Over the past two years, we’ve followed and discussed the twists and turns in the Patient Protection and Affordable Care Act (the “PPACA”) legal battle.[1] In December 2020, we concluded that the Supreme Court would not overturn the PPACA.
We anticipated that the Supreme Court may use the nullified penalty in the individual mandate as a reason to sever the mandate, while upholding the remainder of the PPACA. We knew the Supreme Court was willing to sever other provisions of the PPACA, as it did in National Federation of Independent Businesses v. Sebelius when it prevented the outright elimination of the mandated Medicaid expansion by severing the unconstitutional provisions.[2] As five of the justices that formed the majority in Sebelius (Chief Justice Roberts and Justices Thomas, Breyer, Alito and Kagan) remain on the Supreme Court, it seemed likely that it would take the same approach with the tax penalty issue in Texas v. California.
As predicted, on June 17, 2021, in California et al. v. Texas et al., the Supreme Court upheld the PPACA once again, but it did not address the validity of the PPACA or sever any provisions. [3] The majority opinion was written by Justice Breyer and was joined by Chief Justice John Roberts and Justices Sonia Sotomayor, Elena Kagan, Brett Kavanaugh, and Amy Coney Barrett. Justice Clarence Thomas joined the majority and wrote a concurring opinion. The majority held that “Texas and the other plaintiffs in this suit lack the standing necessary to raise [their arguments].”[4] Justice Thomas, in his concurrence, states the matter plainly:
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.[5]
By way of background, Texas and 17 other States filed an action (which was later joined by two individuals) against the U.S. and numerous federal officials claiming that without the tax penalty (which was reduced to $0 as of January 1, 2019 after Congress enacted the Tax Cuts and Jobs Act of 2017) the PPACA’s minimum essential coverage requirement (that required all applicable – i.e. taxpaying – individuals to have certain health care coverage) is unconstitutional. Because the requirement is not severable from the rest of the PPACA, Plaintiffs argued, the entire PPACA is invalid.
To be permitted to bring a lawsuit, a party must have standing. Standing requires that the parties filing the lawsuit be personally injured and that the injury be traceable to the defendant’s (in this case, the federal government’s) unlawful conduct.[6]
The two individual Plaintiffs that joined the lawsuit after it was filed “claim[ed] a particularized individual harm in the form of payments they have made and will make each month to carry the minimum essential coverage” as they are “commanded” to do under the statutory language.[7] This claim, however, lacks a key requirement for standing – government action connected to the harm. The only enforcement mechanism – IRS imposition of a penalty on taxpayers who fail to obtain insurance – no longer exists. The IRS could not take any action and no other government action is connected to the harm.
The States claimed two types of injuries: (1) “indirect injury in the form of the increased use of (and therefore cost to) state-operated medical insurance programs”; and (2) “direct injury resulting from a variety of increased administrative and related expenses required […] by the minimum essential coverage provision,” among other provisions.[8] With respect to the first injury, the Court found no link between the mandate and the increased use of the state-operated medical insurance programs. Individuals could enroll in those programs for many reasons not linked to the mandate. With respect to the second injury, the direct injuries arose from other parts of the PPACA that were not challenged and did not arise from the mandate.
The Supreme Court reversed the 5th Circuit and sent the case back to the lower court with instructions to dismiss it.
Will the PPACA be challenged again? Unlikely. Although the Court avoided the issue of the validity of the PPACA, the Supreme Court Opinion has the feeling of finality. Even with the change in Justices, the PPACA could not be undone. The message seems clear – if change is to happen, it must occur through legislation and not the courts.
[1] https://aequumhealth.com/news/preparing-for-annual-enrollment/; https://aequumhealth.com/news/you-can-stop-worrying-now-that-the-election-is-over-the-truth-be-told-regarding-health-reform/; https://aequumhealth.com/news/constitutionality-of-the-aca-a-brief-timeline-and-update/
[2] National Federation of Independent Businesses v. Sebelius, 567 U.S. 519 (2012).
[3] California et al. v. Texas et al., U.S. Supreme Court Case No. 19-840 (June 17, 2021) https://s3.documentcloud.org/documents/20949624/19-840_6jfm.pdf
[4] Id. at p. 2.
[5] Id. at p. 20.
[6] Id. at p. 7.
[7] Id. at p. 8.
[8] Id. at p. 13.