5th Circuit Decision in Texas v. U.S. Prolongs Uncertainty for Health Care Consumers, Markets

Perhaps knowing their decision would sow consumer confusion and market uncertainty, the 5th Circuit Court of Appeals delayed its decision in the Texas v. U.S.  litigation until after the close of open enrollment for Affordable Care Act (ACA) insurance coverage in most states. On December 18, 2019, two of the panel’s three judges agreed with the plaintiffs that the ACA’s individual mandate is unconstitutional, but they declined to rule on whether the rest of the law should also fall. Instead, the 5th Circuit returned that decision to District Court Judge Reed O’Connor, who, just over a year ago decided that the entire ACA is non-severable from the individual mandate and should be struck down. So it’s not exactly a mystery what he’ll rule, now that the case has been returned to him. Unfortunately, the 5th Circuit’s ruling in this case not only prolongs the already interminable litigation over the ACA, but it leaves a proverbial “sword of Damocles” hanging over the millions of people who depend on the law’s protections to maintain their insurance coverage and continued access to health care.

In a recent USA Today op-ed piece, former U.S. Department of Health & Human Services Secretary Tom Price lobbed accusations of “fearmongering” over what would happen if the ACA is struck down. But a plain review of the facts supports the assessment that invalidating the ACA would have widespread, immediate, and devastating consequences, including:

  • The end of marketplace tax credits and coverage for over 10 million people and the likely collapse of the individual health insurance market.
  • The end of Medicaid coverage for approximately 17 million people.
  • The end of insurance protections for an estimated 133 million people who have a pre-existing condition.
  • The end of young adults up to age 26 being allowed to stay on their parents’ plan.
  • The return of lifetime and annual dollar limits on insurance coverage.
  • The end of the cap on consumers’ annual out-of-pocket costs for health care services.
  • The end of cost protections for seniors with Medicare prescription drug coverage.
  • The end of minimum standards for insurance companies, including essential health benefits.

For the last three years, President Trump and Republican congressional leaders have repeatedly promised that they would have an ACA “replacement” plan in place, should the ACA be invalidated or repealed. But they have yet to produce such a plan, and every past effort to replace the ACA failed even when the GOP controlled both houses of Congress. As we’ve previously documented in this space, the Congressional Budget Office (CBO) and Joint Committee on Taxation have estimated that repealing the ACA without a replacement would result in 32 million people losing coverage by 2026. Those maintaining coverage in the individual market would see premiums double. A more recent estimate by the Urban Institute found that, if the ACA were invalidated, the total number of uninsured in the U.S. would rise to 50 million, or 18.3 percent of people under age 65.

Furthermore, invalidating the ACA without a replacement plan would place hospitals and other providers at significant financial risk. The Urban Institute has projected that uncompensated care costs will nearly double, while an assessment by America’s Essential Hospitals estimated that public hospitals alone would face $54.2 billion in uncompensated care costs over 10 years, a strain these hospitals “could not sustain.” In Iowa alone, the Iowa Fiscal Partnership estimated that repealing the ACA would generate a $10 billion increase in uncompensated care costs over 10 years, mostly impacting the state’s rural hospitals.

If the past is any guide, Judge O’Connor would likely rule – again – that the entire ACA should be invalidated, meaning the case will wind its way back up to the 5th Circuit. Thursday’s decision thus unnecessarily prolongs this litigation and the attending uncertainty for health care consumers and markets. The California attorney general, who is leading a coalition of states that have intervened as defendants in this case, will ask the Supreme Court to hear the case this term and put an end, once and for all, to this specious litigation. For the sake of the security of coverage for millions of people and the financial stability of providers that serve as an essential safety net, let’s hope the Supreme Court answers his call.

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The opinions expressed here are solely those of the individual blog post authors and do not represent the views of Georgetown University, the Center on Health Insurance Reforms, any organization that the author is affiliated with, or the opinions of any other author who publishes on this blog.