Litigation in Texas over the constitutionality of the individual mandate and, with it, the entire Affordable Care Act (ACA) is receiving more and more attention in Congress. On August 23, 2018, Republican Senators released new legislation that they believe would help blunt the impact of a ruling for the plaintiffs in Texas v. United States. The stated aim of the bill is to “guarantee” equal access to health care coverage regardless of health status or preexisting conditions. However, in the event that the court agrees with the plaintiffs—or even just the Trump administration—the legislation leaves significant gaps.
At the same time, Democratic Senators had their efforts to potentially intervene in the litigation rebuffed during the debate over a recent appropriations bill for the Departments of Labor, Health and Human Services (HHS), Education, and Defense. With a hearing on Texas scheduled for September 5, 2018—the same time as hearings are set to begin in Congress over the confirmation of D.C. Circuit Judge Brett Kavanaugh to the Supreme Court—attention on the case is only likely to increase.
Brief Background On Texas
In Texas, 20 Republican state attorneys general and two individual plaintiffs challenge the constitutionality of the individual mandate, which was zeroed out by Congress beginning in 2019. Without the penalty, the plaintiffs argue that the mandate is unconstitutional. Because the mandate cannot be severed from the rest of the law, they believe the entire ACA should also be struck down.
In June, the Department of Justice (DOJ) declined to defend the constitutionality of the individual mandate alongside the ACA’s provisions on guaranteed issue (42 U.S.C. §§ 300gg-1, 300gg-4(a)), community rating (42 U.S.C. §§ 300gg(a)(1), 300gg-4(b)), and the ban on preexisting condition exclusions and discrimination based on health status (42 U.S.C. § 300gg-3). These provisions collectively ensure that individuals with preexisting conditions cannot be charged more for their coverage or denied coverage or benefits based on health status or other factors.
The plaintiffs have asked Judge Reed O’Connor of the federal district court in the Northern District of Texas to enjoin HHS and the Internal Revenue Service (IRS) from enforcing the ACA and its implementing regulations—or, at a minimum, to strike down the law’s guaranteed issue and community rating provisions alongside the mandate. Judge O’Connor is considering ruling on the merits of the case (instead of issuing a preliminary injunction) and has scheduled a hearing on the motion for a preliminary injunction for September 5.
As noted above, the hearing will coincide with confirmation hearings for Judge Kavanaugh. Texas will likely be a focal point in the Kavanaugh proceedings because of the possibility that the case will reach the Supreme Court and because previous decisions suggest that Judge Kavanaugh believes that a President can decline to enforce laws that he or she believes to be unconstitutional.
The New Republican Legislation
Recognizing the potential impact of the Texas lawsuit, 10 Republican Senators released new legislation on August 23. The bill is sponsored by Senators Thom Tillis (NC), Lamar Alexander (TN), Chuck Grassley (IA), Dean Heller (NV), Bill Cassidy (LA), Lisa Murkowski (AK), Joni Ernst (IA), Lindsey Graham (SC), John Barrasso (WY), and Roger Wicker (MS). It is tied directly to the Texas litigation: Press releases acknowledge the September 5 hearing and state that “protections for patients with pre-existing conditions could be eliminated” if Judge O’Connor rules in favor of the plaintiffs.
The legislation would amend the Health Insurance Portability and Accountability Act of 1996 (HIPAA). Although HIPAA offered significant new protections at the time it was passed, these protections were limited in terms of ensuring that people with preexisting conditions could access affordable, comprehensive coverage, particularly in the individual market. HIPAA established a minimum set of federal protections for certain consumers—for example, those who lost their group coverage—facing certain situations, such as job lock because of a new preexisting condition exclusion period. HIPAA also required guaranteed issue in the small group market and guaranteed renewability in the individual and group markets.
As mentioned, the DOJ has declined to defend the ACA’s provisions on guaranteed issue (42 U.S.C. §§ 300gg-1, 300gg-4(a)) and community rating (42 U.S.C. §§ 300gg(a)(1), 300gg-4(b)), and the ban on preexisting condition exclusions and discrimination based on health status (42 U.S.C. § 300gg-3). Thus, their position in the lawsuit implicates parts of four provisions of federal law: 42 U.S.C. §§ 300gg, 300gg-1, 300gg-3, and 300gg-4.
The legislation introduced by Republican Senators would restore only two of the four provisions that stand to be invalidated in Texas: 42 U.S.C. § 300gg-1 (guaranteed issue) and most of § 300gg-4 (guaranteed issue and rating based on health status). So the bill would prohibit the denial of coverage and rating based on health status, but it would not prohibit preexisting condition exclusions or rating based on other factors, such as age, gender, tobacco use, or occupation. This means that many individuals, including those with preexisting conditions, could still face higher premiums, higher out-of-pocket costs, and the denial of benefits because of a preexisting condition even after paying premiums for many months.
The protections offered by the restoration of the two provisions included in the Senate GOP bill, § 300gg-1 and most of § 300gg-4, are largely illusory without the other parts of the ACA—community rating and the ban on preexisting condition exclusions—that are at risk in the lawsuit. Assuming the at-risk provisions are struck down and the new legislation is adopted, consumers would still face significant gaps. For instance, a woman with a history of cancer could purchase a policy under the new bill, but she could be charged more based on her gender and age, potentially pricing her out of the market. In addition, her policy could have a preexisting condition exclusion, meaning that any recurrence of cancer—or any other health condition—might not be covered at all; this could lead to much higher out-of-pocket costs and far less financial protection.
If Congress were to enact this bill today, it would largely be duplicative of existing law (and would do nothing to disturb the ACA). If Congress were to enact this bill in response to the Texas litigation, its effect would depend on how (if at all) a court would invalidate the ACA provisions in Texas. Would a court strike the entire provisions, including what was adopted under HIPAA and other federal laws? Or would a court simply strike the amendments that were made by the ACA?
If the latter, the new legislation might do even less than its authors think, because much of the bill is, in fact, devoted to readopting existing federal law that may not be at issue in Texas. These provisions were adopted before the ACA and touch on, for instance, genetic information nondiscrimination and long-standing exceptions to guaranteed issue.
No Vote On Manchin Resolution To Potentially Intervene In Texas
In July, Democratic Senators led by Joe Manchin (WV) introduced a resolution with the goal of intervening in Texas to defend the ACA’s protections for people with preexisting conditions. The resolution would authorize the Senate Legal Counsel to move to intervene in the case on behalf of the Senate and defend the ACA. During last week’s debate over an HHS appropriations bill, Senate leadership blocked a vote on the amendment.