A group of 17 states are expected to argue next week that a legal challenge to eviscerate the entire Affordable Care Act should be thrown out because it makes no sense.
The 17 states will argue that, contrary to the legal argument advanced by red-state attorneys general, Congress still has the full authority to implement the law even after the loss of the financial penalty for the individual mandate, which Congress repealed starting in 2019 as part of tax reform.
The coalition, members of which discussed their legal strategy Thursday on a call with reporters, is defending the law next Wednesday in a federal hearing in Fort Worth on a preliminary injunction from Texas and 19 other states. Texas is seeking to halt federal enforcement of Obamacare while the lawsuit is being argued.
Attorneys general for several states said on Thursday that next week’s hearing is pivotal as the entire law is at stake. If the preliminary injunction is granted, Obamacare’s Medicaid expansion and protections for people with pre-existing conditions will go away, they argue.
“Defending the Affordable Care Act from this effort to repeal is a life-or-death issue for so many people,” North Carolina Attorney General Josh Stein said on the call.
The key argument from Texas is the zeroing out of the financial penalty for the individual mandate that required everyone to get insurance. A 2012 Supreme Court decision found that the mandate was a tax and upheld the constitutionality of Obamacare.
But now that the mandate’s penalty is going away, Texas argues that the entire law is therefore unconstitutional since Congress no longer has taxing power for it.
The Justice Department decided not to defend Obamacare in court and supports parts of the lawsuit. So, 17 states decided to step in and defend it.
Obamacare’s allies will argue that just because a tax is zero dollars doesn’t mean it is no longer a tax.
“A tax doesn’t have to generate revenue in order for it to be a tax,” Stein said.
He added that Congress could eventually decide to raise the tax penalty again in the future, further solidifying his point that the mandate remains a tax.
And even if the court buys Texas’ argument that the mandate is no longer a tax, it doesn’t mean that the entire law should be invalidated, the allies argue.
“You don’t get rid of everything if you think one provision is not right,” said California Attorney General Xavier Becerra.
He gave the example of a person with checking, savings, and retirement banking accounts.
“If you decide to take your checking account down to zero balance, that doesn’t mean you close your checking account,” he said. “Texas is arguing that you could lose every other account that you have, like [a] retirement account and savings account.”
The attorneys general on the call also argued that if Congress wanted to get rid of the entire law then it would have done so in tax reform. Instead, it opted to just get rid of the mandate penalty.
“All the other provisions in the law are valid, and Congress clearly indicated their desire to keep the rest of the law,” Stein said.
Texas and the other states argue in their motion for an injunction that the individual mandate needs to go away immediately or else residents in their states will “be forced to continue to purchase ever-more-expensive, ACA-compliant insurance to comply with the mandate.”
The Texas lawsuit argues that the mandate is critical to “the functioning of [Obamacare’s] major features,” and its penalty repeal causes the rest of the law to also be nullified.
The judge likely won’t make a ruling immediately after the hearing, Becerra said.
After the judge makes their ruling, then “we would continue to proceed down the road to get this litigated in full,” he said.
