Supreme Court Hears Case on Affordable Care Act Constitutionality

At 10am EST on November 10, the Supreme Court heard the oral arguments in the California v Texas regarding the Affordable Care Act’s constitutionality.

The case is pivotal as the outcomes could seriously impact the payer industry.

Three questions that have been at the heart of this debate from the beginning remain pertinent for these oral arguments.

First, the court will consider whether Texas and the other plaintiffs have been injured by the current law. This is called “standing.”

Second, the court will evaluate the individual mandate’s constitutionality.

The individual mandate originally required that Americans who did not have health insurance face a financial penalty. Congress has the power to tax, so at the time this was considered legal. However, the legislative branch later zeroed out that mandate without striking it from the law in the 2017 Tax Cuts and Jobs Act (TCJA).

Texas and the other plaintiff states argued that since the penalty no longer required financial compensation to the government, it did not qualify as a tax. If it did not qualify as a tax, then it must be considered a governmental mandate to buy health insurance, which would be unconstitutional, the plaintiffs said.

In December 2019, the Fifth Circuit Court agreed with the plaintiffs that the individual mandate was unconstitutional.

Third, the court will assess whether the individual mandate’s lack of constitutionality invalidates the entire Affordable Care Act.

The argument for this rests on “severability”—that is, the concept that a part of a law that is found to be unconstitutional can be discarded without affecting the rest of the law. The individual mandate must meet certain requirements to be considered severable.

The district court that initially heard this case determined that the individual mandate was inseverable and, thus, found the entire Affordable Care Act to be unconstitutional.

The Fifth Circuit Court of Appeals, however, did not affirm this decision. While the appellate court confirmed that the individual mandate was now unconstitutional since it no longer carried a penalty that would qualify it as a tax, the Fifth Circuit found fault with the district court’s process around determining whether the mandate was severable.

Instead of settling the Affordable Care Act’s constitutionality, the Fifth Circuit Court of Appeals sent the case back to the lower court with instructions to thoroughly investigate the implications of the individual mandate’s unconstitutionality for the rest of the law.

The defendants—California and other states—appealed to the Supreme Court, asking for an expedited review. In January 2020, the Supreme Court announced that it would not expedite the review. However, less than two months later, the highest court agreed to review the Affordable Care Act’s constitutionality in the second half of 2020.

The Supreme Court may not release a final decision until as late as June 2021, Kaiser Family Foundation has noted.

This article will be updated as the story develops.