What the Obamacare lawsuit could mean for you

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Myles Ma, CPFCSenior ReporterMyles Ma, CPFC, is a certified personal finance counselor and former senior reporter at Policygenius, where he covered insurance and personal finance. His expertise has been featured in The Washington Post, PBS, CNBC, CBS News, USA Today, HuffPost, Salon, Inc. Magazine, MarketWatch, and elsewhere.

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Update, Dec. 19, 2019: An federal appeals court ruled that the individual mandate to have health insurance was unconstutional, but did not invalidate the rest of the Affordable Care Act. The court sent the case back to a federal judge in Texas to determine which parts of the law can stand. It's excpected to be appealed up to the Supreme Court.

Is the Affordable Care Act unconstitutional?

A group of Republican governors and state attorneys general sued to overturn the Affordable Care Act in 2018. The case reached the appeals court this year after a Texas judge struck down the entire law. On Tuesday appeals court judges heard arguments whether they should overturn the health care law.

To understand the future of Obamacare, it helps to take a few steps back.

The Affordable Care Act, in court again

Back in 2012, another lawsuit, which made its way to the Supreme Court, argued that one part of the law, the individual mandate, was unconstitutional.

The individual mandate required most people to buy health insurance or pay a penalty. The lawsuit argued that it was unconstitutional to force people to buy insurance. The Supreme Court rejected that argument, interpreting the mandate as a kind of tax, something Congress has the right to impose.

Fast forward to 2017. Congress that year reduced the penalty for violating the individual mandate to $0. The mandate is still part of the law, just without any punitive bite. The case now argues because the penalty is gone, the individual mandate is no longer a tax, so it's unconstitutional — and so is the entire Affordable Care Act.

It's that last part that legal experts from both parties say goes too far, said Abbe Gluck, a law professor and faculty director of the Solomon Center for Health Law and Policy at Yale Law School. Just because one part of the law is unconstitutional doesn't mean the entire 2,000-page Affordable Care Act is unworkable. If that were the case, Congress would have repealed the entire law in 2012, rather than just the individual mandate penalty, she said.

What could the consequences of the case be?

If the appeals court upholds the Texas decision and rules that the entire Affordable Care Act is unconstitutional, the effects will go beyond the 11 million people who signed up for plans on the law's health insurance exchanges.

In addition to providing a marketplace for individuals to buy insurance, the Affordable Care Act also allows states to expand Medicaid coverage to people making a certain income level. (Learn whether you qualify for Medicaid in your state.) It requires insurance companies to cover people with pre-existing medical conditions, like HIV. It allows people to stay on their parents' plans until they turn 26. It provides subsidies to help pay for insurance.

The Urban Institute estimates the number of uninsured people could double as a result of a repeal, to nearly 60 million.

"The consequences cannot be overstated," Gluck said.

What happens next?

A three-judge panel heard about 90 minutes of arguments on Tuesday. It could take them months to issue a ruling, Gluck said. Even then, the loser of the case is likely to appeal the case up to the Supreme Court, so it could be a long time before the case is finally decided.

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