Supreme Court Rules that ACA Challengers Lacked Standing

On June 17, 2021, the US Supreme Court issued its opinion in the latest legal controversy surrounding the ACA. In the opinion for 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 several other states, two individuals and the Trump Administration, challenged the individual mandate requirements under the ACA (which required US citizens to 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 Congress exercising its power to tax, 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 several 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. 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 to run those programs. However, the Supreme Court 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. The Supreme Court also pointed out that some of the administrative expenses that the states complained of were traceable to other sections of the ACA, not the mandate at issue in the case.

Because the plaintiffs could not show that the ACA’s mandate harmed them, the court reversed the lower courts’ judgment regarding standing, vacated the judgment and remanded the case back down to the lower courts with instructions to dismiss the case.

Since the Supreme 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 full-time employees (and the related employer reporting).

California, et al. v. Texas, et al. »