DOJ calls Obamacare preexisting condition protection unconstitutional

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In a court filing late Thursday, the Trump administration is specifically urging the Texas federal court to strike down two provisions from the ACA: one that requires insurers to cover people with pre-existing conditions, and the other that prevents insurers from charging individuals a higher premium due to their pre-existing condition.

While the ACA has been the target of a sharply divided and partisan debate for almost a decade, pre-existing protections are one of the most popular actions Congress has taken in modern times.

Senate Democratic Leader Chuck Schumer of NY urged President Donald Trump to reverse the decision.

The health care law's core consumer protections, which the president once signaled he supported, have been among the most popular parts of the law and have helped extend coverage to millions of previously uninsured Americans. "The Department will not defend the constitutionality" of the Affordable Care Act.

But Democrats were already pouncing. "I don't know if that legal logic will fly or not". "But it's also political malpractice because you've handed us an issue we will ride into the sunset".

Some Democratic politicians didn't waste much time.

Privately, some Republicans involved with midterm races expressed frustration at the move. These are lawyers who have made arguments they personally disagreed with countless times. "Preexisting conditions is something everyone agreed we should keep". The companies were already nervous because of Congress's decision past year to eliminate the penalty for going without health coverage.

But some moderate Republicans, including Sens. Bernard Sanders, I-Vt., to establish a single-payer health-care system, suggesting that would become the Democrats' agenda if they were to regain power.

Department of Financial Services Superintendent Maria Vullo, the state's top health insurance regulator, wrote in a Crain's op-ed last month that she would not let the uncertainty stemming from the Trump administration's actions on the ACA lead to an increase in premiums. They contend that the ACA provision requiring most Americans to carry health insurance soon will no longer be constitutional and that, as a result, consumer insurance protections under the law are not valid either.

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"Removing those provisions will result in renewed uncertainty in the individual market, create a patchwork of requirements in the states, cause rates to go even higher for older Americans and sicker patients, and make it challenging to introduce products and rates for 2019", said Matt Eyles, the president and chief executive of America's Health Insurance Plans, a trade group for insurers. "Congress in 2010 may have thought that a mandate may have been an essential component of the ACA, but a subsequent Congress indicated otherwise by eliminating the penalty without altering the other parts of the law".

While U.S. Attorney General Jeff Sessions argues that no reasonable arguments exist to defend Obamacare, California led a coalition of 15 states and fight Texas's suit, saying the individual mandate has twice survived Supreme Court review and attempts by Congress to repeal the law, thus legitimizing it. Stripping away Obamacare would create a health crisis by putting at risk some $500 billion in health-care funding, according to a statement issued by California Attorney General Xavier Becerra.

Insurers face a more immediate quandary.

The February lawsuit brought in the U.S. District Court by Texas and 19 other states argues that the ACA is unconstitutional and should be overturned because the Tax Cuts and Jobs Act which passed in December removed tax penalties against individuals who choose not to get insurance.

If the judge agrees, "insurers would want to discontinue" health plans that treat healthy and sick customers the same, predicted Larry Levitt, a senior vice president at the Kaiser Family Foundation.

The president has backed new rules that would allow for an expansion of skimpier health plans that do not have to cover a full range of health benefits. The Trump administration also argued that the ACA's guaranteed issue and community rating requirement, which ban insurers from denying coverage or charging people more based on their health, can only work in tandem with the mandate and must also be invalidated. Under normal circumstances, the federal government would defend the law.

Several Republicans said Friday that if the administration did prevail, it would be their responsibility to step in and restore protections for people with preexisting conditions.

"And the Department of Justice is ending the lawlessness that too often took place under the previous administration", Sessions said, according to the prepared remarks. Most significantly, he ended federal payments to insurers for the subsidies they provide lower-income recipients. That will leave sicker people buying insurance.