ACA Update

by Christoper E. Condeluci, Principal and sole shareholder of CC Law & Policy PLLC in Washington, D.C.

What Does Yesterday’s Decision Mean?

In light of yesterday’s news coverage, I feel that I need to emphasize this: The Supreme Court will NOT – I repeat NOT – render a decision on the constitutionality of the “individual mandate” penalty tax, as well as the constitutionality of the entire ACA, until 2021. That means that a decision on the future of the ACA will NOT come until AFTER the November 2020 elections.
- Analysis: Unfortunately, virtually every news article I read yesterday either did NOT clarify these points – OR – you had to read to about the 4^th or 5^th paragraph before the reporter actually explained that a Supreme Court decision would NOT happen until AFTER the November 2020 elections. Virtually all of the headlines were also mis-leading. I even saw a prominent law firm insinuate that a decision striking down the ACA was imminent. Make no mistake, this is a BIG deal. I get it. BUT, there were a lot of people with their hair on fire yesterday. And for some, their hair is still on fire. I just don’t think it had to be that way. Look, I am by no means trying to minimize the fact that the Supreme Court will ONCE AGAIN decide whether the “individual mandate” penalty tax is constitutional or not. AND, it is NOT lost on me that if the Supreme Court does indeed find that the “individual mandate” penalty tax is UNconstitutional this time around, the Supreme Court will ALSO be deciding whether the ENTIRE ACA should fall, or whether ONLY certain provisions of the ACA must fall out (e.g., the pre-existing condition protections and the requirement to offer coverage to anyone who asks (i.e., “guarantee issue”)). BUT, let’s keep our head on straight here, and let’s understand that yesterday’s decision by the Supreme Court to take-up this case does NOT mean that a ruling will come down in 2020. Heck, I would find it hard to believe that the Supreme Court will hold oral arguments in this case BEFORE November 2020.

Isn’t That the Real Issue Here, the Impact on the November Elections?

Yes, indeed. Everyone is FREAKING out over whether the Supreme Court will do something in this case before the November 2020 elections. And that “something” would be asking for written legal briefs from the parties in the case – as well as scheduling oral arguments – BEFORE voters go to the voting booths on November 3^rd.
- Analysis: Let me back up a moment to say this: Although a ruling in this case will NOT come until some time in 2021 (possibly June 2021), the clock on when written legal briefs are due by the parties in the case starts NOW. The official Supreme Court rules say that the first written legal brief is due 45 days after the Court agrees to take-up a case. This means that we could see a written legal brief from the Democratic Attorneys General defending the ACA come April 15^th or so. The written legal brief for the Republican Attorneys General (who originally filed the lawsuit contending the “individual mandate” penalty tax is now UNconstitutional) will be due 30 days after that, around May 15^th or so. Then, final briefs are due about 30 days after that (i.e., mid-June). Around the time each party’s brief is due, interested outside stakeholders will ALSO have an opportunity to file an Amicus Brief stating their position, and encouraging the Court to rule one way or another. HOWEVER, each party to the case can ask for an “extension of time” to file their written legal brief. While I do NOT foresee why the Democratic Attorneys General would want to ask for an “extension,” it is likely that the Republican Attorneys General ask for an “extension.” If granted, this would push the date on which the final written legal briefs must be filed to to later in the Summer (i.e., July). Regardless of whether an “extension” is granted, it seems to be a virtual certainty that the written legal briefs will be in the hopper well before November 2020. This ALSO includes the multitude of the Amicus Briefs that will no doubt be filed, again, well before the elections.

Isn’t That Significant?

Yes. This would mean that the written legal briefs – and the multitude of the Amicus Briefs – will be out in the public domain during the General Election, and most likely, during the Presidential Conventions for BOTH political parties (the Democratic Convention starts July 13^th and the Republican Convention starts August 24^th).
- Analysis: This means that we will NO doubt hear A LOT – I repeat A LOT – about this particular case from BOTH political parties. UT, how significant is that? I mean, BOTH political parties have said A LOT about the ACA for over 10 years now. Soooo, what’s going to be new? NOT much. It will be the same old talking points from BOTH sides. BUT, the fact that voters are going to be reminded of each political party’s position on the ACA only a few short months – and weeks – before a pivotal election, that is what will be SIGNIFICANT. Democrats certainly have “the edge” on making the ACA a WINNING issue for them. As you know, the Democrats successfully used health care – and the issue of pre-existing condition protections – to win back the majority in the House in 2018. AND – as I reported in one of my recent updates – Speaker Pelosi has instructed the Democratic Caucus to use the “pre-existing condition issue” once again in the upcoming election. You can-bet-your-bottom-dollar that the Democratic Presidential nominee will ALSO play up the “pre-existing condition issue,” regardless of who wins the nomination. For Republicans, however, the base is NO longer as gung-ho as it once was about getting rid of the ACA. And, Republicans ALWAYS have a hard time articulating what they would offer the American public if the ACA went away. Also, Republicans seem to cut themselves off at the knees. What I mean is, during the ACA “repeal and replace” exercise, conservative Republicans called some of the “replace” proposals “Obamacare-lite,” which was one of the many contributing factors to the Republicans failing miserably. Importantly, HHS has been touting that premiums in the ACA’s “individual” market are finally going down under President Trump’s watch, which – according to HHS and even the White House – is a GOOD thing. Are conservative Republicans going to boo the President when he says that his Administration is lowering health care costs for people?? Is President Trump going to be able to continue to say that “the ACA is a disaster” when – for-all-intents-and-purposes – his Administration is making the ACA at least a little bit more palatable from a cost perspective?? It is going to be SUPER interesting to see how all of this plays out.

