Appeals court move potentially an ‘ominous’ sign for Obamacare

The law could face strong headwinds in its latest test in the federal courts

Affordable Care Act supporters wave signs outside the Supreme Court after the court upheld Obamacare. A federal appeals court decision to question whether the House and Democratic-led states can defend the law could prove a troublesome sign for the landmark legislation. (Bill Clark/CQ Roll Call)

A federal appeals court has questioned whether the House and Democrat-led states can defend the 2010 health care law in a legal fight that threatens the landmark legislation — a sign the law could face strong headwinds in its latest test in the federal courts.

The House and states had jumped to intervene in the lawsuit after a federal judge in Texas ruled the entire law should fall without the so-called individual mandate, including popular provisions preventing insurance companies from denying coverage or charging more because of pre-existing conditions.

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Officials in Texas and other conservative states filed a lawsuit to strike down the entire law because Congress eliminated the penalty for not having individual health insurance as part of a 2017 tax overhaul. The Justice Department, which partially defended the law at first, now declines to do so.

But on Wednesday, the panel of the U.S. Court of Appeals for the 5th Circuit that will hear oral arguments July 9 asked all the parties to file briefs on whether the House or the states even have the right to intervene in the case.

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Nicholas Bagley, a law professor at the University of Michigan who closely follows litigation on the health care law known as the Affordable Care Act, called the request “an ominous sign.”

“This order suggests that the Fifth Circuit panel may be hostile to the ACA and inclined to support the red states,” Bagley tweeted. “The odds that the Fifth Circuit does something nasty to the health-reform law have gone up.”

The 5th Circuit asked specifically about whether the states or the House have standing in the case, and cited a June 17 decision by the Supreme Court that found lawmakers in Virginia’s Legislature did not have standing to challenge a ruling that struck down the statehouse map as an unconstitutional racial gerrymander.

The panel also asked if there is even a controversy left to decide in the case if the House and the states can’t participate, given the Justice Department’s position that it now agrees with the lower court ruling in the case.

If neither the Democrat-led states nor the House has standing, that would effectively leave no party in the case to appeal the lower court decision from U.S. District Court Judge Reed O’Connor in Texas, Bagley wrote.

O’Connor agreed with Texas and 19 other states who contend that eliminating the penalty makes the mandate to buy insurance unconstitutional — and striking that central provision in turn means the remainder of the 2010 law “must also fall.”

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