At long last, we finally have a ruling in the California v. Texas case. And, as expected following the oral arguments back in November—one week after the presidential election—the United States Supreme Court has upheld the constitutionality of the Affordable Care Act. In 7-2 decision, the Court ruled that the plaintiffs in the case did not have standing because, as Larry Levitt with the Kaiser Family Foundation puts it in a tweet following the ruling, they were unable to “demonstrate that they're injured by an individual mandate that has a penalty of zero dollars.”
In the ruling from both conservative and liberal justices that, as the Associated Press says, “left the entire law intact,” only Justices Alito and Gorsuch dissented.
Following the oral arguments back on November 10, many expected the Supreme Court to uphold the Affordable Care Act, but for a different reason. The most likely outcome, many believed, was that the Court would find the individual shared responsibility requirement with no accompanying penalty to be unconstitutional but severable from the rest of the law. With the no-standing decision, the individual mandate will actually remain.
Today’s ruling marks the third time the Court has saved the ACA. Back in 2012, when the penalty still applied, the Supreme Court found the mandate constitutional as a tax, and in 2015 the Court ruled that the premium tax credits were indeed constitutional and could be offered nationwide.
Today’s ruling is a huge blow to opponents of the Affordable Care Act and is likely the last big legal challenge to the eleven-year-old health care law.
The lawsuit arose after the premium tax credit was reduced to zero in the December, 2017 tax law. Texas led a coalition of about 20 “red” states that sued with the argument that 1) the individual mandate was constitutional as a tax, and 2) it was only a tax because some revenue was being generated for the United States Treasury, but 3) with no penalty, no revenue would be generated and, 4) therefore, the mandate was no longer a tax.
A federal judge sided with the plaintiffs in 2018, the case was appealed, and eventually the Supreme Court decided to hear the case. Oral arguments were held November 10, 2020, and at the time it seemed that the Court was leaning toward upholding the Affordable Care Act. As we reported in a January blog post about the future of the ACA, conservative justices Bret Kavanaugh and Clarence Thomas both indicated that they were inclined to save the law, with Kavanaugh saying that the mandate provision could be severed while leaving the rest of the law intact and Thomas questioning who was being harmed by the elimination of the mandate penalty. Chief Justice John Roberts also chimed in, as reported by NPR, saying to Texas Solicitor General Kyle Hawkins, “I think it's hard for you to argue that Congress intended the entire act to fall if the mandate were struck down when the same Congress that lowered the penalty to zero did not even try to repeal the rest of the act.”
Ultimately, because the Court ruled that the plaintiffs lacked standing, it never ruled on the severability argument. From Justice Breyer’s majority opinion:
They also argue that the minimum essential coverage requirement is not severable from the rest of the Act. Hence, they believe the Act as a whole is invalid. We do not reach these questions of the Act’s validity.
In the case, the Trump Justice Department actually sided with the plaintiffs, but the New York Times reports that the Biden administration sent a letter to the Supreme Court in February that “disavowed the Trump administration’s challenge to the law” and asked the Court to uphold the ACA.
While today’s ruling isn’t a huge surprise, it is still a big development. With President Biden in the White House, we can now safely say that Affordable Care Act will survive for at least the next three-and-a-half years. It appears that the next chance opponents of the law would have to undo the Affordable Care Act will be 2025, and a number of things would have to fall into place for that to happen:
- A Republican would have to win the presidency.
- Republicans would need to control both the House and the Senate. Currently, Democrats have a very slim majority in both chambers.
- Without a super-majority in the Senate, Republicans would need to eliminate the filibuster, if Democrats in the Senate do not do that before then.
Whether you personally support or oppose the Affordable Care Act, the good news for our clients is that the guessing game is over, at least for now. We know that the ACA will be around for a while longer, and that allows us to move forward. We can advise our clients based on the current law without having to wait and see what the Court will decide. Now, let’s just hope the two sides can work together to make some improvements to the existing law because, whatever side you’re on, we all know that there are problems that need to be fixed.
As Larry Levitt says in another tweet: “With the threat to the ACA's existence now in the rearview mirror, attention turns to how to fill in its gaps. The extra premium help in the American Rescue Plan expires next year. 12 states have not expanded Medicaid, leaving 2.2 million uninsured people with no options.”
Yes, there is still much work to be done. It will be interesting to see where we go from here.