Appeals Court Hears Arguments to Strike Down the ACA

Trump administration and Republican states seek to overturn the health care law

Stephen Miller, CEBS By Stephen Miller, CEBS July 10, 2019
Appeals Court Hears Arguments to Strike Down the ACA

On July 9, the 5th Circuit Court of Appeals in New Orleans heard arguments in Texas v. United States, a lawsuit seeking to overturn the Affordable Care Act (ACA). The suit was brought by 20 Republican state attorneys generals and governors, with the Trump administration adding its support. A coalition of 21 Democratic attorneys general and the Democrat-controlled House of Representatives are defending the law.

This case was heard by a three-judge panel, with one judge appointed by President Jimmy Carter, one by President George W. Bush and one by President Donald Trump.

The Democrats are appealing a December 2018 ruling by Judge Reed O'Connor of the federal district court in Fort Worth. He ruled that when Congress eliminated the "individual mandate" tax penalty on people without ACA-compliant health coverage, it removed the constitutional premise for the entire law, which was based on Congress' tax power. O'Connor struck down the ACA but stayed his ruling pending appeal, leaving in place all employer coverage and reporting obligations under the law.

Those appealing the ruling said that it was based on faulty legal analysis and that O'Connor had overstepped his judicial authority.

If the appellate court upholds the lower court ruling against he ACA, the case is expected to land before the U.S. Supreme Court. If the Supreme Court agrees that the ACA is no longer constitutional, it would have far-reaching consequences for employers who sponsor health care benefits and the millions of people who receive ACA-regulated coverage.

The oral arguments—45 minutes on each side—were not broadcast, but an audio file was posted on the Fifth Circuit website later in the day.

We've rounded up articles from SHRM Online and other trusted news sources on this case.

Oral Arguments Left Questions Unanswered

The panel of appellate court judges sounded likely to uphold the lower court's ruling that the requirement that most people have health insurance is unconstitutional without a tax penalty. But it was harder to discern how the court might come down on a much bigger question: whether the rest of the sprawling health law must fall if the insurance mandate does.

The appeals panel also questioned whether the Democratic states and House of Representatives even have standing to appeal Judge O'Connor's ruling. If the appeals court ultimately decides that neither the House nor the intervening Democratic states have standing, it could either let Judge O'Connor's ruling stand or vacate it. In any event, the losing party will almost certainly appeal to the Supreme Court.

The appeals court could take months to decide, but the Trump administration has said it will continue to enforce the many provisions of the law until a final ruling is issued.

(New York Times)

Supreme Court Could Hear the Case Next Year

Depending on what happens at the appeals court level, the health law could be back in front of the U.S. Supreme Court, and land there in the middle of next year's presidential campaign. Interestingly, the administration's position appears to be shifting. In March, a spokeswoman for the Justice Department said it had "determined that the district court's comprehensive opinion came to the correct conclusion and will support it on appeal." But in a filing with the appellate court late last week, Justice Department attorneys argued that perhaps the health law should be invalidated only in the GOP states that are suing, rather than all states.


ACA Obligations Remained in Place After District Court's Ruling

The district court's ruling was "a declaratory judgment and not an injunction to freeze the ACA," which meant that the ruling had no immediate effect, explained Chatrane Birbal, director of policy engagement at the Society for Human Resource Management. "Compliance with the ACA's employer mandate and employer-reporting requirements are still in effect and employers should continue to comply with these requirements," she pointed out.

(SHRM Online)

[SHRM members-only toolkit: Complying with and Leveraging the Affordable Care Act]

A 2020 Campaign Issue

As they did in the 2018 congressional elections, Democrats "plan on making health care a campaign priority" in 2020, said James Klein, president of the Washington, D.C.-based American Benefits Council, which represents benefit plan sponsors. He summed up the Democrats' strategy as protecting the ACA in the short term and creating a larger health care role for government in the long term.

Many congressional Democrats and most of the party's announced presidential candidates support some version of Medicare for all. This could mean either a fully government-paid health care system that prohibits private and employer-sponsored health insurance except for supplemental coverage (as under the Medicare for All Act, which is endorsed by 115 House Democrats), or a system that permits private insurance but allows more people to buy in to Medicare.

(SHRM Online)

Visit SHRM's resource page for the Affordable Care Act.


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