Making Wisconsin More Like Texas

The federal court case is called Texas v. United States of America and 20 other Republican-dominated states have joined Texas to challenge the Affordable Care Act (ACA). If successful, this would cause a significant increase in the number of Wisconsinites without health insurance.

Wisconsin Attorney General Brad Schimel and the Wisconsin Department of Justice are helping Texas lead the challenge. A Wisconsin DOJ press release describes Wisconsin as “one of the lead plaintiffs” and says it “is actively involved in briefing in the case.” Wisconsin’s lead role is reflected in the formats of the briefs in which Wisconsin is usually listed at the top or directly under Texas.

The mystery is why Schimel — and Scott Walker, in approving Wisconsin’s role in challenging the ACA — believe that taking people’s health insurance is good politics.

Texas v. United States arises out of the Tax Cut and Jobs Act (TCJA) passed late last year by the Republican-controlled Congress. Most attention to the TCJA focused on its far bigger benefits for wealthy people and its increase in the federal deficit.

Buried in the TCJA was a provision zeroing-out the penalty the Affordable Care Act imposed on people who refuse to purchase health insurance. The plaintiffs in Texas v. United States argue that reducing the penalty to zero makes the ACA’s mandate unconstitutional. The result, they argued, was that the ACA’s ban on using pre-existing conditions to decide whether to insure people or what to charge them should be invalidated.

The plaintiffs go on to argue that the whole Affordable Care Act should be invalidated. Their logic in Texas v United States runs like this:

1. In upholding the ACA, a majority of US Supreme Court Justices concluded that the individual mandate is constitutional if treated as a tax.
2. “Zero tax is not a tax” and therefore the TCJA makes the individual mandate unconstitutional.
3. “The ACA’s guaranteed-issue and community-rating provisions are inseverable from the mandate.”
4. “Congress did not intend for the ACA’s remaining provisions to remain in effect without the mandate,” thus everything in the ACA should be rejected.

To put this in perspective, it should be remembered that last year, the Republican Congressional leadership and President Trump made several attempts to abolish the ACA. They were unsuccessful. Thus, Texas v. United States is an attempt by the ACA opponents to get from the courts what they could not get from Congress.

This June, the Trump Justice Department accepted the first three steps in the states’ argument against pre-existing protections, but not the fourth. In the words of its court filing, “the individual mandate is not severable from the guaranteed-issue and community-rating provisions, but those three provisions are severable from the rest of the ACA.”

Thus, if the federal judge accepts the view of the Trump White House and the Wisconsin Attorney General, insurers would be free to reject people with pre-existing conditions or to charge them higher premiums. This is not a very popular result. The next graph shows the percentages found by the Kaiser Family Foundation surveys of those strongly favoring bans against rejecting people with pre-existing conditions or charging them more. About three quarters of all respondents, and more than half of Republicans, agree it is very important that protections for those with pre-existing conditions remain law.

Legally, the argument advanced by Schimel and the Trump Justice Department is weak. The fact that Congress, in reducing the tax to zero, did not also eliminate the limits on pre-existing discrimination is strong evidence that Congress did not regard the two provisions as inseparable.

However, this outcome will depend on how Judge Reed Charles O’Connor rules. If he is among the federal judges who follow the law, Schimel and the Trump administration will lose. However, if he is among the judges, including some other George W. Bush appointees, pursuing a right-wing legislative agenda, he may seize the opportunity to strike a blow against Obamacare. It is perhaps telling that an article in Texas Lawyer magazine was headlined: “U.S. District Judge Reed O’Connor distances himself from the pack in his rulings against LGBTQ issues; Perhaps no federal judge has ruled more often to stall the recent pace of acceptance of the LGBTQ community than O’Connor.”

If O’Connor does accept the argument advanced by Schimel and the Trump administration — and that decision is upheld on appeal — insurers would be free to reject people with pre-existing conditions or charge them more. Oddly, however, in their July Reply Brief, Schimel and the other plaintiff states suggest that this be limited just to the 20 states bringing the suit:

if this Court enjoins only the portions of the ACA that the United States concedes are not severable from the mandate, the Court should limit its injunction to operate in the Plaintiff-States.

In other words, discrimination because of a pre-existing condition would be perfectly legal in Wisconsin but not Minnesota. As Wisconsin’s Attorney General shouldn’t Schimel be protecting Wisconsinites with pre-existing conditions?

Schimel and the other plaintiff states don’t stop there. They then ask Judge O’Connor to rule against everything in the ACA, arguing that: “The Court should issue preliminary relief, as of January 1, 2019, enjoining the ACA and its associated regulations nationwide.”

This would eliminate a wide range of provisions that have nothing to do with the individual mandate. A partial list includes the Medicaid expansion, the health care exchange and subsidies for those buying policies through the exchange, closing the Medicare “doughnut hole” for prescription drugs, major changes in Medicare payments to reward value, significant improvements in the fraud and abuse laws, authorization of the Food and Drug Administration to approve generic biologics, covering dependent children up to age 26 and offering preventive services to state employees, banning annual and lifetime limits and banning discrimination against women.

Schimel’s embrace of Texas v. United States has aligned Wisconsin with states which have poor record of helping their residents get health insurance. Compare those states with the 16 states that intervened in the suit to defend the ACA. The next graph compares the percentage of residents without insurance in the 20 Plaintiff states attacking the ACA with the 16 Intervenor Defendant states. Not surprisingly perhaps, residents of Wisconsin’s allies are much more likely to go without insurance than those living in states defending the ACA. (The percentages in this and the next graph are from Gallup surveys.)

Of all the states, Texas has the worst record of insuring its residents, as reflected in the next chart. Wisconsin, by contrast, while not the best, is far and away better than Texas.

Most Americans have grown favorable to the Affordable Care Act, as shown below. Republicans remain strongly unfavorable. This creates a quandary for Republican politicians. A position that helps win the Republican primary may be toxic in the general election.

As we saw with the ban on pre-existing condition discrimination, moreover, even many critics of the ACA support its individual features. For example, it seems unlikely that many parents, whatever party they identify with, will be happy to see insurance coverage on their twenty-something children go away. Nor would retirees be happy to have the prescription drug donut hole return.

It is hard to see how this lawsuit will be a political plus for either Walker or Schimel, or the other politicians around the country who joined. Perhaps the fact that Schimel considered it a good idea reflects too much time spent in the right-wing political bubble.