A month after voters took to the polls by the millions to defend health coverage for people with pre-existing conditions, a federal district court judge in Texas issued a decision that even the Affordable Care Act’s (ACA) opponents have called bananas. The sweeping decision would not only wipe out those protections but would also eliminate: tax credits that help people afford health insurance, expanded access to Medicaid, cheaper prescription drugs for seniors and access to preventive health services without charge, among other things.  

How did we get here?

Earlier this year, a combination of attorneys general and other state officials from 20 states filed a lawsuit arguing the ACA was no longer constitutional. Their central argument is that after Congress removed the penalty for not carrying health insurance as a part of the 2017 tax bill, the remaining mandate to carry health insurance (which still stands in federal law) is unconstitutional.

They then go a step further to argue that if the requirement to carry health insurance is unconstitutional, the rest of the ACA must fall with it (even the parts that have nothing to do with individual health insurance or that went into effect before the mandate).

As if the legal theory of this case wasn’t bizarre enough, in June the Department of Justice announced it wouldn’t uphold its legal duty to defend the ACA in court and instead argued that the law’s pre-existing condition protections should be struck down. This attack on people with pre-existing conditions stands in direct contradiction to the Trump administration’s rhetoric, claiming to support protections.  For a full procedural history on this case check out the Health Affairs Blog entries here, here and here.

Fortunately, this District Court decision is far from the last word. It is only the first step on what is likely to be a journey to the Supreme Court of the United States. Although legal experts on both sides of the aisle agree that this case stands on very shaky legal grounds, we have learned that when it comes to ACA litigation anything is possible. So we are hoping for the best while we prepare for the worst.

A Supreme decision

From a policy perspective, the devil will be in the details of higher court decisions. Although the district court declared the entire law unconstitutional, on appeal a higher court could narrow that decision. Possible outcomes include:

  • Dismiss the case or strike down only the individual mandate language – In either case nothing would need to be done and there would be no policy impact.
  • Strike down the individual mandate and corresponding consumer protections – In this case there could be federal or state action to blunt the impact. However, a divided Congress is highly unlikely to agree on what should be done. Republicans would likely seek other changes to weaken the ACA while Democrats, especially in the House where they are in control and where there is a strong Medicare For All caucus, would almost certainly be looking for improvements. With Congress most likely deadlocked at least until after 2020, the best hope for action not only to repair damage but to forestall it, lies in the states. (Although state action would likely create a patchwork of inconsistent protections across the country, leaving further action to Congress after the next election.)
  • Uphold the lower court decision – This would send the health care system into utter chaos, kicking millions of people off their coverage, increasing the cost of care and coverage for prescription drugs, and more. The health care system would be worse off than it was before the passage of the ACA and the only recourse here would be political.

Whatever the ultimate outcome of this case, we can be sure that health care will be revisited yet again as a key issue in the 2020 election. And if there’s anything to be learned from 2018, it is that health care is a priority for voters and running for office with a record of voting to jeopardize coverage and protections for people with pre-existing conditions is not a good way to keep your job.

Where do we go from here?

As states prepare for the upcoming legislative session, the shadow cast by this decision presents an opportunity for states to seriously consider policy options that could protect consumers in the event of an unfavorable decision out of the Supreme Court. As outlined in a recent Commonwealth Fund issue brief, most states have not fully incorporated key ACA protections that could be eliminated including guaranteed issue, pre-existing condition protections and community rating standards. Because states are the primary regulators of their insurance markets these policies should be on the table for discussion this legislative session.

We remain cautiously optimistic that the sweeping District Court opinion will be thrown out and more rational minds will prevail on appeal, but given our country’s recent history of unexpected legal outcomes, we think the best response is to take this threat seriously until it goes away.