Healthcare Reform

Analysis: What to expect after the Texas vs. Azar ruling

November 5, 2019 2:00 pm
  • An appeals court decision in Texas vs. Azar — the latest challenge to the constitutionality of the ACA — is expected shortly.
  • While the administration has not provided detailed contingency plans should the Fifth Circuit Court ruling uphold the lower court’s ruling, key Health & Human Services staff have suggested there would be minimal immediate disruption to coverage and other key provisions of the law.
  • In all likelihood, the Circuit Court’s decision will be appealed to the Supreme Court extending the uncertainty to at least June of 2020.

CMS Administrator Seema Verma testified before the House Committee on Energy and Commerce last week. With the ruling in Texas vs. Azar expected anytime now, it’s not surprising that members of the Committee were interested in understanding what the administration’s plan is in the event the Fifth Circuit Court of Appeals upholds the lower-court ruling and finds the ACA unconstitutional.

According to The Hill, when asked for specifics of the plan, CMS Administrator Seema Verma declined to provide details but stated that the administration has “. . . planned for a number of different scenarios, but we need to hear from the courts.”

Secretary of Health and Human Services Alex Azar, as reported by The Hill, made similar comments earlier in the week when asked about the decision, responding: “There will be no immediate disruption to anybody. We will run the program the day after such a ruling the same way we ran the program the day before.”


Like the World Series, what these answers by Verma and Azar reflect is there are a lot of innings left to be played (or argued) in Texas vs. Azar. Yes, if the Fifth Circuit upholds the lower court decision overturning the ACA, it will be a big deal in the press. (I’m assuming the case is decided on the merits, and the intervenor states’ standing isn’t an issue.)

Administration’s backup plan

My guess, based on Azar’s comments, is the administration’s backup plan is to ask the Fifth Circuit to stay the decision for some period of time to give Congress an opportunity to pass legislation that either addresses the constitutional issues with the ACA or replaces it with something else. At the risk of stating the obvious, it’s hard to envision Congress coming to a reasonable compromise.

I’m not sure if Democrats would propose it, but the simplest solution is reinstating the penalty for not having qualifying coverage and make the fine a $1 (or less).  And voila . . . the ACA is constitutional again.

This is a little, or a lot, different than the ACA replacement plan announced this week by the House Republican Study Committee. The framework is like the repeal-and-replace legislation that passed the House but failed to garner a simple majority two years ago in the Senate. But Congress won’t have to come to a compromise, at least not immediately.

If the plaintiffs prevail, conventional wisdom, which I agree with, is that the case will eventually be heard by the Supreme Court. During the intervening period between the Fifth Circuit’s ruling and the Supreme Court decision, it’s likely the Fifth Circuit ruling will be stayed at the request of the parties involved.

What should the healthcare industry expect in the meantime?

While it’s hard to accurately predict a Supreme Court ruling, legal scholars of both political persuasions have identified significant flaws in the original lower court decision. What this likely means is that we’ll have to “white knuckle it” (take the time required to come up with a contingency plan) until a decision to uphold the ACA is handed down.

At the earliest, this will likely be next June. In the meantime, several states — including some of the plaintiff states — are already taking steps to mitigate the coverage impact if the ACA, contrary to conventional wisdom, is overturned at the highest level.   


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