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Administration Won’t Defend the Individual Mandate

Administration Won’t Defend the Individual Mandate

On Thursday June 7, the Department of Justice announced that it agrees with plaintiffs in an ongoing federal lawsuit (Texas v. United States, No. 4: l 8-cv-00167-O (N.D. Tex.)) challenging the constitutionality of the Affordable Care Act (ACA). The plaintiffs in the lawsuit contend that, because the Tax Cuts and Jobs Act of 2017 eliminated the penalty under the individual mandate effective in 2019, the entire ACA should be invalidated in its entirety.

In a letter accompanying the last minute court filings, the DOJ announced that it agrees, at least in part, with the 20 states led by Texas, that the individual mandate is unconstitutional along with two of the ACA’s insurance provisions, guaranteed issue and community rating protections. Guaranteed issue requires insurers to offer coverage to everyone regardless of their medical history while the community rating provision prevents insurers from setting premiums based on a person's individual health history. That is, individuals could once again be denied insurance or charged higher rates based on pre-existing conditions.

Attorney General Jeff Sessions acknowledged in the letter that "the Executive Branch has a longstanding tradition of defending the constitutionality of duly enacted statutes if reasonable arguments can be made in their defense."

After considering a variety of factors, however, he concluded that “this is a rare case where the proper course is to forgo defense” of the individual mandate. The letter and filings do not go so far as the plaintiffs argue to invalidate the entire ACA, the DOJ believes that other aspects of the law may survive because they are severable from the individual mandate.

With the withdrawal of the DOJ, the defense of the ACA will fall on 16 states, led by California along with the District of Columbia, who all intervened in the original lawsuit. Any decision by the court, however, would likely be stayed and appealed immediately, eventually making its way to the Supreme Court.

It’s not certain whether the Supreme Court would revisit the individual mandate after declaring it constitutional in a 2012 decision (National Federation of Independent Business v. Sebelius, 567 U.S. 519 (2012)).

PrimePay will continue to monitor the case and provide updates as the matter continues to develop.