The Federal Government Abandons the Most Popular Part of the ACA

The Justice Department won’t defend Obamacare’s preexisting-conditions provision in court—the latest in the administration’s assault on the law.

Health and Human Services Secretary Alex Azar with Attorney General Jeff Sessions (Mandel Ngan / Getty Images)

President Trump’s administration hasn’t lacked for innovative ways to disrupt the Affordable Care Act. Now it’s found another.

Facing a federal lawsuit from Texas and several other red states who want the entire law overturned, the Justice Department announced late Thursday that it won’t defend a core ACA provision in court: the guarantee of coverage for preexisting conditions. In a legal filing, the department essentially agreed with much of the lawsuit’s rationale, which is that recent legislation has voided most of the ACA’s most important provisions. While it’s unclear whether this unusual decision by the DOJ will help the lawsuit’s chances, it is yet another signal that the ACA remains vulnerable to being dismantled in pieces.

The filing originates in the complicated and sometimes perplexing legal history of the ACA. When the reform was passed in 2010, it contained a set of complex provisions involving private health insurance, including new subsidies for the purchase of private insurance and new marketplaces for the sale of private plans by insurers. Crucially, the law also created a series of rules enhancing the minimum level of coverage those plans could provide, including provisions that compelled insurers to cover people with preexisting medical conditions while keeping them from charging those people more. Finally, the law mandated individuals without insurance who could afford those private plans to purchase them or risk paying a tax penalty for going without insurance.

Almost immediately, this framework—along with other major pieces of the ACA—faced partisan opposition and legal scrutiny. The most important legal challenge was the NFIB v. Sebelius case that went before the Supreme Court in 2012. In a controversial 5–4 nail-biter, the Court deemed the individual mandate constitutional because it derived from Congress’s ability to levy taxes. Four conservative justices dissented from that decision, arguing that the Court had improperly saved the ACA: The rest of the law wouldn’t have survived if the justices had decided against the mandate, they said, because the nullification would’ve created an “inability of the other major provisions to operate as Congress intended.”

The Texas-led suit has roots in both this decision and the latest congressional challenge to the ACA. Last year, following dozens of failed legislative attempts to repeal the law, the GOP passed its major tax reform, which included a measure to undermine the very individual mandate that had been such a controversial part of the NFIB decision. By law, the bill couldn’t entirely repeal the mandate; instead, it made the tax penalty zero dollars effective in 2019, meaning it will functionally cease to exist after that.

The Texas challenge, initiated in February, reasons as follows: If the individual mandate, per the Court, is only constitutional because it constitutes a tax, and if that tax has effectively been eliminated, then the tax-less mandate that remains on the books is therefore unconstitutional. What’s more, in an echo of the justices’ NFIB dissent, Texas and the other states argue that invalidating the mandate should invalidate the whole ACA, because the law can’t function the way Congress wanted it to without the mandate in place.

Which brings us back to the Justice Department. In its filing this week affirming the main legal premises of the lawsuit, the DOJ reasoned that because it believes the Supreme Court should soon declare the taxless mandate unconstitutional, the preexisting-conditions provisions so closely attached to it should also be nixed.

The Texas-led lawsuit has a long way to go in its arguments. As Jonathan Cohn at HuffPost and Nicholas Bagley in the Incidental Economist health-policy blog note, there’s major disagreement over whether the empty individual mandate is unconstitutional at all. But the debate is even more complicated than that: Even if the mandate were declared unconstitutional, it would be difficult to argue that the decision would render the law’s other major provisions unable to “operate as Congress intended.” The only part of the law that was changed was the mandate; Congress’s intent was clearly to keep the preexisting-conditions ban and other major pieces of the law in place. Thus, those parts of the law would survive the mandate’s unconstitutionality.

Yet even if this logic wins out in court, it might not matter all that much to the future of the ACA. The Trump administration has proven extremely—often surprisingly—deft in manipulating the policy levers at its disposal to weaken the Affordable Care Act. The Department of Health and Human Services implemented regulatory reforms to reduce the number of people affected by the ACA’s requirements. The administration stopped paying major Obamacare subsidies to insurers in late 2017, and is in the process of expanding skimpy short-term insurance plans that were limited under ACA rules. And Trump and his congressional allies finally dismantled the individual mandate last fall. Health-care markets have been turbulent, and costs and premiums are increasing as a result.

Now, Attorney General Jeff Sessions has signaled that the law will be left to its fate. In the Texas case, that means the federal government abandoning the most popular piece of the ACA, the preexisting-conditions ban, and taking the risk that the sick and disabled who’ve newly received health care will be rendered helpless again.