On December
14, 2018, a federal judge for the U.S. District Court for the Northern District
of Texas ruled that the Affordable Care Act is invalid. The case before the
Court was brought by 20 states, including Texas. The plaintiffs argued that the
ACA’s individual coverage mandate was no longer constitutional, because the Tax
Cuts and Jobs Act of 2017 removed the tax penalty associated with being
uninsured. The plaintiffs claimed that, as a result, the individual mandate
could no longer be upheld as a proper exercise of Congress’ taxing power. In
addition, the plaintiffs argued that the individual mandate could not be severed
from the rest of the law and, therefore, the entire ACA should be held unlawful.
The
federal judge, Judge Reed O’Connor, agreed, holding that the individual
mandate, “unmoored from a tax,” is unconstitutional. Judge O’Connor further
concluded, based on the intent expressed by both the 2010 and 2017 Congresses,
that the individual mandate is “essential” to the ACA and, accordingly, is not severable
from the ACA’s remaining provisions. “In some ways, the question before the
Court involves the intent of both the 2010 and 2017 Congresses,” the judge
wrote in the opinion.
“The former enacted the ACA. The latter sawed off the last leg it stood on.” The
Judge ruled that, without the individual mandate, the remaining provisions of
the ACA are invalid.
Despite
the potentially controversial nature of the ruling and the flurry of news
stories that followed, the ruling does not have an immediate impact on
employers. While Judge O’Connor granted partial summary judgment to the
plaintiffs and ruled that the ACA is invalid, he did not issue an injunction
stopping enforcement of the ACA. Indeed, on December 17, 2018, the U.S.
Department of Health and Human Services released a statement
confirming that “HHS will continue administering and enforcing all aspects of
the ACA as it had before the court issued its decision. The decision does not
require that HHS make any changes to any of the ACA programs it administers or
its enforcement of any portion of the ACA at this time.”
The
case is expected to proceed to the Fifth Circuit Court of Appeals and then to the
U.S. Supreme Court. The U.S. Supreme Court has previously heard challenges to
the ACA, and it issued a 2015 ruling in King
v. Burwell upholding a key provision of the law.
While
we do not expect any changes to employers’ obligations under the ACA in the
near future, we will keep you up to date on later developments.
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