Human Resources News & Insights

20-state lawsuit claims ACA just became ‘unconstitutional’: What now?

Just when you thought the fight to kill the ACA was finally over, a brand new chapter of the Obamacare-repeal saga has emerged. And on the surface, this chapter looks like it could potentially be the last for the controversial law.

Earlier this week, a 20-state coalition of attorneys general (AGs) filed a lawsuit against the federal government — specifically the IRS and HHS — over the Affordable Care Act (ACA).

The claim: The ACA is no longer constitutional after the repeal of tax that enforced the requirement that people purchase health insurance policies or pay a fine — a.k.a., the individual mandate.

‘No remaining legitimate basis for the law’

Plaintiffs claim a recent Supreme Court ruling backs up their argument. Essentially, the AGs claim the Supreme Court only allowed the individual mandate to remain as an exercise of Congress’ taxing authority.

After the passage of the new tax reform law, however, the individual mandate’s penalty was removed. The AGs say the entire mandate was then rendered unconstitutional.

In addition, the AGs claim the individual mandate cannot be removed from the ACA without making the entire law unconstitutional.

As Texas Attorney General Ken Paxton put it:

“The U.S. Supreme Court already admitted that an individual mandate without a tax penalty is unconstitutional. With no remaining legitimate basis for the law, it is time that Americans are finally free from the stranglehold of Obamacare, once and for all.”

Does the suit have merit?

Of course, it’s possible a court won’t even accept the lawsuit’s claims in the first place, as Katie Keith of the Health Affairs Blog points out. Many of the states in this lawsuit may not even have the standing because they were involved in a previous lawsuit that made it all the way to the Supreme Court.

In that case, the court found the individual mandate could be removed from the ACA without causing the law to fail.

Under the legal process know as res judicata or collateral estoppel, the states from the previous ACA individual mandate lawsuit would be prohibited from “relitigating” claims that were already litigated.

A very messy process

For the time-being, the lawsuit now puts the ball in the Trump administration’s court, which must decide whether or not to defend a law it’s promised over and over again to repeal.

HR pros may be thinking, “That’s a no-brainer. Trump and the GOP have been doing everything imaginable to kill the ACA, so there’s absolutely no reason they would ever defend it.”

While it may seem like this is a golden opportunity for Trump to make good on a campaign promise, it’s actually not that simple.

Yes, allowing the ACA to be killed off by this lawsuit would allow Trump and the GOP to make good on a promise that was a cornerstone of their respective campaigns, but it would also be a very, very messy  process — a process that could ultimately do much more harm than good.

Right off the bat, states would lose federal funding, uninsured rates would increase significantly and already unstable insurance markets would be immediately sent into a tailspin. And that doesn’t even account for all of the yet-unknown consequences of a market destabilization spurred by an immediate rollback of such a massive law.

Taking apart the law — and fixing it — piece by piece through planned legislation may be a more preferable path to the administration. Either way, expect this case to drag out.

Stay tuned. We’ll keep you up to date on any developments on this important lawsuit.

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