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Appeals Court Wrestles Over Fate of Obamacare

Tasked with deciding the constitutionality of the Affordable Care Act (ACA), justices at a federal appeals court in New Orleans aggressively questioned the law's defenders during oral arguments on Tuesday, and asked whether the remainder of the law could still be upheld if the individual mandate is rendered unconstitutional.

The lawsuit before the three-judge panel -- Texas v. United States of America -- could obliterate the landmark law and arrived at the U.S. Fifth Circuit following a lower-court ruling that the ACA was unconstitutional following the removal -- or rather zeroing out of -- of the mandate's penalty in 2017.

On Wednesday morning in Washington, members of a major House committee debated whether Americans would be better off without the ACA.


Texas v. United States of America -- also called Texas v. Azar, as Health and Human Services (HHS) Secretary Alex Azar is charged with implementing the law -- was filed in early 2018 by Texas and 19 other republican-controlled states.

In December 2018, lower-court Judge Reed O'Connor of the U.S. District Court for the Northern District of Texas sided with the plaintiffs that the ACA was unconstitutional after Congress scrapped the individual mandate penalty as part of the Tax Cuts and Jobs Act (TCJA) of 2017. Congress had unequivocally stated time and again that the mandate was "essential" and "inseverable" from the rest of the ACA's provisions, O'Connor explained, but that rewriting the law without its "essential" feature was beyond the power of his court.

If the lower-court ruling is upheld by the U.S. Fifth District Court in New Orleans, there could be lasting consequences for the U.S. healthcare system. Insurers would once again be allowed to charge patients more for or refuse to cover patients with pre-existing conditions, and the approximately 20 million people who gained health coverage under the landmark law could lose it.

Subsidies that help low-income Americans to pay for health insurance on the exchanges would disappear as would the entire Medicaid expansion. A laundry list of other policy changes from restaurant calorie counts to mental health parity laws would also be reversed.

Save Obamacare

The law is being defended by 21 states with Democratic attorneys general, along with the Democratic-led House of Representatives. During oral arguments on Tuesday, General Samuel Siegel, JD, a lawyer for the state of California, questioned the states' stance that a now penalty-less mandate is inflicting harm by compelling individuals to acquire health insurance.

Following the TCJA, the individual mandate became "unenforceable" and "no longer requires anyone to do anything," he said.

Judge Jennifer Walker Elrod, appointed to the court by president George W. Bush in 2007, said that even without the threat of a fine, some will follow the law because they want to be "good citizens."

As to the individual mandate, "the most natural reading of the provision was as a command," she said. "So if you no longer have the tax, why isn't it unconstitutional?"

Siegel argued for "an alternative reading" of the text; Elrod did not seem entirely convinced.

As to the question of whether the mandate is inseverable from the rest of the law, Judge Kurt Engelhardt, appointed to the court by President Donald Trump, argued that Congress could have included a "severability clause" within the text of the ACA if it had wanted to.

"Couldn't Congress have said, 'Oh by the way, we think all of these provisions are such excellent ideas ... that if any of them go by the wayside, well then we would want ... the remainder to continue to apply?'" Engelhardt said.

Citing the Supreme Court, Siegel stressed that just because Congress didn't specifically include an inseverability clause does not "create a presumption against severability."

He urged the courts to focus on the text of the TCJA.

When Congress zeroed out the only "negative, legal consequence" for not buying health insurance, it stopped short of repealing the pre-existing condition protections, Siegel said, "or any of the other important reforms made by the Affordable Care Act," and in doing so, declared its intent to keep those provisions.

The justices also questioned Douglas Letter, JD, a lawyer for the House of Representatives, asking whether the House can fairly represent the intent of the entire Congress in choosing to eliminate the penalty through the TCJA.

Why shouldn't the Senate also be available to explain their intentions? Engelhardt asked. "They're sort of the 800-pound gorilla that's not in the room."

Letter said he was not there to present the House's argument, but to clarify legal precedent.

"We know what your responsibilities are in upholding any statutory language you can, particularly in the severability area," he told the panel, and to claim the law is unconstitutional the court would have to determine that Congress intended to eliminate the whole law. "There is no evidence of that."

Obamacare Must Go

Kyle Hawkins, JD, representing the state plaintiffs, pointed to language within the ACA suggesting that the individual mandate is "essential" to the law (an inseverability clause) and cited a Supreme Court decision, King v. Burwell, that characterized the mandate as one leg in a "three-legged stool" -- the other two being the premium subsidies and guaranteed issue.

Congress has had plenty of time to amend the law, but failed to do so, he said. "It is not this court's role to act as a legislature and cut sections out of the statute."

The justices also questioned August Flentje, JD, a lawyer for the Department of Justice (DOJ), and attempted to understand the government's ever-changing strategy. In a brief dated July 3, the DOJ explained that it will continue to enforce the ACA until a final decision has been made over the constitutionality of the individual mandate and severability of the rest of the law.

And in an earlier brief they also signaled that the court's ruling could be restricted to the plaintiff states.

"The government believes that's a possibility?" Elrod asked.

In addition, the initial DOJ brief also suggested other differences between the federal government's views and Judge O'Connor's decision, as Nicholas Bagley, JD, a law professor at the University of Michigan, pointed out in the law blog "Notice & Comment" a few days before the oral arguments.

For example, the brief suggests that provisions of the ACA that did not directly harm the plaintiffs such as certain anti-fraud provisions, should be maintained, but does not clarify just how many of these exceptions to this inseverability stance there are.

