Supreme Court Upholds the Affordable Care Act…Again
For a third time, the Supreme Court has declined to strike down the Affordable Care Act (the “ACA”), this time in a 7-2 ruling in the case of California v. Texas. The Court held that Texas and the 17 other challenging states (the “Plaintiffs”) did not have standing to challenge the ACA, avoiding the need for the Court to decide the main questions raised by the litigation. Justice Breyer authored the majority opinion, with Justice Thomas also writing a concurring opinion. Justice Alito wrote a dissenting opinion in which Justice Gorsuch joined. The decision ends the uncertainty that has surrounded the ACA ever since a Texas district court ruled that the ACA was unconstitutional, and puts the law back on solid footing, at least for now.
The closely watched case, originated when the Plaintiffs challenged the ACA, arguing that it was no longer constitutional after the 2017 Tax Cuts and Jobs Act effectively eliminated the penalty for not complying with the ACA’s so-called “individual mandate”. The logic of their argument went like this: (i) NFIB v. Sebelius upheld the ACA’s individual mandate based solely on Congress’ taxing authority; (ii) the Tax Cuts and Jobs Act eliminated the “tax” imposed on individuals that violated the mandate; (iii) therefore, the individual mandate provision of the ACA is no longer constitutional. Additionally, the Plaintiffs argued that the individual mandate was not severable from the rest of the law, so if the mandate is now unconstitutional, so is the entire ACA. The Court however, did not address the substance of the Plaintiff’s argument. Instead, the Court held that the Plaintiffs had not “shown that the injury they will suffer or have suffered is ‘fairly traceable’ to the ‘allegedly unlawful conduct’ [the enforcement of the individual mandate] of which they complain” and therefore had no standing to bring the case forward.
The result of the case is largely in line with what many legal commentators predicted. Many thought that the ACA would be upheld, although not exactly predicting that the challenge would fail for lack of standing. Still, the case was closely watched due to the large role the ACA plays in the healthcare landscape of today. It affects everything from insurance markets and drug pricing, to safety standards for hospitals and calorie notices on menus. If the Court had sided with the Plaintiffs, it could have thrown the American healthcare system into chaos. While the history of the ACA suggests that it is only a matter of time until it has to withstand its next challenge, it appears that the law is now as safe as it has ever been in the decade since it was passed. Each year it gets more popular and entrenched in the existing healthcare system, making future challenges to the law increasingly unlikely. Additionally, with a new friendly Democratic presidential administration, the federal healthcare debate seems poised to move on to new issues.