The Trump administration filed a brief in the case on Thursday, arguing that without the tax to encourage healthy people to sign up, the parts of the law guaranteeing coverage to people with previous health conditions - without charging them higher rates - should be struck down as well. Texas and other Republican-led states are suing to strike down the entire law because Congress recently repealed a provision that people without health insurance must pay a fine.
In a brief filed Thursday, the Justice Department sided with Texas and a coalition of other Republican-led states that had filed a suit challenging the constitutionality of Obamacare.
"The administration's attempt to eliminate protections for the 130 million Americans with pre-existing conditions is just the latest - and potentially the most damaging - example of the coordinated effort by congressional Republicans and the Trump administration to sabotage the Affordable Care Act, driving up uninsured rates and out-of-pocket costs for Americans", the Democrats said. In that, lawmakers chose to eliminate the tax penalty the ACA requires people to pay if they flout the insurance mandate.
Removing consumer friendly provisions like guaranteed issue, whereby health insurers can not deny coverage to applicants or charge more based on health status, will result in renewed uncertainty in the market as well as push up rates for older and sicker patients, AHIP added.
About 1.5 million Californians buy coverage through the state's ACA exchange, Covered California, and almost 4 million have joined Medicaid as a result of the program's expansion under the law.
Bagley, a former Justice Department attorney, said the DOJ has a "durable, longstanding, bipartisan commitment" to defending the laws passed by Congress as long as there is a legitimate "non-frivolous" argument to be made in its defense. "That change eliminated the basis for the court's decision to uphold the ACA's constitutionality".
"Because the mandate is unconstitutional, those. elements must fail as well", he said.
The state has been at the forefront in resisting many Trump Administration policies, including on health care and immigration.
Because the lawsuit could easily go all the way to the U.S. Supreme Court, a process that could take years, the protections for people with preexisting conditions are likely to stay in place during that period. "That's how far out the administration's position is". The administration's argument would also allow insurers to charge women, older people, and people in certain occupations higher premiums.
The Justice Department said that also nullifies two other major provisions of Obamacare linked to the individual mandate, including one barring insurance companies from denying coverage to people with pre-existing conditions.
If the court agrees with the Justice Department's argument to toss out part of the law that protects individuals with an existing medical condition, that could affect millions of Americans who buy insurance directly from the marketplace.
Before the Affordable Care Act marketplace launched in 2014, people with chronic diseases who tried to buy their own insurance were routinely denied coverage based on their medical history.
Moreover, if the Trump administration did not want to defend the ACA expressly, it could simply have filed a jurisdictional motion, asserting that the states are not injured by the lack of an individual mandate penalty and that the litigation is not yet timely, as the tax is still in effect.