Asked whether the restaurant calorie guide provision, for example, would go away along with the mandate, Flentje explained that the federal government considers the mandate inseverable from guaranteed issue, community ratings, and the insurance reforms, as described in King v. Burwell.

During rebuttal, Engelhardt also questioned whether the court was the correct body to decide which portions of the ACA should be kept and which should be scrapped, and suggested the House create "a menu" of the popular provisions and make the issue of severability moot.

Flentje argued that President Trump would never sign a bill like that.

"That's exactly the point," said a frustrated Engelhardt. "Why does Congress want the Article 3 judiciary to become the taxidermist for every legislative big-game accomplishment that Congress achieves? Congress can fix this."

Flentje countered that the Supreme Court has already said the courts can solve the issue by maintaining everything constitutional that can stand on its own. "The Supreme Court has ordered you to do that."

The third justice on the court, Judge Carolyn Dineen King, who was appointed by President Jimmy Carter in 1979, did not ask any questions throughout the oral argument.

During a press call shortly after the oral arguments, Robert Henneke, JD, general counsel and director of the Center for the American Future at the Texas Public Policy Foundation in Austin (co-plaintiffs in the lawsuit), said his clients were forced to buy insurance they didn't want, lost their choice of doctor, and struggled with rising premiums. He also said that care was being "rationed" because fewer and fewer doctors were willing to accept ACA plans.

Asked whether the federal government could realistically be expected to agree on a replacement plan if the entire ACA were repealed, Henneke said he was "skeptical," but that the development of state-by-state replacements would be "completely doable."

Henneke said he believes the "likely next step" will be to take the lawsuit before the Supreme Court, where the constitutionality of the mandate can be definitively decided.

Perspectives From Congress, Stakeholders

Chairman of the House Committee on Oversight and Reform, Elijah Cummings (D-Md.), spoke of the "catastrophic consequences" that would occur if the Trump administration wins its case during a hearing on Wednesday.

The ACA ended "legalized discrimination" for 130 million people with pre-existing conditions and without the law those protections would disappear, he said.

People with diabetes, asthma, substance use disorder, and even pregnancy -- which is considered a pre-existing condition -- could be denied healthcare coverage or charged more for health insurance, Cummings said.

Striking down the ACA is even bad for the Trump administration, he said, as its elimination would "directly undermine many of their own policy goals, including tackling the opioid epidemic, lowering prescription drug prices, and ending the HIV epidemic."

Abbe Gluck, JD, a professor and director of the Solomon Center for Health Law and Policy at Yale Law School, pointed out that the administration's brand new proposal on improving kidney care would also suffer if the ACA were repealed.

The new payment model relies on an ACA initiative, the Center for Medicare and Medicaid Innovation (CMMI) and CMMI would "be gone" if the ACA were eliminated, Gluck said.

Frederick Isasi, executive director for Families USA, pointed out that "the number one tool" in stopping the opioid epidemic has been the Medicaid expansion, which would also be eliminated if the administration wins its lawsuit.

Ranking Member Jim Jordan (R-Ohio) said the whole hearing was "just another attack on President Trump" and that the discussion distracted from productive conversation on bipartisan issues such as lowering healthcare costs.

Instead of "bipartisan, substantive issues ... we're going to talk about why Democrats are upset that the administration thinks Americans deserve something better than the failed ideas of Obamacare," said Jordan.

He also defended Republicans over criticism by the committee and witnesses, arguing that there was "no one on this committee who would support denying coverage to Americans with pre-existing conditions."

David Balat, director of the Right on Healthcare Initiative for the Texas Public Policy Foundation, the one witness among seven chosen by Republicans, argued that patients are struggling to pay premiums, which have risen anywhere from 200-400% in parts of the country, and that the number of providers accepting ACA plans is shrinking.

"There's no way to fix the Obamacare situation," he said at one point.

A proponent of direct primary care, Balat also emphasized that healthcare coverage and care aren't equivalent, and that many Americans are paying more for coverage, but getting less services in return.

Americans need a "landscape of choices" to suit their care needs, he said.

A number of Republican committee members agreed that rising premiums were a continued stressor for them and their constituents.

Rep. Clay Higgins (R-La.), said he's seen premiums for him and his wife skyrocket. His wife has multiple sclerosis.

Higgins, who worked as a police captain before coming to Congress, made $20 per hour and his wife, a secretary, made $12 per hour. Premiums had been in the range of $300 to $500, but more recently they paid $800 to $1,000. He and other police officers, who earn even less, had to decide between paying for groceries and insurance.

"That was never an issue before the ACA," he said.

Multiple witnesses, patient advocates, argued that they were unable to even access care before the ACA, due to their pre-existing conditions.

Stephanie Burton of Kansas City, Missouri, went back to school to become a lawyer and was uninsured for several years, during which time she left her diabetes untreated and sought care in emergency rooms. During that time, she had a miscarriage and never sought follow-up care to understand what had happened, unable to afford it.

Because of the ACA, she was able to buy health insurance for the first time in years in 2014, for less than $100 per month with a subsidy. As a single mother of four children, she's now able to take care of her own health and her children's, she said.

Another witness, Peter Morley, a patient consumer from New York said he had tens of thousands of dollars in healthcare costs after a surgery, when his medical claims were denied by an insurer, prior to the ACA, because his injuries were considered a pre-existing condition. He is very concerned about what will happen to his coverage and access to care if the administration wins its lawsuit.

"If you think people don't get hurt when the administration doesn't defend the ACA, think again," said Morley. "We do."

Source: https://www.medpagetoday.com/washington-watch/repeal-and-replace/80967

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