The Trump administration may have thrown healthcare insurance markets into further turmoil by declaring it will not defend key provisions of the law against a legal challenge brought by Texas and other conservative states.
The U.S. Supreme Court in 2012 found the Affordable Care Act’s individual mandate requiring people to obtain health insurance or pay a fine for being uninsured was constitutional because it could reasonably be construed as a tax.
But in a court brief filed last week, Department of Justice attorneys agreed with the states that the mandate is no longer constitutional since Congress in last year’s Tax Cuts and Jobs Act reduced the fine to zero.
“The individual mandate thus still exists,” the filing said, but with the associated financial penalty gone, “it will no longer be fairly possible to describe it as a tax because it will no longer generate any revenue.”
The DoJ also sided with the states in arguing that two of the law’s core consumer protections — which make health insurers cover sick consumers and prohibit them from charging sick consumers higher premiums — cannot be severed from the individual mandate and, therefore, are likewise unconstitutional.
The mandate is “’essential’ to the operation of [those] provisions” because they cannot work without the coverage requirement, the department said.
Donald Verrilli Jr., President Barack Obama’s top Supreme Court lawyer who defended the law, called the DoJ’s new posture “a sad moment.”
“I find it impossible to believe that the many talented lawyers at the department could not come up with any arguments to defend the ACA’s insurance market reforms, which have made such a difference to millions of Americans,” he told The Associated Press.
According to the Los Angeles Times, the practical effect of the move may be “relatively minor” as the states’ legal challenge “is widely viewed as a long shot that stands little chance of threatening the 2010 law.”
But the administration’s decision “is likely to further roil insurance markets that are seeing very large premium increases, fed in part by other moves by the Trump administration to loosen insurance regulations,” the Times said.