Kayla Heckman – In 2012, the United States Supreme Court upheld the Affordable Care Act, also known as “Obamacare,” as a valid exercise of Congress’ taxing power. In this notable 5-4 decision, the majority held that the individual mandate was unconstitutional under the Commerce Clause and under the Necessary and Proper Clause but that it was constitutional under Congress’ taxing powers. The individual mandate requires that one either purchase health insurance or pay a tax penalty. Because the penalty is collected through the IRS, the majority found that it was therefore a tax and fell within Congress’ broad taxing powers.
However, with last year’s change in Tax Code and a recent decision by a Texas Federal judge, the Affordable Care Act may be heading back to the Supreme Court to determine the individual mandate’s constitutionality yet again. In 2017, Congress voted to scrap the individual mandate’s tax penalty, thus, the tax penalty will disappear in 2019. On December 14, 2018, U.S. District Judge Reed O’Connor held that the individual mandate will thus no longer be a valid exercise of Congress’ taxing power. Judge O’Connor reasoned that because the individual mandate is an essential part of the Affordable Care Act, that the entire Act must be found to be unconstitutional.
What does this ruling mean for those who are currently insured under the Affordable Care Act? As of right now, there will be no immediate changes. However, it is almost certain that this decision will be appealed to the Fifth Circuit and could potentially go back up to the Supreme Court. This recent ruling by Judge O’Connor could bring us all the way back to 2012 where the Supreme Court first decided the constitutionality of the individual mandate, however, now the Supreme Court will also have to take into account the new tax changes to take place in 2019, specifically, the repeal of the individual mandate’s tax penalty. The Supreme Court will be left with the question as to whether the Affordable Care Act can be deemed constitutional without the individual mandate’s tax penalty. This leaves the Supreme Court essentially with the same questions as in 2012: if the Affordable Care Act is a constitutional exercise of congressional Commerce Clause power or Necessary and Proper Clause power.
It is also important to take into consideration how the newly appointed Justices Gorsuch and Kavanaugh will rule on this issue if it is to go back to the Supreme Court. The original 2012 Supreme Court decision was a 5-4 decision and so it will be a close call. For now, there will be no immediate changes to the Affordable Care Act and there will be no impact on current coverage or coverage in a 2019 plan. Throughout the appeal process the law is to remain in place. However, with about 11.8 million people enrolled in 2018 Obamacare plans, any ruling stripping away Obamacare will have severe and substantial impacts on those enrolled in these plans. While there is no immediate impact as of now, the impact could be devastating in the years to come.
