Federal Appeals Court Strikes Down ACA Individual Mandate, Sends Law Back to Lower Court

A federal appeals court Wednesday struck down the individual mandate—the heart of the Affordable Care Act (ACA) that requires everyone to have health coverage—and sent Texas v Azar back to the federal district court in Texas to determine whether other parts of the law are constitutional and can exist without the mandate.

The Biologics Price Competition and Innovation Act (BPCIA) is part of the landmark ACA. The Department of Justice had argued that the Fifth Circuit Court of Appeals should not only affirm that decision, but it should further find that other ACA provisions should also be struck down if the individual mandate was not severable from the rest of the statute.

Whether Wednesday’s ruling—not to mention other actions that are sure to follow—has any effect on the BPCIA will hinge on that question of severability, observers have said.

Earlier this year, conservative health policy figures—including former FDA Commissioner Scott Gottlieb, MD—said they could not imagine a scenario where the BPCIA, which created a pathway to approval for biosimilar drugs, would be allowed to falter, even if the law were struck down.

Indeed, in one reaction, Senator Lamar Alexander, R-Tennesse, chairman of the Senate health committee, said in a statement that Congress had ended the mandate, and that "the court has finished the job by ruling the individual mandate itself is unconstitutional." Referring to the rest of the law, he said, “I am not aware of a single senator who said they were voting to repeal Obamacare when they voted to eliminate the individual mandate penalty. I thought the Justice Department’s argument in the case was far-fetched.”

But Rep. Frank Pallone, Jr., D-New Jersey, chair of the House Energy and Commerce Committee, called the court decision part of a Republican "grand scheme."

"Make no mistake, this has been Republicans’ health care plan all along. There is no secret Republican plan to protect the hundreds of millions of Americans that will be harmed should the rest of the ACA be struck down by the lower court," he said in a statement.

In a 2-1 ruling, the panel called on the district court to review the ACA with "a finer-toothed comb" and "conduct a more searching inquiry into which provisions of the ACA Congress intended to be inseverable from the individual mandate.''

"We do not hold forth on just how fine-toothed that comb should be— he district court may use its best judgment to determine how best to break the ACA down into constituent groupings, segments, or provisions to be analyzed," the majority opinion read.

In a dissent, Circuit Judge Carolyn Dineen King said the plaintiffs—a group of Republican states led by Texas—had no standing to intervene as plaintiffs, stating that they had not suffered any harm since Congress lowered the tax penalty to $0 for not having health insurance as part of the 2017 tax bill.

"Nobody has standing to challenge a law that does nothing. When Congress does nothing, no matter the form that nothing takes, it does not exceed its enumerated powers," wrote King, who was appointed by President Jimmy Carter; The New York Times said the 2 judges writing the majority opinion were appointed by Republican presidents, Jennifer Walker Elrod (President George W. Bush in 2007) and Kurt Engelhardt (President Trump in 2018).

The Trump administration’s Justice Department initially did not pursue as aggressive a stance as the state attorneys general. But the administration changed course and reversed its position, arguing the entire law is unconstitutional. This puts the administration in the position of opposing a law that includes the creation of the Center for Medicare and Medicaid Innovation (CMMI), upon which the administration has built many of its cost-control programs in oncology care delivery. CMMI authorization is also behind some of the Trump administration’s efforts to control drug costs.