Constitutional Law

5th Circuit overturns insurance mandate in health law, doesn't decide if other provisions survive

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A federal appeals court on Wednesday struck down the Affordable Care Act’s individual mandate requiring Americans to maintain health insurance coverage.

The New Orleans-based 5th U.S. Circuit Court of Appeals said the requirement became unconstitutional after Congress in 2017 lowered the tax penalty to zero for failure to carry insurance, report the Washington Post and the New York Times. How Appealing links to additional coverage and the 2-1 decision.

The U.S. Supreme Court’s 2012 decision upholding the Affordable Care Act was based on Congress’ taxing power under the Constitution.

The 5th Circuit ruled in a suit challenging the law filed by Republican-led states. Eighteen states are plaintiffs. Sixteen states and Washington, D.C., are defending the law.

U.S. District Judge Reed O’Connor of Fort Worth, Texas, had struck down the entire law last December; however, the 5th Circuit did not go that far. Instead the appeals court remanded the case for O’Connor to reconsider whether other aspects of the law can be separated from the individual mandate and remain in effect.

The court also directed O’Connor to decide whether the ruling only applies to the states that sued to overturn the law.

Other provisions in the Affordable Care Act protect people with preexisting conditions, allow children to have coverage through their parents’ policies until age 26, and guarantee “essential health benefits” that include mental health, maternity and drug coverage.

The law also seeks to lower insurance costs by providing tax credits to some people, establishes insurance exchanges to allow customers to compare and buy insurance plans, and enlarges the pool of people eligible for Medicaid. States are allowed to opt out of the Medicaid expansion, however, as a result of the U.S. Supreme Court decision.

The health insurance requirement was intended to broaden the insurance pool and serve as a counterweight for the law’s protections for preexisting conditions, Judge Jennifer Walker Elrod explained in the majority opinion for the 5th Circuit. If there were no insurance requirement, people with preexisting conditions would arguably wait to buy health insurance until they needed care.

The tax penalty, deemed a shared responsibility payment, was imposed on people who didn’t buy insurance.

Under the U.S. Supreme Court’s decision, the command to purchase insurance “was saved from unconstitutionality because it could be read together with the shared responsibility payment as an option to purchase insurance or pay a tax,” Elrod said. Now that there is no tax revenue, the individual mandate is unconstitutional, she wrote.

Elrod said O’Connor “does not do the necessary legwork of parsing through the over 900 pages” of the law, though he did provide a few examples of major provisions.

One section of his opinion, for example, discusses the interplay of the insurance requirement with provisions guaranteeing coverage for everyone who seeks it and requiring insurers to offer same-price coverage, regardless of preexisting conditions.

But the court must undertake the same inquiry for each segment of the law, Elrod said.

One provision of the law, for example, requires restaurants to disclose calorie counts. Another establishes the knowledge of wrongdoing required for a health fraud conviction.

California Attorney General Xavier Becerra, who is seeking to uphold the health law, said he would move swiftly to ask the U.S. Supreme Court to overturn the 5th Circuit decision.

The U.S. Justice Department had originally argued under Attorney General Jeff Sessions that only parts of the law were unconstitutional. Sessions had refused to defend the law’s requirement for individuals to buy health insurance and had refused to defend provisions that ban insurers from denying coverage or charging more to people with preexisting conditions.

The Justice Department switched its stance under Attorney General William Barr. It now argues the entire law should be struck down.

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