Indiana Attorney General Curtis Hill on a federal judge in Texas ruling ObamaCare is unconstitutional. O'Connor, however, did not issue an injunction to stop federal and state governments from enforcing the law.
For now, according to the White House, the law will remain "in place" in expectation of appeals of the ruling.
The 2012 ruling, authored by Chief Justice John Roberts, held that the government cannot order people to purchase health care, but it can impose a tax on those who don't, and interpreted the mandate and penalty as the equivalent of a tax.
Judge O'Connor points to the "findings" from the original ACA itself to claim that the mandate was "essential" to various provisions of the law, but those findings were included to bolster arguments that the mandate was constitutional as a legal requirement and were not meant to make the rest of the law dependent on the mandate.
The ruling is expected to be appealed all the way up to the Supreme Court.
Millions of individuals and families covered through the ACA's Medicaid expansions would lose coverage - even in states that have recently passed referenda to expand coverage - but other Medicaid beneficiaries would lose benefits conferred by the ACA as well.
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A federal judge ruled that the ACA was unconstitutional when Congress struck down the tax penalty that required people to have insurance.
Obamacare expanded by millions the number of Americans with medical insurance. While President Donald Trump and lawmakers such as incoming House Minority Whip Steve Scalise (R-La.) cheered the development, some in the party called for bipartisanship to address the failings of the country's health care system. The Trump administration declined to defend the mandate, spurring Democratic officials in 16 states to intervene. However, all provisions of the statute remain in place pending appeal of the decision.
"We're asking the court to make clear that the ACA is still the law and ensure that all Americans can continue to access affordable healthcare under it", Becerra said in a statement released after the filing.
Without an immediate legal basis for the defendants to appeal, the judicial review process could result in a prolonged period of uncertainty for healthcare industry players and policymakers alike, even if the ACA is ultimately upheld again in part or whole, whether by the Fifth Circuit or Supreme Court.
The ruling, if affirmed, would have a draconian impact on the healthcare sector and the overhang alone could trigger widespread selling across the sector, Oppenheimer analyst Michael Wiederhorn said.
He added, "Not only does tonight's ruling confirm that this broken law can not hold up under court scrutiny, but it also affirms that the law does not actually protect people with preexisting conditions". The law still works without it. Congress in its wisdom has declared that it's severable, has said, look, we're going to keep the law but remove the mandate penalty.
Judge O'Connor believes that in doing so, Congress pulled a grenade pin, exploding the entire law.