Washington Update: US Supreme Court Leaves ACA In Place

On June 17, 2021, the US Supreme Court issued an opinion in the latest legal controversy surrounding the ACA. In the opinion concerning California v. Texas, the Supreme Court determined that the challengers to the law lacked standing to bring the case to court. Accordingly, the case concludes without discussion of the legal challenges to the ACA, and the ACA remains the law of the land.

The plaintiffs in this case, including Texas and a number of other states, two individuals and the Trump Administration, challenged the individual mandate requirements under the ACA (the mandate required that US citizens obtain healthcare coverage or face a penalty). Although previous challenges to the mandate resulted in a 2012 Supreme Court decision that the mandate was the lawful exercise of Congress’ taxing power, the plaintiffs stated that Congress waived that power when it reduced the penalty to $0 in 2017. The plaintiffs argued that without this power, the mandate is unconstitutional. They went even further to say that since the mandate is unconstitutional, the entire ACA is unconstitutional too.

The ACA’s defenders, which included California and a number of other states and the District of Columbia, argued that the plaintiffs could not bring the case to court because they were not harmed by the mandate, particularly once the penalty was reduced to $0. Although the district and appellate courts disagreed and kept the case alive, the defendants asked the Supreme Court to consider the matter.

The Supreme Court agreed with the defendants. In order for a case to be considered by a court, the plaintiffs must show that they were harmed by the allegedly unlawful acts of another. The individual plaintiffs argued that they were harmed because the mandate required them to pay for health coverage every month (with money that they would have spent on other things). The state plaintiffs argued that the mandate forced people to enroll in state-run medical insurance programs, directly and indirectly increasing the state’s costs. The Supreme Court, though, reasoned that the federal government lacked a way to enforce the mandate if the penalty was reduced to $0, so it could not act in a way that would harm the plaintiffs. The individual plaintiffs and the state residents could simply opt not to purchase insurance and experience no repercussions. Since the plaintiffs could not show that the ACA’s mandate harmed them, the court reversed and remanded the case.

Since the court did not rule on any of the underlying constitutional arguments regarding the mandate and other parts of the ACA, the law remains unchanged. For employers, that means continued compliance with the various requirements imposed by the ACA, including offering affordable coverage to all FT employees (and the related employer reporting).

We will continue to report on ACA-related developments and will provide a more thorough analysis of the Supreme Court decision in next week’s edition of Compliance Corner.

California, et al. v. Texas, et al.