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After Ginsburg’s death, high stakes for Texas’ legal challenge to the Affordable Care Act

A Texas-led challenge to the Affordable Care Act will be heard by the U.S. Supreme Court in November.                    Credit: Michael Stravato for The Texas Tribune
A Texas-led challenge to the Affordable Care Act will be heard by the U.S. Supreme Court in November. Credit: Michael Stravato for The Texas Tribune

As a Texas-led lawsuit to end the Affordable Care Act made its way through the federal courts in 2018, Gov. Greg Abbott pledged that should his state’s legal team succeed, he and his policymakers would have a plan ready to keep Texans — including the millions with pre-existing health conditions — insured.

Now that the unlikely lawsuit has perhaps its best odds yet, with a hearing set for Nov. 10 before a U.S. Supreme Court that no longer includes liberal Justice Ruth Bader Ginsburg, Texas Republicans have yet to show any evidence that such a plan exists.

Texas Attorney General Ken Paxton, a Republican, set out in 2018 to achieve through the courts what his party tried and failed for years to achieve in legislation: the end of President Obama’s landmark health law. Paxton, leading a team of red states, argued that after Congress effectively neutered a key provision of the law — the individual mandate — that provision was unconstitutional and the rest of the law had to fall as well.

The lawsuit won early success in a federal court in Texas and then at the U.S. 5th Circuit Court of Appeals, and now it’s before a Supreme Court that appears likely to tilt more conservative if the U.S. Senate quickly confirms President Trump’s third nominee to the high court.

Experts who have long dismissed the lawsuit as a longshot say the Affordable Care Act faces new uncertainty, though they are betting on its survival.

A legal victory for the state in this case would herald an immediate policy emergency for Texas lawmakers. The state has long boasted the nation’s highest uninsured rate, a gulf that has only widened this year as millions of Americans lost employer health coverage during the coronavirus pandemic. And because the Affordable Care Act touches so many facets of health care policy, from insurance benefits to the federal process for approving certain prescription drugs, the effects of its repeal would be felt by virtually everyone.

If the Supreme Court struck down the law, some 1 million Texans would lose subsidized health insurance plans. It would also end popular consumer protections for patients with preexisting health conditions and for young adults who are allowed to stay on their parents’ health plans until age 26.

In the absence of action from a gridlocked U.S. Congress, Texas policymakers would have to weave a replacement for a relatively popular and immensely complicated piece of legislation — while also managing a perilous budget crisis, electing a new speaker of the Texas House, addressing the coronavirus pandemic for the first time through legislation, and drawing new political maps for the state in a high-stakes once-in-a-decade exercise of political will.

“There’s been absolutely no plan whatsoever put forward by state leaders to try to replace any meaningful part of the Affordable Care Act that ensures either affordable coverage or preexisting condition protections,” said Stacey Pogue, a senior policy analyst at the left-leaning think tank Every Texan.

Moreover, the state has regulatory authority over only a small subset of the insurance market. About 16% of Texans have state-regulated health insurance plans, according to the Texas Department of Insurance. Barring radical change, it’s not clear that state leaders could provide pre-existing condition protections to the majority of Texans despite Abbott’s 2018 pledge that Texas leaders would be ready with “replacement health care insurance that includes coverage for pre-existing conditions.”

An Abbott spokesman did not return repeated requests for comment.

In most other states, the Affordable Care Act also pays for low-income adults to receive free health insurance under Medicaid, but Texas has never opted in to that program’s expansion.

If the federal health law were struck down in its entirety, pressure would likely mount on Congress to come up with a replacement, Pogue said. When Republicans took control of Congress and vowed to repeal the law in 2017, an outpouring of popular support for it put pressure on Senate Republicans who ultimately could not muster the votes for repeal.

“People were angry at the idea that they’d lose coverage, that they’d lose protections, that they’d pay more,” Pogue said. “I assume if those outcomes are on the table, the same outcry will happen that Congress needs to fix the mess.”

“A lot more uncertainty”

Legal experts, including those who oppose the ACA as a policy matter, have dismissed Texas’ lawsuit as unlikely from the start.

But it has gained traction as it’s hurtled through the federal courts, earning support from U.S. District Judge Reed O’Connor, who is popular in conservative circles and a favorite at the Texas Attorney General’s Office, which files a disproportionate number of its lawsuits in his Wichita Falls jurisdiction.

When the case reached the U.S. 5th Circuit Court of Appeals, the two Republican-appointed judges on the three-judge panel hearing the case affirmed Texas’ argument on a major provision, declaring the individual mandate unconstitutional, but determining that further analysis was needed before they could strike down the rest of the sprawling law.