What About Oral Arguments?

In my opinion, this is the MOST IMPORTANT question. And admittedly, this is why most folks were FREAKING out yesterday.
- Analysis: According the Supreme Court’s typical schedule, oral arguments in this particular case may be scheduled for some time in October 2020. IF oral arguments are indeed scheduled some time in October 2020, then the “pre-existing condition issue” and the future of the ACA will be FRESH in voters’ minds when they go to the voting booths on November 3^rd. As stated above, that is a WINNER for Democrats. And that is a LOSER for Republicans, unless Republicans can somehow change the narrative between the Summer and November. BUT, there is NO guarantee that oral arguments will be scheduled in October 2020. If, for example, only 1 party to the case (i.e., the Republican Attorneys General) requests an “extension of time” to file their written legal brief, final briefs in this case would likely be due around July (as noted above). Just like Congress, the Supreme Court “recesses” ALL of August. And actually, the Justices often times get-out-of-Dodge shortly after the Term ends on June 30^th, and they do NOT return until close to when the next Term begins (i.e., October 1^st). This means that the Justices may NOT have taken the time to fully review all of the written legal briefs – including Amicus Briefs – in advance of an oral argument date in October. Which means that – at least under this scenario – oral arguments are more likely to be scheduled in November or December. Add in the fact that this particular case is one of the most politically charged cases in decades. Chief Justice Roberts may want to avoid exacerbating the “politics” in and around the case, and thus, opt for scheduling oral arguments AFTER November 3^rd. Regardless, the MOST IMPORTANT point I want to make is this: Despite all of the “noise” we are going to hear over the next 7 months, peaking this Summer, and possibly reaching a fever-pitch come October, the ACA will CONTINUE to be the law of the land UNTIL we hear from the Supreme Court some time in 2021 (probably 1 year and 4 months from now (i.e., June 30, 2021)).

How Might the Supreme Court Rule In 2021?

I really have NO idea. But, if you care to continue to read on, I will leave you with the following posts from July of this year, which gives you a sense of where I might lean on a final Supreme Court decision:

The 5^th Circuit Court of Appeals Hears Oral Arguments on the Latest Challenge to the ACA

Texas v. Azar – the court case in which the “individual mandate” penalty tax and the entire ACA are being challenged – is back in the news. This time, on account of the 5^th Circuit Court of Appeals holding oral arguments in the case. Reports of the proceedings speculate that 2 of the 3 judges hearing the case seemed to agree with the Plaintiffs that the “individual mandate” penalty tax is now unconstitutional, and thus, should be struck down.
- Analysis: As a quick refresher, at the end of 2017, Republicans in Congress enacted Tax Reform. As a way to pay for a portion of the revenue loss associated with Tax Reform, Republicans zeroed out the penalty tax (i.e., the penalty was reduced to $0). How is repealing a tax a “revenue-raiser”? Well, the Congressional Budget Office (CBO) said, yes, the Federal government will lose revenue because the government will no longer be collecting taxes associated with the “individual mandate” penalty tax. BUT, CBO also estimated that without the penalty tax, people who would otherwise be eligible for a premium subsidy will forego health coverage, thus saving the Federal government billions upon billions of dollars because the government would be paying out a far lower amount of premium subsidies to consumers. Shortly after Tax Reform was enacted, some Republican Attorneys General (AGs) got the bright idea that if the “individual mandate” penalty tax is NOT collecting any tax revenue – because the penalty tax was reduced to $0 – then Justice Roberts’ conclusion that the “individual mandate” is constitutional because of Congress’s ability to enact a tax is NO longer valid. As you may recall, Justice Roberts found that the “individual mandate” penalty tax was collecting tax revenue, and Justice Roberts further found that because the “individual mandate” was generating tax revenue for the government, the “individual mandate” is constitutional (because the Constitution gives Congress the exclusive “power to tax”). You have heard my thoughts on this before: While I agree with the argument that the “individual mandate” penalty tax is NOT collecting any tax revenue anymore – because the penalty tax is now $0 – the “individual mandate” is STILL a part of the law. In other words, the “individual mandate” still lives under section 5000A of the Internal Revenue Code. Yes, the penalty amount under Code section 5000A is now $0, but the “individual mandate” was itself NEVER repealed. Why? Because the Senate’s “reconciliation process” did NOT allow full repeal of the “individual mandate.” Soooo, Republicans got creative and asked the Senate Parliamentarian whether they could at least zero out the penalty tax. The Senate Parliamentarian said yes, and the rest is history. Now – at least in my opinion – because the “individual mandate” penalty tax is STILL a creature of current law, I could very well see Justice Roberts continuing to believe that the “individual mandate” remains constitutional. Yes, the current “individual mandate” penalty tax is NOT collecting any tax revenue, but I could see Justice Roberts opining that the penalty tax simply lies dormant until a future Congress increases the penalty to something higher than $0 (even $1). I believe that fully repealing the “individual mandate” penalty tax would have produced a different result. But that didn’t happen. I will admit, 2 of the 3 judges on the 5^th Circuit Court of Appeals may NOT agree with me, and they may find that the “individual mandate” penalty tax is indeed unconstitutional. Their holding might go something like this: The “individual mandate” penalty tax is NO longer collecting any tax revenue, and therefore, the “individual mandate’s” constitutionality CANNOT rest on Congress’s “Taxing Power,” rather, the fact that the Justice Roberts and a majority of the Supreme Court found that the “individual mandate” violated the Constitution’s “Commerce Clause” now leads to the conclusion that the “individual mandate” is indeed unconstitutional. Stay tuned…

