27 Mar States assemble to sue Obamacare
Earlier this week, a 20-state coalition of attorneys general (AGs) filed a lawsuit against the federal government — specifically the IRS and HHS — over the Affordable Care Act (ACA).
The claim: The ACA is no longer constitutional after the repeal of tax that enforced the requirement that people purchase health insurance policies or pay a fine — a.k.a., the individual mandate.
Plaintiffs state thatthe Supreme Court ruling from the last major Obamacare case backs up their argument. Essentially, the Supreme Court only allowed the individual mandate to remain as an exercise of Congress’ taxing authority.
After the passage of the new tax reform law, however, the individual mandate’s penalty was removed. The AGs say the entire mandate was then rendered unconstitutional, as it can no longer be called a tax.
Fundamentally, the AGs claim the individual mandate cannot be removed from the ACA without making the entire law unconstitutional.
As Texas Attorney General Ken Paxton put it:
“The U.S. Supreme Court already admitted that an individual mandate without a tax penalty is unconstitutional. With no remaining legitimate basis for the law, it is time that Americans are finally free from the stranglehold of Obamacare, once and for all.”
Many of the states in this lawsuit may not have standing because they were involved in a previous lawsuit that made it all the way to the Supreme Court.
Under the legal process known as res judicata or collateral estoppel, the states from the previous ACA individual mandate lawsuit would be prohibited from “relitigating” claims that were already litigated.
For the time-being, the lawsuit now puts the ball in the Trump administration’s court, which must decide whether or not to defend a law it’s promised over and over again to repeal.
HR pros may be thinking, “That’s a no-brainer. Trump and the GOP have been doing everything imaginable to kill the ACA, so there’s absolutely no reason they would ever defend it.”
While this is a golden opportunity for Trump to make good on a campaign promise, many argue that it’s not that simple.
Yes, allowing the ACA to be killed off by this lawsuit would allow Trump and the GOP to make good on a promise that was a cornerstone of their respective campaigns, but it would also be a very, very messy process — a process that could ultimately do much more harm than good, they claim.
Right off the bat, states would lose federal funding, uninsured rates would increase significantly and already unstable insurance markets would be immediately sent into a tailspin. And that doesn’t even account for all of the yet-unknown consequences of a market destabilization spurred by an immediate rollback of such a massive law.
Taking apart the law — and fixing it — piece by piece through planned legislation may be a more preferable path to the administration, they conclude.
However, this assumes that the market is unstable, which it is not, and that the markets won’t predict the behavior of this administration, which is extremely unlikely. Insurance rates can be handled with a stop gap from Congress, which we already have, but are unlikely to need, because the high rates are a byproduct of Obamacare in the first place.