- The Affordable Care Act has been ruled unconstitutional by Judge Reed O'Connor of the Federal District Court for the Northern District of Texas. If the decision stands after expected appeals, a tax on drugmakers put in place by the law would also be eliminated and the route to biosimilars could be in jeopardy.
- The Biologics Price Competition and Innovation Act was included in the ACA, setting up a new FDA pathway for approval of biosimilars.
- The decision will likely be appealed to the Deep South's conservative Fifth Circuit, and possibly up to the Supreme Court, where advocates worry it may be struck down now that the court leans right.
The law touches nearly every aspect of healthcare in America, from the mandate that insurers cover pre-existing conditions to changes to how hospitals and doctors are paid to the massive expansion of the Medicaid program.
ACA's coverage provisions are largely credited with slashing the rate on uninsured in the U.S. The drugmaker lobby backed the law when enacted, counting on more insured to lead to more access to pharmaceuticals.
Healthcare providers, including the American Hospital Association and American Medical Association, decried the ruling and urged a stay until a higher court can take it up.
The law will remain in place pending appeal. The ruling came a day before open enrollment for the law ends on Dec. 15. Enrollment has been down after the Trump administration cut outreach for the law.
In any event, it throws the coverage of millions of Americans into disarray. Democrats, who will take control of the U.S. House of Representatives in January, vowed to take action once in power. And President Trump did not attempt to hide his disdain for the law.
As I predicted all along, Obamacare has been struck down as an UNCONSTITUTIONAL disaster! Now Congress must pass a STRONG law that provides GREAT healthcare and protects pre-existing conditions. Mitch and Nancy, get it done!— Donald J. Trump (@realDonaldTrump) December 15, 2018
The big hospital chains HCA, Tenet and Community Health are among those with big exposure, subject to more bad debt and decline in patient volume, Leerink analyst Ana Gupte noted.
Managed care companies Centene and Molina, both active on the exchanges and Medicaid, also fare poorly if the ruling stands, she wrote.
A decision has been waiting in the wings since September, when the U.S. Department of Justice asked O'Connor to wait until the individual market's open enrollment period ends — also convenient timing for Republicans running in the midterm elections.
The notably conservative O'Connor has ruled against the ACA multiple times. The Texas judge issued an injunction on the law's abortion and transgender protections in 2016 and last spring did away with the ACA's imposition of a federal tax on states as a condition for receiving Medicaid funds.
The plaintiffs, 18 attorneys general and two governors from Republican states, argued in their lawsuit that the individual mandate (and the rest of the ACA) is now unconstitutional without the coinciding penalty, which was reduced to $0 in Republicans' 2017 tax bill. The mandate, according to provisions in the ACA, is "essential to creating effective health insurance markets" with better products and protections for consumers.
As a fallback, plaintiffs also made a case for ending protections for people with pre-existing conditions in the 20 states involved in the case by 2019. The DoJ, then under former Attorney General Jeff Sessions, made an unprecedented move by siding with the plaintiffs in support of eliminating of pre-existing condition protections.
The case was defended by a coalition of 17 Democratic attorneys general, sans Maryland Democratic AG Brian E. Frosh. Maryland did not participate in the Texas case, and instead brought its own case seeking a reaffirmation of the ACA's constitutionality before a more liberal court.
Frosh argued that Maryland residents who became insured under the ACA would be harmed if the law were ruled unconstitutional or were eliminated. To Frosh's point, about 150,000 people in Maryland became insured through the ACA marketplace in 2018. More than 300,000 are now insured through the state's expanded Medicaid program.
Maryland asked for a preliminary injunction after the departure of former AG Jeff Sessions in hopes of preventing Acting AG Matthew Whitaker, whom they claimed was unlawfully appointed, from filling in. The DOJ then filed a motion to dismiss Maryland's lawsuit, arguing its case is largely built on conjecture about how harmful eliminating the ACA would be, adding that Congress would be to blame for any future harm considering they were responsible for voiding the individual mandate.
The Maryland case is still ongoing for the time being,
The Urban Institute estimates as many as 17 million people will be left uninsured in 2019 if the O'Connor ruling stands. The 180 million Americans who have employer-sponsored insurance or are self-insured would lose all of the ACA's consumer protections, which have kept young adults up to age 26 on their parents' plans and getting free preventative care. It would also stifle many states' Medicaid expansion efforts.