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Explaining Texas v. US

On July 9, 2019, the U.S. Court of Appeals for the 5th Circuit will hear oral argument in Texas v. U.S., the next round of litigation challenging the Affordable Care Act (ACA). The appeals court is reviewing a federal trial court’s decision that the ACA’s minimum essential coverage provision (known as the individual mandate) is unconstitutional and, as a result, requires the entire ACA to be overturned. The individual mandate provides that most people must maintain a minimum level of health insurance coverage; those who do not do so must pay a financial penalty (known as the shared responsibility payment) to the IRS. The individual mandate was upheld as a constitutional exercise of Congress’ taxing power by a five member majority of the U.S. Supreme Court in NFIB v. Sebelius in 2012.

 

In the 2017 Tax Cuts and Jobs Act (TCJA), Congress set the shared responsibility payment at zero dollars as of January 1, 2019. According to the Texas trial court, this action “compels the conclusion” that the individual mandate ceases to be a constitutional exercise of Congress’ taxing power because the associated financial penalty no longer “produces at least some revenue” for the federal government.1 The trial court went on to find that, because Congress called the individual mandate “essential” when enacting the ACA in 2010, the entire law must be invalidated. The trial court’s decision has not yet been implemented. However, if the decision does take effect, it will have complex and far-reaching consequences for the nation’s health care system, affecting nearly everyone in some way. A host of ACA provisions would be eliminated, including: protections for people with pre-existing conditions, subsidies to make individual health insurance more affordable, expanded eligibility for Medicaid, coverage of young adults up to age 26 under their parents’ insurance policies, coverage of preventive care with no patient cost-sharing, closing of the doughnut hole under Medicare’s drug benefit, and a series of tax increases to fund the new benefits.

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