Legislation & Regulation

Sessions Leaves the ACA Undefended

In a last-minute filing, the attorney general elected not to defend the health care law. The legal arguments in Texas v. Azar hinge on severability and legislative intent.

Richard Mark Kirkner
Contributing Editor

The Justice Department initially intended to defend the ACA entirely but then “switched sides at the last moment,” says health law expert Timothy Jost.

When Texas Attorney General Ken Paxton filed the latest court challenge to the ACA in February in U.S. District Court, he made no secret of his ulterior motive: “Through our multi­state lawsuit, we hope to effectively repeal Obamacare,” he said. The suit claims that the ACA would be unconstitutional when the tax penalty to enforce the individual mandate comes off the books next year.

Still, the lawsuit, joined by 19 other Republican-leaning states, stirred little notice—that is, until early June when, almost out of the blue, the Justice Department filed a brief notifying the court it would not defend the ACA’s guaranteed issue and community rating provisions, which are critical for allowing people with pre-existing conditions to purchase affordable coverage. The shorthand name for the case is Texas v. Azar because HHS Secretary Alex Azar is named as a defendant even though the administration is, in effect, siding with the plaintiffs. While Texas seeks an injunction to block enforcement of the ACA beyond January 1 next year, the Justice Department is seeking a declaratory judgment, which is essentially the court giving its opinion without any enforcement.

Now in the spotlight

Now the case is garnering plenty of attention. In April, California and 16 other states filed as interveners to defend the ACA. At least a dozen organizations have filed amicus briefs in the lawsuit. Most are defending the ACA, but one from Citizens United and a host of other conservative organizations support the Paxton lawsuit. After the DOJ bombshell, a bipartisan coalition of nine governors, led by Ohio Republican John Kasich, have pleaded with the administration to change course.

Chances are good that an appeal and another Supreme Court case will ensue. So what follows is a primer on some of the key legal principles surrounding the latest threat to the ACA.

The first legal principle is severability. When Paxton and Wisconsin Attorney General Brad Schimel filed their lawsuit, they contended the Tax Reform and Jobs Act of 2017, which repealed the ACA’s penalty for not having health insurance, renders the rest of the ACA unconstitutional. In essence, they said the personal mandate is unseverable (legalese for inseparable) from the ACA’s other provisions.

Then the Trump administration bought in, literally at the last minute. According to the Washington Post, the brief was filed at 6 p.m. on the last day to file in the case. The Post also reported that three career DOJ attorneys who had been involved in the case left it (but not their jobs) before it was filed.

Written in haste?

Timothy Jost, a retired professor at Washington and Lee Law School and whose blog posts for Health Affairs about the ACA have become must-reads, calls the DOJ filing “a big surprise.” Adds Jost, “It appears the Justice Department initially intended to defend the ACA entirely. I believe the department switched sides at the last moment, based on a decision made at the highest level.”

Jost notes that after the three attorneys quit the case, a senior DOJ attorney, Joel McElvain, resigned from the Justice Department. And more evidence that it was a hurried decision is how sloppily the brief was written, he says. “It’s not even clear from the brief exactly what provisions of the ACA the administration is unwilling to defend.” And in keeping with the theme of chaos that seems to dominate this administration, the Post reported a week after the filing that Azar told a House committee that people with pre-existing conditions should be able to buy health insurance.

In a letter to Congressional leaders, Attorney General Jeff Sessions cited the landmark case that upheld the ACA, National Federation of Independent Business (NFIB) v. Sebelius, as the basis of the Justice Department’s position. Sessions invoked the words of Obama’s Justice Department in NFIB that if the penalty was declared unconstitutional it would be severable from the ACA’s other provisions except guaranteed issue and community rating. He also cited congressional findings after passage of the ACA in 2010 that the penalty was “essential” to guaranteed issue and community rating.

The congressional findings state the individual mandate “is essential to creating effective health insurance markets in which improved health insurance products that are guaranteed issue and do not exclude coverage of pre-existing conditions can be sold.” Perhaps this is what Jost means when he says the Justice Department brief was “sloppily” written.

In their response to the amicus briefs, the plaintiff states said that if the court agrees with Sessions’ position on severability, then it should limit the injunction only to the plaintiff states and let them regulate their own insurance markets outside the ACA. “Such a limited injunction would not plausibly harm the Intervenor–­Defendants,” the filing states.

Severability argument is weak

Perhaps the most intriguing amicus brief was filed by five law professors who’ve lined up on opposite sides of the ACA in the past but now agree that the guaranteed issue and community rating provisions can function without the individual mandate penalty. Says Ilya Somin, a professor at George Mason University and one of the law professors, “While the states have a good argument that the individual mandate is unconstitutional, their severability argument is very weak.” Somin filed a brief in NFIB that urged the court to strike down the individual mandate.

The brief argues the congressional intent of the tax reform law was clear: to remove the penalty for not having insurance but leaving intact all other provisions of the ACA. “By throwing out the penalty,” Somin says, “Congress has already essentially severed out most of the mandate and made it clear that they don’t think it’s essential to the remainder of the ACA.” Those failed votes last year to repeal the ACA might also speak to congressional intent (or lack thereof).

The law professors’ brief also contends that Texas and the other states are relying on congressional intent in 2010 when Congress passed the ACA, and not 2017 when it passed the Tax Reform and Jobs Act. “Congress told us what it wanted through its 2017 legislative actions,” the brief states.

Citizens United and six other conservative organizations filed the lone friend-of-court brief in support of Texas in the case. However, the brief neither mentions guaranteed issue nor community rating. Instead, it concurs with Texas that Congress essentially intended to repeal the ACA when it passed tax reform. Citizens United declined an interview to further explain the brief.

What’s next?

All of this will be deliberated first in the Fort Worth courtroom of Judge Reed O’Connor. O’Connor, a 2007 appointee of President George W. Bush, has the conservative bona fides. He’s already thrown out the Obama-era rule that prohibits health care providers from discriminating against transgender patients or women who have had abortions. He had earlier issued a temporary injunction against the Obama administration’s guidelines to let students use facilities that align with their sexual identity. The Los Angeles Times has described O’Connor as a “bulwark against LGBT rights.” Earlier this year, O’Connor threw out the Obama administration’s rule that required states to reimburse federal premium taxes paid by Medicaid managed care plans.

“Even though I and most other legal experts believe this case borders on being frivolous, I think there is a good chance that Judge O’Connor will rule for Texas,” says Jost.

“However,” adds Jost, “I think it is almost inconceivable he would hold the entire ACA invalid, which is what Texas requests, as it would plunge our health care system into chaos.”

The first stop in the appeals process, the Fifth Circuit Court of Appeals in New Orleans, is one of the most conservative appellate courts in the country. “It is therefore conceivable that it could uphold an injunction,” says Jost. That could mean another date with the Supreme Court—and the first ACA case for Trump appointee Justice Neil Gorsuch and, if he is confirmed, Brett Kavanaugh.

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