Aside from Effectively Repealing the “Individual Mandate,” Did the Republican Congress Intend to Keep the Rest of the ACA?

This question seems to be coming up again and again. Specifically, at the 5^th Circuit’s oral arguments, the Defendants (a number of Democratic AGs) argued that that the 2017 Congress “did not intend for the entire law to collapse when it repealed the individual mandate penalty as part of Tax Reform.” In my opinion, this argument has NO basis whatsoever. Yes, I get that the Democratic AGs are trying to throw any and all arguments at the Circuit Court in hopes that something sticks. BUT, I believe this is a mis-informed argument.
- Analysis: Let me back-track a moment to say this: As you may recall, the District Court that initially heard this case felt that if the “individual mandate” was unconstitutional – which the District Court found it was – then the entire ACA must be unconstitutional. This ruling was based on the controversial conclusion that the “individual mandate” is NOT severable from the rest of the ACA, and thus, if the “individual mandate” falls, so too must the entire ACA. Now, I am NOT here to argue this controversial “severable” or “inseverable” issue. I am only here to contend that making the argument that Congress intended to keep the rest of the ACA while it was effectively repealing the “individual mandate” is just NOT a good argument. Here’s why: As I mentioned above, Republicans enacted Tax Reform through the “reconciliation process.” As I have told you time-and-time again, the “reconciliation process” is a constrained process. Specifically, the ONLY provisions that may be included in legislation that is being shepherded through the “reconciliation process” are provisions that impact spending or tax revenue. In other words, provisions that would be considered changing “policy” are NOT permitted in a “reconciliation” bill. Why is this important? Because attempts to include provisions that would have repealed all or a portion of the ACA, like the ACA’s insurance market reforms (e.g., the pre-existing condition protections, the prohibition against underwriting based on health status, and requirements like the “essential health benefits,” adjusted community premium rating, and single-risk pool requirements) are considered “policy” changes. And because a “reconciliation” bill can ONLY include provisions that impact spending or taxes – and because a “reconciliation” bill CANNOT include “policy” changes – the Tax Reform legislation could NOT include any provisions repealing all or portions ACA other than zeroing out the “individual mandate” penalty tax. Believe-you-me when I say that there were a lot of Republicans that had a burning desire to repeal all or a portion of the ACA, including the ACA’s insurance market reforms (for most, that desire burned white-hot). And if given the chance, I truly believe that Republicans could have at least repealed some of the ACA’s insurance market reforms. BUT, we don’t know if Republicans would have been successful in repealing the ACA’s insurance market reforms because Republicans NEVER got the chance to even try. Why? Because of…wait for it…the “reconciliation process.” More specifically, the Senate Parliamentarian ruled that provisions attempting to repeal the ACA’s market reforms were “policy” changes that are NOT permitted to be included in a “reconciliation” bill (which Tax Reform was). That all leads me to say this: Because Republicans were precluded from even attempting to repeal all or a portion of the ACA, including the ACA’s insurance market reforms, one CANNOT say that the Republican Congress intended to ONLY repeal the “individual mandate” penalty tax, while ALSO intending to keep the ACA in place. Again, if given the chance, the Republican Congress would NO doubt have tried to at least repeal some or all of the ACA’s insurance market reforms. Soooo, saying that the Republican Congress intended to keep all or a portion of the ACA in place misunderstands what the Republican Congress was able – and not able – to do back in 2017. Last comment: While I could see the 5^th Circuit finding that the “individual mandate” is unconstitutional, I have NO idea whether the 5^th Circuit will rule that the entire ACA must also be unconstitutional. I just hope that the Circuit Court does not base its decision on what the 2017 Congress intended or did not intend. If it does, I believe the Circuit Court’s decision will be vulnerable on appeal to the Supreme Court.