With Ginsburg’s death, the once-longshot lawsuit has gotten a boost. It will be heard either by an eight-member court, raising the possibility of a tie, or by a court of nine justices, six of whom will have been appointed by Republican presidents.

Legal experts who have followed the case for years still believe it’s unlikely that the high court will strike down Obamacare in its entirety. But they say Ginsburg’s death may help Texas’ side.

“The likeliest outcome is that the justices vote to get rid of the lawsuit, because it’s so galactically stupid, to be totally candid,” said Nicholas Bagley, a University of Michigan law professor who has followed the case closely. “But I think any confidence you might have had before Justice Ginsburg died that the case would be turned away has surely been shaken. And I think there’s a lot more uncertainty about the future of the ACA.”

The lawsuit hinges on an argument that the law’s original requirement for most Americans to have health insurance is no longer valid — and that because the mandate to purchase insurance is such a core component of the sweeping law, the entire Affordable Care Act falls without it.

“Congress didn’t pass the ACA to require calorie counts be printed on restaurant menus,” said Robert Henneke, general counsel for the conservative think tank Texas Public Policy Foundation, which represents individual plaintiffs on Texas’ side of the case. “Congress passed the ACA to do the individual mandate.”

Texas argues that after Congress in 2017 set the Affordable Care Act’s penalty for not complying with the individual mandate at $0, the provision is no longer constitutional. The mandate was challenged in earlier lawsuits, but the U.S. Supreme Court ruled it constitutional as an exercise of Congress’ taxing power. (Ginsburg and three other Democrat-appointed justices joined Chief Justice John Roberts in that 5-4 ruling.)

Since the penalty is now set at zero, Texas and its allies argue, it can no longer be considered a tax.

Henneke said he has always been confident the court will strike down the law as unconstitutional and that Ginsburg’s death does not change that prediction.

A coalition of states led by California, as well as a slew of legal experts all over the ideological map, dispute almost every facet of Texas’ argument. They say the individual mandate remains constitutional, but also that even if it were not, the rest of the Affordable Care Act would still stand.

The lawsuit turns on that question of “severability,” experts agree.

Most provisions of the Affordable Care Act have survived despite numerous legal challenges, but Ginsburg’s death means the loss of one of the law’s staunchest defenders on the high court. She voted in 2012 to uphold the law in NFIB v. Sebelius, which challenged the individual mandate, and again in 2015 in King v. Burwell, which challenged the federal government’s ability to subsidize health insurance plans.

Many possible outcomes for the ACA

Now, in Texas’ challenge, any number of different scenarios are possible.

The court could toss the case on procedural grounds, declaring that Texas’ coalition does not have “standing” to sue in federal court. “It wouldn’t surprise me” if that happened, said Carolyn Shapiro, a law professor at Chicago-Kent College of Law and former Illinois solicitor general.

If Ginsburg’s seat on the court remains vacant when oral arguments are heard in November, the justices could split evenly on the issue, which would send the case back to lower courts and open the door to years’ worth of additional litigation.

Some number of justices, depending on the composition of the court, could join together to strike down just a portion of the law — perhaps the individual mandate and a few related provisions.

The least likely outcome, according to legal scholars of many political persuasions, is the court striking down the Affordable Care Act in its entirety. That would leave millions of Americans without insurance coverage during the coronavirus pandemic, and also destabilize practically every piece of the U.S. health care system, from no-cost benefits for certain “essential” health services to annual limits protecting patients from spending massive amounts on expensive treatments.

“Nothing’s gonna happen this year,” said Josh Blackman, a South Texas College of Law professor who authored a friend-of-the-court brief backing many of Texas’ arguments. “There are not any five votes to kill the entire law.”

Bagley also said the Texas-led coalition has a high bar to clear at every stage.

“It’s safe to say the plaintiffs aren’t likely to succeed,” Bagley said.

The Texas Attorney General’s Office did not return a request for comment on the lawsuit. But Henneke, the TPPF attorney working with the Texas coalition, said he remains confident that the court will see the case the way he does.

“Our health care system does not work under Obamacare, and there are real problems out there that should not be fixed by the courts, but should be fixed by the people that we’ve elected to office, that need to go back and get to work,” Henneke said. “We need to insist upon the courts doing their role which is to interpret the law. But we need to demand that Congress and the state get to work to address affordability and access to health care.”

Disclosure: Every Texan and the Texas Public Policy Foundation have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune’s journalism. Find a complete list of them here.