December 16, 2018

Shootout at the OK Corral: Federal Judge Rules Obamacare No Longer OK.

by Hal Gershowitz

Comments Below

Of Thee I Sing Heading AuthorsAnd he might be right. The reader will recall that Republican Chief Justice John Roberts saved the ACA (Obamacare) when he ruled that the penalty, which was the underpinning of the ACA individual mandate (that everyone buy health insurance that conformed to the government’s specifications), was simply a tax (which the Obama Administration had, in the interest of political optics, vehemently denied), and that the federal government’s constitutional right to tax was well established.

The reader will also recall that the mandate that everyone buy government-approved health insurance was, in effect, eliminated when the Republican controlled congress stripped the penalty to zero. In his ruling, Judge Reed O’Connor of the Federal District Court in Fort Worth ruled that the individual mandate requiring people to have health insurance “can no longer be sustained as an exercise of Congress’s tax power.” That’s because the government can’t force anyone to buy anything without the tax penalty.

Now. let us be clear. We were no fans of the Affordable Care Act. Millions of Americans who were perfectly happy with their healthcare coverage suddenly found that their healthcare insurance no longer complied with federal requirements, and replacement policies were much more expensive. To make matters worse, the ACA was sold to the public with presidential statements that were patently untrue. The three famous “untruths” — “if you like your doctor you can keep your doctor, if you like your healthcare plan you can keep your healthcare plan, and, famously, the ACA will drastically reduce healthcare premium costs.  None of this was true, and President Obama knew it. Those who delight in keeping score of President Trump’s “untruths” were remarkably silent when the ACA was being sold to the public, and they have remained silent about those presidential prevarications.

Nonetheless, until the final ruling makes its way to the Supreme Court, which will now certainly happen, the ACA is still in effect. But there is no question that Judge O’Connor’s decision threatens the survival of the landmark health law and, with it, health coverage for millions of Americans, especially for people with pre-existing conditions.

Judge O’Connor, a generally respected George W. Bush appointee, has ruled that “the individual mandate is unconstitutional” and, without it, the remaining provisions of the Affordable Care Act may well be rendered invalid. It’s an interesting argument. Can the health law’s insurance mandate still compel people to buy coverage now that Congress, as part of the tax overhaul a year ago, has reduced the penalty for non-compliance to zero.

Everything has hinged on Congress exercising its taxing power and, thereby, imposing a tax on people who chose not to buy health insurance. Congress, a year ago, chose not to impose that tax any longer.

So, 20 plaintiff states led by Texas have made the case that with the penalty zeroed out, the individual mandate has become unconstitutional and, therefore, the rest of the law crashes. It no longer can pass constitutional muster.

The Justice Department has had an anemic response to the case. While Justice took issue with the plaintiff’s argument that the entire law should be struck down, it failed to defend either the individual mandate, or the law’s provisions that protect people with pre-existing conditions. In other words, Justice punted. Now, a coalition of 16 states and the District of Columbia, and California, have intervened to defend the law. They may have their work cut out for them.

If Judge O’Connor’s decision is upheld, about 17 million Americans could lose their health insurance, including millions who gained coverage through the law’s expansion of Medicaid, not to mention millions more who receive subsidized private insurance through the law’s online exchanges.

Younger Americans up to age 26 who are now covered under their parents’ plans could find themselves without coverage, and the old annual and lifetime limits on coverage could become commonplace again. The biggest issue, however, is certain to be the protection the ACA provided for people with pre-existing conditions.

President Trump, immediately tweeted, “As I predicted all along, Obamacare has been struck down as an UNCONSTITUTIONAL disaster! Now Congress must pass a STRONG law that provides GREAT healthcare and protects pre-existing conditions.”

Now, let’s be clear, about what has happened. The Republican controlled Congress deep-sixed the mandate, which was what made coverage of pre-existing conditions possible. Judge O’Connor merely stated the obvious. With no tax-penalty mandate, there is no constitutional glue holding the ACA together.

Just how President Trump and Congress will create this “STRONG law that provides GREAT healthcare and protects pre-existing conditions should Judge O’Connor’s decision ultimately be upheld is, of course, the big question.

Frankly, they can’t, except by allowing insurance companies to provide an option for such coverage at immense additional cost. And a fair question to ask President Trump  — just who will pay that cost?

If Judge O’Connor’s ruling stands, and it well could, the Kaiser Family Foundation, a nonpartisan research organization, estimates that 52 million adults from 18 to 64, or 27 percent of that population, would be rejected for coverage under the practices that were in effect in most states before the Affordable Care Act.

“If this decision on the ACA is upheld, it would throw the individual insurance market and the whole health care system into complete chaos,” Larry Levitt, a senior vice president of the Kaiser Family Foundation has opined.

Ironically, Judge O’Connor’s ruling came a day before the end of the fifth open enrollment season provided by the Affordable Care Act. What we have rapidly percolating to the surface may be utter chaos in our healthcare system.

We’ll be eager to see President Trump’s “STRONG law that provides GREAT healthcare and PROTECTS pre-existing conditions.” President Trump owns his presidential hyperbole and the looming healthcare conundrum.


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6 responses to “Shootout at the OK Corral: Federal Judge Rules Obamacare No Longer OK.”

  1. Andrea Nelson Murphy says:

    Coverage of those with pre-existing conditions is of course, a must. But what about all those folks who will develop cancer and ALS and Parkingsons and God knows what else AFTER ACA disappears? Which of our benevolent health insurance giants will provide coverage for them at a reasonable cost if at all? I also wonder what’s going to happen to Medicare and Medicaid benefits. Given our trillion billion dollar deficit, somethings gotta go, right?

  2. Hal Gershowitz says:

    Andrea Murphy asks the 64 gazillion dollar question. As we opined in our essay this week, “Frankly, they can’t provide (a STRONG law that provides GREAT healthcare and PROTECTS pre-existing conditions.) except by allowing insurance companies to provide an option for such coverage at immense additional cost. And a fair question to ask President Trump — just who will pay that cost?”
    Keep your eye on the deficit. Last month, the US ran the largest deficit (outlays compared to receipts) in history. That’s a record sure to be broken…sooner rather than later, we would bet.

  3. Paul Lubar says:

    Covering pre-existing conditions is akin to buying automobile insurance after an accident has occurred and having the accident covered. Here is how the system is gamed. Let us say I have no insurance and develop sciatica which requires surgery. At that point I take out insurance to cover this pre-existing condition and the surgery is paid for. Six weeks later I feel great so I cancel my coverage until I develop some knee pain which requires surgery. No problem. I just take out a policy to cover the operation which I cancel after my knee surgery. etc etc etc
    No politician will spell this out to the public.

  4. Hal Gershowitz says:

    Dr. Lubar is, of course, correct. Coverage for pre-existing conditions from illnesses that routinely occur as Dr. Lubar describes, or inborn anomalies, will ultimately simply become an entitlement. Perhaps, a much needed entitlement, but ultimately a very expensive entitlement.

  5. Richard Goldstein says:

    My understanding was that Obamacare wasn’t anticipated to be tax neutral until it had been in effect 3 or 4 years. At that time with everyone buying in, it would be fiscally sound. It was attacked immediately as being irresponsible without letting it continue as legislated. The long range economics of it disappeared with the administrations attacks (talking points).

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