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June 17, 2021

AFFORDABLE CARE ACT
Supreme Court rules in California v. Texas that plaintiffs lacked standing in underlying suit to challenge individual mandate provision of the ACA
The Patient Protection and Affordable Care Act of 2010 (ACA) included a provision requiring individuals to obtain minimum essential health insurance, a provision codified in 26 U.S.C. §5000A(a), and known as the “individual mandate.” The ACA was amended by Congress in 2017 to set the penalty under §5000A(a) to $0 (Tax Cuts and Jobs Act of 2017). Subsequently, Texas and 17 other states, later joined by 2 individual plaintiffs, sued in federal court, claiming that without the penalty, the ACA is unconstitutional, since prior Supreme Court holdings anchored the constitutionality of the individual mandate in the taxing power of Congress. Absent any tax, plaintiffs asserted, the individual mandate is now unconstitutional, and is a non-severable component of the ACA. Therefore, the ACA itself is unconstitutional.

The Trump administration sided with the plaintiffs, and California and 15 other states plus DC intervened to defend the ACA. They challenged plaintiffs’ standing as well as the merits of the plaintiffs’ case. Plaintiffs prevailed at the district court, which ultimately held that §5000A(a) was unconstitutional and was not severable from the ACA, rendering the ACA unconstitutional. It stayed its ruling pending appeal to the 5^th Circuit. A 2-to-1 panel of the 5^th Circuit affirmed, but remanded the case to the district court on the issue of severability, finding the district court’s severability analysis “incomplete” and that “more is needed to justify” the district court’s order.

The state intervenors petitioned for certiorari and the Supreme Court granted the petition. On June 17, the Court held by a 7-to-2 majority that the plaintiffs lacked standing because “Neither the individual nor the state plaintiffs have shown that the injury they will suffer or have suffered is ‘fairly traceable’ to the ‘allegedly unlawful conduct’ of which they complain.”

In the opinion authored by Justice Breyer, joined by Justices Roberts, Thomas, Sotomayor, Kagan, Kavanaugh, and Barrett, the Court found the gravamen of the individual plaintiffs’ complaint to be “a particularized harm in the form of payments they have made and will make each month to carry the minimum essential coverage that §5000A(a) requires. The individual plaintiffs point to the statutory language, which, they say, commands them to buy health insurance. ... But even if we assume that this pocketbook injury satisfies the injury element of Article III standing ... the plaintiffs nevertheless fail to satisfy the traceability requirement. ... Their problem lies in the fact that the statutory provision, while it tells them to obtain that coverage, has no means of enforcement. With the penalty zeroed out, the IRS can no longer seek a penalty from those who fail to comply. ... {[The Act allows] IRS enforcement only of the taxpayer’s failure to pay the penalty, not of the taxpayer’s failure to maintain minimum essential coverage). Because of this, there is no possible Government action that is causally connected to the plaintiffs’ injury – the costs of purchasing health insurance.”

The Court also found the plaintiffs’ claims to be unable to be redressed. Plaintiffs sought injunctive relief and a declaratory judgment. But the injunctive relief concerned other provisions of the ACA that the plaintiffs’ argued were inseverable from the individual mandate. It is not possible to grant an injunction against enforcement of an unenforceable statutory provision. “To find standing here,” the Court concluded, “would allow a federal court to issue what would amount to ‘an advisory opinion without the possibility of any judicial relief.’ ... It would threaten to grant unelected judges a general authority to conduct oversight of decisions of the elected branches of Government. ... Article III guards against federal courts assuming this kind of jurisdiction.”

As to state plaintiffs, the Court held that “The state plaintiffs have failed to show that the challenged minimum essential coverage provision, without any prospect of penalty, will harm the by leading more individuals to enroll in these programs [such as Medicaid or CHIP].”

The Court concluded “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 standing to attack as unconstitutional the Act’s minimum essential coverage provision. Therefore, we reverse the Fifth Circuit’s judgment in respect to standing, vacate the judgment, and remand the case with instructions to dismiss.”

In his concurrence, Justice Thomas largely agreed with Justice Alito’s dissent, with which Justice Gorsuch joined, that the Court erred in its two prior ACA decisions. The dissent opened by noting that “Today’s decision is the third installment in our epic Affordable Care Act trilogy, and it follows the same pattern as installments one and two. In all three episodes, with the Affordable Care Act facing a serious threat, the Court has pulled off an improbable rescue.” Justice Thomas concurred that “This Court has gone to great lengths to rescue the Act from its own text. ... So have the Act’s defenders, who argued in the first instance that the individual coverage mandate is the Act’s linchpin, yet now, in an about-face, contend that it is just a throwaway sentence. But, whatever the Act’s dubious history in this Court, we must assess the current suit on its own terms. ... Today’s result is thus not the consequence of the Court once again rescuing the Act, but rather of us adjudicating the particular claims the plaintiffs chose to bring.” [California et al. v. Texas et al., No. 19-840, S.Ct., 593 U.S. ____, June 17, 2021; https://bit.ly/3zy4Nyx]