Affordable Care Act Survives Latest Challenge in U.S. Supreme Court

The U.S. Supreme Court on June 17, 2021, ruled 7-2 that Republican states, led by Texas, lack standing to challenge the Affordable Care Act (ACA). In the case of California et al. v. Texas et al., Justice Stephen Breyer wrote the majority opinion. He was joined by Justices Sonia Sotomayor, Elena Kagan, John Roberts, Clarence Thomas, Brett Kavanaugh and Amy Coney Barrett. Justices Samuel Alito and Neil Gorsuch dissented.

In the majority opinion, Breyer wrote, "For these reasons, we conclude that the plaintiffs in this suit failed to show a concrete, particularized injury fairly traceable to the defendants' conduct in enforcing the specific statutory provision they attack as unconstitutional. They have failed to show that they have the standing to attack as unconstitutional the Act's minimum essential coverage provision." The dissenting justices said in their opinion that the "penalty is a tax."

The healthcare stakeholder community has anxiously awaited the decision of this case, which has challenged the ACA through litigation since 2017. As a reminder, the Tax Cuts and Jobs Act (TCJA) reduced the tax penalty for the individual mandate to $0. Following the passage of the TCJA, the state of Texas sued the U.S. Department of Health and Human Services (HHS). Texas argued that the zeroing-out of the penalty made the individual mandate unlawful: By eliminating the additional revenue the penalty previously provided, it no longer could be considered an exercise of Congress' power to tax.

As noted above, the court found that Republican-led states behind the case did not have a legal ground to challenge the healthcare law. It's the third time the Supreme Court has upheld the law. With that said, it's not necessarily the end of the ACA trilogy; the majority opinion did not address the issues of constitutionality or severability, which leaves the door open for future legal challenges.