Texas v. United States: The Latest Court Case to Threaten Health Coverage for Millions

Update: Judge O’Connor heard oral arguments in Texas v. United States on September 5, summarized in this Health Affairs article. It is not clear how quickly the judge will rule on a preliminary injunction. The Department of Justice, despite arguing to undo preexisting condition protections, has admitted that a negative decision, even if appealed, would bring chaos and uncertainty during open enrollment this fall. Indeed, as we explain below, no matter when it occurred, a decision to end the Affordable Care Act’s protections would bring enormous harm to millions of people.

On September 5, a Texas Federal District Court will hear arguments in the case Texas v. United States, a case that threatens access to health care and coverage for millions of Americans.

The Texas Attorney General is leading a group of 18 Republican state attorneys general (TX, WI, AL, AR, AZ, FL, GA, IN, KS, LA, MO, NE, ND, SC, SD, TN, UT, WV), two governors (ME and MS), and two individual plaintiffs in challenging the Affordable Care Act. These state and individual plaintiffs are urging the court to overturn the entire health care law now that the individual mandate is no longer being enforced. What’s more, the Trump administration is not defending the law, instead arguing that protections for people with preexisting conditions should be struck down.

On the other side, California Attorney General Becerra is leading a group of 17 Democratic attorneys general who have intervened to defend the law (CA, CT, DC, DE, HI, IL, KY, MA, MN, NJ, NY, NC, OR, RI, VT, VA, WA). Families USA, along with Community Catalyst, the National Health Law Program, the Center on Budget and Policy Priorities, and the Texas-based Center for Public Policy Priorities, has filed an amicus brief in the case. Numerous patient organizations, health care providers, scholars, and individual consumers themselves have also weighed in with declarations and amici to explain the importance of retaining health insurance protections for older people and people with preexisting conditions, as well as other parts of the health care law that are at risk including premium tax credits, Medicaid expansion, and the many other health care improvements made by the Affordable Care Act.

What’s at stake in the Texas v. United States Lawsuit?

The Affordable Care Act is vital to patients’ access to health care. Devastating problems would reverberate throughout the health care system and the nation’s economy if the court strikes down the law. These are just some of the enormous harms and that would result from striking the law:

• Insurers could deny coverage or charge unaffordable premiums to older people and to people with preexisting conditions, or cancel coverage or refuse to cover care for preexisting conditions once people are enrolled. People in employer-based plans, not just individual plans, could face preexisting condition exclusions;
• At least 20 million consumers could lose health insurance– 12 million people who get coverage through Medicaid and 8 million who get federal subsidies in the health insurance marketplace;
• Young people would no longer be guaranteed the right to stay on their parents’ plans until they turn 26, endangering coverage for an additional 3 million people;
• People would no longer be guaranteed access to essential health benefits in health plans including prescription drug coverage, maternity care, mental health and substance use benefits, and other critical services;
• Health plans would once again be able to implement lifetime and annual limits on how much care they will cover for individuals and families;
• States would lose trillions of dollars in federal funds;
• The public health system would lose funds to combat the opioid epidemic and other health problems;
• Hospitals and other health providers would experience a large increase in uncompensated care;
• Major programs to improve quality of health care delivery (such as those that have targeted racial and ethnic inequities, improved the quality of nursing home care, and reduced hospital-acquired conditions) would end.

What are the arguments in the case?

Briefly, Texas is arguing that when Congress passed the Tax Cuts and Jobs Act of 2017 and set the penalty for going without coverage at $0 in 2019, Congress rendered the mandate unconstitutional. Without the mandate Texas argues, the rest of the law cannot stand (that is, the rest of the law is “inseverable,” says Texas). However, legal scholars—including prominent opponents of the Affordable Care Act—agree that Texas’s argument is wrong: even if the court found the individual mandate to be unconstitutional, the court would have to determine what Congress in 2017 wished for the rest of the law. In this instance, it is clear what Congress wanted because Congress explicitly kept the rest of the Affordable Care Act intact when it zeroed out the penalty. In multiple high profile votes during this Congress, Congress decided not to repeal the law.

Nonetheless, if the Court does allow most of the law to stand, Texas still wants the court to rule that guaranteed issue (the requirement that insurers must sell to all regardless of health status) and community rating (which prohibits individual market insurers from pricing policies based on health status) must end; and finally, Texas argues, the Court should at least strike guaranteed issue and community rating for the states that are suing if not nationwide.

When the federal government is sued for enforcing an unconstitutional law, the government’s defense lawyers are the Department of Justice. In a shocking move, under the Trump Administration, the Department of Health and Human Services (the federal agency named in the suit and charged with enforcing the law) and its DOJ lawyers have partially sided with the plaintiff states instead of defending the federal law.  The US Department of Justice is arguing that the court should strike down protections that guarantee that insurers will sell coverage to people with preexisting conditions, cover those conditions once people are enrolled, and charge them the same price for coverage as people who do not have preexisting conditions. Three career Department of Justice attorneys withdrew their appearances in the case when the Department refused to defend the law, and the most senior of them resigned.

California and the defending states who have intervened to defend the law argue that all of its protections should stand. They explain that if Congress wanted to repeal the law, it would have done so. The Congressional record makes it clear that members were only voting to eliminate the penalty in 2019 and not to overturn the law.

What happens next?

Sometime after the oral arguments, the US District Court will rule on whether to issue an injunction or partial injunction (that is, whether or not to stop enforcement of all or parts of the Affordable Care Act in all or some states), or whether the law should stand in its entirety. More specifically, the court could decide any of the following:

1. The ACA stands as written and its many consumer protections must be enforced in all states;
2. The court could stop enforcement of preexisting condition protections in the 20 plaintiff states, leaving consumers in these 20 states unprotected and making it hard or impossible to fairly administer premium tax credits nationally; or
3. The court could stop enforcement of preexisting condition protections nationally, leaving consumers with preexisting conditions uninsured or with unaffordable premiums or without coverage for those conditions;
4. The court could stop enforcement of the entire law nationally, which would throw millions of people off of Medicaid and private insurance and leave them uninsured, as well as eliminating many other health care protections.

For any of outcomes 2-4 above, the next question will be whether the court suspends—“stays”—enforcement of its ruling pending appeal to the next level of federal courts, the federal Circuit Court.

Whatever the outcome in the US District Court, the case is not likely to end here and will probably be appealed. It’s important that people continue to raise their voices about the importance of protecting health coverage and care.