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    Supreme Court Again Upholds the Affordable Care Act

    Almost since its initial approval in 2010, the Affordable Care Act (ACA) has been under attack from many sources, including the Republican leadership in Congress, the Trump Administration and Republican-led states. Despite efforts to repeal it or have it declared unconstitutional, the program has survived time and time again, most recently in another U.S. Supreme Court case. In California v. Texas, the conservative-majority court held 7-2 that both state and individual Plaintiffs lacked standing to challenge the Act. Conservative justices Roberts, Thomas, Kavanaugh and Barrett sided with the majority while Alito and Gorsuch dissented. How did this happen? It has to do with the nature of the controversy and the nature of the court. We also will look at what it means going forward.

    No Standing to Sue

    Standing is the legal right to sue, and plaintiffs must show that they have a provable injury. In this case, the Court held that the Plaintiffs did not have standing to challenge the Act’s minimum essential coverage provision because they did not show a past or future injury “fairly traceable to Defendants’ conduct enforcing the specific statutory provision they attack as unconstitutional.” By basing the decision on the standing issue, the Court did not reach the underlying constitutional issue in the case–whether the entire ACA became unconstitutional when Congress eliminated the individual penalty for failing to obtain health insurance. Amendments to the Act in the 2017 TCJA nullified the penalty by setting its amount to $0.

    History of the Case

    The Plaintiffs in the case, Texas and 17 other states led by Republicans, along with two individuals who did not want to buy health insurance, filed the case in the Northern District Court in Texas, asking that the entire law be struck down, including the gutted individual mandate and the minimum essential coverage requirement, Medicaid expansion and protections for those with pre-existing conditions. The case was filed after Congress failed to repeal the law in a 2017 vote.

    The federal District Court determined that individual plaintiffs had standing. It also found the minimum essential coverage requirement both unconstitutional and not severable from the rest of the Act. The Fifth Circuit Court of Appeals agreed there was standing and unconstitutionality but concluded that the District Court’s severability analysis provided insufficient justification to strike down the entire Act. Petitioner California and 20 other jurisdictions intervened to defend the Act’s constitutionality and to seek further review by the Supreme Court, which ruled based on the standing issue alone.

    Earlier Supreme Court Case, Congressional Action

    An earlier milestone challenge to the ACA was the Supreme Court’s ruling in National Federation of Independent Business v. Sebelius, where Chief Justice Roberts crossed over and voted with the liberal wing of the court to uphold the constitutionality of the individual mandate because it was based on a tax and Congress has broad powers to impose taxes. However, the Court also held that the Medicaid expansion in the states was voluntary, leading to Republican-led states opting out of the program which has left a gap in coverage for the working poor in those states. Robert’s decision was a surprise at the time and led to conservative criticism of the Chief Justice.

    McCain Blocked Repeal

    On July 27, 2017, Senator John McCain (R-Az) joined two moderate Republicans, two independents and every Democrat in voting against a substantial repeal of the Affordable Care Act. McCain made this statement after his no vote: “While the amendment would have repealed some of Obamacare’s most burdensome regulations, it offered no replacement to actually reform our health care system and deliver affordable, quality health care to our citizens.” McCain incurred the wrath of President Trump for blocking repeal, and Senator Mitch McConnell (R-Ky) vowed to continue repeal efforts, although none were successful.

    Where Does This Leave the ACA?

    With the Supreme Court’s latest ruling, most provisions of the ACA remain in effect. The individual mandate is unenforceable, and states can reject Medicaid expansion, but the large employer mandate, minimum essential coverage, health insurance exchanges, and protection for pre-existing conditions continue. Also, the COVID relief bill, the American Rescue Plan of 2021, reduced marketplace health insurance premiums under the ACA, so the Act’s provisions have been enhanced.

    Although the law remains in place, for now, the Court did not reach the question of whether if the individual mandate is unconstitutional, the entire law must be struck down. Opponents of the law are likely to continue to seek a substantive ruling on this point, despite the fact that polling shows that a majority of Americans support the ACA.

    Fifty-three percent of adults approve of the program while 35 percent disapprove as of May 2021, according to the Kaiser Family Foundation. The American Medical Association lauded the ruling, stating, “The American Medical Association (AMA) is pleased that the high court rejected the challenge to the ACA, thereby upholding critical patient protections that are improving the lives and health of millions of Americans, particularly amid a global pandemic.” The American Hospital Association said, “The more than 30 million Americans who secured health insurance under the Affordable Care Act can again breathe a sigh of relief.”

    Lessons Learned

    The latest challenge to the ACA illustrates two points about governing in our Democracy that policy watchers understand:

    • Once government programs are in place, they are very difficult to remove.
    • Judges are notoriously independent once they are appointed for life. They cannot always be relied upon to follow the party line, especially when faced with esoteric legal points.

     

    About the Author

    Lucia Nasuti Smeal is a guest blogger on tax topics for Frazier & Deeter. Smeal is an attorney, a tax professor with Georgia State University’s J. Mack Robinson College of Business and with Franklin University, and former editor of Tax Notes Today, published by Tax Analysts. Smeal also worked as a legislative analyst for the Congressional Research Service and is a former member of the U.S. House Periodical Press Corps. She is a frequent speaker on current tax developments.

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