The Supreme Court’s decision to hear a case that will decide the legality of the Affordable Care Act (ACA) won’t do a lot to ease market uncertainty in the short term, experts say.
The Supreme Court decided Monday to hear a challenge from 18 red states on the legality of the ACA, but not until its next term that kicks off in the fall. Healthcare industry groups were pleased with the decision but want a swift resolution to the lawsuit.
“This lawsuit has cast a pall of uncertainty over the future of the individual insurance market,” said Margaret Murray, CEO of the Association for Community Affiliated Plans, which represents safety-net plans. “This uncertainty has hindered competition as health plans have waited out substantial uncertainty.”
But the industry won’t hear a decision as soon as they had wanted. The court agreed to hear the case at the beginning of their next term, meaning oral arguments will likely happen sometime in the fall, legal experts say.
“The Court will schedule the oral argument at their discretion, but it's possible that argument could be heard in the early days of the next term, which begins in October 2020,” said Katie Keith, a law professor at Georgetown University. “It's too soon to say whether arguments will be before the [presidential] election, but I believe it's still a possibility.”
Keith added that the court will most likely render a decision on the case at the end of its next term, which won’t be until June 2021. She cautioned that the court could release it sooner, but it likely will not be until 2021.
Healthcare investors will likely still be skittish this year, experts say.
“Investors and other healthcare players may be concerned about the Supreme Court’s pending ruling, as the make-up of the court has shifted since it has upheld the ACA,” said Rick Zall, partner and head of healthcare at law firm Proskauer.
The last time the Supreme Court considered a challenge to the ACA was in 2015 when Justice Anthony Kennedy and Chief Justice John Roberts joined the court’s liberal wing to uphold the law’s subsidies.
But Kennedy has since retired from the court and been replaced by Justice Brett Kavanaugh. However, Kennedy did vote against upholding the ACA during a challenge surrounding the individual mandate in 2012. Roberts cast the deciding vote in the case to keep the ACA alive.
“Given this uncertainty, we anticipate that investors may postpone some deal-making related to assets that are impacted by the ACA until after the 2020 election, or even until the [Supreme Court] ruling comes down,” Zall said.
The Supreme Court’s decision means action at the lower courts will be paused.
A three-judge appellate panel with the Fifth Circuit Court of Appeals ruled last December that the ACA’s individual mandate was unconstitutional. However, the judges punted on whether the rest of the ACA needs to be struck down. The lawsuit argues that the rest of the ACA is not severable from the mandate and should be struck down. But blue states are arguing that Congress did not intend to get rid of the law when it zeroed out the penalty for the individual mandate back in the tax reform law in 2017.
A district court judge in December 2018 sided with the red states and the Department of Justice, which is supporting the lawsuit. The blue states then appealed to the Fifth Circuit. The blue states also unsuccessfully appealed to the Supreme Court to fast-track and consider the case after the Fifth Circuit’s ruling last December. If the court had agreed, a decision could have been rendered as soon as June.
But the blue states were pleased that at least the court will be hearing the case.
“As Texas and the Trump Administration fight to disrupt our healthcare system and the coverage that millions rely upon, we look forward to making our case in defense of the ACA,” said California Attorney General Xavier Becerra in a statement.