Appeals court panel grills Democratic defenders on constitutionality of Obamacare

NEW ORLEANS (Reuters) – A federal appeals court panel grilled Democratic attorneys general on Tuesday about whether Obamacare violates the U.S. Constitution, as it weighs whether to uphold a Texas judge’s ruling striking down the landmark healthcare reform law.

The judges focused on whether the 2010 Affordable Care Act lost its justification after Republican President Donald Trump in 2017 signed a law that eliminated a tax penalty used to enforce the ACA’s mandate that all Americans buy health insurance.

Republicans have repeatedly tried and failed to repeal Obamacare since its 2010 passage. The Justice Department would normally defend a federal law, but the Trump administration has declined to take that position against a challenge by 18 Republican-led states.

“If you no longer have a tax, why isn’t it unconstitutional?” Judge Jennifer Elrod, who was appointed to the 5th Circuit Court of Appeals by Republican President George W. Bush, asked attorneys for the Democratic officials defending the law during a hearing in New Orleans.

A coalition of Democratic state attorneys general led by California’s Xavier Becerra stepped up to defend the law. The U.S. House of Representatives intervened after Democrats won control in November’s elections during which many focused their campaigns on defending Obamacare.

A three-judge panel of the 5th U.S. Circuit Court of Appeals in New Orleans is not expected to decide on Tuesday whether to overturn or uphold the ruling by a federal judge in Texas last year that the entire ACA was unconstitutional.

An appellate ruling declaring Obamacare unconstitutional could prompt an appeal to the U.S. Supreme Court, opening the door for the top court to take up the issue in the midst of the 2020 U.S. presidential election.

Obamacare, the signature domestic achievement of Trump’s Democratic predecessor, Barack Obama, has been a political flashpoint since its passage.

Republican opponents call the law an unwarranted intervention by government in health insurance markets, while supporters say striking it down would threaten the healthcare of 20 million people who have gained insurance since its enactment.

In 2012, a divided U.S. Supreme Court upheld most of its provisions, including the individual mandate, which requires people to obtain insurance or pay a penalty.

The mandate compelled healthy people to buy insurance to offset sicker patients’ costs after Obamacare barred insurers from denying coverage to people with pre-existing health conditions.

The Supreme Court’s conservative majority argued that Congress could not constitutionally order people to buy insurance. But Chief Justice John Roberts joined the court’s four liberal members to hold the mandate was a valid exercise of Congress’ tax power.

After Trump signed a tax bill passed by a Republican-led Congress that reduced the tax penalty to zero dollars, a coalition of Republican-led states headed by Texas sued, alleging the tax penalty’s elimination rendered Obamacare unconstitutional.

U.S. District Judge Reed O’Connor in Fort Worth, Texas, agreed in December 2018, saying the individual mandate was unconstitutional because it no longer triggered a tax.

O’Connor, who was also nominated by George W. Bush, said that because Obamacare called the mandate “essential,” the entire law must be struck down.

The Democratic-led House, represented by General Counsel Douglas Letter, argued that even if the panel were to find the remaining mandate unconstitutional, under Supreme Court precedent it should try to save as much of the broader law as possible.

Judge Kurt Engelhardt, a Trump appointee, suggested it was in the House’s power to pass a new healthcare reform law if the panel finds the current one unconstitutional.

“There’s a political solution here that you and various parties are asking us to roll up our sleeves and get involved in,” Engelhardt said.