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In another court victory for the Affordable Care Act (ACA), a federal appellate court ruled in Texas v. Rettig that a provision of the ACA that imposes a federal health insurance provider fee is constitutional. Section 9010 of the ACA contains a provision known as the “Provider Fee,” which is one of the funding mechanisms which allowed Congress to expand healthcare access to 20 million more Americans. According to the IRS, the Provider Fee is broadly required from “each covered entity engaged in the business of providing health insurance for United States health risks.” Opponents of the ACA have tried through legal and political means to diminish the ACA’s efficacy by gutting the federal government’s ability to collect fees and penalties associated with ACA compliance. (In fact, the Provider Fee is set to expire after 2020 anyway.) More often than not, however, courts have upheld the ACA against challengers.
Texas v. Rettig is another data point in this trend. In this case, the states of Texas, Kansas, Louisiana, Indiana, Wisconsin, and Nebraska sued the federal government and its agencies by claiming that Section 9010 violated the constitution. You may be wondering why states sued the government and not the insurance providers themselves, who are responsible for payment of the Provider Fee. Central to the states’ argument that the Provider Fee is unconstitutional was that if the health insurance providers failed to pay the Provider Fee, it would be the states that would suffer, such as by losing Medicaid funding from the federal government. In tax terms, this concept is known as “incidence” and it describes who has the burden to pay the tax. The court quickly dismissed this idea by pointing out that the wording of the statute precludes states from picking up the tab if insurers fail to pay the Provider Fee: “The States misunderstand the meaning of legal incidence… the legal incidence of the Provider Fee does not fall on the states because Congress expressly excluded states from paying the fee.”
Ultimately, Texas v. Rettig reinforces the staying power of the ACA, which has taken on more importance than ever in light of the global COVID-19 pandemic. As of the date of this article, the CDC notes that there are more than 170,000 deaths from COVID-19 in the US alone. Another case challenging the ACA is set to go before the United States Supreme Court this fall. In a brief, the American Medical Association and 20 leading physicians pleaded with the Court that now is the worst time to undue coverage gains associated with the ACA. Stay tuned to the ACA Times as we continue to update coverage of the ACA, the courts, and the pandemic.
Opponents of the ACA have tried through legal and political means to diminish the ACA’s efficacy by gutting the federal government’s ability to collect fees and penalties associated with ACA compliance. More often than not courts have upheld the ACA against challengers.
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