Obamacare’s future in play as U.S. appeals court weighs its constitutionality

NEW ORLEANS (Reuters) – The future of Obamacare could be at stake on Tuesday when a group of Democratic-led states and the House of Representatives urge a federal appeals court to overturn a Texas judge’s ruling that the U.S. healthcare reform law is unconstitutional.

Republicans have repeatedly tried to repeal Obamacare, formally named the Affordable Care Act, 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.

A coalition of Democratic state attorneys general led by California Attorney General Xavier Becerra stepped into the void to defend the law, also called the ACA. The House intervened after Democrats won control in November’s elections after many focused their campaigns on defending Obamacare.

A three-judge panel of the 5th U.S. Circuit Court of Appeals in New Orleans, including two judges appointed by Republican presidents and one by a Democrat, will take up a ruling by a federal judge in Texas last year that the entire ACA was unconstitutional.

Two hours before arguments were to get underway, about a dozen law students and lawyers had lined up outside the courthouse on a steamy New Orleans summer day to make sure they had seats to view the arguments.

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 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.

Republicans in Congress subsequently failed to overturn Obamacare, but in December 2017, Trump signed into law 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, nominated by former Republican President George W. Bush, said that because Obamacare called the mandate “essential,” the entire law must be struck down.

The Justice Department initially argued the mandate was unconstitutional but most of Obamacare could be severed from it. But it argues on appeal the law’s balance must be struck down.