Last Friday, a federal judge in Texas ruled the Affordable Care Act (a.k.a. Obamacare) unconstitutional.
The judge’s decision came in response to a lawsuit filed by 20 Republican state attorneys general earlier this year. The lawsuit was filed after the Tax Cuts and Jobs Act zeroed out the Individual Mandate penalty. The lawsuit claimed the Individual Mandate was so essential to Obamacare, and without it, all of Obamacare must go. The judge agreed.
The judge’s decision will not have any immediate effect. A group of intervening states led by Democrats have promised to appeal the decision. It’s unclear how quickly an appeal will be heard, but all signs are now pointing to an eventual Supreme Court hearing.
In 2012, the Supreme Court heard a similar case challenging the constitutionality of Obamacare. At the time, House Republicans had challenged whether the federal government could require Americans to obtain health insurance or pay a penalty. House Republicans argued this requirement exceeded the power of Congress.
In this case, the Supreme Court ruled that this requirement was within the power of Congress. Chief Justice Roberts wrote in the majority opinion, “The Affordable Care Act’s requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a tax.” Congress does have the power to tax, so the law was upheld at the time.
At the same time, when commenting about the Commerce Clause that gives Congress the power to regulate the economy, Chief Justice Roberts said, “That Clause authorizes Congress to regulate interstate commerce, not to engage in it.”
In 2019, the requirement to have health insurance still exists under Obamacare, however, the penalty for not having coverage is $0. A big part of the argument from the 20 Republican state attorneys general in the current lawsuit is that Congress cannot force people to buy health insurance without a tax, and we now know at least one federal judge agrees.
We are once again in a “wait and see what happens” when it comes to Obamacare. The underlying issue that higher courts will have to decide is whether the Individual Mandate is severable from the rest of Obamacare. In other words, can the Individual Mandate be eliminated in its entirety while the rest of the law remains intact?