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Supreme Court Rules 7-2 to Save Affordable Care Act

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What You Need to Know

  • The majority included Roberts, Thomas, Kavanaugh and Barrett as well the court's liberal justices.
  • The court based its ruling solely on standing.
  • The court held that, because the individual mandate penalty was zeroed it out, it cannot hurt taxpayers, and taxpayers have no standing to sue over it.

The U.S. Supreme Court today issued a 7-2 ruling that keeps the Affordable Care Act in place.

The court held that Texas, other states that oppose the Affordable Care Act, and two self-employed men in Texas have no standing to challenge the constitutionality of the ACA individual coverage ownership mandate, or to use mandate constitutionality challenge to overturn the entire health law.

The case is California et al. v. Texas et al. (Case Number 19-840).

What the Ruling Means

Today’s ruling means that health insurers, pricing actuaries, public health insurance exchange programs, and agents and brokers can continue to plan for the fall health coverage selling season under the current rules.

If the court had sided with Texas’ coalition, the result could have been anything from a stay that could have kept the ACA in place for years, to a narrow ruling that would have simply struck down the individual mandate, to an immediate elimination of laws that shape everything from Medicaid nursing home benefits to Medicare Part D prescription drug benefits.

Breyer’s Opinion

Justice Stephen Breyer wrote the opinion for the majority.

Breyer reasoned in the opinion that that the individual mandate cannot hurt the two individual plaintiffs, because Congress set the penalty for the ACA’s “minimum essential coverage” provision — the individual mandate — at zero when it passed the Tax Cuts and Jobs Act of 2017.

The state plaintiffs did not succeed at showing how the zeroed-out penalty would cause residents to act in ways that would increase costs for Texas or the other state plaintiffs, Breyer added.

The state plaintiffs made other points about how the ACA has hurt them, but Breyer said none of those concerns related directly to the individual mandate.

“We conclude that the plaintiffs in this case failed to show a concrete, particularized injury fairly traceable to the defendants’ conduct in enforcing the specific statutory provision they attack as unconstitutional,’ Breyer wrote. “They have failed to show that they have standing to attack as unconstitutional the act’s minimum essential coverage provision.”

The court reversed a federal district court ruling and a 5th U.S. Circuit Court of Appeals ruling that sided with the plaintiffs.

The Other Justices

Chief Justice John Roberts and Justices Sonia Sotomayor, Elena Kagan, Brett Kavanaugh, Amy Coney Barrett joined in Breyer’s opinion.

Justice Clarence Thomas joined in Breyer’s opinion and also filed a concurring opinion.

Justices Samuel A. Alito Jr. and Neil Gorsuch opposed the ruling. Alito wrote a dissenting opinion, and Gorsuch joined in Alito’s opinion.

Thomas wrote in his concurring opinion that the ACA has a dubious history at the Supreme Court, but that the court must assess the current suit on its own terms.

“The plaintiffs failed to demonstrate that the harm they suffered is traceable to unlawful conduct,” Thomas wrote. “Although this court has erred twice before in cases involving the Affordable Care Act, it does not err today.”

Alito argued that the plaintiffs in the case clearly have suffered harm from the ACA and that the majority applied standing rules incorrectly.

Standing v. Severability

Justices hinted that questions about standing could be central to the outcome of California v. Texas in November 2020, when they heard oral arguments about the case.

Roberts, Kagan and Barrett all asked questions about the plaintiffs’ standing to bring the suit.

During oral arguments, and outside of the court, many discussions about California v. Texas involved “severability” — questions about how much, if any, of the ACA could survive if one part were found to be unconstitutional.

The court did not ending up addressing severability.

“We proceed no further than standing,” Breyer wrote in his opinion.

ACA History

Earlier pleadings and opinions related to the California v. Texas case were unclear about whether the case related solely to the main part of the Affordable Care Act, the Patient Protection and Affordable Care Act of 2010 (PPACA), or both to PPACA and to the other law in the ACA package, the Health Care and Education Reconciliation Act of 2020 (HCERA).

Breyer wrote in his opinion that the cases relates to PPACA. He did not mention HCERA.

Congress passed the bill that created PPACA Dec. 24, 2009.

PPACA is thousands of pages long. One part added an “individual shared responsibility” provision, or Section 5000A, to the Internal Revenue Code. The provision originally required individuals to have what the government classified as minimum essential coverage, or adequate health coverage, or else pay a penalty.

ACA opponents contended that Section 5000A created an unconstitutional requirement for people to buy commercial health insurance. They also argued that, because the ACA contains no “severability clause,” or provision letting the rest of the law survive if one part dies, the courts should kill the entire law.

ACA supporters defended the health law by saying that the mandate penalty was a tax, that it was essential to the ACA, and that opponents could not sue to block the penalty because it was protected by the federal Anti-Injunction Act. The act prevents taxpayers from suing to block the effect of federal taxes.

The Supreme Court ruled in 2012, in National Federation of Independent Business (NFIB) v. Sebelius, that the mandate penalty was a tax, and that ACA opponents could not sue to block it.

When Congress set the mandate penalty at zero, ACA opponents hoped that they could make the case that the penalty was no longer a tax and no longer protected by the Anti-Injunction Act.

The California v. Texas Parties

Texas’ state plaintiff coalition included Alabama, Arizona, Arkansas, Florida, Georgia, Indiana, Kansas, Louisiana, Mississippi, Missouri, Nebraska, North Dakota, South Carolina, South Dakota, Tennessee, Utah and West Virginia. The individual plaintiffs were Neill Hurley, a parking consultant based in Katy, Texas, and John Nantz, a management consultant based in Austin, Texas.

California’s coalition included Connecticut, Delaware, Hawaii, Illinois, Kentucky, Massachusetts, Minnesota, New Jersey, New York, North Carolina, Oregon, Rhode Island, Vermont, Virginia, Washington state and the District of Columbia.

Reactions

America’s Health Insurance Plans and the Blue Cross Blue Shield Association participated in the negotiations that created the ACA. They filed briefs asking the Supreme Court to keep the ACA in place.

AHIP President Matt Eyles put out a statement welcoming the court ruling upholding the ACA.

“The ACA remains the law of the land and a foundational component of health care and coverage for more than 300 million Americans,” Eyles said in the statement. “After a year filled with unprecedented loss when reliable comprehensive health coverage has never been more important, this decision protects the stability of health coverage for people with pre-existing conditions, hardworking families, seniors, and other Americans who need it most.”

Justice Stephen Breyer (Photo: Diego M. Radzinschi/ALM)