Late Friday (Dec. 14), a federal judge in Texas declared the Affordable Care Act unconstitutional on the grounds that a federal tax measure passed by Republicans a year ago struck down the individual mandate requirement.
U.S. District Court Judge Reed O’Connor ruled that the 2017 federal GOP tax cut pushed by President Donald Trump eliminated the tax portion of the health care law’s individual mandate. O’Conner said that a 2012 U.S. Supreme Court decision that upheld the ACA based on the Commerce Clause of the Constitution was now invalid since the tax portion of the individual mandate was eliminated. The judge declared the entire law, also known as Obamacare, invalid based on this provision.
“[T]he Court grants plaintiffs partial summary judgement and declares the Individual Mandate UNCONSTITUTIONAL. Further, the Court declares the remaining provisions of the ACA are INSEVERABLE and therefore INVALID,” O’Conner concluded in a 55-page ruling.
The decision, if eventually upheld, would strike the requirement for mandated insurance coverage, unpopular with healthy citizens who had to pay a tax penalty if they chose to opt out of coverage. However, the ruling would repeal popular requirements such as mandatory coverage of anyone with pre-existing conditions and allowing children to stay on their parents’ plans up to the age of 26.
U.S. Sen. Tom Cotton, R-Ark., was one of the senators who pushed for the mandate repeal to be included in the 2017 tax reform measure. He and Sen. John Boozman, R-Ark., as well as all of Arkansas’ four Republican Congressmen – U.S. Reps. Rick Crawford, French Hill, Steve Womack and Bruce Westerman — voted for the tax repeal.
Arkansas Attorney General Leslie Rutledge, who intervened in the Texas case, on behalf of Arkansans, declared victory with the ruling.
“The ruling is a big win for Arkansans,” Rutledge said. “Without the individual mandate in place, Obamacare cannot be upheld and is unconstitutional. Now, it is time for Congress to increase options, lower costs and protect those with pre-existing conditions.”
Rutledge and Arkansas were part of a 20-state coalition of states involved in the lawsuit.
The final fate of the district court ruling is still unclear. The decision will inevitably find its way to the U.S. Supreme Court. Many legal experts predict it would be 2020 before the nation’s high court might have the chance to consider the case.
In the meantime, the fate of health insurance for Arkansas citizens will more than likely stay on course with current options while the industry and policy leaders sort through the uncertainty created by the Texas ruling. The next session of Congress could also act on the ruling, but with a Democratic-led House and a Republican-led Senate and White House, the chances of consensus are minimal.
Unlike some states that have seen skyrocketing annual premium hikes, Arkansas’ health insurance markets have remained relatively stable and shown single-digit increases year-over-year thanks to the Medicaid expansion component of the ACA, which planted several private insurance carriers in the marketplace.
Arkansas Gov. Asa Hutchinson transformed the “private option” Medicaid expansion program started under Democratic Gov. Mike Beebe and GOP state lawmakers into Arkansas Works, which requires able-bodied recipients to work or attempt to work in order to remain in the program. The work requirement, which received a federal waiver, led to conservative buy-in to continue the program in the last legislative session.
Heading into January’s meeting of the Arkansas General Assembly, Hutchinson tells Talk Business & Politics the Supreme Court will have to ultimately decide the ACA’s fate. He doesn’t expect much short-term change and he said it’s time to get serious on long-term solutions.
“It is no surprise that the individual mandate was ruled unconstitutional. The key question remains as to whether striking down the individual mandate voids the entire law. This issue will ultimately be decided by the U.S. Supreme Court,” Hutchinson said.
“At this time, there is no impact on Arkansas Works and the coverage will continue. The court decision is a clarion call for more long-term thinking on healthcare and what is the best way to give the states more flexibility in improving health care coverage for its citizens,” he added.
Ray Hanley, CEO of Arkansas Foundation for Medical Care and a former state Medicaid director, thinks the ruling could lead to disaster for Arkansas’ insurance markets.
“If the ruling our Attorney General regrettably helped seek stands, more than 10% (counting Arkansas Works and those using the exchange) will lose insurance coverage and some access to care. It will harm and even threaten the viability of some rural hospitals and drive up uncompensated care statewide and at UAMS where taxpayers have to step in. It will damage the entire healthcare infrastructure of the state if the ruling stands. It will bring back the pre-existing condition penalty and that will be a death sentence for some,” Hanley said.
“Before the ACA, 60% of personal bankruptcies in Arkansas medical debt was the primary debt and losing the ACA will see that return. The robust pool made possible by Arkansas Works saw Arkansas’ insurance exchange with among the lowest rate hike in the nation in 2018,” he added. “Arkansas can well afford Arkansas Works under the ACA. Our cost is 7% this year, eventually maxing out at 10%. The economic activity of a billion dollars-plus turning over in the economy each year covers all or most of the state’s share, not to mention the savings of not putting millions into UAMS for what is now covered care.”
“Arkansas, through leadership and innovation from the Governor on down, has made the ACA a great success, and the state and its people will be hurt badly if the Texas ruling stands,” Hanley said.
Talk Business & Politics will update this story later today.