Justice Department won't defend Obamacare in GOP states' lawsuit

The U.S. Justice Department on Thursday refused to defend the Affordable Care Act against 20 states' lawsuit looking to strike down the healthcare law, calling the individual mandate unconstitutional.

Although the Justice Department stopped short of asking a federal judge in Texas to overturn the entire ACA, the agency echoed the core arguments of the Republican state attorneys general: that the ACA can't stand without the individual mandate's tax penalty.

The case filed in February by a group of Republican-governed states is led by Texas Attorney General Ken Paxton and Wisconsin Attorney General Brad Schimel, who slammed the law as an "unconstitutional and irrational regime" forced on the states that undermined their sovereignty.

The U.S. Supreme Court upheld the ACA in 2012, determining President Barack Obama's healthcare reform law was a tax penalty and that the federal government couldn't order people to buy health insurance. But the tax cuts signed by President Donald Trump in December zeroed out the penalty starting in 2019, and the rest of the ACA can't stand as law without it, according to the states.

"Congress eliminated the linchpin of that saving construction—the revenue-raising penalty—without altering the unambiguous language of the mandate itself," the Justice Department wrote in its brief.

However, the Trump administration said that the court need only overturn the ACA's provisions that guarantee coverage for individuals with pre-existing conditions and the requirement that insurers set premiums using community ratings rather than individual ratings. The rest of the law can still stand, according to the Justice Department.

The Obama administration acknowledged in earlier litigation that those two provisions go hand-in-hand with the individual mandate and cannot survive without it.

"Congress found that enforcing guaranteed-issue and community-rating requirements without an individual mandate would allow individuals to game the system by waiting until they were sick to purchase health insurance, thereby increasing the price of insurance for everyone else—the polar opposite of what Congress sought in enacting the ACA," the Justice Department wrote.

It will be up to several Democratic state attorneys general to defend the law, and they have already received permission to intervene in the case. A core group of blue state attorneys general are also fighting the federal government to revive cost-sharing reduction payments for insurers.

Several career Justice Department lawyers withdrew from the ACA case Thursday, and it's unusual for the agency to refuse to defend federal law.