After a district court judge declared the Affordable Care Act unconstitutional in 2018, Democratic attorneys general from 16 states led by California challenged it. Their legal arguments included using their power to regulate interstate commerce to force people to buy health insurance while not considering it a tax as claimed by Congress.
What is the ACA?
The Affordable Care Act, commonly referred to as Obamacare, offers health coverage to millions of Americans. This act ensures that health plans cover essential benefits like maternity and mental health services; additionally it prohibits insurers from denying people coverage due to preexisting conditions.
In 2012, the Supreme Court upheld Congress’ taxing power when they upheld an individual mandate under their taxing power; but when Congress reduced penalties in 2017, Texas and other states sued to challenge it based on their belief that without its mandate the Affordable Care Act is unconstitutional.
On December 14th, the Fifth Circuit partially upheld the lower court ruling on individual mandate unconstitutionality but sent back for further analysis on severability issues.
What is the Individual Mandate?
The individual mandate is the requirement that most Americans either carry health insurance or pay a penalty, making up a key part of the Affordable Care Act and helping offset costs for sicker patients and making insurance more cost-effective overall.
The Affordable Care Act also set rules to ensure all insurers provide comprehensive coverage at reasonable costs, covering preexisting conditions without lifetime caps and covering preexisting conditions at no extra charge.
Finally, the Affordable Care Act provided for federal premium subsidies to assist with costs. Furthermore, states could create their own Exchanges while making necessary modifications to Medicare.
What is the Tax Penalty?
Individuals and small businesses that fail to purchase health insurance through an Exchange, or provide it to their employees, would face penalties equivalent to one percent of household income that exceeds 400% of poverty line (or the cost of purchasing bronze-level plan through Exchanges), per month that they do not meet minimum creditable coverage threshold. This bill contains several other provisions.
Requires that the Secretary establish a mechanism, such as an Internet website, through which residents of each State may identify affordable coverage options in their State. Furthermore, requires him/her to study and report back to Congress regarding procedures necessary to safeguard privacy and due process rights in making eligibility and other decisions under this title.
What is the Severability Clause?
A severability clause is a clause in a contract that specifies that, should one or more terms of it become invalid, all remaining ones will still remain legally enforceable. It is an essential safeguard against having an entire agreement become unenforceable due to one unenforceable term being found invalid.
However, severability can also be hazardous if not carefully considered and drafted. If a court interprets it as only protecting what was agreed to between both parties, this could lead to loss of benefits that were previously agreed upon between both sides. Furthermore, other ways exist for maintaining agreements without having a severability clause added indiscriminately into documents; so it is crucial that one understands its consequences prior to automatically inserting one into any document.
What is the Unconstitutionality Clause?
The Constitution contains several clauses which outline the power and authority of federal and state governments, such as the Supremacy Clause, Equal Protection Clause, Commerce Clause and Due Process/Fifth Amendment Clause. These ensure that government action adheres to the law without infringing upon people’s rights.
The Unconstitutionality Clause states that any law which conflicts with the Constitution is invalid. The Supreme Court under Chief Justice Marshall established this clause to give them a role in reviewing laws passed by Congress and signed off by President. Although not specifically mentioned in the Constitution, Presidents cannot have an influence over legislation’s passage or repeal.