Obamacare ruling delivers new shock to health system

Expanded Medicaid for millions. Penalties for poorly performing hospitals. Even the Trump administration's own plans to lower drug prices.

Those and many other initiatives would all be illegal under a federal judge's sweeping decision that the entire Affordable Care Act must be struck down — the latest shock to the nation's health system after a decade of upheavals, including two fights over the ACA that reached the Supreme Court.

Friday night's surprise decision — the Trump administration had asked U.S. District Court Judge Reed O'Connor to wait until after the ACA's open enrollment period ended early Sunday morning — doesn't require all ACA-created projects and health coverage to immediately cease. California Attorney General Xavier Becerra already has vowed to appeal, and administration officials say the law will remain in place while the legal challenges play out.

But the case, seemingly bound for the Supreme Court's new conservative majority, now threatens to complicate a wide array of policies, from state decisions on Medicaid expansion to HHS Secretary Alex Azar's national health agenda.

The decision's timing also throws another wrench into ACA enrollment, a campaign that was showing signs of new strength after former President Barack Obama and others tried to boost flagging sign-up numbers this week. And it raises new uncertainty for the entire U.S. health care system, as hospitals, doctors and patient groups have increasingly reoriented around the numerous provisions buried within the 2010 health law.

"The judge got it wrong," said Chip Kahn, the head of the Federation of American Hospitals. "This ruling would have a devastating impact on the patients we serve and the nation's health care system as a whole."

Among the pressing questions ahead:

Who appeals and how fast?

Friday night's ruling raises a number of decisions for the White House: Will the government appeal, how quickly and will its agencies continue to enforce the law in the meantime?

It's not clear what the Trump administration will choose to do, given its legal strategy to date. Career Justice Department lawyers this summer were told to drop their defense of the law — a near-unprecedented decision that led three lawyers to remove their names from the government's brief and prompted the senior attorney, Joel McElvain, to resign.

While some senior officials inside the administration have lobbied to preserve elements of the ACA, President Donald Trump's public jubilation over Friday night's ruling may complicate that outcome.

"As I predicted all along, Obamacare has been struck down as an UNCONSTITUTIONAL disaster!" the president tweeted. "Great news for America!" he added.

The Trump administration bears some responsibility for Friday night's decision because it failed to protect the law in court, said Tim Jost, an emeritus professor at Washington and Lee University School of Law. But, he noted, "the judgment goes far beyond what they asked for" by invalidating all of the ACA — including parts that the Trump administration has used to achieve its own goals.

Democratic-led states immediately said they will challenge the decision, ensuring that the court fight stays alive — although it's not clear how quickly they will move.

How will higher courts, including the Supreme Court, view the case?

The lawsuit was brought by the attorneys general of Texas and other conservative-led states, who are expected to continue the legal fight for years.

But if the case is appealed all the way to the Supreme Court, legal scholars — including Jonathan Adler, a law professor who was the architect of a previous challenge to strike down the ACA — say they're deeply skeptical that the arguments will sway Chief Justice John Roberts or Justice Brett Kavanaugh, the court's newest addition.

"The states would be lucky to get two votes at SCOTUS, and there's no way Roberts or Kavanaugh goes along," Adler told POLITICO.

Notably, O'Connor ruled on Friday night that the entire ACA should be struck down because the health law's mandate was repealed. That verdict takes direct aim at the majority ruling Roberts wrote in 2012 that the law could stand even though Roberts believed that part was unconstitutional — a decision that is unlikely to endear O'Connor's decision to the chief justice.

What happens to in-progress reforms?

The Trump administration has increasingly oriented its strategy around using the ACA to test new pilot projects.

"The biggest things we're going to be launching, coming soon, are going to be these demonstrations that Adam Boehler — our head of the Center for Medicare And Medicaid Innovation — has been working on," Azar said on Wednesday. Those projects would involve "testing new models of how we pay in Medicare for services… and then getting out of the way."

Those projects — and Boehler's entire center — would be illegal if Friday night's ruling stands.

The Trump administration also has repeatedly pledged to lower the nation's high drug prices, with the president vowing to "bring soaring drug prices back down to earth." Azar has steadily rolled out a multi-part strategy this year, pushing ideas like changing how Medicare pays for some drugs.

But "Secretary Azar's most ambitious plans to lower the price of prescription drugs are only possible because of authority conferred on the department by the ACA," said Rachel Sachs, a Washington University in St. Louis law professor. "Without that power, his ability to deliver what he has promised is severely limited."

When does the Trump administration hash out its strategy?

The White House and its key health agencies issued short, vague statements in the wake of Friday night's ruling — largely because health officials were caught flat-footed by the timing, multiple HHS officials told POLITICO, speaking on condition of anonymity.

"There are a few dusty plans in a drawer, but we didn't think a ruling was coming down this week," said one official.

"There's been no messaging, no nothing," said another official.

Administration officials late Friday indicated it would be business as usual, pending legal appeals.

How will this affect Democrats' 2019 health strategy?

House Democratic leaders already had planned to immediately file to intervene in the case upon taking control of the chamber in January — a largely symbolic move intended as a signal to voters after health care helped carry the party to victory.

But the latest legal threat to the ACA could be a pressure point to do far more on Obamacare, even as fissures emerge over whether Democrats should focus their energies on preserving the law or fight for universal government health care, which many new House members campaigned on this fall.