U.S. District Court Rules ACA Unconstitutional

A federal judge for the U.S. District Court for the Northern District of Texas has ruled in favor of a lawsuit filed by his state and 19 others which claimed that Congress’ recent repeal of the ACA’s tax penalty has undone the rationale of the Supreme Court’s 2012 decision that the law is constitutional.

U.S. District Court Judge Reed O'Connor issued a decision on December 14 in Texas v. Azar declaring the individual mandate for health insurance coverage unconstitutional and ruling further that the mandate cannot be severed from the rest of the ACA, rendering the entire law invalid.

The original lawsuit by the states was filed against the U.S. Department of Health and Human Services (HHS) and the Internal Revenue Service (IRS).  Its claim against the ACA’s constitutionality rests upon the U.S. Supreme Court ruling that the individual mandate was constitutional under the powers of taxation held by Congress; however, elimination of the individual mandate’s enforcement mechanism in last year's Tax Cuts and Jobs Act did not actually eliminate the mandate.  Rather, it simply dropped the tax penalty for not having qualifying health insurance to $0 beginning in 2019.

Therefore, the lawsuit argued that the individual mandate has been retained and rendered unconstitutional, as it no longer exercises Congress’ powers of taxation.  Judge O'Connor agreed with the lawsuit’s plaintiffs and issued partial summary judgement in their favor; although he did not order an injunction against the ACA as requested in the lawsuit.

Following the December 14 ruling, HHS stated it “will continue administering and enforcing all aspects of the ACA as it had before the court issued its decision.”  The ruling is expected to be appealed by various state attorneys general and possibly will end up back at the Supreme Court.