The Supreme Court is almost certain to find Obamacare’s requirement that people have health insurance unconstitutional, but the rest of the law is likely to remain intact.
That is the argument being put forward by a conservative constitutional law professor about the federal court ruling that would overturn the Affordable Care Act if upheld.
The high court is likely to find the so-called individual mandate unconstitutional due to a provision in the 2017 tax reform law that reduced the penalty for not having health coverage to zero, Josh Blackman, an associate law professor at the South Texas College of Law in Houston and the author of several books on the ACA, said.
ACA supporters argue that forcing people who lack health insurance to pay a penalty is necessary to make the ACA work. Without the penalty, healthy people would wait until they get sick to buy coverage, which insurers are required to sell without charging more for pre-existing conditions, they argue.
Even with the penalty—which was $695 for individuals in 2018—young, healthy people failed to sign up for ACA plans as expected. That has contributed to higher premiums in the ACA exchanges for people who earn too much money to receive much in the way of subsidies.
In their landmark 2012 decision allowing the ACA to stand, Chief Justice John Roberts ruled with liberals on the court that the mandate and the penalty were legal under Congress’s power to tax.
Without the tax, the individual mandate could be struck down, legal experts said at a recent briefing on the U.S. district court ruling in Texas v. United States. If the case does go to the Supreme Court, it would likely take about a year to get there.
Blackman outlined four possibilities if the district court ruling is ultimately upheld by the Supreme Court:
- The mandate could be overturned;
- The entire ACA could be overturned as the district court judge ruled;
- The mandate and the law’s provisions that prevent insurers from discriminating against people with pre-existing conditions could be overturned; or
- Congress could restore the ACA’s penalty.
The later possibility is unlikely given the Republican-controlled Senate and President Donald Trump’s opposition to the ACA, Blackman said.
If the mandate is simply found to be unconstitutional, “this remedy will not have much of an impact,” Blackman said. “I would take it as a salutary victory for the rule of law,” he said.
But Blackman said he is “skeptical of the all-or-nothing proposition” that without the mandate the entire rest of the law would have to be struck down. The law’s Medicaid expansion and other provisions of the law could continue to exist, he said.
Even if the law’s requirement that insurers not take existing health conditions into account when setting premiums were overturned along with the individual mandate, it would not make much difference, Blackman said. That is the position taken by the Trump Justice Department. Those provisions are called guaranteed issue and community rating.
“The mandate never actually worked,” Blackman said. “The penalty was always too small, and it was not effective at nudging people into the insurance market.”
Furthermore, almost every state has provisions requiring some form of guaranteed issue on their books, and other states as well as Congress could enact those requirements, Blackman said.
But Ted Frank, a cofounder of public-interest law firm Hamilton Lincoln Law Institute, argued that “what Congress has done has created an incoherent statute” by repealing the ACA penalty.
That could lead to a “death spiral” if insurers must sell policies to people with health problems and if people are not fined for not having coverage, he said.
Even before the penalty was repealed, it was “strikingly ineffective because it wasn’t harsh enough,” Frank said. The annual cost of ACA health insurance policies for people without adequate subsidies is far higher than the penalty for not having the coverage.
If the ACA had been struck down in the first ruling in 2012, “you still had a functioning market that the world could return to,” Frank said. “That has been wiped out by seven years of ACA, and there’s nothing in place for it,” he said.
“It would be chaos.”