U.S. Justice Department says Obamacare individual mandate unconstitutional

WASHINGTON (Reuters) – The U.S. Justice Department said on Thursday that the part of Obamacare requiring individuals to have health insurance is unconstitutional, an unusual move that could lead to stripping away some of the most significant and popular parts of the law.

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In a brief filed in a federal court in Texas, the department said a tax law signed last year by President Donald Trump that eliminated penalties for not having health insurance rendered the so-called individual mandate under Obamacare unconstitutional.

The Justice Department said that also nullifies two other major provisions of Obamacare linked to the individual mandate, including one barring insurance companies from denying coverage to people with pre-existing conditions.

Attorney General Jeff Sessions, in a letter to House of Representatives Speaker Paul Ryan, said he had determined the individual mandate will be unconstitutional when the tax law becomes effective in 2019.

The mandate in Obamacare was meant to ensure a viable health insurance market by forcing younger and healthier Americans to buy coverage.

The Justice Department rarely declines to argue in favor of existing law in court and this decision will put pressure on the Affordable Care Act, the formal name for former President Barack Obama’s signature domestic achievement.

A coalition of 20 U.S. states sued the federal government in February, claiming the law was no longer constitutional after last year’s repeal of the penalty that individuals had to pay for not having insurance.

Led by Texas Attorney General Ken Paxton and Wisconsin Attorney General Brad Schimel, the lawsuit said that without the individual mandate, Obamacare in its entirety was unlawful.

Sessions said in his letter that the Justice Department was not arguing that the entire law does not pass constitutional muster. He said the department only refused to defend the pre-existing conditions provision as well as one forbidding insurers from charging people in the same community different rates based on gender, age, health status or other factors.

Trump and fellow Republicans in Congress have sought to dismantle Obamacare, which sought to expand insurance coverage to more Americans.

(Reporting by Eric Beech and Lisa Lambert; Editing by Leslie Adler)