Judge rules that individual mandate tax penalty is “no longer fairly readable as an exercise of Congress’s tax power”
By NACS Online // December 18, 2018
On December 14th, 2018, a Texas federal judge struck down the entire Affordable Care Act (ACA). The case, brought by a group of Republican governors and state attorneys general, centered around the Supreme Court’s decision in 2012, which upheld the individual mandate as constitutional based on Congress’s taxing power. Because Congress recently “zeroed out” the tax with the passage of the Tax Cuts and Jobs Act, the states argued that the individual mandate can no longer be upheld under Congress’s tax power, and without it the whole health law falls apart.
Judge Reed O’Connor of the District Court for the Northern District of Texas in Fort Worth agreed on both points, finding that the individual mandate tax penalty—which will be zero beginning in 2019—is “no longer fairly readable as an exercise of Congress’s tax power” and that, because it is “the keystone, the linchpin” of the ACA, the balance of the health law is “inseverable” from it.
Of importance for convenience stores, the ruling will not immediately affect the ACA or impact current coverage (or coverage in 2019). The decision is expected to be appealed to the United States Court of Appeals for the Fifth Circuit. The current view among analysts is that—at a minimum—the portion of the opinion invalidating the whole law will not be upheld on review.