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Democrats Just Got an ‘Ominous’ Sign in the Fight to Save Obamacare

Democrats seeking to save Obamacare were asked by a court to explain why they should be allowed to defend the health-care plan.

Democrats Just Got an ‘Ominous’ Sign in the Fight to Save Obamacare
An exam bed sits in a room at Perry Memorial Hospital in Princeton, Illinois, U.S. (Photographer: Daniel Acker/Bloomberg)

(Bloomberg) -- Democrats seeking to save Obamacare from oblivion were asked by a federal appeals court to explain why they should be allowed to defend the national health-care plan in court if the Trump administration won’t.

The U.S. Court of Appeals in New Orleans, with a high-stakes July 9 hearing approaching, posed the question in a brief notice Wednesday to the Affordable Care Act’s last defenders: a group of Democratic state attorneys general, led by California, and the Democratic-led U.S. House of Representatives.

The Democrats stepped in to defend Obamacare after the Justice Department abandoned the law when its constitutionality was challenged by a group of Republican-led states. The blue states aim to overturn an explosive December ruling that put former President Barack Obama’s signature health-care overhaul on the chopping block, potentially leaving millions of Americans without insurance.

But the Fifth Circuit panel reviewing the case -- whose three judges haven’t been identified yet -- is already signaling skepticism by asking the parties to explain within seven days, in a 15-page filing, why they have standing and whether they were too slow to intervene in the case.

The panel hinted that one possible outcome is to declare the red states the winners without even hearing the blue states’ arguments.

The judges asked "whether or not, if none of the intervenors have standing, there is a live case or controversy between the plaintiffs and the federal government given their positions on appeal."

One law professor, Nicholas Bagley of the University of Michigan, said in a tweet that the notice from the court was an "ominous sign."

"If neither the blue states nor the House has standing, it would mean that no one has standing to appeal the decision," Bagley wrote in the tweet. "That would effectively leave the lower court decision unappealable."

This isn’t the first time the federal courts have faced such a dilemma. When the Obama administration wouldn’t defend a federal law that allowed states to refuse to recognize same-sex marriage, the Republican-led House of Representatives was allowed to step in to advocate for the law.

“Presumably, the courts will allow the House to do so again,” said professor Charles Silver, a specialist in health-care law at the University of Texas at Austin School of Law.

Silver also said the blue states may have standing, “because they receive substantial benefits that will be imperiled if the statute is invalidated,” including billions of dollars promised by the federal government for expanding their Medicaid programs.

Another law professor said that if the appeals court concludes the lawsuit was essentially cooked up by Obamacare foes to get a judge to sign off on the ruling they wanted without anyone defending the opposing viewpoint, the entire case could be dismissed.

“This case could become moot because of the Trump administration’s own policy calculations about positions it wants to take,” Jonathan Adler, a professor at Case Western Reserve University School of Law who helped draft a filing in the Obamacare case opposing the lower-court ruling.

The Texas attorney general’s office declined to comment on the appeals court’s notice.

New York Attorney General Letitia James said in an emailed statement that the government’s refusal to defend the law in court was an abdication of Trump’s Health and Human Services department.

“Americans deserve someone who will fight for them and this right, and that’s exactly what we are doing,” James said. “Once again, states will step in and lead the way where the federal government fails.”

The Obamacare case was filed by a group of Republican attorneys general, led by Texas, in February 2018. In December, a Texas judge appointed by former President George W. Bush ruled in their favor, backing their claim that Obamacare should be scrapped because Congress removed a key element -- the penalty for not having insurance.

In February, a federal judge dismissed a lawsuit by the state of Maryland seeking a ruling that the Affordable Care Act is lawful even without the tax penalty once tied to it.

While analysts on both sides of the political spectrum have raised doubts about the Texas court’s ruling, they say the fight could reach the U.S. Supreme Court. If that happens next year, it could make Obamacare a defining issue in the race for the White House and Congress.

--With assistance from Andrew Harris and Laurel Calkins.

To contact the reporter on this story: Erik Larson in New York at elarson4@bloomberg.net

To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Peter Blumberg, Steve Stroth

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