Federal Appeals Court Finds ACA Individual Mandate Unconstitutional, Sends Case Back to Lower Court for Further Study

The U.S. Court of Appeals for the Fifth Circuit in New Orleans on Wednesday struck down the Affordable Care Act’s individual mandate, ruling on a 2-1 vote that the coverage requirement was unconstitutional after Congress in 2017 eliminated the tax penalty that was intended to enforce it. Despite ruling against a core component of the ACA, the Appellate Court panel did not invalidate the rest of the law, allowing it to stand while U.S. District Court Judge Reed O’Connor of Texas was ordered to “employ a finer-toothed comb” and conduct “a more searching inquiry” into which of the law’s components could survive without the individual mandate.

Recall, District Judge O’Connor in December 2018 struck down the entire ACA on the grounds that the individual health insurance mandate could not be severed from the rest of the law because it was “the keystone” to the broader act. Judge O’Connor shortly afterward issued a stay on his ruling while the ruling was challenged by a 21 state coalition led by California Attorney General Xavier Becerra. Wednesday’s ruling by the Fifth Circuit Court of Appeals further places the ACA in limbo as the severability assignment given to the lower court in Texas is expected to take an extended amount of time and likely stretch beyond the 2020 election.

Citing concerns with leaving millions of Americans in limbo regarding their health care, Attorney General Becerra on Wednesday suggested California may be poised to immediately appeal Wednesday’s decision to the U.S. Supreme Court. “It’s time to get rid of the uncertainty,” Becerra remarked following the ruling. “Americans don’t need to be jerked around when it comes to their health care.” During a call with the public on Thursday, Becerra further discussed the possibility of filing with the Supreme Court to have the matter heard this coming spring for a summer ruling.

If the Supreme Court – which has twice upheld the ACA since its enactment in 2010, albeit under a different judicial makeup – were to agree with the Fifth Circuit Court of Appeals on the matter, the decision could have massive and far-reaching implications for the country’s health care delivery system, industry, and economy. Becerra noted in an announcement these potential impacts, including the nearly $1.3 trillion in federal funding (including Medicaid expansion and public health funds), how the ACA has assisted more than 12 million Americans receive coverage through Medicaid expansion, 9 million Americans receive tax credits to afford insurance through individual marketplaces, and millions of working families who rely on high-quality employer-sponsored insurance plans.

For now, the case heads back to the district court that already attempted to overturn the law in its entirety, and uncertainty on the matter is expected to persist for the foreseeable future. While California and the broader coalition of states attempting to preserve the ACA have yet to formally file a motion on Wednesday’s ruling, the matter is all but certain to be a significant topic of interest in the new year.