I’m sure most of you heard about a recent ruling by a federal judge in Texas declaring the ACA is unconstitutional. As part of his decision, U.S. District Court Judge Reed O’Connor ruled that the individual mandate is unconstitutional because it is no longer a tax following its repeal roughly a year ago as part of the GOP’s tax legislation.

So how exactly did the entire ACA get thrown out because of the individual mandate?

The main issue that Judge O’Connor addressed in his decision is severability. In a standard contract, a severability clause basically means that individual provisions within the contract shall be treated independent of one another. In essence, if one provision of a contract is found to be invalid, the rest of the contract is still intact. Citing two previous Supreme Court decisions, Judge O’Connor stated in his decision that the “Individual Mandate is inseverable from the ACA.”

To sum it up: in the opinion of Judge O’Connor, since the individual mandate is no longer treated as a tax, it is unconstitutional. And going back to this whole issue of severability, since the individual mandate is inseverable from the rest of the ACA, the entire law is therefore invalid.  

With that said, the ACA is still the law of the land while this decision is being appealed by Democratic attorney generals (AGs). Almost immediately after Judge O’Connor’s decision came down on December 14, Democratic AGs filed a motion asking for clarification on the ruling and to allow for an immediate appeal. The reason they asked for clarification was in part because Judge O’Connor’s decision did not address all the claims raised by the original plaintiffs – a group a Republican governors and AGs. Judge O’Conner concurred with the motion filed by Democrats and issued an order to allow for an expedited briefing.

So, what’s next?

The case will likely be appealed to the Fifth Circuit Court of Appeals and eventually make its way back in front of the Supreme Court. Some legal experts have noted they expect this case to be overturned on appeal because Judge O’Connor’s decision “willfully ignores the intent of the 2017 Congress, which zeroed out the individual mandate penalty without touching the rest of the Affordable Care Act.”

While this case continues to play out in court, the ACA will still be in effect so there is no impact on URAC at this time.