Court says Obamacare individual mandate unconstitutional

Sends law back to lower court

(CNN) -- A federal appeals court has found the Affordable Care Act's individual mandate unconstitutional, but did not invalidate the entire law, which remains in effect.

The 2-1 decision by the 5th US Circuit Court of Appeals likely pushes any Supreme Court action on Obamacare until after the 2020 election but again thrusts the issue of health care into the forefront of the campaign. The challenge was brought by Texas and a coalition of Republican states, then joined by the Trump administration -- which argued the entire law should be thrown out.

The ruling should not affect the millions of Americans who signed up for 2020 coverage on the exchanges in recent weeks. Nearly 3.9 million people had selected policies through December 7, but millions more signed up or were automatically re-enrolled in policies through the end of open enrollment, which finished early Wednesday morning.

The court challenge is part of what once was considered a long-shot attempt to gut the Affordable Care Act after a 2017 Republican-led repeal effort failed in Congress at the last minute due to the vote of the late Arizona Sen. John McCain. But two courts have now sided with the argument that a key part of Obamacare -- the individual mandate requiring Americans to purchase health insurance -- is no longer constitutional.

"The most straightforward reading applies: the mandate is a command. Using that meaning, the individual mandate is unconstitutional," Wednesday's ruling states.

Judges Jennifer Walker Elrod -- appointed by President George W. Bush -- and Kurt Engelhardt -- appointed by President Donald Trump -- were in the majority. Judge Carolyn Dineen King, an appointee of President Jimmy Carter, dissented.

John Roberts and Texas's lawsuit

Legal challenges to Obamacare have continually defied predictions and its fate may be even more difficult to predict in the 2020 presidential election year -- other than the fact it will continue.

Wednesday, the panel told a lower court that it must consider whether the individual mandate can be separated from the rest of the law.

Texas and other Republican-led states sued after the Republican-led Congress in 2017 cut the tax penalty for those who lacked insurance to zero. When Chief Justice John Roberts and the Supreme Court upheld the ACA's linchpin individual insurance requirement in 2012, the majority had relied on Congress' taxing power.

But because the individual mandate is no longer tied to a specific tax penalty, the states argue, it is unconstitutional. They also say that because the individual mandate is intertwined with a multitude of ACA provisions, invalidating it should bring down the entire law, including protections for people with pre-existing conditions.

Last winter, US District Court Judge Reed O'Connor agreed and struck down the full law.

The appeals court majority agreed.

In 2012, "the individual mandate -- most naturally read as a command to purchase insurance -- was saved from unconstitutionality because it could be read together with the shared responsibility payment as an option to purchase insurance or pay a tax," Wednesday's opinion states.

"It could be read this way because the shared responsibility payment produced revenue. It no longer does so," the judges added. "Therefore the most straightforward reading applies: the mandate is a command. Using that meaning, the individual mandate is unconstitutional."

Defenders of the ACA, which include California and other Democratic-run states, as well as the Democratic-led US House of Representatives, have argued that Congress' 2017 action affected only the amount of the tax penalty, not the individual mandate or the law as a whole. They say that if lawmakers wanted to actually repeal additional Obamacare regulations, they would have done so.

The Department of Health and Human Services and Centers for Medicare and Medicaid Services, which administer the Affordable Care Act, did not immediately return requests for comment.

What happens next

In its ruling, the court directed the lower court to look at two issues: How much of the law can stand and whether it should apply nationwide.

The appeals court said that O'Connor went too far when he invalidated the full law and needs to explain "with precision" what he believes should happen next. They advised O'Connor to use a "finer toothed comb" and conduct a more "searching inquiry" into which provisions congress intended to be inseverable from the individual mandate.

"The rule of law demands a careful, precise explanation," the court said.

The judges also said O'Connor must take a second look at the law after the Trump administration made new arguments late in the game that had said the law should only be struck as it applies to the states that brought the challenge.

The court acknowledged that when the lower court reviews its opinion it might once again hold that the entire law must fall. But, it urges limits.

"It is no small thing for unelected, life-tenured judges to declare duly enacted legislation passed by the elected representatives of the American people unconstitutional."