Trump Administration’s Move to Gut Obamacare Raises Risks for 2020

Sahil Kapur and Andrew Harris
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Trump Administration’s Move to Gut Obamacare Raises Risks for 2020

(Bloomberg) -- The Trump administration is siding with Obamacare opponents who argue that it is unconstitutional and should be scrapped entirely, initiating a new, more aggressive assault on the health care law that will assure the issue will be squarely at the forefront of the 2020 presidential campaign.

The Justice Department shifted its stance, after arguing last year that some parts of the 2010 law -- but not all of it -- should be struck down in a case brought by the state of Texas. A federal district judge voided the law in a December ruling that is now under appeal.

In a filing late Monday night, the Justice Department said that President Barack Obama’s signature legislative achievement should be wiped out.

“The Department of Justice has determined that the district court’s comprehensive opinion came to the correct conclusion and will support it on appeal," DOJ spokeswoman Kerri Kupec said in a statement.

The filing draws renewed attention to Trump’s and the Republican Party’s stance that Obamacare, formally known as the Affordable Care Act, should be eliminated. That would include subsidies for coverage and rules popular with voters such as preventing insurers from discriminating against those with pre-existing conditions, limits on coverage and coverage for preventative care.

Campaign Issue

The Justice Department’s action could prove to be a gift for Democrats as they refocus their campaign message on pocketbook issues. The debate over Obamacare -- which Republicans tried unsuccessfully to repeal in 2017 -- was a focal point for Democrats in the 2018 midterms when they took control of the House and scored significant wins in state and local elections.

“Tonight in federal court, the Trump administration decided not only to try to destroy protections for Americans living with pre-existing conditions, but to declare all-out war on the health care of the American people,” House Speaker Nancy Pelosi said shortly after the administration’s filing.

Trump on Tuesday didn’t directly mention the court filing when he spoke to reporters at the U.S. Capitol after leaving a lunch meeting with Republican senators. But he again hinted at a promise of a replacement that has so far not materialized in the years that the GOP has been vowing to repeal Obamacare.

“The Republican Party will soon be known as the party of health care,’’ Trump said.

While the Fifth U.S. Circuit Court of Appeals in New Orleans that’s handling the matter is known for its conservatism, Congress’s decision in 2017 to remove the penalty for not having coverage means Texas and its allies could have problems proving any harm to give them grounds for their challenge. That would put the issue firmly back in the hands of Congress.

The administration’s move comes as the White House is celebrating Attorney General William Barr’s review of the long-awaited findings by Special Counsel Robert Mueller, which he reported didn’t find evidence to show the Trump campaign conspired with Russia to meddle in the 2016 election.

Senate Minority Leader Chuck Schumer, a New York Democrat, said the Justice Department decision “will prove far more detrimental” to the Republicans than any political “gains” they might enjoy from the end of Mueller’s investigation.

Democratic strategist and campaign veteran Jesse Ferguson said Trump’s party “lost the midterms" as a result of its position on health care. Exit polls published by CNN found that health care was the top issue for 2018 voters in House elections across the country. The 41 percent who cited it preferred Democratic candidates over Republicans by a jarring margin of 75 percent to 23 percent.

Yet it’s an issue Democrats have struggled to stay focused on after taking the House in January and effectively neutering the Republican threat to repeal the 2010 law. Trump’s vow to repeal the law was a central promise of his 2016 campaign.

Democratic National Committee Chairman Tom Perez said Tuesday the filing moves Republicans "one step closer to throwing the financial security and peace of mind of millions -- not to mention one of the largest sectors of our economy -- into a tailspin."

The Affordable Care Act has extended coverage to about 20 million Americans through private insurance marketplaces and an expansion of Medicaid. It has long been a target of conservatives for its tax hikes, regulations and new spending, which they argue have exacerbated flaws in the health care system.

Texas and the states that joined in the suit assert that because Congress in 2017 zeroed out the tax penalty for violating Obamacare’s individual mandate to buy insurance, the measure is no longer constitutional, and that the rest of the law is “inseverable” from it and “therefore invalid.”

Several states, including California, New York, Illinois, Connecticut and Virginia have intervened in the suit to keep Obamacare intact.

Government Filing

The Justice Department wrote in the filing to the appeals court Monday that “because the United States is not urging that any portion of the district court’s judgment be reversed, the government intends to file a brief on the appellees’ schedule.”

In his December decision, U.S. District Judge Reed O’Connor said the law had survived its first wave of challenges only because the Supreme Court determined in 2012 that the penalty imposed on those who did not sign up for coverage was a valid exercise of Congress’ power to tax and spend. When Congress reduced that penalty to zero in 2017, it effectively removed the high court’s justification for upholding the act.

Timothy Jost, a Washington & Lee University law professor emeritus who has been tracking Obamacare litigation since the measure was signed into law in 2010, said the change actually had the opposite effect, removing any injury for which the suing states could demand redress. He predicted the appellate panel may dismiss the suit on those grounds.

“How can you be injured by a tax that doesn’t exist?” Jost said.

Jonathan Adler, a law professor at Case Western Reserve University, agreed and called the administration’s maneuver “unconventional.”

“Typically we expect the Justice Department to defend federal statutes, particularly when there are reasonable arguments to be made,” Adler said. “Here there are reasonable arguments to be made.”

Adler said that the absence of an actual penalty means the appellate court will likely conclude the states’ lack the requisite legal injury to pursue their claims.

Failing that, it could also reverse O’Connor’s determination that the so-called individual mandate -- the purchase or penalty provision at the heart of the states’ suit -- can be struck down without dismantling the remainder of Obamacare too.

"At the end of the day, I don’t think this is going to have a big effect," Adler said.

House Minority Leader Kevin McCarthy wouldn’t say Tuesday if he supports the DOJ’s new position on the ACA, telling reporters he hasn’t read the one-page filing, and referred questions to his office.

The California Republican’s office didn’t immediately return a request for comment.

The appellate case is Texas v. U.S., 19-10011, U.S. Court of Appeals, Fifth Circuit (New Orleans). The lower court case is Texas v. U.S., 4:18-cv-00167-O, U.S. District Court, Northern District of Texas (Fort Worth)

--With assistance from Laura Litvan.

To contact the reporters on this story: Sahil Kapur in Washington at skapur39@bloomberg.net;Andrew Harris in Washington at aharris16@bloomberg.net

To contact the editors responsible for this story: Joe Sobczyk at jsobczyk@bloomberg.net, Wendy Benjaminson

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