The latest constitutional threat to ObamaCare just got some heavyweight backing — from the Justice Department. The Trump administration said late Monday that it now supports a federal judge’s December ruling which would throw out the law. Most legal experts — even those who pushed earlier challenges to the law — think the case has little merit. The added dose of uncertainty hit health care stocks Tuesday. Yet the bigger story may be what the move means for President Trump’s 2020 election prospects.
Health Care Stocks Hit
As the broad stock market surged higher Tuesday, health care stocks came under pressure. Managed care stocks with the most exposure to the ObamaCare exchanges and Medicaid expansion suffered the most. Centene (CNC) fell 3.9%, Molina Healthcare (MOH) 9.7% and WellCare Health Plans (WCG) 3.9%. Meanwhile, UnitedHealth Group (UNH) lost 1.4% and Anthem (ANTM) 3.2%. Hospital stocks also lost ground, with Tenet Healthcare (THC) off 1.8% and HCA Healthcare (HCA) 2.2%.
In a filing to the federal appeals court in New Orleans, the Justice Department said it no longer wants to reverse much of the decision. Democratic state attorneys general are appealing the Texas vs. United States ruling. If Trump’s position prevails, subsidies used by 8 million people to buy health insurance on state insurance exchanges and the expansion of Medicaid to 12 million Americans would disappear.
ObamaCare Individual Mandate: $0 Fine
The plaintiffs argue that ObamaCare’s individual mandate, which was upheld in 2012 as a tax, is no longer a tax. That part of the argument makes sense. Congress zeroed out the mandate fines effective 2019 as part of the huge Trump tax cuts. But Congress kept the language requiring people to buy insurance or pay a penalty. Even though the mandate doesn’t cause harm, Judge Reed O’Connor ruled that the entire law must be thrown out.
Initially, under then-Attorney General Jeff Sessions, the Trump administration opposed much of the case. Then, the Justice Department argued that only regulations ensuring no price increases for people with pre-existing conditions should be invalidated. But new Attorney General William Barr has thrown the Trump administration’s weight behind the full case.
Trump 2020 Election Stakes
The move raises the possibility — if the case eventually advances to the Supreme Court — that Trump will spend most of the time between now and the 2020 election supporting a major retrenchment of health coverage. While Trump campaigned against ObamaCare in 2016, he pledged to replace it with something great. Yet the Republican-controlled Congress failed to pass legislation to replace ObamaCare. All of the replacement bills were projected to significantly increase the ranks of the uninsured.
Democratic presidential aspirants, meanwhile, back various approaches to Medicare for all. Some involve disruptive shifts away from commercial insurance, while others take more moderate approaches. Democrats in Congress on Tuesday plan to propose an expansion of ObamaCare subsidies to help cover more people and lower out-of-pocket costs.
To some extent, the stock market could rise and fall with Trump’s re-election prospects. Rising odds that a Democrat will win the White House and that Democrats could gain control of the Senate will cast doubt on the durability of Trump’s big corporate tax cut.
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Author: JED GRAHAM