The U.S. Department of Justice on Monday took a broader stance against the Affordable Care Act, telling a federal appeals court the entire law can be discarded.
The agency called on the 5th U.S. Circuit Court of Appeals to affirm a District Court ruling invalidating the entire Obamacare law, saying it "is not urging that any portion of the district court's judgment be reversed."
The one-page letter came hours after 21 Democratic state attorneys general argued that Congress' zeroing out of the penalty did not make the individual mandate unconstitutional, as U.S. District Judge Reed O'Connor decided in mid-December.
At the heart of the case is whether the entire Affordable Care Act can stand without the individual mandate penalty, which the GOP-led Congress effectively eliminated in the 2017 tax law.
"With the amount of the tax set at zero, the remaining minimum coverage provision becomes simply precatory—precisely as the amending Congress intended," the Democratic state attorneys general's brief stated. "It is no more constitutionally objectionable than the 'sense of the Congress' resolutions that Congress often adopts."
Even without a dollar amount attached to the individual mandate, the provision can still be read as part of Congress' taxing authority, the brief continued. This is significant since the U.S. Chief Justice John Roberts upheld the ACA citing congressional power to tax in a 2012 landmark ruling.
The 5th Circuit has not yet scheduled arguments, although the federal government has proposed a hearing date for July 8 and the Democratic attorneys general agreed.
America's Health Insurance Plans on Friday night came out against the Justice Department's letter, calling it a "significant reversal of the government's position."
"We said before that the district court's decision was misguided and wrong. So, too, is the government's reversal to now support it," AHIP CEO Matt Eyles said in a statement. "This harmful position puts coverage at risk for more than 100 million Americans that rely on it."
The U.S. Justice Department has 30 days to file its brief, and then the Democratic attorneys general will have another 21 days to respond. The case hasn't been expedited, according to the clerk's office.
So far O'Connor's decision has had little effect on the market, despite sending shock waves in the political world. Before he released his ruling on the lawsuit, congressional Democrats won the U.S. House of Representatives in an election during which the ACA's protections of coverage for pre-existing conditions nabbed headlines and drove healthcare messaging.
O'Connor certified the ruling as final in late December to pave the way for an appeal, as petitioned by the Democratic attorneys general. He also ruled the ACA should remain in place while the lawsuit led by the Texas attorney general winds through court.