GDP Blog

The Future of the ACA & The 5th Circuit

Posted by Andrew Clark

Apr 11, 2019 4:11:09 PM

The next chapter of the ACA is being written, with American’s possibly impacted eagerly standing by. In a filing yesterday with the Fifth Circuit Court of Appeals, the Department of Justice requested that the case be scheduled for oral argument the week of July 8th – but what does that mean for our current healthcare system? For those not following along, this appeal is the result of a recent ruling by Judge Reed O’Connor (out of Texas) that found the ACA unconstitutional (for more information see this recent blog posting from GDP Advisors regarding the original ruling).  

On a practical level, nothing has changed; the current system remains in place, and the ACA is still the active law of the land. When Judge O’Connor declared the entire ACA invalid last December, he also filed an injunction to forestall any immediate changes, knowing that such a ruling would could cause disruption in healthcare. Judge O’Connor is aware of the scale of his ruling, and acted appropriately so as to allow sufficient time for appeal, and analysis, while those other steps take place. The original roll-out of the ACA was a several year process, and if this ruling is upheld, it will take a similar length of time to disentangle from the current healthcare curriculum, and implement a replacement plan should one have been written at that point.

Additionally, the DOJ’s filing noted that the coalition of states defending the ACA in court are not opposing the motion to expedite, so it’s likely that the request will be granted by the Fifth Circuit. That gives both sides about 3 months to get ready, and they’ll need that time to prepare; this is going to be a titanic fight. By arguing a lack of severability, by removing the individual mandate tax for not having insurance, the entire system collapses. Whether or not this will hold up in court is a matter of serious debate, as it depends on the political nature of the court, and whether they are arguing the specifics of the case, or taking it as a whole.

If broken down into specifics, it looks like this: Judge O’Connor says that by removing the individual mandate, it invalidates the whole system. There is no severability, final sale, everything must go.

But I would argue that that may not be the case. In the 2017 Tax Cuts and Jobs Act (TCJA), the individual mandate was not removed; it was modified to zero. So, if you don’t have insurance, you ARE still penalized; the penalty amount is zero dollars. But technically there is still a penalty, even if the practical effect is non-existent. Remember: we’re arguing law here, and it is all about how it is written, not about how it actually affects anything. Technicalities and loopholes are part and parcel of legislation, and on those merits, the 5th circuit court may overturn Judge O’Connor’s decision.

Of course, that brings us back to an earlier point: are they going to swing political instead of legislative? If that’s the case, one would note that the 5th Circuit of Louisiana is by far the most conservative appeals court in the country, and that if upheld, this WILL likely move up to the Supreme Court. The ACA is the lynchpin of recent Democrat accomplishments during the last administration (the colloquial term for the ACA being Obamacare), and beyond that, this affects all Americans; SCOTUS should be the final verdict on something as important as this.

Topics: ACA, Obamacare, healthcare, SCOTUS, Trump, 5th Circuit, doj

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