Judge Keeps PPACA in Effect While Appeal Is Under Way

The John Minor Wisdom courthouse, home of the 5th Circuit, in March 2005.

The Texas judge who ruled on Dec. 14 that one core provision of the Affordable Care Act is unconstitutional, and that all of the Patient Protection and Affordable Care Act (PPACA) is invalid, has decided to keep his decision from taking effect while an appeal to the 5th U.S. Circuit Court of Appeals is under way.

"Many everyday Americans would otherwise face great uncertainty during the pendency of appeal," U.S. District Judge Reed O'Connor said in an order filed Sunday, in the U.S. District Court for the Northern District of Texas.

The judge issued the order in connection with Texas v. United States, 4:18-cv-00167.

States led by Democrats have asked for permission to intervene in the case, and they were the ones who asked for the stay, according to O'Connor's discussion of his order.

Lawyers for the administration of President Donald Trump supported the request for the stay. The administration said it would like to see all appellate review be exhaused before the federal government starts implementing the court's judgment.

The Republican-led states said they thought that the case should be certified for appeal, and that whether the Dec. 14 order should be stayed should up to O'Connor's discretion.

PPACA History

The Affordable Care Act is a statutory package made up of two laws that were signed in 2010: PPACA, and the Health Care and Education Reconciliation Act (HCERA).

One section of PPACA requires many people to have what the federal government classifies as solid major medical coverage, or "minimum essential coverage," or else pay an "individual shared responsibility" penalty.

In the past, the U.S. Supreme Court has held that the individual shared responsibility penalty is a tax, that Congress has the ability under the U.S. Constitution to impose such a tax, and that the federal Tax Anti-Injunction Act, an 1867 law, shields the penalty against suits seeking to block it.

TCJA and the PPACA Individual Mandate

When Congress passed the Tax Cuts and Jobs Act of 2017 (TCJA), it included a provision that sets the individual mandate penalty at zero for 2019 and later years.

Texas and other states controlled by Republicans have argued that, once Congress set the penalty level at zero, the individual mandate became an unconstitutional requirement for people to buy commercial health insurance, rather than a tax.

O'Connor ruled in favor of the states' views on the mandate.

Because PPACA contains no clause letting the rest of the law stay in effect if one part is declared invalid, all of PPACA is invalid, O'Connor ruled.

HCERA: PPACA's Less Famous Sister

PPACA includes many provisions related to major medical insurance, but others, such as provisions related to education funding for health care providers who work with the elderly, and the provision phasing out the Medicare Part D prescription drug plan doughnut hole, that have no direct relationship with commercial major medical insurance for people under 65.

O'Connor's Dec. 14 ruling does not appear to affect HCERA, which does included provisions related to individual major medical insurance.

— Read ACA Battle Now Before a Baltimore Judge Picked by Obama, on ThinkAdvisor.

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