Cottingham & Butler has obtained information regarding the recent federal court decision overturning the ACA and wishes to provide its clients with the following update.
What Happened?
On Friday, December 14, 2018, a U.S. federal district court judge in Texas ruled that the ACA was unconstitutional, overturning Obamacare.
Summary of Court Action
In 2012, the U.S. Supreme Court ruled that the ACA was constitutional (legal) based on the idea that the Individual Mandate that penalized people for not buying health care coverage was a tax. Congress does not have the power to force individuals to buy insurance, but it can tax them if they do not.
The Tax Cuts and Jobs Act of 2017 reduced the Individual Mandate tax penalty to $0, effectively removing the tax. The Texas federal court ruled that without the tax the Individual Mandate is no longer a valid expression of Congressional power and is not enforceable. Because the Individual Mandate is inseparably linked to the rest of the ACA, the rest of the ACA becomes unconstitutional as well.
Given the current administration’s prior attempts to overturn the ACA, it is highly doubtful it will appeal the decision. While it is unclear whether there are any other parties with legal standing in the case who would mount an appeal, an appeal is possible. In the event of an appeal, the ACA could be temporarily reinstated while an appeals court considers the matter.
What’s Next?
Given the broad effect of the ruling, especially during the ACA MarketPlace open enrollment, the full effect of the decision is not yet known. It is possible that either the President or Congress may take short-term emergency action, especially with regard to the potential loss of coverage in the ACA MarketPlace.
We suggest our clients take no drastic action in the short term until the situation stabilizes. We will continue to monitor this situation and will provide ongoing updates as more information becomes available.
Contact Us if You Have Questions
Cottingham & Butler is prepared to assist you through this process. If you have any questions, please contact your Cottingham & Butler representative.