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ACA's individual mandate unconstitutional, appeals court says; lower court to decide whether rest can stand

A federal appeals court on Wednesday struck down part of the Affordable Care Act, ruling that its requirement that most Americans carry insurance was unconstitutional while sending back to a lower court the question of whether the rest of the law can stand without it.

The decision by a three-judge panel of the U.S. Court of Appeals for the 5th Circuit has little immediate practical effect because Congress already has removed the penalty for the insurance requirement as of this year. But the two-to-one ruling leaves the rest of the sprawling statute in limbo heading into a presidential and congressional election year.

The panel’s one Democratic appointee dissented, writing that states challenging the law did not have standing to do so and that, if they did, she would find the mandate constitutional.

Still, the decision carries significant political implications. It catapults to the forefront of the 2020 presidential and congressional campaigns questions about insurance coverage and consumer protections for people with preexisting medical conditions - issues that Democrats wielded in last year’s midterm elections to win a House majority.

Wednesday’s ruling resembles the legal position the Trump administration staked out in the case a year ago before the Justice Department hardened its stance to argue in March that the whole law is unconstitutional.

The 5th Circuit decision may or may not be the final word on the ACA, depending on whether its opinion is appealed to the Supreme Court and, if so, whether the high court takes the case.

The ruling comes in a case initially regarded as marginal by ACA supporters and critics alike. But since December 2018, when a federal trial court judge ruled the whole law unconstitutional, it has posed a more serious challenge to the 2010 statute passed by a Democratic Congress and considered a major accomplishment of President Barack Obama’s first term.

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The lawsuit was filed in February 2018 by Texas Attorney General Ken Paxton, a Republican, and his counterparts from other Republican-led states - currently 18 in all. Their main argument is that the ACA became unconstitutional when Congress adopted a broad tax bill in late 2017 that, starting this year, eliminated the law’s penalty for people who flout the requirement that most Americans carry health insurance. The plaintiffs pointed out that when the Supreme Court upheld the ACA in 2012, the majority reasoned it was legal under Congress’s taxing powers.

The suit further argues that sections of the law cannot be separated - or severed, in legal parlance - so that if the part of the law that includes the insurance requirement is no longer valid, the entire law must be considered unconstitutional.

In June 2018, the Trump administration decided not to defend the law in court. It was an unorthodox step, since the federal government is the defendant in the case, and the executive branch typically defends existing statutes in court.

At first, the Justice Department did not go as far as the GOP attorneys general, contending that the insurance requirement and consumer insurance protections should be struck down, while saying the rest of the law could be preserved. However, the administration changed positions early this spring, agreeing with Paxton and the others that the whole law is unconstitutional.

The law has been defended mainly by a coalition of Democratic attorneys general, led by California’s Xavier Becerra, who contend that in changing tax law, Congress’s GOP majority lowered the ACA’s tax penalty to zero but did not eliminate it. Even if that aspect of the law were invalidated, Congress gave no hint in the tax law that it intended to disrupt the rest of the ACA, they contend.

The court heard oral arguments in the case in early July. During the more than 90-minute hearing in a circuit courtroom in downtown New Orleans, the panel’s two Republican appointees expressed skepticism to varying degrees that the ACA should remain intact.

The panel’s newest member - Judge Kurt Engelhardt, who was appointed by President Donald Trump last year - sounded most sympathetic to arguments that the law was unconstitutional. Judge Jennifer Walker Elrod, an appointee of President George W. Bush, questioned both sides in the case. The panel’s lone Democratic appointee, Judge Carolyn Dineen King, a former chief judge of the court who was appointed by President Jimmy Carter, said nothing during the hearing.

The three judges were hearing an appeal of the opinion issued by U.S. District Judge Reed O’Connor issued in mid-December, on the eve of the deadline for the annual sign-up period for Americans to buy health plans through the ACA’s online marketplaces.

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A Bush appointee, O’Connor is a judge on the U.S. District Court for the Northern District of Texas.

In the 55-page opinion, O’Connor wrote that the law’s individual mandate is unconstitutional because it “can no longer be fairly read as an exercise of Congress’ tax power.” That requirement, he wrote, “is essential to and inseverable from the remainder of the ACA.”

Despite Trump’s frequent condemnation of the ACA, his administration told the court it was willing to keep the law in place while the case was appealed. O’Connor stayed his decision to let that happen.

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