Health Law Daily High Court rules the Affordable Care Act stays as-is
Thursday, June 17, 2021

High Court rules the Affordable Care Act stays as-is

By Cathleen Calhoun, J.D.

In a 7-2 opinion, the U.S. Supreme Court found more than one "fatal weakness" in the case on the issue of standing, reversed the Fifth Circuit decision, and dismissed the case.

The U.S. Supreme Court issued its highly anticipated opinion on the constitutionality of the Affordable Care Act and the decision came through like a whisper—on a simple and narrow finding of lack of standing. In the 7-2 majority opinion, written by Justice Stephen Breyer, portions of the Affordable Care Act (P.L. 111-148) (ACA), other than the individual mandate and penalty portions, were not discussed since the lack of standing of individuals and the states meant that further analysis was not needed, according to the high court. The issue of standing, for both individuals and the states, was examined thoroughly by the Court. The Court held that the individuals and the states lacked standing to challenge the ACA’s minimum essential coverage provision because they did not show past or future injury connected to the enforcement of that statutory provision (California v. Texas, June 17, 2021, Breyer, S.).

Lower court ruling and appeal. The case came to the High Court following a Fifth Circuit decision in December 2019. The Fifth Circuit, in a 2-1 opinion, upheld the Texas federal district court’s ruling that the individual mandate in section 5000A of the ACA was unconstitutional. The ACA individual mandate provision gives individuals a health care choice—either purchasing health insurance or paying to the IRS what is called in the law a "shared responsibility payment," but Congress reduced the "shared responsibility payment" to zero in 2017 without repealing the ACA. In March 2020, the U.S. Supreme Court agreed to hear the case, known now as California v. Texas.

U.S. Supreme Court analysis. The issue of standing was analyzed by the Court in two ways—with respect to the individuals involved in the case, and regarding the multiple states who were also a party to the case.Individuals. Two individuals claimed harm due to past and future payments necessary to carry the minimal essential coverage that section 5000A of the ACA requires. The Court found that even assuming that there was a pocketbook injury to satisfy the injury element for standing, that injury is not fairly traceable to the complaint of allegedly unlawful government conduct.

Justice Breyer wrote, "Their problem lies in the fact that the statutory provision, while it tells them to obtain that coverage, has no means of enforcement. With the penalty zeroed out, the IRS can no longer seek a penalty from those who fail to comply... Because of this, there is no possible Government action that is causally connected to the plaintiffs’ injury—the costs of purchasing health insurance." The unenforceable statutory language was not enough, according to the court, to establish standing.

In looking at the issue another way, the Supreme Court asked, "What is the relief?" The Court found that injunctive relief could only be a declaration that the statutory provision attacked is unconstitutional, meaning a declaratory judgment. The Court noted that if it found standing to attack an unenforceable statutory provision, it would mean federal courts could issue what would amount to an advisory opinion without the possibility of any judicial relief.States. The states made two claims: (1) an indirect injury from the increased use of state-operated medical insurance programs; and (2) a direct injury resulting from increased administrative and related expenses required as a result of the minimum essential coverage provision. Like the individuals, the Supreme Court found Texas and other states failed to show that they claimed an injury fairly traceable to the alleged unlawful conduct by the government. On top of that, the court found "another fatal weakness" – the state failed to show that the challenged minimum essential coverage provision, without any prospect of penalty, will harm them by leading more individuals to enroll in the state programs. The programs that the states noted, such as Medicaid services, hospice care, and COVID-19 testing, are programs that offer their recipients many benefits that have nothing to do with the minimum essential coverage provision of §5000A(a). "Given these benefits, neither logic nor intuition suggests that the presence of the minimum essential coverage requirement would lead an individual to enroll in one of those programs that its absence would lead them to ignore," according to the Supreme Court.

Ruling. The Court found that the individuals and states both failed to show that they have standing to attack as unconstitutional the ACA’s minimum essential coverage provision. They did not show a concrete, particularized injury fairly traceable to the government’s conduct in enforcing the provision they attacked as unconstitutional. The Supreme Court reversed the Fifth Circuit’s judgment with respect to standing, vacated the judgment, and remanded the case with instructions to dismiss.

The case is No. 19-840.

Attorneys: Samuel Passchier Siegel, California Department of Justice, for State of California. Judd Edward Stone II, Texas Attorney General's Office, for State of Texas.

Companies: State of California; State of Texas

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