United States: Texas Federal Court Declares The Entire ACA Unconstitutional: Now What?


In a dramatic decision in the case of Texas v. US1, Judge Reed O'Connor, sitting in the US District Court for the Northern District of Texas, declared on December 14, 2018, that the entire Affordable Care Act (ACA) is unconstitutional. The decision is based on the argument that the ACA's individual mandate to obtain health insurance will no longer be a valid use of Congress' taxing power, starting on January 1, 2019, when a statute lowers the tax penalty for noncompliance with the mandate to zero. While an appeal will certainly follow, it is unclear how quickly. In the meantime, the US Department of Health and Human Services (HHS) has stated that it will continue to implement and administer all aspects of the ACA, noting the that decision does not require the agency to change any ACA programs or its administration of the law.

In this alert, we address key aspects of the decision, its immediate effects, the longer-term outlook for appeal and the industry, and the likely political repercussions.

What was the decision in this case?

Judge O'Connor ruled that, since the individual mandate for health insurance is unconstitutional, the entire ACA is unconstitutional. The lawsuit was brought by multiple Republican state attorneys general, led by Texas, representing several individuals who claimed to be harmed by the mandate. California, leading a different group of Democratic state attorneys general, joined the lawsuit as intervenor-defendants. The Trump administration decided not to defend the existing law. 

This ruling only resolves one of several counts in the case. Furthermore, it is only a declaratory judgment, as discussed below. Nevertheless, the opinion states that, starting on January 1, 2019, the individual mandate for health insurance will be unconstitutional, and so will the rest of the ACA.

Does the decision have any immediate impact? 

There are no clear or immediate effects; while declaring the ACA unconstitutional, the court did not enjoin its implementation. In addition, HHS has indicated it will continue implementing and administering all parts of the law. However, starting on January 1, the Trump administration would, technically, be free to stop administering any aspect of the ACA. This would be legally and politically risky, should there be a pending appeal.

What will happen next?

Anything could happen, starting January 1. For now, the government is free to keep implementing the ACA, because Judge O'Connor issued a declaratory judgment, but not an injunction. That being said, this was a ruling only on one of several counts in the lawsuit. The judge has ordered the parties to submit a proposed schedule for the remaining claims by January 4. Therefore, we cannot rule out an injunction in a future ruling in the case.

California Attorney General Xavier Becerra has announced his intent to appeal. Appeal would likely occur after the final resolution of the case, and would go to the Fifth Circuit Court of Appeals. Most likely, in due time, any decision by the Fifth Circuit would be further appealed to the US Supreme Court. 

The legal effect on the health care industry is still uncertain, even though the resulting uncertainty is roiling the health care community. In theory, it is possible that an insurance company could defy the ACA as early as January 1, for example, by selling lower-priced plans to people without pre-existing conditions. If someone challenged that action, the company could defend it on the basis of this ruling—unless, in the meantime, it is reversed on appeal. It seems unlikely that an insurer would invest resources in such a product while the future is so uncertain, but if the ruling is upheld, we may expect to see such products re-enter the market in future years.

What is the "severability" issue? 

The question is whether the individual mandate can be separated from the rest of the ACA. If it is not severable, then none of the ACA is valid law. 

In prior challenges to the ACA, the federal government had argued that the individual mandate was an important part of the overall plan in the ACA. Congress intervened and, effective January 1, 2018, reduced to zero the amount of the tax penalty for noncompliance with the individual mandate. In effect, Congress eliminated the individual mandate. 

Several legal scholars argue that Congress, by removing the individual mandate while leaving the rest of the ACA intact, displayed a clear intent to have the individual mandate be severable from the rest of the ACA. This stands in contrast to the recent ruling. 

The recent opinion characterizes the individual mandate as the "ACA keystone," not a severable provision. The opinion also notes that, in the first challenge to the ACA, the court had upheld the individual mandate as a valid exercise of Congress' power to tax. Now that the "tax" will be zero, as of January 1, the opinion explains that the mandate remains, but will no longer be enforced, and therefore, it cannot be justified as an exercise of Congress' taxing power. Coupled with the conclusion that the mandate is not severable, the result is that the entire law is unconstitutional. 

What is the possible timeline for the case?

The district court will likely rule on the rest of the case in 2019, as the parties have been ordered to submit a proposed schedule to resolve the remaining claims by January 4. As noted above, California's attorney general has already stated an intent to appeal. There is some speculation about whether an appeal would be viable before the rest of the case is resolved, or whether the ruling might not be appealable at all as a declaratory judgment. (Attorney General Becerra has asked Judge O'Connor to allow the ruling to be appealed.) The case will most likely be appealed to the Fifth Circuit, and subsequently, to the Supreme Court. This will be a long process, and the case is not likely to be resolved in 2019. 

What is the likelihood that the decision will be upheld by higher courts, particularly the Supreme Court?

The outcome is ultimately uncertain. Many legal scholars and commentators expressed skepticism about the legal theory of the case, and the decision is surprising to some. Judge O'Connor is known as a conservative judge, having previously issued a nationwide injunction against an Obama administration rule regarding gender-identity discrimination in health care. Similarly, the Fifth Circuit is known as a conservative circuit, and has several new judges appointed during the Trump administration. Therefore, despite criticism of the opinion's reasoning, the possibility for an equally surprising result on appeal cannot be dismissed.

What will this mean politically, especially for the new Congress?

House and Senate Democratic leadership were quick to respond to the court's ruling. Both Senate Minority Leader Chuck Schumer and the likely incoming House Speaker, Nancy Pelosi, criticized the decision and pledged congressional action.

Shortly after the ruling, Representative Pelosi said, "When House Democrats take the gavel, the House of Representatives will move swiftly to formally intervene in the appeals process to uphold the life-saving protections for people with pre-existing conditions and reject Republicans' effort to destroy the Affordable Care Act." We can expect the new Democratic majority in the House of Representatives to join supporters of the ACA in their appeal efforts. The House's intervention would almost certainly be considered and passed by the Democratic majority in the opening weeks of the 116th Congress. However, such intervention in the case would not be as definitive an action as passing a law or amendment, such as one eliminating the mandate altogether, or reinstating it in a very low amount, either of which could negate the ruling. In the Senate, Democrats will lament the court's decision and may offer legislative remedies, but will likely be stymied by Majority Leader Mitch McConnell on any substantive response.

In practice, given the divided nature of the Congress in 2019, their actions may be more "messaging" than legislation. Democrats in both chambers will lay the confusion and uncertainty around the ACA going forward squarely at the feet of Republicans, touting this as the latest example of the GOP's efforts to deny health care to those with pre-existing conditions. Although the GOP had hoped to turn the debate to drug pricing, this ruling has, for now, put the spotlight back on health insurance and the ACA.


1 Texas v. U.S., 4:18-cv-00167-O (N.D. Texas Dec. 14, 2018)

About Dentons

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
22 Jan 2019, Seminar, San Francisco, United States

Dentons is pleased to offer a full day of classes, just in time for the California MCLE compliance period deadline of January 31, 2019.*

23 Jan 2019, Seminar, Los Angeles, United States

Dentons is pleased to offer a full day of classes, just in time for the California MCLE compliance period deadline of January 31, 2019.*

24 Jan 2019, Other, New York, United States

Join Dentons’ Health Care Partner Lori Mihalich-Levin and White Collar & Government Investigations Counsel Christine Genaitis as they lead conference sessions at AHLA Academic Medical Centers and Teaching Hospitals Institute.

Similar Articles
Relevancy Powered by MondaqAI
Smith Gambrell & Russell LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Smith Gambrell & Russell LLP
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions