Obamacare's uncertain fate leaves Congress, industry lying in wait

(Updated at 7:50 p.m. ET)

In the aftermath of Friday's late-night court decision to overturn all of Obamacare, policymakers and the healthcare industry are still unsure what will happen next or when as the judge continues to hold the case in his hands.

U.S. District Judge Reed O'Connor of Texas on Sunday gave state attorneys general until Jan. 4 to propose a plan for the rest of the case that claimed the Affordable Care Act violated the U.S. Constitution. O'Connor's Friday decision was only a partial decision that declared the individual mandate unconstitutional and that the entire law could not stand without that essential provision.

Until O'Connor issues a final judgment, the Democratic attorneys general defending the law cannot appeal the case to the 5th U.S. Circuit Court of Appeals.

Democratic attorneys general, who became the de facto defendants for the Affordable Care Act when the Trump administration refused to defend the law, have asked O'Connor for clarification of his order, as it's unclear what effect the declaratory judgment has.

Although the effective elimination of the individual mandate penalty starts Jan. 1—before the filing deadline—HHS and the White House say the law will remain in place since O'Connor did not grant an injunction.

"This decision does not require that HHS make any changes to any of the ACA programs it administers or its enforcement of any portion of the ACA at this time," HHS said Monday.

The department's stance echoes a statement from White House spokeswoman Sarah Huckabee Sanders who over the weekend said the administration expects the lawsuit will end up in the Supreme Court but that "pending the appeal process, the law remains in place."

In a call with reporters on Monday, Democratic Attorneys General Association Co-chair Mark Herring, Virginia's attorney general, said the defendants are still developing a strategy for the most "appropriate and expeditious way" to lodge an appeal.

A spokesperson for California Attorney General Xavier Becerra, who is leading the Democratic effort to defend the law, said the appeal would come soon.

"Our team worked around the clock over the weekend, and we're planning to imminently challenge Friday's decision," the spokesperson said.

In the meantime, congressional Democrats are also focused on the court, and at least one key aide said any legislative push while the ACA still stands would be redundant.

House Minority Leader Nancy Pelosi (D-Calif.), who is likely poised to become speaker in January, vowed to bring the House into the lawsuit when Democrats claim the gavels early next month.

Senate Democrats also want to force a Senate floor vote this week on a resolution introduced by Sen. Joe Manchin (D-W.Va.) that would authorize Senate counsel to intervene in the lawsuit as well. Senate Republicans have stayed silent on the resolution and aren't likely to support it, so Senate Democrats will likely have to introduce the measure again in the new year.

House Democrats campaigned this year on protecting coverage for people with pre-existing conditions, but they likely won't introduce a bill specifically focused on those protections.

"In our view the ACA is constitutional and the law of the land," a Democratic aide for the House Ways and Means Committee said. "That being said, we expect Friday's decision to be overturned, so legislating on the issue would be redundant."

On Monday Rep. Frank Pallone (D-N.J.), next chair of the House Energy and Commerce Committee, touted a stabilization bill he introduced earlier this year with Democratic leaders of the Ways and Means and Education and Workforce panels.

"The pre-existing conditions (protections) was the part that got the most attention," Pallone said, adding that he wanted the House to pass the legislation and send it to the Senate. "We will do something right away, or almost immediately."

This proposal, not yet finalized, would increase exchange subsidies and make more people eligible for them. Its provisions on pre-existing condition coverage involve a proposed block on this year's HHS regulations that expanded so-called short-term plans and association health plans.

ACA legal expert Tim Jost noted that any specific "pre-existing conditions" legislation would be largely political and congressional Republicans are the ones who should be trying to defend them.

"The ACA has layer and layer of protections," Jost said. "The easiest thing for Congress to do right now is re-instate a $1 individual mandate penalty, or a meaningful penalty, and that would make the whole case go away."

Legal analysts continue to pan the merits of the lawsuit. Many expect the appeals process will reverse his decision even if it ends up in the Supreme Court.

The defendants' core argument on behalf of the law focuses on Congress' intent for the ACA, because lawmakers left the rest of the law standing when they zeroed out the individual mandate penalty through the GOP's 2017 tax law.

But Misha Tseytlin, outgoing solicitor general for Wisconsin who argued before O'Connor in September and has been intricately involved with the case, said most analysts are ignoring the statutory text that underpinned GOP states' argument and served as the basis for O'Connor's ruling.

The ACA provision in question states that "if there were no requirement (to buy health insurance), many individuals would wait to purchase health insurance until they needed care. By significantly increasing health insurance coverage, the requirement, together with other provisions of this act, will minimize this adverse selection and broaden the health insurance risk pool to include healthy individuals, which will lower health insurance premiums."

While O'Connor's ruling has so far done little other than to further roil partisan tensions over the ACA, conservative analyst Chris Jacobs said he thinks the lawsuit "is a good opportunity for Republicans to re-examine and hopefully come up with better solutions on pre-existing conditions."

Incoming Senate Finance Chair Chuck Grassley (R-Iowa) opened the door to relitigating Obamacare in his committee.

On Twitter he wrote that Iowans who enroll in the state's health insurance exchanges shouldn't worry about losing their insurance "while courts settle the issue," and that he plans to hold hearings in his committee in the next Congress to figure out different options for insurance.