The lawsuit led by Texas Attorney General Ken Paxton, argued an earlier case against the ACA made it clear that tax penalty was an essential component of the law, and when the Supreme Court upheld the ACA the ruling stated "without the tax penalty, the mandate that individuals purchase health insurance was an unconstitutional exercise of federal power".
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.
Some experts have said that regardless of how the case is decided, insurers could raise premiums for next year due to the uncertainty the case is causing, a point echoed by the Democrats.
The DOJ's central argument is outlined in a brief filed in a Texas federal court and an accompanying letter to House Minority Leader Nancy Pelosi, D-Calif.
Texas and the accompanying states have asked for a preliminary injunction that could suspend the entire law while the case plays out in court. Previously, insurers could deny or restrict applicants' coverage based on their medical history, or carriers could charge higher premiums or offer only skimpy benefits to those who are or were sick.
Democrats are seeking to tie the move into their argument that the Trump administration is "sabotaging" health care and driving up premiums, a key midterm message.
These consumer protections proved enormously popular with Americans and are among the reasons why efforts to repeal Obamacare in Congress failed a year ago.
"This is yet another malicious Republican attack that will undermine the stability of our healthcare system, and could once again mean that you or a loved one are denied healthcare because of a pre-existing condition", said Meredith Kelly, the communications director of the Democratic Congressional Campaign Committee (DCCC).
More recently, the administration also sought to loosen rules on short-term health insurance plans that are less expensive but don't carry the same consumer protections as Obamacare plans. Tom Miller of the American Enterprise Institute told Politico that the refusal to defend key parts of the ACA shows that the Trump administration is going even further in its battle against the health care law.
If the court agrees with the Justice Department's argument to toss out part of the law that protects individuals with an existing medical condition, that could affect millions of Americans who buy insurance directly from the marketplace.
California and 15 other states filed an opposing brief on Thursday defending the law. "It's important for consumers to know that the Affordable Care Act and the protections it ensures for their coverage are still the law, and they should continue to see their health providers and plan to shop for coverage this fall as they have any other year", says Imholz.
The US attorney general, Jeff Sessions, said in a letter to Congress on Thursday that Trump, who campaigned on repealing the law and almost did so his first year in office, approved the legal strategy.
Shortly before the government's court filing, three career lawyers at the Justice Department withdrew from the case and were replaced by two political appointees, according to court filings.