Federal judge in Texas rules Obamacare unconstitutional; California vows to defend the law on appeal

A federal judge in Texas declared the Affordable Care Act unconstitutional on Friday, issuing a blockbuster ruling that threatens to throw insurance markets into chaos and strip health coverage from tens of millions of patients nationwide.

The ruling by U.S. District Judge Reed O’Connor hands a victory to 20 Republican governors and state attorneys general who sued to wipe out the 2010 healthcare law, widely known as Obamacare. But it could create a massive political headache for Republicans in Congress, who lost control of the House in November in large part because Democrats accused them of seeking to undermine the law.

O’Connor, a conservative judge appointed by President George W. Bush, had been widely expected to rule against the law, at least in part. His ruling, however, swept more broadly than many had expected, striking down the entirety of the healthcare law, including its provisions that have allowed California and 31 other states to expand Medicaid to some 15 million Americans and the subsidies that keep insurance affordable for millions of others who do not get healthcare coverage through their jobs.

The judge did not issue an injunction ordering the government to stop carrying out the law, however, meaning that its provisions will remain in effect pending further action.

The Trump administration had partially backed the suit by the conservative states, not endorsing their request to declare the entire law invalid. Instead, the administration had declined to defend the healthcare law and asked the judge to eliminate its guarantee of coverage for people with preexisting health conditions.

A group of left-leaning states led by California that have stepped in to defend the healthcare law quickly said they would appeal O’Connor’s ruling.

“Today’s ruling is an assault on 133 million Americans with pre-existing conditions, on the 20 million Americans who rely on the A.C.A.’s consumer protections for health care, on America’s faithful progress toward affordable health care for all Americans,” California Atty. Gen. Xavier Becerra said in a statement.

President Trump praised the judge’s ruling. But healthcare groups denounced it. The American Medical Assn. said it would back an appeal, warning that the judge’s ruling would move the U.S. back toward the days when 20% of the population lacked insurance.

The states likely will appeal to the U.S. 5th Circuit Court of Appeals. Eventually, the case could wind up back at the Supreme Court, which has twice ruled in favor of the law.

The foundation of the case brought by conservative-leaning states led by Texas Atty. Gen. Ken Paxton was a provision in last year’s mammoth tax bill. The tax law eliminated the penalty on Americans who don’t have health insurance, although it preserved the technical requirement that people have coverage.

In 2012, when the Supreme Court upheld the constitutionality of the Affordable Care Act, it ruled that Congress had the authority to adopt the requirement that people have insurance — the so-called individual mandate — as an exercise of its power to levy taxes.

In the current case, O’Connor said that with the tax penalty now repealed, the coverage mandate “can no longer be sustained as an exercise of Congress’s tax power.”

Going one step further, he ruled that Congress would not have approved the rest of the law without the mandate. Therefore, he said, the entire law must be struck down as unconstitutional.

That ruling adopted the argument made by Wisconsin Solicitor General Misha Tseytlin, representing the conservative states, who told the judge in September when the case came up for a hearing that “the entire ACA should fall” because the coverage requirement could no longer be sustained.

Attorneys for California had urged O’Connor to instead focus on the intent of the lawmakers who wrote the 2017 tax law. During the extensive debate on the tax law, lawmakers never suggested that they were quietly repealing the healthcare law, they noted. Moreover, the tax law specifically elected to preserve the healthcare law’s consumer protections even as it eliminated the individual mandate penalty.

The California attorneys also warned of the widespread disruptions that could ensue if those protections are rolled back.

Republicans had feared that O’Connor would rule before the election, which would have made the healthcare law even more of an issue for voters. As it was, healthcare topped the list of major issues that voters said they were considering in choosing candidates in November. Throughout the campaign, Republicans, who tried unsuccessfully to repeal the Affordable Care Act in 2017, desperately tried to fend off Democratic charges that they wanted to take away health protections from Americans.

Once the election was over, the Trump administration asked O’Connor not to rule until the end of this year’s open enrollment period in order not to disrupt the enrollment process. Open enrollment in most states closes Saturday evening.

Although the mandate that individuals have insurance or pay a penalty was widely disliked, many other parts of the 2010 law have become popular. Three-quarters of Americans in one recent nationwide poll said they believed it was very important to preserve the guarantee that people who are sick can get coverage.

The judge’s ruling would also eliminate hundreds of billions of dollars in federal assistance that has made it possible to extend coverage to some 20 million previously uninsured Americans through expansions to state Medicaid programs and through subsidies available to low- and middle-income Americans who buy coverage on insurance marketplaces around the country.

Scores of patient advocates, physicians and hospital groups and other healthcare experts have warned that such a retrenchment would be catastrophic.

“Invalidating the guaranteed-issue and community rating provisions — or the entire ACA — would have a devastating impact on doctors, patients and the American healthcare system as a whole,” noted a coalition of physician groups that included the American Medical Assn., the American Academy of Family Physicians, the American College of Physicians and the American Academy of Pediatrics.

Also opposing the lawsuit were leading national groups representing patients, including the American Diabetes Assn., the American Lung Assn., the American Heart Assn., the National Multiple Sclerosis Society and the advocacy arm of the American Cancer Society.

Although the administration opposes the healthcare law, officials issued statements Friday night emphasizing that the law remains in effect while the case moves through the courts.

“We will continue with open enrollment. There is no impact to current coverage or coverage in a 2019 plan,” Seema Verma, the administration’s top official overseeing the law, said in a statement.

noam.levey@latimes.com

Twitter: @noamlevey