the state have benefited the economy, and the state has not had to pay for uncompensated care. And, he said, “Lives have been saved because people had a means to access care.”

Hanley said that if the law is overturned, individuals with pre-existing conditions would lose insurance, and hospitals would provide more uncompensated care. Instead of repealing the Affordable Care Act, he’d prefer to see it improved.

Dr. Joe Thompson, president and CEO of the Arkansas Center for Health Improvement, a research and advocacy organization, agreed that the focus should be on improving the system, not replacing it.

“It’s time to move on and try to address the health care system as it is today and look for solutions. … I think our Legislature, General Assembly, Governors Beebe and Hutchinson have both found ways to make the rules in play now work, and it’s time for us in a bipartisan way to move forward at the federal level and put the next set of rules in place that are going to move our health care system forward,” he said.

The lawsuit, meanwhile, continues. Asked about the extent of Arkansas’ involvement, Rutledge’s spokesperson, Jessica Ray, said, “Attorneys with our office are monitoring the case and discussing its progression with the other plaintiff states to ensure the strategy aligns with what Attorney General Rutledge deems appropriate. Joining a lawsuit which is led by another state is a financially efficient method for Arkansas to collaborate with other states on matters that impact multiple, if not all, states.”