So The Obamacare Penalty Is Unconstitutional Again: What’s Next?

A three-judge federal appeals court panel ruled Wednesday that the Affordable Care Act’s individual mandate and penalty is unconstitutional. The Court, in a 2-1 decision, did not strike down the entire law, leaving many questions as to what this means for the future of Obamacare as a whole.

The Fifth Circuit Court of Appeals panel in New Orleans heard the case stemming from a lawsuit initiated by Texas, and later joined by 19 states and opposed by a number of liberal states led by California. The suit alleged that since the 2017 Tax Cuts and Jobs Act that zeroed-out the individual mandate penalty, that the rest of Obamacare falls along with it. This follows a 2017 ruling by Fort Worth U.S. District Judge Reed O’Connor that ACA is unconstitutional, rendering the remainder of the law unenforceable, addressing the “severability” of the law.

The Fifth Circuit panel sends the decision back to the federal District Court for further review.


“We look forward to the opportunity to further demonstrate that Congress made the individual mandate the centerpiece of Obamacare and the rest of the law cannot stand without it,” Texas Atty. Gen. Ken Paxton, the leader of the lawsuit, said in a statement Wednesday.

Before Obamacare opponents pop the cork, let’s take a look at what’s next.

  • A Supreme Court challenge is all but inevitable. Though the case is against the United States, the Trump Administration has so far refused to defend the law, leaving California in a leadership position. As such, California AG Xavier Beccara said he would challenge the Fifth Court panel’s decision which he said “could mean the difference between life and death for so many Americans and their families.” There’s nowhere else to go but the Supreme Court, aside from a review by the lower court.
  • ACA will become a campaign issue again. With Democratic presidential candidates eager to step out in front, and without impeachment driving their train, they will be looking for an issue to make the Republicans look un-compassionate and out of touch with the complex realities of what the U.S. health care system has become. Furthermore, the temporary chaos caused by a sudden striking of ACA from federal code (statutory and administrative alike) will be talking point by health care lobbyists, adding fire to Democratic campaigns up and down the ballot.
  • With the $0 penalty still in effect, we can expect a booming cottage industry of direct primary care clinics and free market hospitals to continue to fill the gap for low-income (and cost-conscious) Americans in the market for health care options. Alas, these health care providers are more interested in the business of caring for patients and pioneering a new industry — they are not as organized in terms of lobbying and advocacy. But expect them to be a quieter voice that could potentially throw a monkey wrench into the usual arguments made by the pro-ACA side.



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