St. Luke's CEO Dr. David Pate: 4 takeaways on the latest ACA ruling

A federal appeals court issued a much-awaited opinion Dec. 18, ruling the ACA's individual mandate to buy health insurance unconstitutional, but it left a key question unanswered — if this invalidates the entire law.

The three-judge panel in the Fifth Circuit Court of Appeals reviewed an appeal of U.S. District Judge Reed O'Connor's decision in Texas v. United States, in which he declared the ACA unconstitutional because he found the law's individual mandate unconstitutional. Mr. O'Connor's decision was based on the idea that the mandate was a tax, as it required Americans to buy insurance or pay a penalty. He believed the mandate became unconstitutional when the 2017 tax law signed by President Donald Trump zeroed out the penalty associated with it.

Becker's caught up with David Pate, MD, president and CEO of St. Luke's Health System in Boise, Idaho, to discuss the Fifth Circuit Court ruling. Dr. Pate, who has a background in medicine and law, has written extensively about the case. Based on our discussion with Dr. Pate, here are four key takeaways on the Dec. 18 ruling and what it means for the industry:

1. The constitutionality of the law is still undecided. The individual mandate ruling was not surprising, according to Dr. Pate, but as he put it, "What everybody really was hanging on for" was the severability argument, or "how the court was going to handle the lower court judge's decision that because the individual mandate is unconstitutional, now we have to strike the entire ACA."

Instead, the appeals court sent this part of the legal challenge back to the lower court for review. "In essence, this was kind of a nondecision," Dr. Pate said. "They sent the case back to the lower court judge, saying, 'You have to go through piece by piece and do the analysis of how critical the individual mandate is to those provisions of the ACA.'" This means there are no immediate changes to the healthcare law or how it is enforced.

2. Courts are reexamining the case through the lens of Congress in 2017, rather than 2010. "What the lower court judge did was he really looked at the congressional intent in 2010 when the ACA was passed," Dr. Pate said. At this time, Congress assumed the individual mandate was integral to making the law work.

The appeals court directed the lower court to hold up the severability argument to the "post-2017 law," because congressional intent may have shifted. Dr. Pate believes it did. "We actually know what Congress' intent was because they enacted the provision in 2017 that said the only thing we are changing is zeroing out the penalty, and they knew the rest of the law would stand," he said.

3. Protections for people with preexisting conditions could be struck down. Dr. Pate believes the lower court judge will change his opinion on severability, as there are provisions in the sweeping healthcare law completely unrelated to the individual mandate — for example, the provision requiring restaurants to make nutrition information publicly available.

"I do think he'll change his opinion about throwing out the entire ACA, but what I'm very afraid of is he's going to continue to look at it in light of the 2010 intent so that guarantee issue and community rating go too. That would be a very bad outcome in my mind," Dr. Pate said. The guarantee issue provision requires insurance companies to provide coverage regardless of health status, and the community rating provision prohibits variation of premiums based on factors like health, age and gender. If the judge finds these provisions inseverable and unconstitutional, the ruling is likely to be appealed back to the Fifth Circuit, according to Dr. Pate.

4. Hospital leaders should push legislators for a plan B. Given the potential outcome that the individual mandate, guarantee issue and community rating provisions could be struck down, Dr. Pate advises healthcare leaders to start pushing legislators to create a backup plan.

"Republicans may be in an awkward situation," he said. "They want to score points and claim success with this lawsuit for their base, only for their base to get turned down for insurance or find premiums priced too high. Then [their base is] going to be upset."

He urged leaders to press legislators to develop plans if these protections are struck down. Without a plan B, the insurance landscape will turn back the clock to pre-2010, when insurance was unaffordable or unattainable for many Americans. "We don't want to get to this point," he said.

Read a more in-depth analysis of the ruling by Dr. Pate here.

 

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