BY ED OLEKSIAK, JD
SENIOR VICE PRESIDENT, EMPLOYEE BENEFITS
This past Friday, December 14, a U.S. District Court Judge for the Northern District of Texas Fort Worth Division ruled that the Affordable Care Act (ACA) was unconstitutional. How can this be given the Supreme Court of the United States (SCOTUS) already determined the ACA to be constitutional?
Here’s a bit of detail, and just a warning, you may have to read a couple of times to digest. The judge, Reed O’Connor, made his decision after 18 Republican state attorneys general and two GOP governors brought their case to the court. They claimed SCOTUS upheld the ACA in 2012 because it included an individual mandate — or a tax penalty for Americans who didn’t buy health insurance. Basically, SCOTUS determined the ACA was constitutional under Congress’s authority to Tax. Since failure to obtain individual insurance resulted in a “Tax,” the ACA was found to be constitutional. “The Court held that Congress did not have authority under the Commerce Clause to require citizens to purchase health insurance, but still upheld the law’s ‘individual mandate’ provision under Congress’ taxing authority.”
Earlier this year, the Tax Cuts and Jobs Act of 2017 (TCJA) passed and set the penalty for not having individual insurance to zero. The tax law didn’t eliminate the individual mandate to have health insurance coverage. So, even though an individual isn’t subject to a tax penalty in 2019, they’re still required under the ACA to have health insurance coverage. I know…confusing, bear with me. That’s where this case comes about.
The plaintiffs filed their complaint claiming that now that the tax penalty has been eliminated, the mandate to have health insurance violates the Interstate Commerce Clause, and thus, is unconstitutional. The Supreme Court determined the ACA with the penalty avoided this violation because an individual could pay the penalty (tax) if they didn’t want to purchase health insurance. Since the TCJA eliminated the penalty, an individual no longer has a way to comply with the law other than purchasing insurance. Are you confused yet? Join the crowd!
This won’t be the last we hear about this case, as this ruling will certainly be appealed. For now, the ACA remains in place as the battle continues. But the “tax” for failing to have health insurance coverage in 2019 has been eliminated.