Like a cat with nine lives, the Affordable Care Act has survived yet another challenge at the U.S. Supreme Court level. On a 7-2 vote, the Court rejected the latest challenge to the Affordable Care Act (“ACA”), concluding that the plaintiffs did not have standing to challenge the constitutionality of the Act. With this ruling, authored by Justice Breyer, the ACA looks secure for the foreseeable future.
In the latest case, California v. Texas (known as Texas v. U.S. in the lower courts), the Court was asked to review the legal issue of “severability.” This legal concept is a bit like the popular game Jenga. The court looks at a piece of legislation and determines if the removal of one provision in the law causes the entire legislation to topple, or if the “tower” can remain standing even with the removal. Here, the question centered on Congress’s decision to reduce the individual mandate penalty to $0 as part of the Tax Cuts and Jobs Act of 2017. The core argument was that once Congress removed the penalty, the mandate could no longer survive as a “tax” and therefore the entire law was outside of Congress’s power.
As noted in the opening paragraph, the Supreme Court held that the plaintiffs did not have standing to challenge the law and therefore dismissed this latest challenge. “Standing” is a legal concept which determines whether the party bringing a lawsuit has the legal right to sue. A party must have suffered some sort of injury to establish standing. The Plaintiffs in this case included a group of twenty (20) states, led by Texas, and two self-employed individuals who are residents of Texas.
The Court held that the individual plaintiffs lacked standing because they were not harmed by a mandate that lacks a financial penalty. In other words, even if they defied the mandate and did not purchase insurance, they would not be penalized.
Similarly, the State plaintiffs lacked standing because they were unable to show that the individual mandate directly caused financial injuries. The Court rejected the arguments that the mandate created financial harm by either driving up enrollment in state health programs (such as Medicaid) or by creating additional administrative costs associated with reporting and compliance.
For those keeping score at home, this was the third time the U.S. Supreme Court has reviewed (and upheld) the ACA. In this latest round, the Court dismissed the challenge because all plaintiffs lacked standing to bring suit. This decision, coupled with the Biden administration’s push to expand ACA protections, should strengthen the law for the foreseeable future.
However, the ACA is not completely out of the woods yet. Another challenge has been filed in the U.S. District Court for the Northern District of Texas, a case entitled Kelley v. Becerra. And that case is before Judge Reed O’Conner; the same judge who struck down the entire ACA in California v. Texas and sparked this latest challenge. Which means we could be in for another Supreme Court decision in a few years.