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The ACA Is Under Fire Again

The Trump administration announced Thursday it would not defend the Affordable Care Act in court against a lawsuit filed last year by 20 states.
President Donald Trump, pictured here on May 26th, 2018.

On Thursday, the Department of Justice under President Donald Trump filed a brief in a case brought by 20 red states against Secretary of Health and Human Services Alex Azar. The suit, which was filed in February, alleges that the entire Affordable Care Act is unconstitutional now that the tax penalty associated with the individual mandate has been repealed (as part of the tax reform package passed in December).

The Texas case rests on the fact that the Supreme Court's 2012 ruling on the ACA concluded that the mandate could remain in place since it essentially constituted a tax. The plaintiffs in the current case are arguing that, without the individual mandate's tax penalty, the mandate is now unconstitutional. They are further arguing that the mandate is not "severable" from the rest of the law—in other words, if the mandate's unconstitutional, the whole law is unconstitutional.

In the brief filed Thursday by the Trump administration, and in a letter to congressional leaders, the Trump administration announced it would not defend the ACA in court against the lawsuit, and that it believed several provisions of the law should be nixed. The administration's brief argues that the individual mandate is now unconstitutional and that two crucial protections for consumers with pre-existing conditions—the guaranteed issue and community rating requirements—cannot work without the mandate and should also be scrapped. The administration, however, stops short of calling for the rest of the law to be struck down.

It will be months before the lawsuit is resolved (the attorneys general of 17 blue states are defending the law in court), and most legal experts are deeply skeptical of the plaintiffs' case. Notably, three Department of Justice career officials refused to sign the brief. In the unlikely event that the suit is successful, however, Americans with pre-existing conditions would face pre-ACA conditions. Here's what Tim Jost, an ACA expert, had to say about the effects of such a ruling:

If the judge buys the administration's argument, and if his ruling is upheld on appeal, 52 million Americans with preexisting conditions could face denial of coverage or higher premiums. The administration's argument would also allow insurers to charge women, older people, and people in certain occupations higher premiums. This policy change would jeopardize coverage not just for consumers in the individual market, but also people with preexisting conditions who have employer-sponsored coverage. If these people lost or left their jobs, they may not be able to get individual market coverage.

Even if the suit is unsuccessful as expected, however, the administration's brief is likely to increase uncertainty and turmoil in markets already suffering the effects of previous actions by Trump and the GOP. A Congressional Budget Office report released last month predicted that premiums in the non-group market will increase by 15 percent next year as a result of the repeal of the individual mandate and the end of cost-sharing payments.