Will the ACA survive its latest legal challenge? St. Luke's CEO Dr. David Pate weighs in

The ACA faces yet another challenge to its constitutionality, one that could put healthcare front and center during the 2020 election season.

A panel of three judges in the Fifth Circuit Court of Appeals heard oral arguments in July in review of a lower court's ruling that found the ACA unconstitutional. The panel may not deliver a decision for months, and the losing side is expected to appeal, sending the case to the Supreme Court. 

Becker's caught up with David Pate, MD, president and CEO of St. Luke's Health System in Boise, Idaho, to discuss the implications of the oral arguments. Dr. Pate holds medical and law degrees, and he has written extensively about the case. Here, Dr. Pate discusses the arguments he believes could sway the court's decision, what he believes will happen to the ACA and what that means for hospitals.

Editor's note: The following responses were lightly edited for length and clarity.

Question: What's your take on the oral arguments? Did anything surprise you?

Dr. David Pate: The judges asked very good, difficult questions. The counsel representing the different parties, other than the Department of Justice, did a good job answering those questions.   

Three things surprised me. First was the focus on the intervener standing. The interveners are the Democratic state attorneys general and the U.S. House of Representatives. The issue of standing seeks to determine if they have a right to be involved in this lawsuit. What was surprising is that the court briefed the issue of intervener standing, and the judges asked so many questions. What I took it to mean was that they didn't think the standing was so clear — that was the first surprise.

The second surprise was that of the three judges — two appointed by Republican presidents and one appointed by a Democratic president — the judge appointed by a Democratic president didn't ask any questions. This is not unheard of, but it is unusual, especially in a case of this complexity and importance.

The third was the DOJ's new position that the lower court decision should only apply to the 18 plaintiff states and the two individuals who filed the lawsuit. Clearly the discussion at the lower court was that this decision was going to apply across the country. Now the DOJ is taking the position that that decision would only apply in the plaintiff states. They made that assertion, but inadequately supported that position in the oral arguments and had almost no ability to articulate how the ACA would be even be operationalized in some states but not others. I really thought all the parties did a great job in arguing this case other than the DOJ.

Q: Do any arguments in the case strike you as particularly compelling?

DP: My first point goes to the plaintiffs, and second point to the interveners. Two particularly compelling arguments that I think are very strong:

1. The plaintiffs' argument that the individual mandate is unconstitutional without the tax penalty. I think that's compelling because a prior Supreme Court decision went to great lengths to try to save the individual mandate from otherwise being unconstitutional by characterizing it as a tax. One of the features of a tax is that it generates revenue for the federal government. If you decrease that penalty to zero, obviously you are not generating any revenue for the government. I do think it's hard to construe that to be a tax. Parties made arguments why you could still look at it that way, which I didn't think were persuasive at all.

2. The second argument I found strong was the intervener states' severability argument. They are arguing that even if the individual mandate is unconstitutional, it ought to be severed from ACA without striking down the whole law. I don't think it can be disputed that the Supreme Court gives us the guidance that there is a strong presumption of severability. If just part of a law is unconstitutional, the court should always find a way to save the law if it can.

The other strong support for it is when the court looks at the issue of severability, they have to look at Congress' intent. The plaintiffs stressed that the 2010 Congress, which enacted the ACA, strongly felt that the individual mandate was instrumental in making the law work — I think that's true. What I think has happened, though, is now that the ACA has been in place, it is generally agreed upon that the individual mandate is much less critical than we thought. Yes, some people will not purchase insurance without a mandate, but the law can still work. What I look to, what intervener states look to and what the House said courts should look to is not what the 2010 Congress thought, but what the 2017 Congress thought when they zeroed out this penalty. I think it's a strong argument that they could do away with the individual mandate.

Q: In your July 2 blog post on this case, you predicted the Fifth Circuit would uphold the lower court's decision that the individual mandate is unconstitutional, but would overturn its decision on severability, effectively keeping the ACA in place. After the hearing, does your prediction still stand?

DP: Yes, it still stands. Even though the questioning by the judges seemed to favor the plaintiffs/appellees, I learned long ago not to read too much into judges' questioning.

If my prediction comes true, I would anticipate that the plaintiffs/appellees will request a hearing "en banc" — meaning a rehearing by the entire Fifth Circuit, rather than just a panel of judges — because the Fifth Circuit as a whole is more conservative than these three judges. For the same reason, if my prediction is not correct and the panel upholds the whole lower court decision, I think the interveners (the Democratic state attorneys general and the U.S. House of Representatives) will appeal directly to the U.S. Supreme Court.

Q:  Given your prediction, what's the biggest implication of this case for hospitals? 

DP: Hospitals need to continue their work to improve outcomes and lower the total cost of care. It's hard to imagine those efforts not serving us well, no matter how the case comes out.

In the best case, the Fifth Circuit Court of Appeals and ultimately the Supreme Court will overturn the lower court decision and the ACA will remain in place. In the expected case, the individual mandate will be ruled unconstitutional, but the remainder of the ACA will be left in place. Thus far, it appears that some enrollment in ACA-compliant plans will decrease in that event, but it's unlikely to be of significant impact to hospitals or workings of the ACA.

In the worst case, the U.S. Supreme Court does not save the ACA and allows it to be struck down in its entirety. Given the disruption that this would create in the American healthcare delivery system — the end of the public exchanges, loss of the advanced premium tax credits, loss of the subsidies, end of Medicaid expansion, loss of protection for patients with preexisting conditions, loss of the community rating, etc. — it is hard to imagine that the Court would not provide for a period of time before the decision would take effect or that Congress would not step in and enact a new law to provide for these insurance protections and subsidies for lower-income individuals. If Congress did not step in, the projections are that at least 20 million people would become uninsured and hospitals will see bad debt and charity care increase significantly. And, of course, we would return to the days where people who have preexisting conditions cannot get coverage for their health conditions or must pay significantly more in premiums for coverage for those conditions.

Dr. Pate's latest blog on this topic is available here.


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